Nature’s Sunshine Q3 earnings fall 65.9% in 2026
Nine-month sales remained nearly flat, while operating cash flow was $9.7 million and tariffs may adversely affect costs for the rest of 2026.
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
Form Type
10-Q
Rhea-AI Filing Summary
Nature’s Sunshine Products, Inc. (NATR) reported third-quarter 2026 net sales of $116.6 million, down 9.1% from $128.3 million a year earlier, and net income of $1.9 million, compared with $5.5 million; diluted earnings per share were $0.11 versus $0.30. Sales decreased 14.9% in Asia and 48.8% in China. The company said consolidated sales declined primarily because of lower product sales in Asia, Europe and North America.
For the nine months ended September 30, 2026, net sales were $356.5 million versus $356.3 million in 2025, while net income was $10.5 million versus $15.9 million. Operating cash flow was $9.7 million, compared with $25.4 million. The company repurchased 345,000 shares for $6.1 million, with $11.3 million remaining under the program at September 30.
At September 30, cash was $89.4 million, including $76.1 million in foreign markets that may be subject to withholding taxes and other restrictions before repatriation. No amounts were outstanding under the two credit agreements. Nature’s Sunshine expects tariffs may adversely affect costs during the remainder of 2026.
0 points · 0 major0 major · 4 points
How this balance works
Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.
It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.
Rhea-AI Sentiment measures something else, the tone of the wording.
Positive
- None.
Negative
- Moderate pointThird-quarter net sales declined 9.1% year over year.
- Moderate pointThird-quarter net income fell 65.9% year over year.
- Moderate pointOperating cash flow fell to $9.7 million from $25.4 million.
- Minor pointNine-month net income decreased 33.8% year over year.
Filing Explained
At September 30, 2026, 1,587 thousand restricted stock units remained outstanding, not issued common shares.
This unaudited third-quarter report says the 2026 Stock Incentive Plan reserves 1,500,000 shares for awards; that is potential issuance capacity, not a report that those shares have been issued. During the nine months ended
The company says China’s third-quarter sales decline reflected in part the passing of two sales representatives and restrictions on another, and that it cannot assure the affected organizations will recover or sales will return to prior levels.
The company reports that the Bureau of Industry and Security closed its trade-controls matter without further action, while its voluntary self-disclosure to the Office of Foreign Assets Control remains pending; it says the outcome and timing cannot be predicted.
Key Figures
Third-quarter net sales: $116.6 million
Third-quarter net income: $1.9 million
Diluted earnings per share: $0.11
+5 more
8 metrics
Third-quarter net sales
$116.6 million
Three months ended September 30, 2026; $128.3 million in 2025
Third-quarter net income
$1.9 million
Three months ended September 30, 2026; $5.5 million in 2025
Diluted earnings per share
$0.11
Three months ended September 30, 2026; $0.30 in 2025
Nine-month net sales
$356.5 million
Nine months ended September 30, 2026; $356.3 million in 2025
Operating cash flow
$9.7 million
Nine months ended September 30, 2026; $25.4 million in 2025
Cash and cash equivalents
$89.4 million
As of September 30, 2026
Common shares repurchased
345,000 shares; $6.1 million
Nine months ended September 30, 2026
Remaining share repurchase program balance
$11.3 million
As of September 30, 2026
Key Terms
Volume incentives, Net sales excluding the impact of foreign exchange fluctuations, Restricted stock units, Adjusted EBITDA, +1 more
5 terms
Volume incentives financial
"Volume incentives expense as a percent of net sales was 32.0 percent"
Volume incentives are discounts, rebates or extra payments a seller or buyer offers that depend on how much product is bought or sold: the more units moved, the bigger the reward. For investors, these arrangements matter because they can boost reported sales or win larger customers while also cutting per-unit profit margins, creating trade-offs in growth, cash flow and the predictability of future earnings — like a ‘buy more, save more’ deal that changes both revenue and margins.
Net sales excluding the impact of foreign exchange fluctuations financial
"Net sales excluding the impact of foreign exchange fluctuations is not a U.S. GAAP financial measure"
Restricted stock units financial
"Our outstanding restricted stock units ("RSUs") include time-based RSUs"
Restricted stock units are a type of company reward where employees are promised shares of stock, but they only fully own these shares after meeting certain conditions, like staying with the company for a set time. They matter because they can become valuable assets and are often used to motivate employees to help the company succeed.
Adjusted EBITDA financial
"adjusted EBITDA growth, stock price levels and/or total shareholder return"
Adjusted EBITDA is a way companies measure how much money they make from their core operations, like running a business, by removing certain costs or income that aren’t part of regular business activities. It helps investors see how well a company is doing without distractions from unusual expenses or gains, making it easier to compare companies or track performance over time.
revolving credit agreement financial
"We maintain a revolving credit agreement with Bank of America, N.A."
A revolving credit agreement is a flexible loan arrangement where a borrower can borrow, repay, and borrow again up to a set limit, similar to a credit card. It matters because it gives businesses or individuals quick access to funds whenever needed, helping manage cash flow and cover expenses without applying for a new loan each time.
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
What were NATR’s sales in Q3 2026?
Net sales were $116.6 million, down 9.1% from $128.3 million in the third quarter of 2025. Excluding foreign-exchange fluctuations, sales declined 7.2%; the company attributed the consolidated decrease primarily to lower product sales in Asia, Europe and North America.
How much did NATR earn in Q3 2026?
Net income was $1.9 million, compared with $5.5 million in the third quarter of 2025, and diluted earnings per share were $0.11 versus $0.30. Operating income for the quarter was $5.3 million, compared with $9.0 million a year earlier.
AI-generated analysis. How Rhea-AI works. Not financial advice.
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________________________________________________________
FORM 10-Q
(Mark One)
For the quarterly period ended September 30, 2026
OR
For the transition period from to .
Commission File Number: 001-34483
(Exact name of Registrant as specified in its charter)
| (State or other jurisdiction of | (IRS Employer | |||||||
| incorporation or organization) | Identification No.) | |||||||
(Address of principal executive offices and zip code)
(801 ) 341-7900
(Registrant’s telephone number including area code)
Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
The | ||||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ý No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and an “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer o | ||||||||
Non-accelerated filer o | Smaller reporting company | |||||||
Emerging growth company | ||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Table of Contents
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ý .
The number of shares of Common Stock, no par value, outstanding on October 23, 2026, was 17,328,776 shares.
Table of Contents
NATURE’S SUNSHINE PRODUCTS, INC.
