NATURES SUNSHINE PRODUCTS INC

(1)Basis of Presentation

We are a natural health and wellness company primarily engaged in the manufacture and sale of nutritional and personal care products. We are a Utah corporation with our principal place of business in Lehi, Utah, and sell our products directly to consumers and to a sales force of independent consultants who use the products themselves or resell them to consumers.

Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States ("U.S. GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by U.S. GAAP for complete financial statements. The unaudited condensed consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany accounts and transactions are eliminated in consolidation. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of our financial information as of September 30, 2026, and for the three- and nine-month periods ended September 30, 2026 and 2025. The results of operations of any interim period are not necessarily indicative of the results of operations to be expected for the year ending December 31, 2026.

These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2025.

Use of Estimates

The preparation of consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities in these financial statements and accompanying notes. Actual results could differ from these estimates and those differences could have a material effect on our financial position and results of operations.

The significant accounting estimates inherent in the preparation of our financial statements include estimates associated with our determination of liabilities related to independent consultant incentives, the determination of income tax assets and liabilities, certain other non-income tax and value-added tax contingencies and legal contingencies. In addition, significant estimates form the basis for allowances with respect to inventory valuations. Various assumptions and other factors enter into the determination of these significant estimates. The process of determining significant estimates takes into account historical experience and current and expected economic conditions.

Noncontrolling Interests

On December 17, 2025, the Company completed the purchase of Fosun Industrial’s interests in Nature’s Sunshine Hong Kong Limited and Shanghai Nature’s Sunshine Health Products Co., Ltd., the Company'stwo joint ventures. Following the completion of the repurchases, the Company owned 100% of both joint ventures, andno noncontrolling interests remained outstanding as of September 30, 2026 and December 31, 2025.

Net income attributable to the noncontrolling interests was $0.2 million and $0.5 million for the three and nine months ended September 30, 2025, respectively.

Recent Accounting Pronouncements

In November 2024, the FASB issued ASU No. 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. This standard requires disclosure, in the notes to financial statements, of specific information about certain costs and expenses. ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. The adoption of this ASU is not expected to have a significant impact on our consolidated financial statements.

(2)Inventories

The composition of inventories is as follows (dollar amounts in thousands):

(3)Restricted Investment Securities - Trading

Our trading securities portfolio totaled $1.2 million at September 30, 2026, and $1.1 million at December 31, 2025, and generated losses of $1,000 and gains of $0.1 million for the three months ended September 30, 2026 and 2025, respectively, and gains of $0.2 million and $0.1 million for the nine months ended September 30, 2026 and 2025, respectively.

(4)Revolving Credit Facility and Other Obligations

On July 11, 2017, we entered into a revolving credit agreement with Bank of America, N.A., with a borrowing limit of $25.0 million (the “Credit Agreement”). On June 23, 2022, the Credit Agreement was amended to extend the term to mature on July 1, 2027. On September 11, 2024, the Credit Agreement was amended to modify the calculation of interest. Interest as defined under the amended Credit Agreement is the greater of SOFR Daily Floating Rate or the Index Floor, plus 1.50 percent (5.50 percent as of September 30, 2026), and an annual commitment fee of 0.25 percent on the unused portion of the commitment. At September 30, 2026 and December 31, 2025, there wasno outstanding balance under the Credit Agreement.

The Credit Agreement contains customary financial covenants, including financial covenants relating to our solvency and leverage. In addition, the Credit Agreement restricts certain capital expenditures, lease expenditures, other indebtedness, liens on assets, guarantees, loans and advances, dividends, mergers, consolidations and transfers of assets except as permitted in the Credit Agreement. The Credit Agreement is collateralized by our manufacturing facility, accounts receivable, inventories and other assets. As of September 30, 2026, we were in compliance with the debt covenants set forth in the Credit Agreement.

(5)Net Income Per Share

Basic net income per common share (“Basic EPS”) is computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted net income per common share (“Diluted EPS”) reflects the potential dilution that could occur if stock options or other contracts to issue common stock were exercised or converted into common stock. The computation of Diluted EPS does not assume exercise or conversion of securities that would have an anti-dilutive effect on net income per common share.

