USANA HEALTH SCIENCES INC
For the period ended Mar 29, 2025. Filed May 6, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 29, 2025 · Filed May 6, 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-Q
Period ended 2024-09-28; filed 2024-11-05.
0000896264-24-000222
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-03-29; filed 2025-05-06.
0000896264-25-000126
Item 2. 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 75 previous paragraphs and 74 current paragraphs.
41 unchanged; 11 reworded; 20 added; 22 removed; 1 previous and 2 current paragraphs rearranged.
Tables are not compared: 5 previous and 6 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 (20)
Current report
Hiya direct-to-consumer: Hiya operates and sells products to customers in the United States. Hiya's customers purchase Hiya products for personal use primarily through a subscription model, which is intended to provide a steady, predictable income stream for Hiya. The ongoing nature of subscriptions fosters stronger relationships with customers by making it easier for them to receive products regularly, which we believe leads to retention and loyalty. Hiya's subscription model also provides important data on customer preferences and behaviors, which enables personalized offerings, efficient marketing and data-driven innovation insights. We evaluate Hiya's customer counts and behavior through their monthly subscribers and only count as "active Monthly Subscribers" those Hiya customers who have purchased from Hiya at any time during the most recent month. As of March 29, 2025, Hiya had approximately 224,000 active Monthly Subscribers.
Current report
Other: The "other" category is comprised of Rise Bar Wellness, Inc. ("Rise") and Oola Global, LLC ("Oola"), which are both businesses we acquired in 2022. Rise manufactures and sells high-quality protein bars and powdered drinks that are formulated to help customers achieve their health goals through clean and simple ingredients. Oola is a direct selling company that offers a personal development framework and nutritional products that helps individuals create a life of balance, growth, and purpose.
Current report
We discuss our "other" category, which is not a reportable segment, together with our "direct selling" segment.
Current report
The following table summarizes operating results as a percentage of net sales for thecurrent and prior-year periods, as indicated:
Current report
For more information relating to our reportable segments, see Note K to our condensed consolidated financial statements.
Current report
Direct selling
Current report
Hiya direct-to-consumer
Current report
Hiya's active Monthly Subscribers are comprised of two types: first-time customers and recurring customers. First-time customers are viewed as an investment as the customer is provided a discount, and shipping costs are higher due to the inclusion of a refillable glass bottle. Additionally, as a direct-to-consumer company, customer acquisition is heavily influenced by the level of marketing spend. Recurring customers are not provided the same discount, and shipping costs are lower on refill orders. Both gross margins as well as operating margins improve with recurring customer orders, therefore, profitability margins are affected by sales mix between these two types of customers.
Current report
Net sales for the first quarter of 2025 increased 9.5% to $249.5 million, an increase of $21.7 million, compared with the prior-year quarter. The addition of Hiya was the primary catalyst to year-over-year growth in consolidated net sales while the direct selling segment experienced modest declines during the quarter. A challenging economic and operating environment contributed to a decrease in active Customers in the direct selling segment, which was a key factor in the lower year-over-year performance. Additionally, unfavorable changes in currency exchange rates negatively impacted net sales by an estimated $5.6 million in the current year quarter.
Current report
Net earnings attributable to USANA for the first quarter of 2025 were $9.4 million, a decrease of 43.1% compared with $16.5 million during the prior-year quarter. Several items contributed to lower year-over-year net earnings during the current year quarter including amortization costs of acquired intangible assets as well as lower net interest income attributable to deploying cash reserves related to the acquisition of Hiya. The impact of a strong U.S. dollar on our operating model and lower net sales in the direct selling segment also contributed to lower year-over-year net earnings.
Current report
Direct Selling Net Sales
Current report
Net sales in our direct selling business for the three-month period ended March 29, 2025 were $212.5 million, down 6.7% when compared to the corresponding period of 2024. On a constant currency basis, net sales in the direct selling segment declined 4.5%. A generally lower cadence of promotional activity during the current year quarter and a decrease in active Customer counts were the primary contributors to lower net sales in the direct selling segment. This decrease was partially offset by modest price increases and higher sales per active Customer.