FORM 10-Q
For the Quarter Ended September 30, 2026
Table of Contents
Part I. Financial Information | 4 | ||||||||||
Item 1. | Financial Statements (Unaudited) | 4 | |||||||||
Condensed Consolidated Balance Sheets | 4 | ||||||||||
Condensed Consolidated Statements of Income | 5 | ||||||||||
Condensed Consolidated Statements of Comprehensive Income | 7 | ||||||||||
Condensed Consolidated Statements of Changes in Shareholders’ Equity | 8 | ||||||||||
Condensed Consolidated Statements of Cash Flows | 10 | ||||||||||
Notes to Condensed Consolidated Financial Statements | 11 | ||||||||||
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 22 | |||||||||
Item 3. | Quantitative and Qualitative Disclosures about Market Risk | 29 | |||||||||
Item 4. | Controls and Procedures | 29 | |||||||||
Part II. Other Information | 31 | ||||||||||
Item 1. | Legal Proceedings | 31 | |||||||||
Item 1A. | Risk Factors | 31 | |||||||||
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 33 | |||||||||
Item 3. | Defaults Upon Senior Securities | 33 | |||||||||
Item 4. | Mine Safety Disclosures | 33 | |||||||||
Item 5. | Other Information | 33 | |||||||||
Item 6. | Exhibits | 34 | |||||||||
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain information included or incorporated herein by reference in this report may be deemed to be “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may include, but are not limited to, statements relating to our objectives, plans, strategies and financial results, including expected improvement in gross profit and gross margin. All statements (other than statements of historical fact) that address activities, events or developments that we intend, expect, project, believe or anticipate will or may occur in the future are forward-looking statements. These statements are often characterized by terminology such as “believe,” “hope,” “may,” “anticipate,” “should,” “intend,” “plan,” “will,” “expect,” “estimate,” “project,” “positioned,” “strategy” and similar expressions, and are based on assumptions and assessments made in light of our experience and perception of historical trends, current conditions, expected future developments and other factors we believe to be appropriate. For example, information appearing under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” includes forward-looking statements. Forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties. Important factors that could cause actual results, developments and business decisions to differ materially from forward-looking statements are more fully described in this report, including the risks set forth under “Risk Factors” in Item 1A, and in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, but include the following:
•failure to comply with laws and regulations relating to trade restrictions and export controls;
•laws and regulations regarding direct selling that may prohibit or restrict our ability to sell our products in some markets or require us to make changes to our business model in some markets;
•corrective or remedial actions involving independent sales representatives that may disrupt their sales organizations or adversely affect our sales and results of operations;
•current and potential future extensive government regulations to which the Company’s products, business practices and manufacturing activities are subject;
•registration of products for sale in foreign markets, or difficulty or increased cost of importing products into foreign markets;
•legal challenges to the Company’s direct selling program or to the classification of its independent consultants;
•failure of the Company’s independent consultants to comply with advertising laws;
•product liability claims;
•impact of anti-bribery laws, including the U.S. Foreign Corrupt Practices Act;
•the Company’s ability to attract and retain independent consultants;
•the loss of one or more key independent consultants who have a significant sales network;
•potential for liability relating to the Company’s full ownership of its China business;
•the effect of fluctuating foreign exchange rates;
•liabilities and obligations arising from improper activity by the Company’s independent consultants;
•changes to the Company’s independent consultant compensation plans;
•geopolitical issues, conflicts or other global events;
•negative consequences resulting from difficult economic conditions, including the availability of liquidity or the willingness of the Company’s consumers to purchase products;
•risks associated with the manufacturing of the Company’s products;
•supply chain disruptions, manufacturing interruptions or delays or the failure to accurately forecast consumer demand;
•failure to timely and effectively obtain shipments of products from our suppliers and deliver products to our independent consultants and consumers;
•uncertainties relating to the application of transfer pricing, duties, value-added taxes and other tax regulations, and changes thereto;
•failure to maintain an effective system of internal controls over financial reporting;
•cybersecurity threats and exposure to data loss;
•the storage, processing and use of data, some of which contain personal information, are subject to complex and evolving privacy and data protection laws and regulations;
•reliance on information technology infrastructure; and
•the sufficiency of trademarks and other intellectual property rights.
All forward-looking statements speak only as of the date of this report and are expressly qualified in their entirety by the cautionary statements included in or incorporated by reference into this report. Except as is required by law, we expressly disclaim any obligation to publicly release any revisions to forward-looking statements to reflect events after the date of this report. Throughout this report, we refer to Nature’s Sunshine Products, Inc., together with our subsidiaries, as “we,” “us,” “our,” “our Company” or “the Company.”
3
Table of Contents
PART I FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
NATURE’S SUNSHINE PRODUCTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
(Unaudited)
| September 30, 2026 | December 31, 2025 | ||||||||||
| Assets | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
Accounts receivable, net of allowance for doubtful accounts of $ | |||||||||||
| Inventories | |||||||||||
| Prepaid expenses and other | |||||||||||
| Total current assets | |||||||||||
| Property, plant and equipment, net | |||||||||||
| Operating lease right-of-use assets | |||||||||||
| Restricted investment securities - trading | |||||||||||
| Deferred income tax assets | |||||||||||
| Other assets | |||||||||||
| Total assets | $ | $ | |||||||||
| Liabilities and Shareholders’ Equity | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | $ | |||||||||
| Accrued volume incentives and service fees | |||||||||||
| Accrued liabilities | |||||||||||
| Deferred revenue | |||||||||||
| Income taxes payable | |||||||||||
| Current portion of operating lease liabilities | |||||||||||
| Total current liabilities | |||||||||||
| Liability related to unrecognized tax benefits | |||||||||||
| Long-term portion of operating lease liabilities | |||||||||||
| Deferred compensation payable | |||||||||||
| Deferred income tax liabilities | |||||||||||
| Other liabilities | |||||||||||
| Total liabilities | |||||||||||
| Shareholders’ equity: | |||||||||||
Common stock, | |||||||||||
| Retained earnings | |||||||||||
| Accumulated other comprehensive loss | ( | ( | |||||||||
| Total shareholders’ equity | |||||||||||
| Total liabilities and shareholders’ equity | $ | $ | |||||||||
See accompanying notes to condensed consolidated financial statements.
4
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NATURE’S SUNSHINE PRODUCTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands, except per share information)
(Unaudited)
| Three Months Ended September 30, | 2026 | 2025 | ||||||||||||
| Net sales | $ | $ | ||||||||||||
| Cost of sales | ||||||||||||||
| Gross profit | ||||||||||||||
| Operating expenses: | ||||||||||||||
| Volume incentives | ||||||||||||||
| Selling, general and administrative | ||||||||||||||
| Operating income | ||||||||||||||
| Other income: | ||||||||||||||
| Interest and other income, net | ||||||||||||||
| Interest expense | ( | ( | ||||||||||||
| Foreign exchange gains, net | ||||||||||||||
| Total other income | ||||||||||||||
| Income before provision for income taxes | ||||||||||||||
| Provision for income taxes | ||||||||||||||
| Net income | ||||||||||||||
| Net income attributable to noncontrolling interests | ||||||||||||||
| Net income attributable to common shareholders | $ | $ | ||||||||||||
| Basic and diluted net income per common share: | ||||||||||||||
| Basic earnings per share attributable to common shareholders | $ | $ | ||||||||||||
| Diluted earnings per share attributable to common shareholders | $ | $ | ||||||||||||
| Weighted average basic common shares outstanding | ||||||||||||||
| Weighted average diluted common shares outstanding | ||||||||||||||
See accompanying notes to condensed consolidated financial statements.
5
Table of Contents
NATURE’S SUNSHINE PRODUCTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands, except per share information)
(Unaudited)
| Nine Months Ended September 30, | 2026 | 2025 | ||||||||||||
| Net sales | $ | $ | ||||||||||||
| Cost of sales | ||||||||||||||
| Gross profit | ||||||||||||||
| Operating expenses: | ||||||||||||||
| Volume incentives | ||||||||||||||
| Selling, general and administrative | ||||||||||||||
| Operating income | ||||||||||||||
| Other income (expense): | ||||||||||||||
| Interest and other income, net | ||||||||||||||
| Interest expense | ( | ( | ||||||||||||
| Foreign exchange gains (losses), net | ( | |||||||||||||
| Total other income (expense) | ( | |||||||||||||
| Income before provision for income taxes | ||||||||||||||
| Provision for income taxes | ||||||||||||||
| Net income | ||||||||||||||
| Net income attributable to noncontrolling interests | ||||||||||||||
| Net income attributable to common shareholders | $ | $ | ||||||||||||
| Basic and diluted net income per common share: | ||||||||||||||
| Basic earnings per share attributable to common shareholders | $ | $ | ||||||||||||
| Diluted earnings per share attributable to common shareholders | $ | $ | ||||||||||||
| Weighted average basic common shares outstanding | ||||||||||||||
| Weighted average diluted common shares outstanding | ||||||||||||||
See accompanying notes to condensed consolidated financial statements.
6
Table of Contents
NATURE’S SUNSHINE PRODUCTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Amounts in thousands)
(Unaudited)
| Three Months Ended September 30, | 2026 | 2025 | ||||||||||||
| Net income | $ | $ | ||||||||||||
| Foreign currency translation gain (loss) (net of tax) | ( | |||||||||||||
| Total comprehensive income | $ | $ | ||||||||||||
| Nine Months Ended September 30, | 2026 | 2025 | ||||||||||||
| Net income | $ | $ | ||||||||||||
| Foreign currency translation gain (net of tax) | ||||||||||||||
| Total comprehensive income | $ | $ | ||||||||||||
See accompanying notes to condensed consolidated financial statements.
