Nature's Sunshine — Third Quarter 2026 Earnings Summary

Financial Performance

• Net sales decreased 9% year-over-year to $116.6 million for the quarter ended September 30, 2026, compared to $128.3 million in the prior year period; excluding foreign exchange impacts, sales declined 7%.
• Gross profit margin decreased 42 basis points to 72.9% from 73.3% in the prior year quarter, primarily driven by unfavorable foreign exchange rates.
• GAAP net income attributable to common shareholders fell to $1.9 million ($0.11 per diluted share) from $5.3 million ($0.30 per diluted share) in the prior year quarter.
• Adjusted EBITDA declined to $11.1 million from $15.2 million in the prior year quarter.
• Operating income decreased to $5.3 million (4.5% of net sales) from $9.0 million (7.0% of net sales) in the prior year quarter.
• Selling, general and administrative (SG&A) expenses were $42.3 million, down from $45.7 million in the prior year quarter, though SG&A as a percentage of net sales increased to 36.3% from 35.6%.
• Volume incentives as a percentage of net sales rose to 32.0% from 30.7% in the prior year quarter due to the timing of promotional incentives and market mix.
• Net cash provided by operating activities for the nine months ended September 30, 2026, was $9.7 million, down from $25.4 million in the comparable 2025 period.
• Capital expenditures for the nine months ended September 30, 2026, totaled $6.8 million, compared to $4.1 million in the prior year period.
• The company held $89.4 million in cash and cash equivalents as of September 30, 2026, with zero debt.

Guidance and Future Outlook

• Full-year 2026 net sales guidance was lowered to a range of $460 million to $470 million, down from the previous range of $490 million to $500 million, reflecting a stronger U.S. dollar and challenges in the China market.
• Full-year 2026 Adjusted EBITDA guidance was lowered to a range of $44 million to $48 million, down from the previous range of $48 million to $52 million.
• Management indicated continued investment in the Digital business to position it for the next phase of growth following several quarters of exceptional growth.

Business Segments and Product Lines

• Asia segment net sales decreased 14.9% to $55.1 million from $64.7 million in the prior year quarter, with a 11.2% decline excluding currency impacts.
• Europe segment net sales decreased 0.1% to $22.1 million from $22.1 million in the prior year quarter, with a 0.9% increase excluding currency impacts.
• North America segment net sales decreased 6.1% to $34.0 million from $36.2 million in the prior year quarter, with a 6.0% decline excluding currency impacts.
• Latin America and Other segment net sales increased 3.4% to $5.5 million from $5.3 million in the prior year quarter.
• Operational disruptions in China significantly impacted the consultant leadership base, which the company is currently rebuilding.
• Following the December 2025 purchase of noncontrolling interests, there was no net income attributable to NSP China for the third quarter of 2026, compared to $1.0 million in the prior year quarter.

Market and Competitive Landscape

• The company operates in more than 40 countries, manufacturing most products through its own facilities.
• A stronger U.S. dollar negatively impacted reported net sales and financial results.
• The China market presented specific challenges regarding operational disruptions and consultant base retention.

Risks and Challenges

• Operational disruptions in China affecting the consultant leadership base.
• Foreign exchange rate fluctuations impacting net sales and gross margins.
• Increased volume incentives and market mix changes affecting profitability.
• Potential regulatory risks related to direct selling laws, trade restrictions, and product registration in foreign markets.
• Risks associated with the full ownership of the China business and potential liabilities from improper consultant activity.

Management Commentary and Tone

• CEO Ken Romanzi described the third-quarter results as "disappointing" and noted they "fell short of our expectations."
• Management acknowledged challenges in China and the Digital business but stated that confidence in the long-term potential of Nature's Sunshine remains strong.
• The company is actively rebuilding its consultant leadership base in China following operational disruptions.

Other Key Points

• During the nine months ended September 30, 2026, the company repurchased 345,000 shares of common stock at a total cost of $6.1 million, averaging $17.66 per share.
• The company acquired noncontrolling interests in December 2025, resulting in the elimination of noncontrolling interest income for the third quarter of 2026.
• Deferred revenue was $5.9 million as of September 30, 2026, compared to $5.8 million as of December 31, 2025.
• Accounts receivable increased to $18.3 million as of September 30, 2026, from $8.6 million as of December 31, 2025.
• Inventories increased to $71.3 million as of September 30, 2026, from $68.3 million as of December 31, 2025.