Current report
Asia Pacific: Net sales declined 6.3%, or 4.2% on a constant currency basis, in this region during the current year quarter. Active Customers in this region declined 5.3% year-over-year. This decline reflects a lower cadence of promotional activity that was partially offset by higher sales per active Customer and modest price increases throughout the region. This decline was primarily concentrated in China and South Korea. Local currency net sales declined 5.3% in China on a 7.4% decrease in active Customers, partially offset by an increase of 2.3% in average spend per customer. Local currency net sales declined 3.6% in South Korea that was primarily attributable to a 5.6% decrease in average spend per customer, partially offset by a 2.3% increase in active Customers.
Current report
Americas and Europe: Net sales declined 9.8%, or 5.5% on a constant currency basis, in this region during the current year quarter. Active Customers in this region declined 14.1% year-over-year. Year-over-year results in this region reflect a continued challenging environment to attract new customers as well as the variability of the timing and type of promotional activity offered during the quarter. Net sales decreased 8.2% in the United States that was attributable, in great part, to a 16.7% decrease in active Customers and was partially offset by a 10.2% increase in average spend per customer. Local currency net sales decreased 8.4% in Mexico on lower active Customer counts.
Current report
Hiya Net Sales
Current report
Our Hiya direct-to-consumer net sales for the three-month period ended March 29, 2025 were $37.1 million. There were no sales in the corresponding period of 2024 as the acquisition of Hiya occurred in the fourth quarter of 2024.
Current report
Gross profit decreased 210 basis points to 79.0% of net sales, down from 81.1% in the prior-year quarter. The decrease in gross profit is largely attributed to an approximate 300 basis point unfavorable impact on consolidated results from Hiya, which carries lower gross margins relative to the direct selling business. Gross margin in the direct selling business improved 90 basis points from the prior year to 81.9% of segment net sales. The increase in gross profit for the direct selling segment can primarily be attributable to the reorganization of our commercial team, a favorable change in market sales mix, and modest price increases, partially offset by unfavorable changes in currency exchange rates.
Current report
Associate incentives expense is incurred only in the direct selling segment. Associate incentives within the direct selling business increased 40 basis points to 42.4% of segment net sales, up from 42.0% in the prior-year quarter. The relative increase can be attributed to increased spend on promotional incentives, partially offset by market mix and modest price increases. On a consolidated basis, Associate incentives decreased 590 basis points to 36.1% of net sales, down from 42.0% in the prior-year quarter. This decrease can be attributed to inclusion of Hiya sales where no Associate incentives are paid.
Current report
Selling, general and administrative expenses increased$27.1 million in absolute terms during the current year quarter, or 830 basis points relative to net sales. The increase reflects an approximate 460 basis point unfavorable impact on consolidated results from the Hiya direct-to-consumer segment, which has a higher mix of selling, general and administrative expenses compared to the direct selling segment. Hiya's first quarter reflected normal seasonality of higher marketing spend, as well as the inclusion of amortization costs of acquired intangible assets. Our direct selling segment increased 370 basis points from the prior year to 32.0% of segment net sales. The increase is primarily due to a loss of leverage on lower year-over-year net sales and also reflects the change in the activities and organization of the commercial team.
Current report
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 and the ability to navigate these challenging times effectively.
Removed paragraphs (22)
Previous report
Net sales for the third quarter of 2024 decreased 6.2% to $200.2 million, a decrease of $13.1 million, compared with the prior-year quarter. The decrease in net sales was primarily the result of a decrease in active Customers and a decrease in average spend per Customer, due to a challenging economic environment in many of our key markets, which had varying degrees of impact on attracting new customers. This was partially offset by modest price increases compared to the prior-year quarter. While we've experienced an unfavorable impact from changes in currency exchange rates over the past several quarters, the impact was minimal on the current quarter.