7
Table of Contents
NATURE’S SUNSHINE PRODUCTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(Amounts in thousands)
(Unaudited)
| Common Stock | Retained Earnings | Accumulated Other Comprehensive Loss | Total | ||||||||||||||||||||||||||
| Shares | Amount | ||||||||||||||||||||||||||||
| Balance at December 31, 2025 | $ | $ | $ | ( | $ | ||||||||||||||||||||||||
| Share-based compensation expense | — | — | — | ||||||||||||||||||||||||||
| Shares issued from the exercise of stock options and vesting of restricted stock units, net of shares exchanged for withholding tax | ( | — | — | ( | |||||||||||||||||||||||||
| Repurchase of common stock | ( | ( | — | — | ( | ||||||||||||||||||||||||
| Net income | — | — | — | ||||||||||||||||||||||||||
| Other comprehensive income | — | — | — | ||||||||||||||||||||||||||
| Balance at March 31, 2026 | $ | $ | $ | ( | $ | ||||||||||||||||||||||||
| Share-based compensation expense | — | — | — | ||||||||||||||||||||||||||
| Shares issued from the exercise of stock options and vesting of restricted stock units, net of shares exchanged for withholding tax | ( | — | — | ( | |||||||||||||||||||||||||
| Repurchase of common stock | ( | ( | — | — | ( | ||||||||||||||||||||||||
| Net income | — | — | — | ||||||||||||||||||||||||||
| Other comprehensive income | — | — | — | ||||||||||||||||||||||||||
| Balance at June 30, 2026 | $ | $ | $ | ( | $ | ||||||||||||||||||||||||
| Share-based compensation expense | — | — | — | ||||||||||||||||||||||||||
| Shares issued from the exercise of stock options and vesting of restricted stock units, net of shares exchanged for withholding tax | ( | — | — | ( | |||||||||||||||||||||||||
| Repurchase of common stock | ( | ( | — | — | ( | ||||||||||||||||||||||||
| Net income | — | — | — | ||||||||||||||||||||||||||
| Other comprehensive income | — | — | — | ||||||||||||||||||||||||||
| Balance at September 30, 2026 | $ | $ | $ | ( | $ | ||||||||||||||||||||||||
8
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| Common Stock | Retained Earnings | Noncontrolling Interest | Accumulated Other Comprehensive Loss | Total | |||||||||||||||||||||||||||||||
| Shares | Amount | ||||||||||||||||||||||||||||||||||
| Balance at December 31, 2024 | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||
| Share-based compensation expense | — | — | — | — | |||||||||||||||||||||||||||||||
| Shares issued from the exercise of stock options and vesting of restricted stock units, net of shares exchanged for withholding tax | ( | — | — | — | ( | ||||||||||||||||||||||||||||||
| Repurchase of common stock | ( | ( | — | — | — | ( | |||||||||||||||||||||||||||||
| Net income | — | — | — | ||||||||||||||||||||||||||||||||
| Other comprehensive income | — | — | — | — | |||||||||||||||||||||||||||||||
| Balance at March 31, 2025 | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||
| Share-based compensation expense | — | — | — | — | |||||||||||||||||||||||||||||||
| Shares issued from the exercise of stock options and vesting of restricted stock units, net of shares exchanged for withholding tax | ( | — | — | — | ( | ||||||||||||||||||||||||||||||
| Repurchase of common stock | ( | ( | — | — | — | ( | |||||||||||||||||||||||||||||
| Net income | — | — | — | ||||||||||||||||||||||||||||||||
| Other comprehensive income | — | — | — | — | |||||||||||||||||||||||||||||||
| Balance at June 30, 2025 | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||
| Share-based compensation expense | — | — | — | — | |||||||||||||||||||||||||||||||
| Shares issued from the exercise of stock options and vesting of restricted stock units, net of shares exchanged for withholding tax | ( | — | — | — | ( | ||||||||||||||||||||||||||||||
| Repurchase of common stock | ( | ( | — | — | — | ( | |||||||||||||||||||||||||||||
| Net income | — | — | — | ||||||||||||||||||||||||||||||||
| Other comprehensive loss | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||
| Balance at September 30, 2025 | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||
See accompanying notes to condensed consolidated financial statements.
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NATURE’S SUNSHINE PRODUCTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited)
| Nine Months Ended September 30, | 2026 | 2025 | ||||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||||||||
| Net income | $ | $ | ||||||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||
| Depreciation and amortization | ||||||||||||||
| Non-cash lease expense | ||||||||||||||
| Share-based compensation expense | ||||||||||||||
| Deferred income taxes | ( | |||||||||||||
| Purchase of trading investment securities | ( | ( | ||||||||||||
| Proceeds from sale of trading investment securities | ||||||||||||||
| Realized and unrealized gains on investments | ( | ( | ||||||||||||
| Foreign exchange (gains) losses | ( | |||||||||||||
| Changes in assets and liabilities: | ||||||||||||||
| Accounts receivable | ( | ( | ||||||||||||
| Inventories | ( | ( | ||||||||||||
| Prepaid expenses and other current assets | ( | ( | ||||||||||||
| Other assets | ( | |||||||||||||
| Accounts payable | ( | |||||||||||||
| Accrued volume incentives and service fees | ||||||||||||||
| Accrued liabilities | ( | |||||||||||||
| Deferred revenue | ( | |||||||||||||
| Lease liabilities | ( | ( | ||||||||||||
| Income taxes payable | ( | |||||||||||||
| Liability related to unrecognized tax benefits | ||||||||||||||
| Deferred compensation payable | ||||||||||||||
| Net cash provided by operating activities | ||||||||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||||||||
| Purchases of property, plant and equipment | ( | ( | ||||||||||||
| Net cash used in investing activities | ( | ( | ||||||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||||||
| Proceeds from revolving credit facility | ||||||||||||||
| Principal payments of revolving credit facility | ( | ( | ||||||||||||
| Payments related to tax withholding for net-share settled equity awards | ( | ( | ||||||||||||
| Repurchase of common stock | ( | ( | ||||||||||||
| Net cash used in financing activities | ( | ( | ||||||||||||
| Effect of exchange rates on cash and cash equivalents | ||||||||||||||
| Net increase (decrease) in cash and cash equivalents | ( | |||||||||||||
| Cash and cash equivalents at the beginning of the period | ||||||||||||||
| Cash and cash equivalents at the end of the period | $ | $ | ||||||||||||
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||||||||||||||
| Cash paid for income taxes, net of refunds | $ | $ | ||||||||||||
| Cash paid for interest | ||||||||||||||
See accompanying notes to condensed consolidated financial statements.
10
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NATURE’S SUNSHINE PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(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.
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's two joint ventures. Following the completion of the repurchases, the Company owned 100 no
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.
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(2) Inventories
The composition of inventories is as follows (dollar amounts in thousands):
| September 30, 2026 | December 31, 2025 | ||||||||||
| Raw materials | $ | $ | |||||||||
| Work in process | |||||||||||
| Finished goods | |||||||||||
| Total inventories | $ | $ | |||||||||
(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 was no
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.
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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):
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Net income attributable to common shareholders | $ | $ | $ | $ | |||||||||||||||||||
| Basic weighted average shares outstanding | |||||||||||||||||||||||
| Basic earnings per share attributable to common shareholders | $ | $ | $ | $ | |||||||||||||||||||
| Diluted shares outstanding: | |||||||||||||||||||||||
| Basic weighted-average shares outstanding | |||||||||||||||||||||||
| Stock-based awards | |||||||||||||||||||||||
| Diluted weighted-average shares outstanding | |||||||||||||||||||||||
| Diluted earnings per share attributable to common shareholders | $ | $ | $ | $ | |||||||||||||||||||
| Dilutive shares excluded from diluted-per-share amounts: | |||||||||||||||||||||||
| Share-based awards | |||||||||||||||||||||||
| Anti-dilutive shares excluded from diluted-per-share amounts: | |||||||||||||||||||||||
| Share-based awards | |||||||||||||||||||||||
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
Dividends
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.