The following is a reconciliation of the numerator and denominator of Basic EPS to the numerator and denominator of Diluted EPS for the three and nine months ended September 30, 2026 and 2025 (dollar and share amounts in thousands, except for per share information):

Potentially dilutive shares excluded from diluted-per-share amounts include performance-based restricted stock units, for which certain metrics have not been achieved. Potentially anti-dilutive shares excluded from diluted-per-share amounts include both non-qualified stock options and unearned performance-based options to purchase shares of common stock with exercise prices greater than the weighted-average share price during the period and shares that would be anti-dilutive to the computation of diluted net income per share for each of the periods presented.

(6)Capital Transactions

Divi dends

The declaration of future dividends is subject to the discretion of our Board of Directors and will depend upon numerous factors, including earnings, financial condition, restrictions imposed by any indebtedness that may be outstanding, cash requirements, future prospects and other factors deemed relevant by our Board of Directors. No dividends were declared for the nine months ended September 30, 2026 and 2025.

Share Repurchase Program

On March 10, 2021, we announced a $15.0 million common share repurchase program. On March 8, 2022, we announced an amendment to the share repurchase program allowing the repurchase of an additional $30.0 million in common shares. On May 6, 2025, we announced an amendment to the share repurchase program allowing the repurchase of an additional $25.0 million in common shares. The repurchases may be made from time to time as market conditions warrant and are subject to regulatory considerations. For the nine months ended September 30, 2026 and 2025, we repurchased 345,000 and 1,129,000 shares of our common stock for $6.1 million and $14.4 million, respectively, including excise taxes. At September 30, 2026, the remaining balance available for repurchases under the program was $11.3 million.

Share-Based Compensation

On May 6, 2026, the shareholders of the Company approved the adoption of the 2026 Stock Incentive Plan (“2026 Incentive Plan”) that provides for the grant of incentive stock options, stock appreciation rights, restricted stock and restricted stock units, performance awards, dividend equivalents, stock awards, and other stock-based awards. The Compensation Committee of the Board of Directors has authority and discretion to determine the type of award, as well as the amount, terms and conditions of each award under the 2026 Incentive Plan, subject to the limitations of the 2026 Incentive Plan. A total of 1,500,000 shares of common stock have been reserved for issuance under the 2026 Incentive Plan. The number of shares available for awards, as well as the terms of outstanding awards, are subject to adjustment as provided in the 2026 Incentive Plan for stock splits, stock dividends, recapitalizations and other similar events.

Our Amended and Restated 2012 Stock Incentive Plan (“2012 Incentive Plan”) expired on March 3, 2026. Upon expiration, no further equity awards may be granted under the 2012 Incentive Plan. However, any outstanding equity awards that were granted prior to expiration of the 2012 Incentive Plan will continue to remain in effect in accordance with their respective terms.

Stock Options

Our outstanding stock options include time-based stock options, which vest over differing periods of time ranging from the date of issuance to up to 48 months from the option grant date, and performance-based stock options, which have already vested upon achieving operating income margins ofsix, eight andten percent as reported in four of five consecutive quarters over the term of the options.

Stock option activity for the nine-month period ended September 30, 2026, is as follows (amounts in thousands, except per share information):

There wasno share-based compensation expense for the three- and nine-month periods ended September 30, 2026 and 2025. As of September 30, 2026 and December 31, 2025, there wasno unrecognized share-based compensation expense related to the grants described above.

At September 30, 2026, the aggregate intrinsic value of outstanding and exercisable stock options to purchase 25,000 shares of common stock was $0. At December 31, 2025, the aggregate intrinsic value of outstanding and exercisable options to purchase 25,000 shares of common stock was $0.2 million.

For the nine months ended September 30, 2026, no shares of common stock were issued upon the exercise of stock options.

For the nine months ended September 30, 2025, we issued 25,000 shares of common stock upon the exercise of stock options at an average exercise price of $9.05 per share. The aggregate intrinsic value of options exercised during the nine months ended September 30, 2025, was $0.1 million. For the nine months ended September 30, 2025, we recognized $0.1 million of tax benefits from the exercise of stock options.

As of September 30, 2026 and December 31, 2025, we didnot have any unvested stock options outstanding.

Restricted Stock Units

Our outstanding restricted stock units ("RSUs") include time-based RSUs, which vest over differing periods of time ranging from 12 months to up to 36 months from the RSU grant date, as well as performance-based RSUs, which vest upon achieving targets relating to adjusted EBITDA growth, stock price levels and/or total shareholder return ("TSR"). RSUs granted to members of the Board of Directors contain a restriction period in which the shares are not issued untiltwo years after vesting. At September 30, 2026 and December 31, 2025, there were 87,000 and 78,000 vested RSUs outstanding, respectively, held by members of our Board of Directors with an accompanying restriction period.