Previous report
Net earnings for the third quarter of 2024 were $10.6 million, a decrease of 6.5% compared with $11.3 million during the prior-year quarter. The decrease in net earnings was the result of decreased sales and higher relative operating expenses, partially offset by a decrease in effective tax rate during the quarter.
Previous report
Asia Pacific: The constant currency decline in this region was primarily the result of lower sales per active Customer and lower active Customer counts, partially offset by modest price increases throughout the region. This decline was primarily concentrated in China, South Korea and Singapore. A local currency net sales decline of 4.7% in China was due to a decrease of 10.6% in average spend per customer, largely due to the challenging economic environment within China, partially offset by a 6.6% increase in active Customers. A local currency net sales decline of 12.5% in South Korea was primarily due to a 16.7% decrease in active Customers partially offset by a 5.0% increase in average spend per customer. A local currency net sales decline of 22.2% in Singapore was primarily due to an 11.1% decrease in active Customers and a 12.6% decrease in average spend per customer.
Previous report
Americas and Europe: The decrease in this region was primarily the result of lower active Customer counts and lower average spend per customer, partially offset by modest price increases. The decrease in constant currency net sales is largely the result of a sales decline in the United States, which had a net sales decline of 8.5% due to a 9.3% decrease in active Customers partially offset by a 0.8% increase in average spend per customer, and Canada, which had a net sales decline of 4.2% due to a 6.3% decrease in active Customers partially offset by a 2.4% increase in average spend per customer.
Previous report
Gross profit increased 30 basis points to 80.4% of net sales, up from 80.1% in the prior-year quarter. The increase can primarily be attributed to lower material costs in China, favorable changes in market mix, price increases, and lower freight expense, which was partially offset by unfavorable changes in currency exchange rates.
Previous report
Associate incentives decreased 10 basis points to 42.0% of net sales, down from 42.1% in the prior-year quarter. The relative decrease can primarily be attributed to benefits from price increases and afavorable shift in market sales mix.
Previous report
Selling, general and administrative expenses increased 90 basis points relative to net sales and decreased $2.0 million in absolute terms. The relative increase is largely due to a loss of leverage on lower year-over-year net sales. The lower expense in absolute terms can be primarily attributed to adecrease in spending for employee related costs, legal costs and meeting and events.
Previous report
Net Sales
Previous report
The following table summarizes the changes in net sales by geographic region for the nine months ended as of the dates indicated:
Previous report
Asia Pacific: The constant currency decline in this region was primarily the result of a sales decline in North Asia and Southeast Asia Pacific. The decrease in constant currency net sales in North Asia was primarily concentrated in South Korea, which had a local currency sales decline of 18.9%. The decrease in local currency net sales in South Korea was primarily due to a 16.8% decrease in active Customers and a 2.5% decrease in average spend per customer. There were local currency declines in nearly all markets in the Southeast Asia Pacific sub-region, most notably in the Philippines, Singapore, and Malaysia which had local currency net sales declines of 22.1%, 14.9%, and 7.4%, respectively. The decrease in local currency net sales in the Philippines was primarily the result of a 17.9% decrease in active Customers and a 5.1% decrease in average spend per customer. The decrease in local currency net sales in Singapore was primarily due to a 13.8% decrease in active Customers and a 1.0% decrease in average spend per customer. The decrease in local currency net sales in Malaysia was primarily due to a 13.1% decrease in active Customers, partially offset by a 6.9% increase in average spend per customer.
Previous report
Americas and Europe: There were local currency sales declines in most of the markets in this region. The decrease in constant currency net sales was primarily concentrated in the United States and Canada, which had local currency net sales declines of 11.9%, and 8.4%, respectively. The decrease in net sales in the United States was primarily due to a 6.9% decrease in active Customers and a 5.4% decrease in average spend per customer. The decrease in net sales in Canada was primarily due to a 4.0% decrease in active Customers and a 4.3% decrease in average spend per customer.