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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 of six , eight and ten 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):
| Number of Shares | Weighted Average Exercise Price Per Share | Weighted Average Grant Date Fair Value | |||||||||||||||
| Options outstanding at December 31, 2025 | $ | $ | |||||||||||||||
| Granted | |||||||||||||||||
| Forfeited or canceled | |||||||||||||||||
| Exercised | |||||||||||||||||
| Options outstanding at September 30, 2026 | $ | $ | |||||||||||||||
There was no no
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 did not
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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 until two 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):
| Number of Shares | Weighted Average Grant Date Fair Value | ||||||||||
| Restricted Stock Units outstanding at December 31, 2025 | $ | ||||||||||
| Granted | |||||||||||
| Forfeited | ( | ||||||||||
| Issued | ( | ||||||||||
| Restricted Stock Units outstanding at September 30, 2026 | |||||||||||
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 a - to three-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 a - and three-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.
(7) Segment Information
We have four six 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
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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):
| Three Months Ended September 30, 2026 | Asia | Europe | North America | Latin America and Other | Total | |||||||||||||||||||||||||||
| Net sales | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Cost of sales | ||||||||||||||||||||||||||||||||
| Volume incentives | ||||||||||||||||||||||||||||||||
| Selling, general and administrative (1) | ||||||||||||||||||||||||||||||||
| Segment operating income | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Unallocated corporate selling, general and administrative expense | ( | |||||||||||||||||||||||||||||||
| Operating income | ||||||||||||||||||||||||||||||||
| Interest and other income, net | ||||||||||||||||||||||||||||||||
| Interest expense | ( | |||||||||||||||||||||||||||||||
| Foreign exchange gains, net | ||||||||||||||||||||||||||||||||
| Income from operations before provision for income taxes | $ | |||||||||||||||||||||||||||||||
| Three Months Ended September 30, 2025 | Asia | Europe | North America | Latin America and Other | Total | |||||||||||||||||||||||||||
| Net sales | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Cost of sales | ||||||||||||||||||||||||||||||||
| Volume incentives | ||||||||||||||||||||||||||||||||
| Selling, general and administrative (1) | ||||||||||||||||||||||||||||||||
| Segment operating income | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Unallocated corporate selling, general and administrative expense | ( | |||||||||||||||||||||||||||||||
| Operating income | ||||||||||||||||||||||||||||||||
| Interest and other income, net | ||||||||||||||||||||||||||||||||
| Interest expense | ( | |||||||||||||||||||||||||||||||
| Foreign exchange gains, net | ||||||||||||||||||||||||||||||||
| Income from operations before provision for income taxes | $ | |||||||||||||||||||||||||||||||
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| Nine Months Ended September 30, 2026 | Asia | Europe | North America | Latin America and Other | Total | |||||||||||||||||||||||||||
| Net sales | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Cost of sales | ||||||||||||||||||||||||||||||||
| Volume incentives | ||||||||||||||||||||||||||||||||
| Selling, general and administrative (1) | ||||||||||||||||||||||||||||||||
| Segment operating income | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Unallocated corporate selling, general and administrative expense | ( | |||||||||||||||||||||||||||||||
| Operating income | ||||||||||||||||||||||||||||||||
| Interest and other income, net | ||||||||||||||||||||||||||||||||
| Interest expense | ( | |||||||||||||||||||||||||||||||
| Foreign exchange losses, net | ( | |||||||||||||||||||||||||||||||
| Income from operations before provision for income taxes | $ | |||||||||||||||||||||||||||||||
| Nine Months Ended September 30, 2025 | Asia | Europe | North America | Latin America and Other | Total | |||||||||||||||||||||||||||
| Net sales | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Cost of sales | ||||||||||||||||||||||||||||||||
| Volume incentives | ||||||||||||||||||||||||||||||||
| Selling, general and administrative (1) | ||||||||||||||||||||||||||||||||
| Segment operating income | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Unallocated corporate selling, general and administrative expense | ( | |||||||||||||||||||||||||||||||
| Operating income | ||||||||||||||||||||||||||||||||
| Interest and other income, net | ||||||||||||||||||||||||||||||||
| Interest expense | ( | |||||||||||||||||||||||||||||||
| Foreign exchange gains, net | ||||||||||||||||||||||||||||||||
| Income from operations before provision for income taxes | $ | |||||||||||||||||||||||||||||||
_________________________________________
(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):
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Net sales: | |||||||||||||||||||||||
| United States | $ | $ | $ | $ | |||||||||||||||||||
| Japan | |||||||||||||||||||||||
| Taiwan | |||||||||||||||||||||||
| South Korea | |||||||||||||||||||||||
| Other | |||||||||||||||||||||||
| Total net sales | $ | $ | $ | $ | |||||||||||||||||||
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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):
| Three Months Ended September 30, 2026 | Asia | Europe | North America | Latin America and Other | Total | |||||||||||||||||||||||||||
| General health | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Immune | ||||||||||||||||||||||||||||||||
| Cardiovascular | ||||||||||||||||||||||||||||||||
| Digestive | ||||||||||||||||||||||||||||||||
| Personal care | ||||||||||||||||||||||||||||||||
| Weight management | ||||||||||||||||||||||||||||||||
| Total net sales by segment | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Three Months Ended September 30, 2025 | Asia | Europe | North America | Latin America and Other | Total | |||||||||||||||||||||||||||
| General health | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Immune | ||||||||||||||||||||||||||||||||
| Cardiovascular | ||||||||||||||||||||||||||||||||
| Digestive | ||||||||||||||||||||||||||||||||
| Personal care | ||||||||||||||||||||||||||||||||
| Weight management | ||||||||||||||||||||||||||||||||
| Total net sales by segment | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Nine Months Ended September 30, 2026 | Asia | Europe | North America | Latin America and Other | Total | |||||||||||||||||||||||||||
| General health | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Immune | ||||||||||||||||||||||||||||||||
| Cardiovascular | ||||||||||||||||||||||||||||||||
| Digestive | ||||||||||||||||||||||||||||||||
| Personal care | ||||||||||||||||||||||||||||||||
| Weight management | ||||||||||||||||||||||||||||||||
| Total net sales by segment | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Nine Months Ended September 30, 2025 | Asia | Europe | North America | Latin America and Other | Total | |||||||||||||||||||||||||||
| General health | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Immune | ||||||||||||||||||||||||||||||||
| Cardiovascular | ||||||||||||||||||||||||||||||||
| Digestive | ||||||||||||||||||||||||||||||||
| Personal care | ||||||||||||||||||||||||||||||||
| Weight management | ||||||||||||||||||||||||||||||||
| Total net sales by segment | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
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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):
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||
| Depreciation and amortization: | ||||||||||||||||||||||||||
| Asia | $ | $ | $ | $ | ||||||||||||||||||||||
| Europe | ||||||||||||||||||||||||||
| North America | ||||||||||||||||||||||||||
| Latin America and Other | ||||||||||||||||||||||||||
| Total depreciation and amortization | $ | $ | $ | $ | ||||||||||||||||||||||
From an individual country perspective, only the United States has material balances of consolidated property, plant and equipment as follows (dollar amounts in thousands):
| September 30, 2026 | December 31, 2025 | |||||||||||||
| Property, plant and equipment | ||||||||||||||
| United States | $ | $ | ||||||||||||
| Other | ||||||||||||||
| Total property, plant and equipment | $ | $ | ||||||||||||
(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.
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(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.
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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):
| Level 1 | Level 2 | Level 3 | |||||||||||||||||||||
| Quoted Prices in Active Markets for Identical Assets | Significant Other Observable Inputs | Significant Unobservable Inputs | Total | ||||||||||||||||||||
| Restricted investment securities - trading | $ | $ | $ | $ | |||||||||||||||||||
| Total assets measured at fair value on a recurring basis | $ | $ | $ | $ | |||||||||||||||||||
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):
| Level 1 | Level 2 | Level 3 | |||||||||||||||||||||
| Quoted Prices in Active Markets for Identical Assets | Significant Other Observable Inputs | Significant Unobservable Inputs | Total | ||||||||||||||||||||
| Restricted investment securities - trading | $ | $ | $ | $ | |||||||||||||||||||
| Total assets measured at fair value on a recurring basis | $ | $ | $ | $ | |||||||||||||||||||
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.
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Disaggregation of Revenue
Our products are grouped into six principal categories: general health, immune, cardiovascular, digestive, personal care and weight management. We have four
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.
