USANA HEALTH SCIENCES INC
For the period ended Dec 28, 2024. Filed Mar 12, 2025.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2024 · Filed Mar 12, 2025
USNA$13.63-1.7%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2023-12-30; filed 2024-02-27.
0000896264-24-000093
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2024-12-28; filed 2025-03-12.
0000896264-25-000092
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 85 previous paragraphs and 84 current paragraphs.
65 unchanged; 18 reworded; 1 added; 1 removed; 1 previous and 0 current paragraphs rearranged.
Tables are not compared: 4 previous and 4 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (1)
Current report
Business Combinations. To record the value of assets acquired, liabilities assumed, and noncontrolling interest as a result of our acquisition of Hiya on December 23, 2024, we have performed a purchase price allocation utilizing the best information available to management. Assets acquired, liabilities assumed, and noncontrolling interests as part of a business acquisition are generally recorded at their fair value at the date of acquisition. The excess of purchase price over the fair value of assets acquired, liabilities assumed, and noncontrolling interest is recorded as goodwill. The acquisition method requires management to make assumptions and apply judgment, particularly for those assets acquired, liabilities assumed, and noncontrolling interest for which inputs are unobservable, such as trade name and customer relationship intangible assets. The fair value for the acquired trade name intangible asset was estimated utilizing an income approach, specifically the multi-period excess earnings method. The fair value for the acquired customer relationship intangible asset was estimated utilizing an income approach, specifically the with-and-without method. Both methods involve the use of significant estimates and assumptions including related to projected revenue growth rates, projected earnings before interest, taxes, depreciation and amortization (“EBITDA”) margins, and discount rates. Intangible assets estimated and recognized as a result of the Hiya Acquisition are based upon assumptions and inputs which have inherent estimation uncertainty. These estimates may be adjusted as more current information becomes available, and any adjustment could be material.
Removed paragraphs (1)
Previous report
Inventory Valuation. Inventories are stated at the lower of cost or net realizable value. Cost is determined using a standard costing system, which approximates the first-in, first-out method. The components of inventory cost include raw materials, labor, and overhead. Net realizable value is determined using various assumptions with regard to excess or slow-moving inventories, non-conforming inventories, expiration dates, current and future product demand, production planning, and market conditions. The forecasted future product demand for excess or slow-moving inventories is based on judgment and available information. A change in any valuation assumptions could result in an adjustment to inventory. However, the reported carrying value of inventory is not highly sensitive to reasonable changes in individual assumptions.
Reworded paragraphs (18)
Previous wording
We develop and manufacture high quality, science-based nutritional and personal care and skincare products that are distributed internationally primarily through direct selling. We use this distribution method because we believe it is more conducive to meeting our vision as a company, which is to improve the overall health and nutrition of individuals and families around the world. Our customer base is primarily comprised of two types of customers: “Associates” and “Preferred Customers,” referred to together as “active Customers.” Our Associates also sell our products to retail customers. Associates share in our company vision by acting as independent distributors of our products in addition to purchasing our products for their personal use. In 2023, we launched our Affiliate program in the United States, Canada, and Mexico and are evaluating introducing the program in other markets. This program offers another sales and compensation opportunity to individuals who are interested in selling USANA products. Affiliates are discussed and reported in this report with Associates. Preferred Customers purchase our products strictly for personal use and are not permitted to resell or to distribute the products. We only count as active Customers those Associates and Preferred Customers who have purchased from us at any time during the most recent three-month period. As of December 30, 2023, we had approximately 483,000 active Customers worldwide.
