diff --git a/.idea/runConfigurations/run_tests.xml b/.idea/runConfigurations/run_tests.xml
index ea56f5fb0..6a09e8c49 100644
--- a/.idea/runConfigurations/run_tests.xml
+++ b/.idea/runConfigurations/run_tests.xml
@@ -13,7 +13,7 @@
     <option name="MAIN_CLASS_NAME" value="" />
     <option name="METHOD_NAME" value="" />
     <option name="TEST_OBJECT" value="package" />
-    <option name="VM_PARAMETERS" value="-ea -Dteavm.junit.target=target/js-tests -Dteavm.junit.js.runner=htmlunit -Dteavm.junit.js.threads=2" />
+    <option name="VM_PARAMETERS" value="-ea -Dteavm.junit.target=out -Dteavm.junit.js.runner=htmlunit -Dteavm.junit.js.threads=2" />
     <option name="PARAMETERS" value="" />
     <option name="WORKING_DIRECTORY" value="file://$MODULE_DIR$" />
     <option name="ENV_VARIABLES" />
diff --git a/core/src/main/java/org/teavm/optimization/LoopInversionImpl.java b/core/src/main/java/org/teavm/optimization/LoopInversionImpl.java
index b228f906b..8e76b8588 100644
--- a/core/src/main/java/org/teavm/optimization/LoopInversionImpl.java
+++ b/core/src/main/java/org/teavm/optimization/LoopInversionImpl.java
@@ -157,6 +157,7 @@ class LoopInversionImpl {
         final IntIntMap copiedVars = new IntIntOpenHashMap();
         final IntIntMap copiedNodes = new IntIntOpenHashMap();
         final IntIntMap varDefinitionPoints = new IntIntOpenHashMap();
+        final IntIntMap newHeadPhiMap = new IntIntOpenHashMap();
         boolean shouldSkip;
 
         LoopWithExits(int head, LoopWithExits parent) {
@@ -188,9 +189,9 @@ class LoopInversionImpl {
             collectVariablesToCopy();
             copyCondition();
             moveBackEdges();
+            putNewPhis();
             removeInternalPhiInputsFromCondition();
             removeExternalPhiInputsFromConditionCopy();
-            putNewPhis();
             adjustOutputPhis();
 
             return true;
@@ -354,21 +355,15 @@ class LoopInversionImpl {
             BasicBlock block = program.basicBlockAt(headCopy);
             for (Phi phi : block.getPhis()) {
                 List<Incoming> incomings = phi.getIncomings();
-                List<Incoming> newIncomings = new ArrayList<>(incomings.size());
-                for (Incoming incoming : incomings) {
-                    if (nodesAndCopies.contains(incoming.getSource().getIndex())) {
-                        newIncomings.add(incoming);
+                for (int i = 0; i < incomings.size(); ++i) {
+                    Incoming incoming = incomings.get(i);
+                    if (!nodesAndCopies.contains(incoming.getSource().getIndex())) {
+                        incomings.remove(i--);
                     } else {
-                        for (int exit : exits.toArray()) {
-                            Incoming newIncoming = new Incoming();
-                            newIncoming.setValue(incoming.getValue());
-                            newIncoming.setSource(program.basicBlockAt(exit));
-                            newIncomings.add(newIncoming);
-                        }
+                        int var = incoming.getValue().getIndex();
+                        incoming.setValue(program.variableAt(newHeadPhiMap.getOrDefault(var, var)));
                     }
                 }
-                incomings.clear();
-                incomings.addAll(newIncomings);
             }
         }
 
@@ -389,6 +384,7 @@ class LoopInversionImpl {
                 Phi phi = new Phi();
                 phi.setReceiver(program.createVariable());
                 phiMap.put(var, phi.getReceiver().getIndex());
+                newHeadPhiMap.put(varCopy, phi.getReceiver().getIndex());
                 phisToAdd.add(phi);
 
                 for (int source : cfg.incomingEdges(bodyStart)) {
diff --git a/tests/out/.gitignore b/tests/out/.gitignore
new file mode 100644
index 000000000..a724cbb07
--- /dev/null
+++ b/tests/out/.gitignore
@@ -0,0 +1,2 @@
+*.js
+run-test.html
\ No newline at end of file