USANA HEALTH SCIENCES INC

Previous wording

Direct selling: Direct selling is our primary business with approximately 84% of consolidated net sales during the six months ended June 28, 2025. Our direct selling customer base is primarily comprised of two types of customers: “Brand Partners” (previously Associates) and “Preferred Customers,” referred to together as “active Customers.” To demonstrate our commitment to our sales leaders, we are refining the terminology to reference our sales leaders from "Associates" to "Brand Partners." The term Brand Partner reflects a more strategic, collaborative relationship, and better represents the crucial role these individuals play in the sustainable long-term growth of the business. Our Brand Partners also sell our products to retail customers. Brand Partners 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, which 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 Brand Partners. 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 Brand Partners and Preferred Customers who have purchased from us at any time during the most recent three-month period. As of June 28, 2025, we had approximately 418,000 active Customers worldwide in our direct selling business.

Current wording

Direct selling: Direct selling is our primary business with approximately 84% of consolidated net sales during the nine months ended September 27, 2025. Our direct selling customer base is primarily comprised of two types of customers: “Brand Partners” and “Preferred Customers,” referred to together as “active Customers.” Our Brand Partners also sell our products to retail customers. Brand Partners 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, which 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 Brand Partners. 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 Brand Partners and Preferred Customers who have purchased from us at any time during the most recent three-month period. As of September 27, 2025, we had approximately 388,000 active Customers worldwide in our direct selling business.

Previous 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 six months ended June 28, 2025, net sales outside of the United States represented 91.3% 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.

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 nine months ended September 27, 2025, net sales outside of the United States represented 90.6% 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

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 June 28, 2025, Hiya had approximately 200,400 active Monthly Subscribers.

Current wording

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 September 27, 2025, Hiya had approximately 193,400 active Monthly Subscribers.

Previous wording

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 wording

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, powdered drinks, and clear protein 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.

Previous wording

Sales to Brand Partners accounted for approximately 51% of direct selling segment sales during the six months ended June 28, 2025, with the remainder of our sales generated from Preferred Customers. As of June 28, 2025, Brand Partners and Preferred Customers represented approximately 41% and 59%, 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:

Current wording

Sales to Brand Partners accounted for approximately 53% of direct selling segment sales during the nine months ended September 27, 2025, with the remainder of our sales generated from Preferred Customers. As of September 27, 2025, Brand Partners and Preferred Customers represented approximately 43% and 57%, 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

Net sales in our direct selling business (discussed withour "other" category)for the three-month period ended June 28, 2025 were $201.9 million, down 5.1% when compared to the corresponding period of 2024. On a constant currency basis, net sales in the direct selling segment declined 5.2%. A challenging economic and operating environment, which contributed to a decrease in active Customers, was the primary contributor 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 wording

Net sales in our direct selling business (discussed withour "other" category)for the three-month period ended September 27, 2025 were $182.8 million, down 8.7% when compared to the corresponding period of 2024. On a constant currency basis, net sales in the direct selling segment declined 9.0%. A challenging economic and operating environment, which contributed to a decrease in active Customers, was the primary contributor to lower net sales in the direct selling segment. This decrease was partially offset by modest price increases and higher sales per active Customer. While net sales in the direct selling segment declined year-over-year, net sales in the other category increased $5.2 million and 299.0%.

Previous wording

Americas and Europe: Net sales declined 11.5%, or 9.8% on a constant currency basis, in this region during the current year quarter. Active Customers in this region declined 17.2% year-over-year, while average spend per customer increased 9.0% year-over-year. Year-over-year results in this region reflect a continued challenging environment to attract new customers. Net sales decreased 13.1% in the United States attributable, in great part, to a 17.1% decrease in active Customers and was partially offset by a 4.9% increase in average spend per customer. Local currency net sales decreased 5.0% and 6.0% in Mexico and Canada, respectively, primarily due to a decrease in active Customers of 12.5% and 18.2%, respectively, partially offset by average spend per customer increases of 8.7% and 14.7%, respectively.