Current wording
We develop and manufacture high quality, science-based nutritional and personal care and skincare products that are distributed internationally primarily through direct selling. We use this distribution method because we believe it is more conducive to meeting our vision as a company, which is to improve the overall health and nutrition of individuals and families around the world. Our customer base is primarily comprised of two types of customers: “Associates” and “Preferred Customers,” referred to together as “active Customers.” Our Associates also sell our products to retail customers. Associates share in our company vision by acting as independent distributors of our products in addition to purchasing our products for their personal use. In 2023, we launched our Affiliate program in the United States, Canada, and Mexico and are evaluating introducing the program in other markets. This program offers another sales and compensation opportunity to individuals who are interested in selling USANA products. Affiliates are discussed and reported in this report with Associates. Preferred Customers purchase our products strictly for personal use and are not permitted to resell or to distribute the products. We only count as active Customers those Associates and Preferred Customers who have purchased from us at any time during the most recent three-month period. As of December 28, 2024, we had approximately 454,000 direct selling active Customers worldwide. In addition, on December 23, 2024, we acquired a 78.85% controlling ownership interest in Hiya, a leading provider of high-quality children's health and wellness products through which we operate our direct-to-consumer business.
Previous wording
Because we sell our products to a customer base of independent Associates and Preferred Customers, we increase our sales by increasing the number of our active Customers, the amount they spend on average, or both. Our primary focus continues to be increasing the number of active Customers. We believe this focus is consistent with our vision of improving the overall health and nutrition of individuals and families around the world. Sales to Associates account for approxim ately 52%of Direct-selling segment product sales during 2023, with the remainder of our sales being to Preferred Customers. Increases or decreases in product sales are typically the result of variations in the volume of product sold relating to fluctuations in the number of active Customers purchasing our products. The number of active Associates and
Current wording
Because we primarily sell our products to a customer base of independent Associates and Preferred Customers, we increase our sales by increasing the number of our active Customers, the amount they spend on average, or both. Our primary focus continues to be increasing the number of active Customers. We believe this focus is consistent with our vision of improving the overall health and nutrition of individuals and families around the world. Sales to Associates account for approxim ately 52%of direct selling segment product sales during 2024, with the remainder being to Preferred Customers. Increases or decreases in product sales are typically the result of variations in the volume of product sold relating to fluctuations in the number of active Customers purchasing our products. The number of active Associates and Preferred Customers is therefore used by management as a key non-financial indicator to evaluate our operational performance.
Previous wording
The table below summarizes the change in our active Customer base by geographic region, rounded to the nearest thousand, as of the dates indicated.
Current wording
The table below summarizes the change in our direct selling active Customer base by geographic region, rounded to the nearest thousand, as of the dates indicated.
Previous wording
Net sales in 2023 decreased 7.8%, or $77.6 million, to $921.0 million, compared with 2022. The decrease in net sales was primarily the result of a challenging economic environment in many of our key markets, which had varying degrees of impact on attracting new customers as well as consumer purchasing behavior of our products throughout the year. In some markets, we recognized our consumers were faced with an increasingly challenging economic environment. Consequently, we experienced a decline in active Customers of 1.4% compared to the prior year. Additionally, unfavorable changes in currency exchange rates decreased net sales for the year by an estimated $27.8 million.
Current wording
Net sales in 2024 decreased 7.2%, or $66.5 million, to $854.5 million, compared with 2023. The decrease in net sales was primarily the result of a decrease in average spend per Customer and a decrease in active Customers, due to a challenging economic environment in many of our key markets, which had varying degrees of impact on attracting new customers. We experienced a decline in active Customers of 6.0% compared to the prior year. Additionally, unfavorable changes in currency exchange rates decreased net sales for the year by an estimated $13.6 million.
Previous wording
Net earnings decreased 8.0% to $63.8 million in 2023, when compared with 2022. The decrease in net earnings was primarily the result of decreased sales and higher relative operating expenses.
Current wording
Net earnings attributable to USANA decreased 34.1% to $42.0 million in 2024, when compared with 2023. The decrease in net earnings attributable to USANA was primarily the result of decreased sales, higher relative operating expenses, and a higher effective tax rate.