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following Management’s Discussion and Analysis should be read in conjunction with the unaudited condensed consolidated financial statements and notes thereto included in this report, as well as the consolidated financial statements, the notes thereto and management’s discussion and analysis included in our Annual Report on Form 10-K for the year ended December 31, 2025, and our other reports filed since the date of such Form 10-K.
OVERVIEW
We are a global leader in manufacturing and marketing high-quality herbal and nutritional supplements. 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 resell our products to consumers.
Our independent consultants market and sell our products to consumers and sponsor other independent consultants who also market our products to consumers. Because a significant amount of revenue is generated through the sales of our independent consultants, our revenue can be impacted by the number and productivity of our independent consultants. We seek to motivate and provide incentives to our independent consultants by offering high-quality products, product support, training seminars and financial incentives, among other considerations.
Third Quarter Performance
In the third quarter of 2026, we experienced a decrease in our consolidated net sales of 9.1 percent (or 7.2 percent in local currencies) compared to the same period in 2025. Asia net sales decreased approximately 14.9 percent (or 11.2 percent in local currencies) compared to the same period in 2025. Europe net sales decreased approximately 0.1 percent (or increased 0.9 percent in local currencies) compared to the same period in 2025. North America net sales decreased approximately 6.1 percent (or 6.0 percent in local currencies) compared to the same period in 2025. Latin America and Other net sales increased approximately 3.4 percent (or decreased 0.1 percent in local currencies) compared to the same period in 2025. The weakening of the local currencies versus the U.S. dollar, primarily in our Asian markets, resulted in an approximate 1.9 percent, or $2.5 million, decrease of our net sales during the quarter.
Cost of sales decreased $2.6 million during the three months ended September 30, 2026, compared to the same period in 2025, and as a percentage of net sales were 27.1 percent and 26.7 percent for the three months ended September 30, 2026 and 2025, respectively. The increase in cost of sales percentage is primarily due to unfavorable foreign currency translation.
In absolute terms, selling, general and administrative expenses decreased $3.4 million during the three months ended September 30, 2026, compared to the same period in 2025, and as a percentage of net sales were 36.3 percent and 35.6 percent for the three months ended September 30, 2026 and 2025, respectively. The dollar decrease was primarily related to a reduction in variable selling expenses and cost management.
As an international business, we have significant sales and costs denominated in currencies other than the U.S. dollar. We expect foreign markets with functional currencies other than the U.S. dollar will continue to represent a substantial portion of our overall sales and related operating expenses. Accordingly, changes in foreign currency exchange rates could materially affect sales and costs or the comparability of sales and costs from period to period as a result of translating foreign markets' financial statements into our reporting currency.
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Eastern Europe
On February 24, 2022, Russian forces launched significant military action against Ukraine. There continues to be sustained conflict and disruption in the region, which is expected to endure for the foreseeable future. Our consultants in the impacted regions continue to operate their independent businesses, albeit at a reduced level than prior to the start of the conflict. We expect that this will continue to impact our business for the foreseeable future. We will continue monitoring the social, political, regulatory and economic environment in Ukraine and Russia and will consider further actions as appropriate.
More broadly, there could be additional negative impacts to our net sales, earnings and cash flows should the situation escalate beyond its current scope, including, among other potential impacts, economic recessions in certain neighboring countries.
Despite the war in Ukraine, net sales related to Eastern Europe for the three and nine months ended September 30, 2026, were $14.8 million and $47.6 million, respectively, compared to $13.9 million and $43.2 million for the same periods in 2025. Operating income related to Eastern Europe for the three and nine months ended September 30, 2026, was $1.8 million and $5.4 million, respectively, compared to $1.3 million and $3.7 million for the same periods in 2025. As of September 30, 2026, Eastern Europe had assets of $7.3 million, net of working capital reserves related to inventories.
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.
China Joint Ventures
On December 17, 2025, we 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's two joint ventures. Following the completion of the repurchases, the Company owned 100% of both joint ventures.
Tariffs
While we did not experience material impacts as a result of tariffs for the nine months ended September 30, 2026 and 2025, we continue to monitor the additional pressure that tariff-related price increases may have on our business, including the price, availability and quality of raw materials and other ingredients. We expect that tariffs may adversely affect our costs in the remainder of 2026.
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RESULTS OF OPERATIONS
The following table summarizes our unaudited consolidated operating results from continuing operations in U.S. dollars and as a percentage of net sales for the three months ended September 30, 2026 and 2025 (dollar amounts in thousands):
| Three Months Ended September 30, | 2026 | 2025 | Change | |||||||||||||||||||||||||||||||||||
| Total dollars | Percent of net sales | Total dollars | Percent of net sales | Total dollars | Percentage | |||||||||||||||||||||||||||||||||
| Net sales | $ | 116,603 | 100.0 | % | $ | 128,339 | 100.0 | % | $ | (11,736) | (9.1) | % | ||||||||||||||||||||||||||
| Cost of sales | 31,641 | 27.1 | 34,290 | 26.7 | (2,649) | (7.7) | ||||||||||||||||||||||||||||||||
| Gross profit | 84,962 | 72.9 | 94,049 | 73.3 | (9,087) | (9.7) | ||||||||||||||||||||||||||||||||
| Volume incentives | 37,365 | 32.0 | 39,348 | 30.7 | (1,983) | (5.0) | ||||||||||||||||||||||||||||||||
| SG&A expenses | 42,315 | 36.3 | 45,726 | 35.6 | (3,411) | (7.5) | ||||||||||||||||||||||||||||||||
| Operating income | 5,282 | 4.5 | 8,975 | 7.0 | (3,693) | (41.1) | ||||||||||||||||||||||||||||||||
| Other income, net | 86 | 0.1 | 697 | 0.5 | (611) | (87.7) | ||||||||||||||||||||||||||||||||
Income before income taxes | 5,368 | 4.6 | 9,672 | 7.5 | (4,304) | (44.5) | ||||||||||||||||||||||||||||||||
| Provision for income taxes | 3,478 | 3.0 | 4,137 | 3.2 | (659) | (15.9) | ||||||||||||||||||||||||||||||||
| Net income | $ | 1,890 | 1.6 | % | $ | 5,535 | 4.3 | % | $ | (3,645) | (65.9) | % | ||||||||||||||||||||||||||
The following table summarizes our unaudited consolidated operating results from continuing operations in U.S. dollars and as a percentage of net sales for the nine months ended September 30, 2026 and 2025 (dollar amounts in thousands):
| Nine Months Ended September 30, | 2026 | 2025 | Change | |||||||||||||||||||||||||||||||||||
| Total dollars | Percent of net sales | Total dollars | Percent of net sales | Total dollars | Percentage | |||||||||||||||||||||||||||||||||
| Net sales | $ | 356,480 | 100.0 | % | $ | 356,337 | 100.0 | % | $ | 143 | — | % | ||||||||||||||||||||||||||
| Cost of sales | 95,367 | 26.8 | 98,392 | 27.6 | (3,025) | (3.1) | ||||||||||||||||||||||||||||||||
| Gross profit | 261,113 | 73.2 | 257,945 | 72.4 | 3,168 | 1.2 | ||||||||||||||||||||||||||||||||
| Volume incentives | 110,075 | 30.9 | 108,552 | 30.5 | 1,523 | 1.4 | ||||||||||||||||||||||||||||||||
| SG&A expenses | 130,730 | 36.7 | 129,972 | 36.5 | 758 | 0.6 | ||||||||||||||||||||||||||||||||
| Operating income | 20,308 | 5.7 | 19,421 | 5.5 | 887 | 4.6 | ||||||||||||||||||||||||||||||||
| Other income (expense), net | (1,419) | (0.4) | 4,904 | 1.4 | (6,323) | (128.9) | ||||||||||||||||||||||||||||||||
Income before income taxes | 18,889 | 5.3 | 24,325 | 6.8 | (5,436) | (22.3) | ||||||||||||||||||||||||||||||||
| Provision for income taxes | 8,343 | 2.3 | 8,387 | 2.4 | (44) | (0.5) | ||||||||||||||||||||||||||||||||
| Net income | $ | 10,546 | 3.0 | % | $ | 15,938 | 4.5 | % | $ | (5,392) | (33.8) | % | ||||||||||||||||||||||||||
Net Sales
International operations have provided, and are expected to continue to provide, a significant portion of our total net sales. As a result, total net sales will continue to be affected by fluctuations in the U.S. dollar against foreign currencies. In order to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency fluctuations, in addition to comparing the percent change in net sales from one period to another in U.S. dollars, we present net sales excluding the impact of foreign exchange fluctuations. We compare the percentage change in net sales from one period to another period by excluding the effects of foreign currency exchange as shown below. Net sales excluding the impact of foreign exchange fluctuations is not a U.S. GAAP financial measure and removes from net sales in U.S. dollars the impact of changes in exchange rates between the U.S. dollar and the functional currencies of our foreign subsidiaries, by translating the current period net sales into U.S. dollars using the same foreign currency exchange rates that were used to translate the net sales for the previous comparable period. We believe presenting the impact of foreign currency fluctuations is useful to investors because it allows a more meaningful comparison of net sales of our foreign operations from period to period. However, net sales excluding the impact of foreign currency fluctuations should not be considered in isolation or as an alternative to net sales in U.S. dollar measures that reflect current period exchange rates, or to other financial measures calculated and presented in accordance with U.S. GAAP. Throughout the last five years, foreign currency exchange rates have fluctuated significantly. See Item 3. Quantitative and Qualitative Disclosures about Market Risk.