Current wording

Americas and Europe: Net sales declined 5.2%, or 5.4% on a constant currency basis, in this region during the current year quarter. Active Customers in this region declined 13.0% year-over-year and average spend per customer increased 8.9% year-over-year. Year-over-year results in this region reflect a continued challenging environment to attract new customers, partially offset by an increase in average spend per active Customer.

Previous wording

Our Hiya direct-to-consumer net sales for the three-month period ended June 28, 2025 were $33.9 million. There were no sales in the corresponding period of 2024 as the acquisition of Hiya occurred in the fourth quarter of 2024.

Current wording

Our Hiya direct-to-consumer net sales for the three-month period ended September 27, 2025 were $30.8 million. There were no sales in the corresponding period of 2024 as the acquisition of Hiya occurred in the fourth quarter of 2024.

Previous wording

Gross profit decreased 220 basis points to 78.9% of net sales, down from 81.1% for the six months ended June 29, 2024. The decrease in gross profit is largely attributed to an approximate 270 basis point unfavorable impact on consolidated results from the inclusion of Hiya, which carries lower gross margins relative to the direct selling business. Gross margin in the direct selling business improved 50 basis points from the prior year to 81.6% of segment net sales. The increase in gross profit for the direct selling segment can primarily be attributable to restructuring of the commercial team, modest price increases, and lower freight costs for customer shipments, partially offset by unfavorable changes in currency exchange rates.

Current wording

Gross profit decreased 320 basis points to 77.2% of net sales, down from 80.4% in the prior-year quarter. The decrease in gross profit is largely attributed to an approximate 210 basis point unfavorable impact on consolidated results from the inclusion of Hiya, which carries lower gross margins relative to the direct selling business. Gross margin in the direct selling business declined 110 basis points from the prior year mainly due to the inclusion of higher sales from the other category, which generates meaningfully lower gross margins. Excluding the impact of the other category, direct selling gross margin improved 50 basis points from the prior-year quarter. This improvement can primarily be attributed to the change in cost attribution from cost of sales to selling, general and administrative expenses resulting from the reorganization of our commercial team, modest price increases, and favorable changes in currency exchange rates.

Previous wording

Brand Partner incentives expense is incurred only in the direct selling segment. Brand Partner incentives within the direct selling business increased 60 basis points to 43.1% of segment net sales, up from 42.5% in the prior-year quarter. The relative increase canbe attributed to an unfavorable shift in market mix and higher accruals for incentive trips and awards in the current year quarter, partially offset by modest price increases. On a consolidated basis, Brand Partner incentives decreased 560 basis points to 36.9% of net sales, down from 42.5% in the prior-year quarter. This decrease can be attributed to inclusion of Hiya sales where no Brand Partner incentives are paid.

Current wording

Brand Partner incentives expense is incurred only in the direct selling segment. Brand Partner incentives increased 50 basis points to 42.5% of segment net sales, up from 42.0% in the prior-year quarter. The relative increase was primarily driven by higher accruals for incentives related to the rollout of our enhanced Brand Partner compensation plan as well as an unfavorable change in market sales mix, partially offset by lower accruals for incentive trips and events in the current year quarter. On aconsolidated basis, Brand Partner incentives decreased 560 basis points to 36.4% of consolidated net sales, down from 42.0% in the prior-year quarter. This decrease can be attributed to the inclusion of Hiya net sales and the incremental net sales of the other category where no Brand Partner incentives are paid.

Previous wording

Selling, general and administrative expenses increased $17.6 million in absolute terms during the current year quarter, or 450 basis points relative to net sales. The increase reflects an approximate 300 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 second quarter reflected normal levels of marketing spend, as well as the inclusion of amortization costs of acquired intangible assets. Relative selling, general and administrative expenses for our direct selling segment increased 150 basis points from the prior year to 31.7% of segment net sales. The increase is primarily due to a loss of leverage on lower year-over-year net sales and the change in the activities and organization of the commercial team, partially offset by a decrease in costs for distributor events.