Previous report
Gross Profit
Previous report
Gross profit increased 10 basis points to 80.9% of net sales, up from 80.8% for the nine months ended September 30, 2023. The increase in gross profit margin can be attributed to favorable changes in market and product sales mix, decreased scrap charges, price increases, and lower freight expense, partially offset by unfavorable changes in currency exchange rates and loss of leverage on lower sales.
Previous report
Associate Incentives
Previous report
Associate incentives decreased 40 basis points to 42.2% of net sales, down from 42.6% for the nine months ended September 30, 2023. The relative decrease can primarily be attributed to benefits from price increases and decreased spending on promotional incentives. These improvements were partially offset by an unfavorable shift in market sales mix.
Previous report
Selling, General and Administrative Expenses
Previous report
Selling, general and administrative expenses increased 120 basis points relative to net sales and decreased$8.4 million in absolute terms. The relative increase can be attributed to leverage lost on lower net sales. The lower expense in absolute terms can be primarily attributed to a decrease in spending for employee related costs, meetings and events, advertising, legal and other professional services.
Previous report
Income Taxes
Previous report
Income taxes increased to 43.0% of pre-tax earnings, up from 38.0% of pre-tax earnings for thenine months ended September 30, 2023. The higher effective tax rate can be attributed to: i) China’s increased relative share of taxable income, ii) a concentration of infrastructure costs in our corporate headquarters, and iii) generally softer operating performance, including the impact of unfavorable exchange rates in our other markets around the world.
Previous report
Diluted Earnings per Share
Previous report
Diluted EPS decreased 19.3% to $1.96 as compared to $2.43 reported for the nine months ended September 30, 2023. This decrease can be attributed to lower net earnings.
Previous report
During the nine months ended September 28, 2024, our China subsidiary remitted profits through an annual dividend of $75.8 million to the United States, inclusive of net proceeds from a dividend hedge and net of applicable taxes.
Reworded paragraphs (11)
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 the report as part of our 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 September 28, 2024, we had approximately 452,000 active Customers worldwide.
Current wording
Direct selling: Direct selling is our primary business with approximately 84% of consolidated net sales. Our direct selling 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 the report as part of our 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 March 29, 2025, we had approximately 459,000 active Customers worldwide in our direct selling business.
Previous wording
We have operations in multiple markets, with sales and expenses being generated and incurred in multiple currencies. Our reported U.S. dollar sales and earnings can be significantly affected by fluctuations in currency exchange rates. In general, our operating results are affected positively by a weakening of the U.S. dollar and negatively by a strengthening of the U.S. dollar. During the nine months ended September 28, 2024, net sales outside of the United States represented 89.8% of consolidated net sales. In our net sales discussions that follow, we approximate the impact of currency fluctuations on net sales by translating current year sales at the average exchange rates in effect during the comparable periods of the prior year.
Current wording
We have direct selling operations in multiple markets, with sales and expenses being generated and incurred in multiple currencies. Our reported U.S. dollar sales and earnings can be significantly affected by fluctuations in currency exchange rates. In general, our operating results are affected positively by a weakening of the U.S. dollar and negatively by a strengthening of the U.S. dollar. During the three months ended March 29, 2025, net sales outside of the United States represented 91.0% of direct selling net sales. In our net sales discussions that follow, we approximate the impact of currency fluctuations on net sales by translating current year sales at the average exchange rates in effect during the comparable periods of the prior year.
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 acco unted for approximately 52% of Direct-selling segment sales during the nine months ended September 28, 2024, with the remainder of our sales generated from 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.
Current wording
Because we sell our products to a direct selling 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. 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 Customers is, therefore, used by management as a key non-financial indicator to evaluate our operational performance.