Restricted stock unit activity for the nine-month period ended September 30, 2026, is as follows (amounts in thousands, except per share information):

During the nine-month period ended September 30, 2026, we granted 602,000 RSUs under the 2026 Incentive Plan to the Board of Directors, executive officers and other employees, which were comprised of time-based RSUs, adjusted EBITDA and TSR performance-based RSUs. The time-based RSUs were issued with a weighted-average grant date fair value of $19.59 per share and vest in annual installments from the grant date over aone- tothree-year period from the grant date. The adjusted EBITDA performance-based RSUs were issued with a weighted-average grant date fair value of $19.68 per share and vest upon achieving adjusted EBITDA targets and maintaining those targets over a four-quarter period from the grant date. The TSR performance-based RSUs were issued with a weighted-average grant date fair value of $21.55 per share and vest upon achieving TSR targets at both atwo- andthree-year measurement date from the grant date.

Share-based compensation expense related to time-based RSUs for the three-month periods ended September 30, 2026 and 2025, was approximately $1.2 million and $0.9 million, respectively. Share-based compensation expense related to time-based RSUs for the nine-month periods ended September 30, 2026 and 2025, was approximately $3.1 million and $2.9 million, respectively. As of September 30, 2026 and December 31, 2025, the unrecognized share-based compensation expense related to the grants described above, excluding incentive awards discussed below, was $6.4 million and $3.6 million, respectively. The remaining compensation expense is expected to be recognized over the weighted average period of approximately 0.9 years.

Share-based compensation expense related to performance-based RSUs for the three-month periods ended September 30, 2026 and 2025, was $0.7 million and $0.4 million, respectively. Share-based compensation expense related to performance-based RSUs for the nine-month periods ended September 30, 2026 and 2025, was $2.5 million and $1.3 million, respectively. Should we attain all the metrics related to performance-based RSU grants, we would recognize up to $6.3 million of potential share-based compensation expense. We currently expect to recognize an additional $4.8 million of that potential share-based compensation expense. The remaining compensation expense is expected to be recognized over the weighted average period of approximately 2.3 years.

The number of shares issued upon vesting of RSUs granted pursuant to our share-based compensation plans is net of the minimum statutory withholding requirements that we pay on behalf of our employees, which was 99,000 and 70,000 shares for the nine-month periods ended September 30, 2026 and 2025, respectively. Although shares withheld are not issued, they are treated as common share repurchases for accounting purposes, as they reduce the number of shares that would have been issued upon vesting. These shares do not count against the authorized capacity under the repurchase program described above.

(7)Segment Information

We have four reportable business segments (Asia, Europe, North America and Latin America and Other) based primarily upon the geographic region where each segment operates, as well as the internal organization of our officers and their responsibilities. Each of the geographic segments operates under the Nature’s Sunshine Products and Synergy WorldWide® brands and sells similar products grouped intosix principal categories: general health, immune, cardiovascular, digestive, personal care and weight management. The Latin America and Other segment includes our wholesale business in which we sell products to various locally-managed entities, independent of the Company, that we have granted distribution rights for the relevant market.

The Company's chief operating decision maker ("CODM") is our chief executive officer. The CODM assesses the performance of each segment using operating income. The CODM reviews the performance of each segment using monthly internal reports which provide variance analysis of actual results by segment compared to budget, forecast and prior year. The CODM uses this information when making decisions about the allocation of operating resources to each segment. The CODM does not evaluate reportable segments using asset or liability information.

Reportable business segment information for the three and nine months ended September 30, 2026 and 2025, is as follows (dollar amounts in thousands):

(1) Service fees in China totaled $2.2 million and $9.6 million for the three- and nine-month periods ended September 30, 2026, respectively, compared to $4.6 million and $10.9 million for the three- and nine-month periods ended September 30, 2025. These service fees are included in selling, general and administrative expenses.