Current wording

Selling, general and administrative expenses increased $24.7 million in absolute terms during the current year quarter, or 960 basis points relative to net sales. The increase reflects an approximate 440 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 third quarter reflected slightly elevated levels of marketing spend, as well as the inclusion of amortization costs of acquired intangible assets. Relative selling, general and administrative expenses for our direct selling segment increased 520 basis points from the prior year to 35.8% of segment net sales. The increase is primarily due to incremental event costs in the United States for the Global Convention in the current year quarter versus a smaller Americas/Europe Convention in the prior year quarter, and the change in cost attribution from cost of sales to selling, general and administrative expenses resulting from the reorganization of the commercial team, partially offset by a decrease in accrued employee bonus.

Previous wording

Diluted Earnings per Share Attributable to USANA

Current wording

Diluted earnings per share attributable to USANA decreased to $(0.36) as compared to $0.56 reported in the prior-year quarter primarily as a result of the substantially higher income tax provision as well as lower earnings from operations in the current year quarter.

Previous wording

Six Months Ended June 28, 2025 and June 29, 2024

Current wording

Nine Months Ended September 27, 2025 and September 28, 2024

Previous wording

The following table summarizes the changes in net sales by segment for the six months ended as of the dates indicated:

Current wording

The following table summarizes the changes in net sales by segment for the nine months ended as of the dates indicated:

Previous wording

Net sales in our direct selling business (discussed withour "other" category)for the six-month period ended June 28, 2025 were $414.4 million, down 6.0% when compared to the corresponding period of 2024. On a constant currency basis, net sales in the direct selling segment declined 4.7%. A generally lower cadence of promotional activity during the current year period 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 wording

Net sales in our direct selling business (discussed withour "other" category)for the nine-month period ended September 27, 2025 were $597.2 million, down 6.8% when compared to the corresponding period of 2024. On a constant currency basis, net sales in the direct selling segment declined 6.0%. A generally lower cadence of promotional activity during the current year period 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.

Previous wording

Americas and Europe: Net sales declined 10.6%, or 7.6% on a constant currency basis, in this region during the current year period. Active Customers in this region declined 15.7% year-over-year, while average spend per customer increased 9.6% 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 10.6% in the United States attributable, in great part, to a 16.9% decrease in active Customers and was partially offset by a 7.6% increase in average spend per customer. Local currency net sales decreased 6.8% and 3.6% in Mexico and Canada, respectively, primarily due to a decrease in active Customers of 17.6% and 13.8%, respectively, partially offset by an increase in average spend per Customer of 13.0% and 11.9%, respectively.

Current wording

Americas and Europe: Net sales declined 8.9%, or 6.9% on a constant currency basis, in this region during the current year period. Active Customers in this region declined 14.8% year-over-year, while average spend per customer increased 9.3% year-over-year. Year-over-year results in this region reflect a continued challenging environment to attract new customers.

Previous wording

Our Hiya direct-to-consumer net sales for the six-month period ended June 28, 2025 were $71.0 million. There were no sales in the corresponding period of 2024 as the acquisition of Hiya occurred in the fourth quarter of 2024.

Current wording

Our Hiya direct-to-consumer net sales for the nine-month period ended September 27, 2025 were $101.9 million. There were no sales in the corresponding period of 2024 as the acquisition of Hiya occurred in the fourth quarter of 2024.

Previous wording

Gross profit decreased 240 basis points to 78.7% of net sales, down from 81.1% in the prior-year quarter. The decrease in gross profit is largely attributed to an approximate 250 basis point unfavorable impact on consolidated results from the inclusion of Hiya, which carries lower gross margins relative to the direct selling business. Gross margin in the direct selling business improved 10 basis points from the prior year to 81.2% 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 wording

Gross profit decreased 260 basis points to 78.3% of net sales, down from 80.9% for the nine months ended September 28, 2024. The decrease in gross profit can be entirely attributed to an approximate 260 basis point unfavorable impact on consolidated results from the inclusion of Hiya, which carries lower gross margins relative to the direct selling business. Gross margin in the direct selling business was flat year-over-year, which is primarily attributed to a change in cost attribution from cost of sales to selling, general and administrative expenses resulting from the reorganization of our commercial team, and modest price increases, offset by unfavorable changes in currency exchange rates and market and product sales mix.