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The following table summarizes the changes in net sales by operating segment with a reconciliation to net sales excluding the impact of currency fluctuations for the three months ended September 30, 2026 and 2025 (dollar amounts in thousands):
| Three Months Ended September 30, | 2026 | 2025 | Percent Change | Impact of Currency Exchange | Percent Change Excluding Impact of Currency | |||||||||||||||||||||||||||
| Asia | $ | 55,056 | $ | 64,725 | (14.9) | % | $ | (2,437) | (11.2) | % | ||||||||||||||||||||||
| Europe | 22,076 | 22,107 | (0.1) | (227) | 0.9 | |||||||||||||||||||||||||||
| North America | 34,009 | 36,224 | (6.1) | (42) | (6.0) | |||||||||||||||||||||||||||
| Latin America and Other | 5,462 | 5,283 | 3.4 | 182 | (0.1) | |||||||||||||||||||||||||||
| $ | 116,603 | $ | 128,339 | (9.1) | % | $ | (2,524) | (7.2) | % | |||||||||||||||||||||||
The following table summarizes the changes in net sales by operating segment with a reconciliation to net sales excluding the impact of currency fluctuations for the nine months ended September 30, 2026 and 2025 (dollar amounts in thousands):
| Nine Months Ended September 30, | 2026 | 2025 | Percent Change | Impact of Currency Exchange | Percent Change Excluding Impact of Currency | |||||||||||||||||||||||||||
| Asia | $ | 160,236 | $ | 166,042 | (3.5) | % | $ | (4,240) | (0.9) | % | ||||||||||||||||||||||
| Europe | 71,165 | 67,962 | 4.7 | 768 | 3.6 | |||||||||||||||||||||||||||
| North America | 108,283 | 106,219 | 1.9 | 72 | 1.9 | |||||||||||||||||||||||||||
| Latin America and Other | 16,796 | 16,114 | 4.2 | 580 | 0.6 | |||||||||||||||||||||||||||
| $ | 356,480 | $ | 356,337 | — | % | $ | (2,820) | 0.8 | % | |||||||||||||||||||||||
Consolidated net sales for the three months ended September 30, 2026 and 2025, were $116.6 million and $128.3 million, which represents a decrease of 9.1 percent. Consolidated net sales for the nine months ended September 30, 2026 and 2025, remained flat at $356.5 million and $356.3 million, respectively. The decrease for the three months ended September 30, 2026 was primarily related to product sales decreases in our Asia, Europe and North America operating segments. Excluding the impact of foreign currency exchange rate fluctuations, consolidated net sales for the three and nine months ended September 30, 2026 decreased 7.2 percent and increased 0.8 percent, respectively, from the same periods in 2025.
Asia
Net sales related to Asia for the three and nine months ended September 30, 2026, were $55.1 million and $160.2 million, respectively, compared to $64.7 million and $166.0 million for the same periods in 2025, or decreases of 14.9 percent and 3.5 percent, respectively. In local currencies, net sales for the three and nine months ended September 30, 2026, decreased 11.2 percent and 0.9 percent, respectively, compared to the same periods in 2025.
Notable activity in the following markets contributed to the results of Asia:
In our Japan market, net sales decreased $0.4 million and increased $6.0 million, or decreased 2.5 percent and increased 14.4 percent, for the three and nine months ended September 30, 2026, respectively, compared to the same periods in 2025. In local currency, net sales for the three and nine months ended September 30, 2026 increased 5.2 percent and 22.4 percent, respectively, compared to the same periods in 2025. The increase in local currency was primarily the result of strong momentum that drove greater consultant activity and an increase in total orders and average order value.
In our Taiwan market, net sales decreased $2.8 million and $8.7 million, or 14.8 percent and 16.2 percent, for the three and nine months ended September 30, 2026, respectively, compared to the same periods in 2025. In local currency, net sales for the three and nine months ended September 30, 2026 decreased 9.5 percent and 14.7 percent, respectively, compared to the same periods in 2025. The decrease was primarily the result of slower consumer acquisition and a reduction in total orders, slightly offset by increases in average order values.
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In our South Korea market, net sales decreased $0.7 million and increased $0.2 million, or decreased 4.8 percent and increased 0.5 percent, for the three and nine months ended September 30, 2026, respectively, compared to the same periods in 2025. In local currency, net sales for the three and nine months ended September 30, 2026 decreased 2.5 percent and increased 3.9 percent, respectively, compared to the same periods in 2025. The decrease for the three months ended September 30, 2026 was primarily due to a reduction in average order values. The increase for the nine months ended September 30, 2026 was primarily the result of increases in total orders, subscription sales and active consultants.
In our China market, net sales decreased $5.5 million and $3.4 million, or 48.8 percent and 12.1 percent, for the three and nine months ended September 30, 2026, compared to the same periods in 2025. In local currency, net sales for the three and nine months ended September 30, 2026 decreased 51.6 percent and 16.4 percent, respectively, compared to the same periods in 2025. The decrease in net sales was primarily the result of the passing of two key leaders and sales disruptions resulting in part from corrective actions involving independent consultants whose activities we deemed inconsistent with our policies.
Europe
Net sales related to Europe for the three and nine months ended September 30, 2026, were $22.1 million and $71.2 million, respectively, compared to $22.1 million and $68.0 million for the same periods in 2025, or a decrease of 0.1 percent and an increase of 4.7 percent, respectively. In local currencies, net sales for the three and nine months ended September 30, 2026, increased 0.9 percent and 3.6 percent, respectively, compared to the same periods in 2025. The functional currency for many of these markets is the U.S. dollar which reduces the effect from foreign currency fluctuations. Fluctuations in foreign currency exchange rates had unfavorable impacts on net sales of $0.2 million and favorable impacts of $0.8 million for the three and nine months ended September 30, 2026, respectively. Net sales in local currencies increased for the three and nine months ended September 30, 2026, primarily as a result of growth in average order size and active consultants.
North America
Net sales related to North America for the three and nine months ended September 30, 2026, were $34.0 million and $108.3 million, respectively, compared to $36.2 million and $106.2 million for the same periods in 2025, or a decrease of 6.1 percent and an increase of 1.9 percent, respectively. In local currencies, net sales for the three and nine months ended September 30, 2026, decreased 6.0 percent and increased 1.9 percent, respectively, compared to the same periods in 2025.
In the United States, net sales for the three and nine months ended September 30, 2026 decreased $2.0 million and increased $2.2 million, or decreased 6.0 percent and increased 2.3 percent, respectively, compared to the same periods in 2025. The decrease for the three months ended September 30, 2026 was primarily due to reduced consultant engagement. The increase for the nine months ended September 30, 2026 was primarily due to improved consumer acquisition through our digital channels.
