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NATURES SUNSHINE PRODUCTS INC

NATURES SUNSHINE PRODUCTS INCNATREarnings & Financial Report

Nasdaq · food industry

Nature's Sunshine Products, Inc. also known as "NSP", is a manufacturer of dietary supplements, including herbs, vitamins, minerals, and personal care products. It is based in Lehi, Utah, with a manufacturing facility in Spanish Fork, Utah.

What changed in NATURES SUNSHINE PRODUCTS INC's 10-K — 2024 vs 2025

Top changes in NATURES SUNSHINE PRODUCTS INC's 2025 10-K

169 paragraphs added · 174 removed · 144 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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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 years ended December 31, 2024 and 2023, by business segment can be found in Note 12, “Business Segment and International Operation Information,” to our Consolidated Financial Statements, in Item 8, Part 2 of this report.
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 years ended December 31, 2025 and 2024, by business segment can be found in Note 12, “Business Segment and International Operation Information,” to our Consolidated Financial Statements, in Item 8, Part 2 of this report.
Such regulatory provisions did not have a material effect upon our results of operations or competitive position during the year ended December 31, 2024. Regulation General In both the United States and foreign markets we are affected by extensive laws, governmental regulations, administrative determinations and guidance, court decisions and similar constraints (collectively “Regulations”).
Such regulatory provisions did not have a material effect upon our results of operations or competitive position during the year ended December 31, 2025. Regulation General In both the United States and foreign markets we are affected by extensive laws, governmental regulations, administrative determinations and guidance, court decisions and similar constraints (collectively “Regulations”).
During the years ended December 31, 2024 and 2023, we experienced no major complications in obtaining and maintaining adequate sources of raw materials supply. We attempt to ensure the availability of many of our raw materials by contracting, in advance, for our annual requirements. In the past, we have been able to find alternative sources of raw materials when needed.
During the years ended December 31, 2025 and 2024, we experienced no major complications in obtaining and maintaining adequate sources of raw materials supply. We attempt to ensure the availability of many of our raw materials by contracting, in advance, for our annual requirements. In the past, we have been able to find alternative sources of raw materials when needed.
The amounts of volume incentives that we expensed during the years ended December 31, 2024 and 2023, are set forth in our Consolidated Financial Statements in Item 8 of this report.
The amounts of volume incentives that we expensed during the years ended December 31, 2025 and 2024, are set forth in our Consolidated Financial Statements in Item 8 of this report.
The SEC also maintains an Internet website that contains reports and other information regarding issuers that file electronically with the SEC at www.sec.gov . We also make available, free of charge on our website, our Code of Conduct Policy and the charters of our Audit Committee, Governance Committee, Compensation Committee and Risk Management Committee.
The SEC also maintains an Internet website that contains reports and other information regarding issuers that file electronically with the SEC at www.sec.gov . We also make available, free of charge on 9 Table of Contents our website, our Code of Conduct Policy and the charters of our Audit Committee, Governance Committee, Compensation Committee and Risk Management Committee.
There are inherent limitations to our ability to monitor the activities of our independent consultants sufficient to ensure that they refrain, in accordance with our consultant agreements, from distributing our products in countries where we have not commenced operations.
There are inherent limitations to our ability to monitor the 8 Table of Contents activities of our independent consultants sufficient to ensure that they refrain, in accordance with our consultant agreements, from distributing our products in countries where we have not commenced operations.
Our hiring practices focus on the skills and qualifications of a candidate relative to the job requirements. As of December 31, 2024 we employed 819 individuals with viewpoints and backgrounds as diverse as the customers we serve around the world.
Our hiring practices focus on the skills and qualifications of a candidate relative to the job requirements. As of December 31, 2025, we employed 806 individuals with viewpoints and backgrounds as diverse as the customers we serve around the world.
Key initiatives focused on attracting and retaining top talent include, but not limited to the following: • Leadership development program designed to help employees develop leadership skills and obtain executive coaching over a three-year period. • Competitive wage and benefits package building loyalty and engagement in Company performance. • Hybrid work model that recognizes the evolving needs of workers and allows them to build a hybrid work schedule providing greater flexibility for their personal needs. • A wellness rewards program that rewards healthy behaviors such as healthy eating, exercise and wellness ambassadorship.
Key initiatives focused on attracting and retaining top talent include, but not limited to the following: • Leadership development program designed to help employees develop leadership skills and obtain executive coaching over a three-year period. • Competitive wage and benefits package building loyalty and engagement in Company performance. • A wellness rewards program that rewards healthy behaviors such as healthy eating, exercise and wellness ambassadorship.
Item 1. Business The Company We are a natural health and wellness company primarily engaged in the manufacturing and direct selling of nutritional and personal care products.
Item 1. Business The Company We are a natural health and wellness company primarily engaged in the manufacturing and direct selling of nutritional and personal care products. We are a Utah corporation formed in 1976 with our principal place of business in Lehi, Utah.
Participants have many reward options to choose from such as swag, gift cards and product credit. 9 Table of Contents • Stringent safety standards and promotion of a company culture that prioritizes safety throughout our manufacturing and distributions centers around the world.