Previous wording
Asia Pacific: The decrease in constant currency net sales in Greater China was primarily the result of a sales decline in China and Taiwan where local currency net sales decreased 0.6% and 3.9%, respectively. There were local currency declines in all markets in the Southeast Asia Pacific sub-region, most notable in the Philippines and Australia, which had local currency net sales declines of 25.7% and 8.4%, respectively. The decrease in constant currency net sales in North Asia was most notable in South Korea, which had a local currency net sales decline of 5.6%.
Current wording
Asia Pacific: The decrease in constant currency net sales in Greater China was primarily the result of a sales decline in China and Taiwan where local currency net sales decreased 1.7% and 3.9%, respectively. There were local currency declines in most markets in the Southeast Asia Pacific sub-region, most notable in the Philippines, Malaysia, and Singapore, which had local currency net sales declines of 18.6%, 9.4%, and 14.0%, respectively. The decrease in constant currency net sales in North Asia was most notable in South Korea, which had a local currency net sales decline of 19.5%.
Previous wording
Americas and Europe: There were local currency sales declines in all markets in this region. The decrease in constant currency net sales is largely the result of sales declines in the United States and Canada, which had local currency net sales declines of 12.1%, and 7.2%, respectively
Current wording
Americas and Europe: There were local currency sales declines in all markets in this region. The decrease in constant currency net sales is largely the result of sales declines in the United States and Canada, which had local currency net sales declines of 7.8%, and 6.0%, respectively.
Previous wording
Gross profit increased 20 basis points to 80.8% of net sales, up from 80.6% in 2022. The increase in gross profit margin can be attributed to decreased inventory valuation adjustments, and the impact of modest price increases that occurred throughout the year. These increases were partially offset by higher material costs, unfavorable changes in currency exchange rates, and loss of leverage on lower sales.
Current wording
Gross profit increased 30 basis points to 81.1% of net sales, up from 80.8% in 2023. The increase in gross profit margin can be attributed to favorable changes in market and product sales mix, lower inventory scrap, the impact of modest price increases that occurred throughout the year, and lower material costs in China. These increases were partially offset by unfavorable changes in currency exchange rates.
Previous wording
Associate incentives decreased 70 basis points to 42.8% of net sales in 2023, compared with 43.5% in the prior year. The relative decrease can primarily be attributed to decreased spend on promotional and program incentives, as well as modest price increases that occurred throughout the year.
Current wording
Associate incentives decreased 20 basis points to 42.6% of net sales in 2024, compared with 42.8% in the prior year. The relative decrease can primarily be attributed to benefits from modest price increases that occurred throughout the year, was well as decreased spend on Associate incentive promotions. These improvements were partially offset by an unfavorable shift in market sales mix and higher spending on distributor trips and events.
Previous wording
Selling, general and administrative expenses increased 160 basis points relative to net sales and decreased $5.3 million in absolute terms. The relative increase can be attributed to leverage lost on lower net sales. The decreased expense in absolute terms can be primarily attributed to a decrease in variable operating expenses as well as the capitalization of expenses associated with our digital commerce initiatives.
Current wording
Selling, general and administrative expenses increased 280 basis points relative to net sales and increased $6.3 million in absolute terms. The relative increase can be attributed to leverage lost on lower net sales. The increased expense in absolute terms can be primarily attributed to an increase in spending for legal and other professional services, which can be attributed to acquisition related costs of $8.2 million. This increase was partially offset by a decrease in spending for employee related costs.
Previous wording
Income taxes increased to 37.7% of pre-tax earnings in 2023, up from 36.2% of pre-tax earnings in 2022. The effective tax rate increase is due primarily to a change in the market mix of pre-tax book income.
Current wording
Income taxes increased to 44.9% of pre-tax earnings in 2024, up from 37.7% of pre-tax earnings in 2023. The higher effective tax rate is primarily attributable to the distribution of pre-tax earnings between markets. This increase was offset, in part, by a change in U.S. tax law for foreign currency conversion of foreign branch operations.
