USANA HEALTH SCIENCES INC

As a critical driver of our competitive advantage in the global nutritional supplement industry, we focus our research and development (“R&D”) efforts on developing and bringing to market high quality, science-based products that promote long-term health and wellness. Scientific innovation and rigorous product development enable us to deliver differentiated, high-quality products. Our R&D activities include identifying emerging trends, investigating new ingredients, developing products that are new to USANA and to the industry, and updating existing USANA-brand formulas to keep them current with the latest science and regulations in global markets, all of which ensure products are optimized to meet the changing, diverse needs of our global customer base.

Our team is composed of scientists experienced in human nutrition, cellular biology, biochemistry, genetics, the microbiome, natural product chemistry, foods and cosmetic science, clinical research, and product development. Through strategic collaborations with academic institutions, independent research organizations, and healthcare professionals, along with reviewing the latest research on nutrition at scientific conferences and in journals, they work to identify possible new ingredients and product upgrade opportunities. As well, we employ experts in quality assurance, quality control, and global regulatory affairs in order to manage the entire product development lifecycle. These teams work in close partnership to ensure products are consistent, safe, and compliant with international regulations.

When developing and manufacturing our products, we follow the highest applicable industry quality standards across all stages of product development and manufacturing. Our ingredients are selected to ensure purity, potency, and efficacy. Quality control is maintained through controlled sourcing of raw ingredients, manufacturing, packaging and labeling, as well as testing throughout the manufacturing process. Our commitment to quality ensures that our products meet or exceed the highest standards in the industry and that customers can trust the products and reinforces the value of our brand.

We seek to differentiate ourselves in the marketplace by focusing on proprietary science-backed formulations that consumers can trust. Our ability to develop innovative solutions tailored to specific regulatory and consumer requirements in diverse global markets, while consolidating formulas and ensuring efficiencies of manufacturing scale, is a key factor in our international growth strategy. Our investment in R&D creates significant barriers to entry for competitors, as we leverage the diverse expertise of our team to address consumer needs while capitalizing on new opportunities in the nutritional supplement space. By combining strong scientific foundations with operational excellence, we enhance our ability to drive growth and deliver value to both our customers and shareholders.

The R&D team is also involved in protecting our proprietary position with exclusive ingredients, proprietary formulations, product-specific scientific validation, and in some cases, patent protection. Research continues to support our proprietary InCelligence technology, advances in women’s health, immune system support, stress adaptation, healthy aging, and brain health. In 2024, we expanded our team of scientists focused specifically on research and reorganized our regulatory affairs and quality teams to further promote efficiency and quality. We also added Kathryn Armstrong, PhD, to our executive team to oversee all R&D efforts.

In fiscal years 2024, 2023, and 2022, we expended $11.6 million, $11.4 million, and $11.6 million, respectively, on product R&D activities. We expect to continue investing in R&D to advance our expertise and leadership in cellular nutrition, as well as overall health and wellness. In 2025, we plan to continue our increased investments into early-stage research and scientific innovation as we believe these investments continue to provide a sustainable competitive advantage.