Latin America and Other
Net sales related to Latin America and Other markets for the three and nine months ended September 30, 2026, were $5.5 million and $16.8 million, respectively, compared to $5.3 million and $16.1 million for the same periods in 2025, or increases of 3.4 percent and 4.2 percent, respectively. In local currencies, net sales for the three and nine months ended September 30, 2026, decreased 0.1 percent and increased 0.6 percent, respectively, compared to the same periods in 2025. Fluctuations in foreign currency had favorable impacts on net sales of $0.2 million and $0.6 million for the three and nine months ended September 30, 2026, respectively.
Further information related to our Asia, Europe, North America and Latin America and Other business segments is set forth in Note 7 to the unaudited Condensed Consolidated Financial Statements in Part I, Item 1 of this report.
Cost of Sales
Cost of sales as a percent of net sales was 27.1 percent and 26.8 percent for the three and nine months ended September 30, 2026, compared to 26.7 percent and 27.6 percent for the same periods in 2025. The increase in cost of sales percentage for the three months ended September 30, 2026, is primarily due to unfavorable foreign exchange. The decrease in cost of sales percentage for the nine months ended September 30, 2026, is primarily the result of offering fewer discounts.
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Volume Incentives
Volume incentives expense as a percent of net sales was 32.0 percent and 30.9 percent for the three and nine months ended September 30, 2026, respectively, compared to 30.7 percent and 30.5 percent for the same periods in 2025. The increases were primarily due to timing of promotional incentives and market mix. These payments are designed to provide incentives for reaching certain sales levels. Volume incentives vary slightly, on a percentage basis, by product due to pricing policies and commission plans in place in our various geographies. Instead of volume incentives, in China, we pay independent service providers for their sales and marketing services, which are included in selling, general and administrative expenses.
Selling, General and Administrative
Selling, general and administrative expenses represent operating expenses, components of which include labor and benefits, sales events, professional fees, travel and entertainment, marketing, occupancy costs, communications costs, bank fees, depreciation and amortization, independent services fees paid in China and other miscellaneous operating expenses.
Selling, general and administrative expenses decreased $3.4 million and increased $0.8 million, respectively, to $42.3 million and $130.7 million for the three and nine months ended September 30, 2026, respectively, compared to the same periods in 2025. Selling, general and administrative expenses were 36.3 percent and 36.7 percent of net sales for the three and nine months ended September 30, 2026, compared to 35.6 percent and 36.5 percent for the same periods in 2025. The dollar decrease was primarily related to a reduction in variable selling expenses and cost management.
Other Income (Expense), Net
Other income (expense), net, for the three and nine months ended September 30, 2026, was income of $0.1 million and expense of $1.4 million, respectively, compared to income of $0.7 million and $4.9 million during the same periods in 2025, respectively. Other income (expense), net for the three and nine months ended September 30, 2026 primarily consisted of foreign exchange gains and losses, respectively, in Asia that resulted from net changes in foreign currencies.
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 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 that have 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.
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Product Categories
Our line of over 800 products includes several different product classifications, such as immune, cardiovascular, digestive, personal care, weight management and other general health products. We purchase herbs and other raw materials in bulk, and after quality control testing, we formulate, encapsulate, tablet or concentrate them, label and package them for shipment. Most of our products are manufactured at our facility in Spanish Fork, Utah. Contract manufacturers produce some of our products in accordance with our specifications and standards. We have implemented quality control procedures to verify that our contract manufacturers have complied with our specifications and standards.
See Note 7, Segment Information, for a summary of the U.S. dollar amounts from the sale of general health, immune, cardiovascular, digestive, personal care and weight management products for the three and nine months ended September 30, 2026 and 2025, by business segment.
Distribution and Marketing
We market our products primarily through our network of independent consultants, who market our products to consumers through direct selling techniques. We seek to motivate and provide incentives to our independent consultants by offering high-quality products and providing independent consultants with product support, training seminars, sales conventions, travel programs and financial incentives.
Our products sold in the United States are shipped directly from our manufacturing and warehouse facilities located in Spanish Fork, Utah, as well as from our regional warehouses located in Georgia, Ohio and Texas. Many of our international operations maintain warehouse facilities and inventory to supply their independent consultants. However, in foreign markets where we do not maintain warehouse facilities, we have contracted with third parties to distribute our products and provide support services to our force of independent consultants.
In the United States, we generally sell our products on a cash or credit card basis. From time to time, our U.S. operations extend short-term credit associated with product promotions. For certain of our international operations, we use independent distribution centers and offer credit terms that are generally consistent with industry standards within each respective country.
We pay sales commissions, or “volume incentives,” to our independent consultants based upon their own product sales and the product sales of their sales organization. As an exception, in China, we pay independent service providers for their sales and marketing services, which are included in selling, general and administrative expenses. These volume incentives and independent service fees are recorded as an expense in the year earned. The amounts of volume incentives that we expensed during the quarters ended September 30, 2026 and 2025, are set forth in the unaudited Condensed Consolidated Financial Statements in Item 1 of this report. In addition to the opportunity to receive volume incentives, independent consultants who attain certain levels of monthly product sales are eligible for additional incentive programs including automobile allowances, sales convention privileges and travel awards.
LIQUIDITY AND CAPITAL RESOURCES
Our principal use of cash is to pay for operating expenses, including volume incentives, inventory and raw material purchases, capital assets, digital investments and funding of international expansion. As of September 30, 2026, working capital was $114.9 million, compared to $100.3 million as of December 31, 2025. At September 30, 2026, we had $89.4 million in cash, of which $13.3 million was held in the U.S. and $76.1 million was held in foreign markets and may be subject to various withholding taxes and other restrictions related to repatriation before becoming available to be used along with the normal cash flows from operations to fund any unanticipated shortfalls in future cash flows.
Our net consolidated cash inflows (outflows) are as follows (in thousands):
| Nine Months Ended September 30, | 2026 | 2025 | ||||||||||||
| Operating activities | $ | 9,739 | $ | 25,423 | ||||||||||
| Investing activities | (6,793) | (4,143) | ||||||||||||
| Financing activities | (8,598) | (15,248) | ||||||||||||
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Operating Activities
For the nine months ended September 30, 2026, operating activities provided cash of $9.7 million, compared to $25.4 million in the same period in 2025. Operating cash flows decreased primarily due to reduced net income and the timing of payments and receipts for accrued liabilities, deferred revenue, income taxes payable, and accounts receivable, partially offset by a decrease in inventories and lease liabilities.
Investing Activities
For the nine months ended September 30, 2026, investing activities used $6.8 million, compared to $4.1 million for the same period in 2025, which consisted of capital expenditures related to the purchase of equipment, computer systems and software.
Financing Activities
For the nine months ended September 30, 2026, financing activities used $8.6 million, compared to $15.2 million for the same period in 2025.
During the nine months ended September 30, 2026, we used cash to repurchase 345,000 shares of our common stock under the share repurchase program for $6.1 million. At September 30, 2026, the remaining balance available for repurchases under the program was $11.3 million.
We maintain a revolving credit agreement with Bank of America, N.A. (the “Credit Agreement”), as well as a credit agreement with Banc of America Leasing and Capital, LLC (the "Capital Credit Agreement"). At September 30, 2026, there were no outstanding balances under the Credit Agreement or the Capital Credit Agreement. Our debt obligations are discussed in greater detail in Note 4, “Revolving Credit Facility and Other Obligations,” to our unaudited Condensed Consolidated Financial Statements in Part I, Item 1 of this report.
We believe that cash generated from operations, along with available cash and cash equivalents, will be sufficient to fund our normal operating needs, including capital expenditures, on both a short- and long-term basis.
In addition, other factors such as a prolonged economic downturn, a decrease in demand for our products, an unfavorable settlement of our unrecognized tax positions or non-income tax contingencies could adversely affect our long-term liquidity.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
There were no significant changes in our critical accounting policies or estimates for the nine months ended September 30, 2026. A summary of our significant accounting policies is provided in Note 1 of the Notes to Consolidated Financial Statements in Item 8 of the Annual Report on Form 10-K for the year ended December 31, 2025.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We conduct business in several countries and intend to grow our international operations. Net sales, operating income and net income are affected by fluctuations in currency exchange rates, interest rates and other uncertainties inherent in doing business and selling products in more than one currency. In addition, our operations are exposed to risks associated with changes in social, political and economic conditions inherent in international operations, including changes in the laws and policies that govern international investment in countries where we have operations, as well as, to a lesser extent, changes in U.S. laws and regulations relating to international trade and investment. Furthermore, we are subject to risks from shifting tariff regimes and trade policies between countries where we operate, which could increase our costs of materials and finished goods, or disrupt our supply chain operations. For further information, see Part II, Item 7A of our Annual Report on Form 10-K for the year ended December 31, 2025.