The table below reflects sales based upon the sales location where they occurred. From an individual country/region perspective, the United States, Japan, Taiwan and South Korea comprise 10 percent or more of consolidated net sales for the three- and nine-month periods ended September 30, 2026 and 2025, as follows (dollar amounts in thousands):

Net sales generated by each product line for the three and nine months ended September 30, 2026 and 2025, are as follows (dollar amounts in thousands):

Depreciation and amortization by reportable business segment for the three and nine months ended September 30, 2026 and 2025, are as follows (dollar amounts in thousands):

From an individual country perspective, only the United States has material balances of consolidated property, plant and equipment as follows (dollar amounts in thousands):

(8)Income Taxes

For the three months ended September 30, 2026 and 2025, our provision for income taxes, as a percentage of income before income taxes, was 64.8 percent and 42.8 percent, respectively, compared with a U.S. federal statutory rate of 21.0 percent. For the nine months ended September 30, 2026 and 2025, our provision for income taxes, as a percentage of income before income taxes, was 44.2 percent and 34.5 percent, respectively, compared with a U.S. federal statutory rate of 21.0 percent.

The difference between the effective tax rate and the U.S. federal statutory tax rate for the three and nine months ended September 30, 2026, was primarily attributed to recording a valuation allowance on foreign tax credits which are not expected to be utilized before expiration, recording a reserve for uncertain tax positions, and non-deductible executive compensation, partially offset by the deduction allowed for foreign-derived eligible income and favorable deductions for share-based compensation.

The difference between the effective tax rate and the U.S. federal statutory tax rate for the three and nine months ended September 30, 2025, was primarily attributed to operations in foreign countries which are treated as a branch for U.S. tax purposes, partially offset by the foreign-derived intangible income deduction.

The difference between the effective tax rate for the three and nine months ended September 30, 2026, compared to September 30, 2025, was primarily caused by recording a reserve in the current period for uncertain tax positions and favorable adjustments to deferred tax assets in the prior period which do not repeat in the current period.

Our U.S. federal income tax returns for 2022 through 2025 are open to examination for federal tax purposes. We have several foreign tax jurisdictions with open tax years from 2020 through 2025.

As of September 30, 2026 and December 31, 2025, we had accrued $1.7 million and $0.4 million, respectively, related to unrecognized tax positions net of offsetting tax attributes.

Interim income taxes are based on an estimated annualized effective tax rate applied to the respective quarterly periods, adjusted for discrete tax items in the period in which they occur. Although we believe our tax estimates are reasonable, we can make no assurance that the final tax outcome of these matters will not be different from that which we have reflected in our historical income tax provisions and accruals. Such differences could have a material impact on our income tax provision and operating results in the period in which we make such a determination.

(9)Commitments and Contingencies

Legal Proceedings

We are a party to various legal proceedings and disputes in the United States and foreign jurisdictions. As of September 30, 2026 and December 31, 2025, accrued liabilities were $0.8 million and $1.0 million, respectively, related to the estimated outcome of these proceedings. In addition, we are a party to other litigation where there is a reasonable possibility that a loss may be incurred, but either the losses are not considered to be probable or we cannot at this time estimate the loss, if any; therefore, no provision for losses has been provided. We believe future payments related to these matters could range from $0 to approximately $2.9 million.

In November 2024, we began an internal investigation regarding our past compliance with relevant U.S. trade controls and made an initial voluntary self-disclosure of apparent trade controls violations to the U.S. Department of Commerce's Bureau of Industry and Security (“BIS”). In addition, in April 2025 we filed an initial voluntary self-disclosure with the Office of Foreign Assets Control (“OFAC”) relating to the same internal investigation. Following our internal investigation, we filed final voluntary self-disclosures with BIS and OFAC on September 5, 2025. We received a response from BIS closing the matter without further action. The voluntary self-disclosure with OFAC remains pending. We estimate that such potential violations represented less than one percent of our net revenue in each of our last three fiscal years. An unfavorable outcome of this investigation may include fines or penalties imposed in response to our voluntary disclosures. While we believe the amount of any fines or penalties would not be material to our financial condition and results of operations, we are unable to predict the outcome or the timing of resolution of these matters.

Management cannot predict the ultimate outcome of these matters, individually or in the aggregate, or their resulting effect on our business, financial position, results of operations or cash flows as litigation and related matters are subject to inherent uncertainties, and unfavorable rulings could occur. Were an unfavorable outcome to occur, there exists the possibility of a material adverse impact on our business, financial position, results of operations, or cash flows for the period in which the ruling occurs and/or future periods. We maintain product liability, general liability and excess liability insurance coverage. However, insurance may not continue to be available at an acceptable cost to us, such coverage may not be sufficient to cover one or more large claims, or the insurers may successfully disclaim coverage as to a pending or future claim.