Previous wording
Diluted Earnings Per Share
Current wording
Diluted Earnings Per Share Attributable to USANA
Previous wording
Diluted EPS decreased to $3.30 in 2023 from $3.59 in 2022. This decrease can be attributed to lower net earnings.
Current wording
Diluted earnings per share attributable to USANA decreased to $2.19 in 2024 from $3.30 in 2023. This decrease can be attributed to lower net earnings.
Previous wording
We believe our current liquidity is adequate to meet our cash requirements and sustain our operations through cash flow from operations. Maintaining a capital structure that emphasizes sufficient liquidity and adaptability in the prevailing economic climate is our top priority. We actively assess potential acquisition opportunities and investments in complementary ventures. While we continuously aim to preserve ample liquidity and ensure business continuity amid uncertainties, we also explore initiatives such as stock repurchases. These strategic decisions have the potential to impact our liquidity, enabling us to navigate these challenging times effectively.
Current wording
We believe our current liquidity, through cash flow from operations, is adequate to meet our cash requirements and sustain our operations. Maintaining a capital structure that emphasizes sufficient liquidity and adaptability in the prevailing economic climate is our top priority. We actively assess potential acquisition opportunities and investments in complementary ventures. While we continuously aim to preserve ample liquidity and ensure business continuity amid uncertainties, we also explore initiatives such as stock repurchases. These strategic decisions have the potential to impact our liquidity, enabling us to navigate these challenging times effectively.
Previous wording
Cash and cash equivalents increased to $330.4 million at December 30, 2023, from $288.4 million at December 31, 2022. Cash flow provided by operating activities was $70.6 million partially offset by cash used in financing activities of $14.2 million, and cash used in investing activities of $12.0 million. Additionally, unfavorable changes in currency exchange rates, have impacted cash and cash equivalents, and restricted cash by an estimated $2.5 million.
Current wording
Cash and cash equivalents decreased to $181.8 million at December 28, 2024, from $330.4 million at December 30, 2023. Cash flow provided by operating and financing activities was $61.0 million and $9.6 million, respectively, offset by cash used in investing activities of $213.1 million. Additionally, unfavorable changes in currency exchange rates, have impacted cash and cash equivalents, and restricted cash by an estimated $6.2 million.
Previous wording
As discussed above, our principal source of liquidity comes from cash flows from operations. Net cash flow provided by operating activities totaled $70.6 million in 2023. Net earnings combined with adjustments of non-cash items contributed positively to our net cash flow provided by operating activities, partially offset by changes in working capital.
Current wording
As discussed above, our principal source of liquidity comes from cash flows from operations. Net cash flow provided by operating activities totaled $61.0 million in 2024. Net earnings combined with adjustments of non-cash items contributed positively to our net cash flow provided by operating activities, partially offset by changes in working capital.
Previous wording
Other significant uses of cash included an investment of $14.5 million to purchase property and equipment primarily related to our digital commerce initiatives and our India operations. Additionally, cash used to repurchase and retire shares totaled $11.6 million for 2023.
Current wording
Other significant uses of cash included the Hiya Acquisition of $203.3 million, net of cash acquired, and an investment of $10.1 million to purchase property and equipment. Additionally, cash used to repurchase and retire shares totaled $9.4 million in 2024.
Previous wording
Net cash flow provided by operating activities totaled $103.9 million in 2022. Net earnings combined with adjustments of non-cash items contributed positively to our net cash flow provided by operating activities, partially offset by cash used to payout the annual employee bonus, reduce accruals related to inventories, and a reduction in trade payables. Additionally, cash used to repurchase and retire shares was $25.4 million for 2022.
Current wording
Net cash flow provided by operating activities totaled $70.6 million in 2023. Net earnings combined with adjustments of non-cash items contributed positively to our net cash flow provided by operating activities, partially offset by $14.5 million in cash used to purchase property and equipment primarily related to our digital commerce initiatives and our India operations and cash used to repurchase and retire shares of $11.6 million.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
Preferred Customers is therefore used by management as a key non-financial indicator to evaluate our operational performance.