Item 4. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
Our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) are designed to provide reasonable assurance that the information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in rules and forms adopted by the SEC and that
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such information is accumulated and communicated to management, including the Chief Executive Officer and the Chief Financial Officer, to allow timely decisions regarding required disclosures.
Our management, under the supervision and with the participation of the Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of September 30, 2026. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of September 30, 2026.
Changes in Internal Control over Financial Reporting
There were no changes in our internal controls over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) during the quarter ended September 30, 2026, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
The information set forth under the heading 'Legal Proceedings' in Note 9, Commitments and Contingencies, to our unaudited condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q is incorporated herein by reference.
Item 1A. RISK FACTORS
In addition to the information set forth in this report, you should carefully consider the risks discussed under the heading “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025, which could have a material adverse effect on our business or consolidated financial statements, results of operations and cash flows. Additional risks not currently known, or risks that are currently believed to be not material, may also impair business operations. There have been no material changes to our risk factors since the filing of our Annual Report on Form 10-K for the year ended December 31, 2025, except as follows:
Our global operations are subject to numerous laws and regulations relating to trade restrictions and export controls and failure to comply with such rules could adversely affect our business.
Our global operations are subject to numerous trade and economic sanctions and other restrictions imposed by the U.S., the EU and other governments and organizations. The U.S. Departments of Justice, Commerce, State and Treasury and other federal agencies and authorities have a broad range of civil and criminal penalties they may seek to impose against corporations and individuals for violations of economic sanctions laws, export control laws and other federal statutes and regulations, including those established by the Office of Foreign Assets Control (“OFAC”). Under these laws and regulations, as well as other anti-corruption laws, anti-money-laundering laws, export control laws, customs laws, sanctions laws and other laws governing our operations, various government agencies may require export licenses, may seek to impose modifications to business practices, including cessation of business activities in sanctioned countries or with sanctioned persons or entities and modifications to compliance programs, which may increase compliance costs and may subject us to fines, penalties and other sanctions. A violation of these laws, regulations, policies or procedures could adversely impact our business, results of operations and financial condition.
For example, 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 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 matter may include fines or penalties imposed in response to our voluntary self-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 to reasonably estimate the time it may take to resolve these matters.
Although we have implemented policies and procedures in these areas, we cannot assure you that our policies and procedures are sufficient or that directors, officers, employees, representatives, manufacturers, suppliers and agents have not engaged and will not engage in conduct in violation of such policies and procedures.
We depend on our independent consultants and other independent sales representatives, and the loss of key individuals, or corrective or remedial actions we take involving them, has adversely affected and could continue to adversely affect our sales.
Our success depends on our ability to attract, retain and motivate independent consultants and other independent sales representatives. A relatively small number of these individuals and their extensive sales organizations account for a significant portion of our revenue in certain markets. The loss or inactivity of any of these individuals could reduce activity in, or cause disruption to, their sales organizations.
We may also take corrective or remedial action when we identify activities by independent consultants that are inconsistent with our policies. Such actions, including restricting or terminating their activities, may disrupt the activities of the affected sales organization and could adversely affect our sales and results of operations.
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We have experienced sales disruption resulting in part from corrective or remedial actions involving independent consultants. For example, net sales in China decreased 48.8 percent, for the three months ended September 30, 2026, compared to the same period in 2025. The decrease reflected several factors, including the passing of two key sales representatives, and restrictions we imposed on another sales representative whose activities we deemed inconsistent with our policies. We cannot assure you that the affected sales organizations will recover or that net sales in China will return to prior levels. Similar corrective or remedial actions could adversely affect our sales and results of operations in the future.
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Item 2. UNREGISTERED SALES OF EQUITY SECURITIES, USE OF PROCEEDS AND ISSUER PURCHASES OF EQUITY SECURITIES
The following table summarizes the purchases of our common stock during the fiscal quarter ended September 30, 2026:
| Periods | Total Number of Shares Purchased (in thousands) | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (in thousands) | Maximum Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs(1) (in thousands) | ||||||||||||||||||||||
| July 1, 2026 to July 31, 2026 | 26 | $ | 20.91 | 26 | ||||||||||||||||||||||
| August 1, 2026 to August 31, 2026 | 131 | 15.26 | 131 | |||||||||||||||||||||||
| September 1, 2026 to September 30, 2026 | 75 | $ | 13.35 | 75 | ||||||||||||||||||||||
| Total | 232 | 232 | $ | 11,254 | ||||||||||||||||||||||
(1) 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 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. We purchased 232,000 shares of our common stock during the quarter ended September 30, 2026, under the terms of this Board-approved plan.
The actual timing, number and value of common shares repurchased under our board-approved plan will be determined at our discretion and will depend on a number of factors, including, among others, general market and business conditions, the trading price of common shares and applicable legal requirements. We have no obligation to repurchase any common shares under the authorization, and the repurchase plan may be suspended, discontinued, or modified at any time for any reason.
Item 3. DEFAULTS UPON SENIOR SECURITIES
None.
Item 4. MINE SAFETY DISCLOSURES
Not applicable.
Item 5. OTHER INFORMATION
During the three months ended September 30, 2026, none of our directors or officers adopted terminated
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Item 6. EXHIBITS
a) Index to Exhibits
| Item No. | Exhibit | |||||||
| 10.1(1) | Nature's Sunshine Products, Inc. 2026 Stock Incentive Plan | |||||||
| 10.3 | Employment Agreement between the Company and Ruth Perkins | |||||||
| 31.1(3) | Certification of Chief Executive Officer under SEC Rule 13a-14(a)/15d-14(a) promulgated under the Securities Exchange Act of 1934 | |||||||
| 31.2(3) | Certification of Chief Financial Officer under SEC Rule 13a-14(a)/15d-14(a) promulgated under the Securities Exchange Act of 1934 | |||||||
| 31.3(3) | Certification of Chief Accounting Officer under SEC Rule 13a-14(a)/15d-14(a) promulgated under the Securities Exchange Act of 1934 | |||||||
| 32.1(4) | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350 | |||||||
| 32.2(4) | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350 | |||||||
| 32.3(4) | Certification of Chief Accounting Officer pursuant to 18 U.S.C. Section 1350 | |||||||
| 101.INS | Inline XBRL Instance Document | |||||||
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | |||||||
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |||||||
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | |||||||
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |||||||
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |||||||
| 104 | Cover page Interactive Data File (the cover page XBRL tags are embedded within iXBRL (Inline Extensible Business Reporting Language) document) | |||||||
_________________________________________
(1) Previously filed as Exhibit 10.1 to the Current Report on Form 8-K filed on May 7, 2026, and is incorporated herein by reference.
(2) Previously filed as Exhibit 10.2 to the Current Report on Form 8-K filed on May 11, 2026, and is incorporated herein by reference.
(3) Filed currently herewith.
(4) Furnished currently herewith.
* Management contract or compensatory plan.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Nature’s Sunshine Products, Inc. | ||||||||
| Date: | November 4, 2026 | /s/ Kenneth G. Romanzi | ||||||
| Kenneth G. Romanzi, | ||||||||
| Chief Executive Officer | ||||||||
| (Principal Executive Officer) | ||||||||
| Date: | November 4, 2026 | /s/ Ruth A. Perkins | ||||||
| Ruth A. Perkins, | ||||||||
| Executive Vice President, Chief Financial Officer and Treasurer | ||||||||
| (Principal Financial Officer) | ||||||||
| Date: | November 4, 2026 | /s/ Jonathan D. Lanoy | ||||||
| Jonathan D. Lanoy, | ||||||||
| Senior Vice President, Chief Accounting Officer | ||||||||
| (Principal Accounting Officer) | ||||||||
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