Previous wording
The table below summarizes the changes in our active Customer base by geographic region, rounded to the nearest thousand as of the dates indicated:
Current wording
Sales to Associates acco unted for approximately 50% of direct selling segment sales during the three months ended March 29, 2025, with the remainder of our sales generated from Preferred Customers. Associates and Preferred Customers represented approximately 40% and 60%, respectively, of the total active Customer base for the quarter in the direct selling segment. The table below summarizes the changes in our active Customer base for our direct selling segment by geographic region, rounded to the nearest thousand as of the dates indicated:
Previous wording
The following table summarizes the changes in net sales by geographic region for the fiscal quarters ended as of the dates indicated:
Current wording
The following table summarizes the changes in net sales by segment for the fiscal quarters ended as of the dates indicated:
Previous wording
Income taxes decreased to 43.0% of pre-tax earnings from the 44.7% reported in the comparable period of 2023 or 37.7% for fiscal 2023. The higher effective tax rate in 2023 can be attributed to an increase in the year-to-date effective tax rate estimate due to an unfavorable change in the mix of taxable income by market. There was no effective tax rate increase in the third quarter of 2024.
Current wording
Income taxes increased to 44.5% of pre-tax earnings from the 39.0% reported in the comparable period of 2024, or 44.9% for fiscal 2024. The higher effective tax rate can be attributed primarily to the change in market mix of pre-tax income.
Previous wording
Diluted Earnings per Share
Current wording
Diluted Earnings per Share Attributable to USANA
Previous wording
Diluted EPS decreased 5.1% to $0.56 as compared to $0.59 reported in the prior-year quarter. This decrease can be attributed to lower net earnings.
Current wording
Diluted EPS attributable to USANA decreased to $0.49 as compared to $0.86 reported in the prior-year quarter. This decrease can be attributed to lower net earnings attributable to USANA driven, in great part, by amortization costs of acquired intangible assets, lower net interest income, an unfavorable impact from currency exchange rates, and lower net sales in the direct selling segment.
Previous wording
Cash and cash equivalents incre ased to $364.9 million as of September 28, 2024, from $330.4 million as of December 30, 2023. Cash flow provided by operating activities was$55.2 million partially offset by cash used in financing activities of $13.4 million, and cash used in investing activities of $8.0 million. Additionally, favorable changes in currency exchange rates have impacted cash and cash equivalents, and restricted cash by $0.6 million.
Current wording
Cash and cash equivalents decre ased to $179.6 million as of March 29, 2025, from $181.8 million as of December 28, 2024. Cash flow provided by operating activities was$15.5 million, offset by cash used in financing activities of $14.5 million, and cash used in investing activities of $3.9 million. Additionally, favorable changes in currency exchange rates have impacted cash and cash equivalents, and restricted cash by $0.7 million.
Previous wording
Net cash flow provided by operating activities was$55.2 million for the first nine months of 2024. 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 pay accounts payable, accrued associate incentives, and the 2023 annual employee bonus and the purchase of inventories.
Current wording
Net cash flow provided by operating activities was$15.5 million for the first three months of 2025. 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 pay the 2024 annual employee bonus, accrued associate incentives, and the purchase of inventories.
Previous wording
Net cash flow provided by operating activities was $44.6 million for the first nine months of 2023. 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 pay accrued associate incentives and the 2022 annual employee bonus.
Current wording
Net cash flow provided by operating activities was $17.7 million for the first three months of 2024. Net earnings attributable to USANA combined with adjustments of non-cash items contributed positively to our net cash flow provided by operating activities, partially offset by cash used to pay the 2023 annual employee bonus, accrued associate incentives and prepaid expenses.
Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
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. 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. We believe that the addition of Hiya to our business promotes our vision and adds a diversified layer of growth in the direct-to-consumer channel. Consequently, we operate and sell products through both the direct selling and direct-to-consumer channels and organize our business into two reportable segments: direct selling and Hiya direct-to-consumer.
Current report — wording carried from elsewhere
The following table summarizes the approximate percentage of total product revenue for our Hiya direct-to-consumer segment that has been contributed by our major product lines for the current period, as indicated:
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
Nine Months Ended September 28, 2024 and September 30, 2023