Previous wording

Brand Partner incentives expense is incurred only in the direct selling segment. Brand Partner incentives within the direct selling business increased 50 basis points to 42.7% of segment net sales, up from 42.2% in the prior-year period. The relative increase can primarily be attributed to an unfavorable shift in market mix, decreased spend on incentive promotions in the first quarter of 2024, and higher accruals for incentive trips and events in the current year, partially offset by modest price increases. On a consolidated basis, Brand Partner incentives decreased 570 basis points to 36.5% of net sales, down from 42.2% in the prior-year period. This decrease can be attributed to inclusion of Hiya sales where no Brand Partner incentives are paid.

Current wording

Brand Partner incentives expense is incurred only in the direct selling segment. Brand Partner incentives within the direct selling business increased 50 basis points to 42.7% of segment net sales, up from 42.2% in the prior-year period. The relative increase was mainly due to higher accruals for incentives related to the rollout of our enhanced Brand Partner compensation plan as well as an unfavorable change in market sales mix, partially offset by modest price increases. On a consolidated basis, Brand Partner incentives decreased 580 basis points to 36.4% of net sales, down from 42.2% in the prior-year period. This decrease can be attributed to the inclusion of Hiya net sales and the incremental net sales for the other category where no Brand Partner incentives are paid.

Previous wording

Selling, general and administrative expenses increased $44.7 million in absolute terms during the current year period, or 640 basis points relative to net sales. The increase reflects an approximate 380 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 reflected normal levels of marketing spend, as well as the inclusion of amortization costs of acquired intangible assets. Our direct selling segment increased 260 basis points from the prior year to 31.8% of segment net sales. The increase is primarily due to the change in the activities and organization of the commercial team, an increase in employee related costs, and costs related to the Hiya acquisition, partially offset by a decrease in spending on distributor events.

Current wording

Selling, general and administrative expenses increased $69.4 million in absolute terms during the current year period, or 750 basis points relative to net sales. The increase reflects an approximate 410 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 reflected slightly elevated levels of marketing spend, as well as the inclusion of amortization costs of acquired intangible assets, which is approximately $4.5 million per quarter. Our direct selling segment increased 340 basis points from the prior year to 33.0% of segment net sales. The increase is primarily attributed to the change in cost attribution from cost of sales to selling, general and administrative expenses resulting from the reorganization of our commercial team, higher spending on distributor events, and costs related to the Hiya integration, partially offset by a decrease in employee related costs.

Previous wording

Cash and cash equivalents decre ased to $151.3 million as of June 28, 2025, from $181.8 million as of December 28, 2024. Cash flow provided by operating activities was$27.7 million, offset by cash used in financing activities of $53.1 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 $3.0 million.

Current wording

Cash and cash equivalents decre ased to $145.3 million as of September 27, 2025, from $181.8 million as of December 28, 2024. Cash flow provided by operating activities was$25.7 million, offset by cash used in financing activities of $54.1 million, and cash used in investing activities of $11.2 million. Additionally, favorable changes in currency exchange rates have impacted cash and cash equivalents, and restricted cash by $3.2 million.

Previous wording

During the six months ended June 28, 2025, our China subsidiary remitted profits through an annual dividend of $69.4 million to the United States, inclusive of net loss from a dividend hedge and net of applicable taxes.

Current wording

During the nine months ended September 27, 2025, our China subsidiary remitted profits through an annual dividend of $69.4 million to the United States, inclusive of net loss from a dividend hedge and net of applicable taxes.

Previous wording

Net cash flow provided by operating activities was$27.7 million for the firstsix months of 2025. Net earnings combined with adjustments of non-cash items and an increase in accounts payable contributed positively to our net cash flow provided by operating activities, partially offset by cash used to pay the 2024 annual employee bonus, accrued Brand Partner incentives, and the purchase of inventories.

Current wording

Net cash flow provided by operating activities was$25.7 million for the first nine months of 2025. Net earnings combined with adjustments of non-cash items and an increase in accounts payable contributed positively to our net cash flow provided by operating activities, partially offset by purchases of inventories, cash used to pay the 2024 annual employee bonus, and accrued Brand Partner incentives.

Previous wording

Net cash flow provided by operating activities was $25.7 million for the first six 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 Brand Partner incentives, and the 2023 annual employee bonus.

Current 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 Brand Partner incentives, and the 2023 annual employee bonus and the purchase of inventories.