Nature's Sunshine — Third Quarter 2026 Earnings Summary

Financial Performance:

• Net sales decreased 9% year-over-year to $116.6 million for the quarter, compared to $128.3 million in the prior year period; sales decreased 7% in constant currency.
• Gross profit margin declined 42 basis points to 72.9% from 73.3% in the prior year quarter, primarily due to unfavorable foreign exchange.
• 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 decreased to $11.1 million from $15.2 million in the prior year quarter.
• Operating income dropped to $5.3 million (4.5% of net sales) from $9.0 million (7.0% of net sales) in the prior year quarter.
• Volume incentives as a percentage of net sales increased to 32.0% from 30.7% 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 rose to 36.3% from 35.6%.
• 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 prior year 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.

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.
• Europe segment net sales were flat, decreasing 0.1% to $22.1 million from $22.1 million in the prior year quarter.
• North America segment net sales decreased 6.1% to $34.0 million from $36.2 million in the prior year quarter.
• Latin America and Other segment net sales increased 3.4% to $5.5 million from $5.3 million in the prior year quarter.
• The company noted operational disruptions in China impacting the consultant leadership base and is actively rebuilding that base.
• The company continues to invest in its Digital business following several quarters of exceptional growth to position it for the next phase of growth.
• Net income attributable to NSP China was $0 for the quarter due to the December 2025 purchase of noncontrolling interests, compared to $1.0 million in the prior year quarter.

Market and Competitive Landscape:

• The company operates in more than 40 countries.
• Foreign exchange rates, specifically a stronger U.S. dollar, negatively impacted net sales and gross profit margins.

Risks and Challenges:

• Operational disruptions in China significantly impacted the consultant leadership base.
• Unfavorable foreign exchange rates contributed to lower gross margins and sales.
• Timing of promotional incentives and market mix drove an increase in volume incentives as a percentage of sales.

Management Commentary and Tone:

• CEO Ken Romanzi described the third-quarter results as "disappointing" and stated they "fell short of our expectations."
• Management acknowledged challenges in China and the Digital business but maintained "strong" confidence in the long-term potential of Nature's Sunshine.

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 completed the purchase of noncontrolling interests in NSP China in December 2025, resulting in full ownership of the China business.
• 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.