Non-Income Tax Contingencies

We have reserved for certain state sales and use tax and foreign non-income tax contingencies based on the likelihood of an obligation in accordance with accounting guidance for probable loss contingencies. Loss contingency provisions are recorded for probable losses at management’s best estimate of a loss, or when a best estimate cannot be made, a minimum loss contingency amount is recorded. We provide provisions for potential payments of tax to various tax authorities for contingencies related to non-income tax matters, including value-added taxes and sales tax. We provide provisions for U.S. state sales taxes in each of the states where we have nexus. As of September 30, 2026 and December 31, 2025, accrued liabilities were $0.1 million and $0.2 million, respectively, related to non-income tax contingencies. While we believe that the assumptions and estimates used to determine contingent liabilities are reasonable, the ultimate outcome of these matters cannot presently be determined. We believe future payments related to these matters could range from $0 to approximately $3.8 million.

(10)Fair Value Measurements

The fair value of a financial instrument is the amount that could be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Financial assets are marked to bid prices and financial liabilities are marked to offer prices. Fair value measurements do not include transaction costs. A fair value hierarchy is used to prioritize the quality and reliability of the information used to determine fair values of each financial instrument. Categorization within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The fair value hierarchy is defined into the following three categories:

Level 1: Quoted market prices in active markets for identical assets or liabilities.

Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data.

Level 3: Unobservable inputs that are not corroborated by market data.

The following table presents our hierarchy for our assets, measured at fair value on a recurring basis, as of September 30, 2026 (dollar amounts in thousands):

The following table presents our hierarchy for our assets, measured at fair value on a recurring basis, as of December 31, 2025 (dollar amounts in thousands):

Restricted investment securities - trading — Our trading portfolio consists of various marketable securities that are valued using quoted prices in active markets.

For the nine months ended September 30, 2026 and for the year ended December 31, 2025, there were no fair value measurements using significant other observable inputs (Level 2) or significant unobservable inputs (Level 3).

The carrying amounts reflected on the condensed consolidated balance sheets for cash and cash equivalents, accounts receivable and accounts payable approximate fair value due to their short-term nature. The carrying value of our debt approximates fair value due to its recent acquisition and short maturity. During the nine months ended September 30, 2026 and 2025, we did not have any re-measurements of non-financial assets at fair value on a nonrecurring basis subsequent to their initial recognition.

(11)Revenue Recognition

Revenue Recognition

Net sales include sales of products and shipping and handling charges, net of estimates for product returns and any related sales incentives or rebates based upon historical information and current trends. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring products. All revenue is recognized when we satisfy our performance obligations under the contract. We recognize revenue by transferring the promised products to the consumer, with revenue recognized at shipping point, the point in time the consumer obtains control of the products. The majority of our contracts have a single performance obligation and are short-term in nature. Contracts with multiple performance obligations are insignificant. Sales taxes and value-added taxes in the United States and foreign jurisdictions that are collected from consumers and remitted to governmental authorities are accounted for on a net basis and therefore are excluded from net sales. Amounts received for unshipped merchandise are recorded as deferred revenue. Amounts for membership fees are deferred and amortized as revenue over the life of the membership, primarily one year.

A reserve for product returns is recorded based upon historical experience and current trends. We allow independent consultants to return the unused portion of products within ninety days of purchase if they are not satisfied with the product. In some of our markets, the requirements to return products are more restrictive.

Volume incentives and other sales incentives or rebates are a significant part of our direct sales marketing program and represent commission payments made to independent consultants. These payments are designed to provide incentives for reaching higher sales levels. The amount of volume incentive expense recognized is determined based upon the amount of qualifying purchases in a given month and recorded as volume incentive expense. Payments to independent consultants for sales incentives or rebates related to their own purchases are recorded as a reduction of revenue. Some payments for sales incentives are processed daily, while others, including rebates, are calculated monthly based upon qualifying sales.

Disaggregation of Revenue

Our products are grouped intosix principal categories: general health, immune, cardiovascular, digestive, personal care and weight management. We have four reportable business segments that are based primarily upon the geographic region where each segment operates. Each of the geographic segments operates under the Nature’s Sunshine Products and Synergy WorldWide® brands. See Note 7, Segment Information, for further information on our reportable segments and presentation of disaggregated revenue by reportable segment and product category.

Practical Expedients and Exemptions

We have made the accounting policy election to treat shipping and handling as a fulfillment activity rather than a promised service under Topic 606.