Participants have many reward options to choose from such as swag, gift cards and product credit. • Stringent safety standards and promotion of a company culture that prioritizes safety throughout our manufacturing and distributions centers around the world. A vailable Information Our principal executive office is located at 2901 West Blue Grass Blvd., Suite 100, Lehi, Utah 84043.
Business Segments We have four business segments (Asia, Europe, North America and Latin America and Other) based primarily upon the geographic region where each segment operates, as well as the internal organization of our officers and their responsibilities. The geographic segments operate under the Nature’s Sunshine Products and Synergy WorldWide brands.
We sell our products to a sales force of independent consultants who use the products themselves or resell them to consumers. Business Segments We have four business segments (Asia, Europe, North America and Latin America and Other) based primarily upon the geographic region where each segment operates, as well as the internal organization of our officers and their responsibilities.
Assertions that we failed to comply with regulations or the effect of adverse regulations in one market could adversely affect us in other markets as well, by causing increased regulatory scrutiny in those other markets or as a result of the negative publicity generated in those other markets. 8 Table of Contents Compliance In order to comply with regulations that apply to both us and our independent consultants, we conduct research into the applicable regulatory framework prior to entering any new market to identify all necessary licenses, registrations and approvals and applicable limitations on our operations in that market.
Compliance In order to comply with regulations that apply to both us and our independent consultants, we conduct research into the applicable regulatory framework prior to entering any new market to identify all necessary licenses, registrations and approvals and applicable limitations on our operations in that market.
We have implemented quality control procedures to verify that our contract manufacturers have complied with our specifications and standards.
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.
The Latin America and Other segment includes our wholesale business in which we sell products to various locally-managed entities, independent of the Company, that we have granted distribution rights for the relevant market. 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.
The geographic segments operate under the Nature’s Sunshine Products and Synergy WorldWide® brands. The Latin America and Other segment includes our wholesale business in which we sell products to various locally-managed entities, independent of the Company, that we have granted distribution rights for the relevant market.
A vailable Information Our principal executive office is located at 2901 West Blue Grass Blvd., Suite 100, Lehi, Utah 84043. Our telephone number is (801) 341-7900 and our Internet website address is www.natr.com .
Our telephone number is (801) 341-7900 and our Internet website address is www.natr.com .
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.
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.
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We are a Utah corporation formed in 1976 with our principal place of business in Lehi, Utah, and sell our products to a sales force of independent consultants who use the products themselves or resell them to consumers.
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Assertions that we failed to comply with regulations or the effect of adverse regulations in one market could adversely affect us in other markets as well, by causing increased regulatory scrutiny in those other markets or as a result of the negative publicity generated in those other markets.
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Sustainability We believe that our focus on reliable, pure, proven and potent ingredients and the processes through which ingredients are harvested sets our products and business apart. We emphasize collaborating with growers and suppliers that protect and care for the natural resources they farm and harvest along with the economic and social interests of their local communities.
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We choose supply partners with business models that value making a positive impact on the environments and economies that they source from and, in many cases, go to creative lengths to bring benefits to the communities they operate within.
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In May 2024, we achieved our goal of zero waste at our distribution centers and received the TRUE Zero Waste Gold Certification. Since the year ended December 31, 2022, we have maintained the use of 100 percent renewable energy at our manufacturing facility.
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We continue to make progress on our goals set to address the environmental impacts from operations and we are optimistic that we will achieve the following by the end of 2025: • 50 percent reduction of greenhouse gas emissions for Scope 1 & 2 by 2025; and • 35 percent waste reduction at our owned manufacturing facility by 2025.
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To learn more about our environmental, social and governance (“ESG”) initiatives, as well as review our annual ESG report and accompanying policies, access the ESG section of our website at: https://ir.naturessunshine.com/esg. Information found on the Company’s website is not part of this Annual Report on Form 10-K or any other report filed with the United States Securities and Exchange Commission.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Our manufacturing facilities and distribution facilities are subject to the risk of catastrophic loss due to, among other things, earthquake, fire, flood, epidemic, terrorism or other natural or man-made disasters, as well as the occurrence of significant equipment failures.
Our manufacturing and distribution facilities are subject to the risk of catastrophic loss due to, among other things, earthquake, fire, flood, epidemic, terrorism or other natural or man-made disasters, as well as the occurrence of significant equipment failures.
We are subject to anti-bribery laws, including the Foreign Corrupt Practices Act (“FCPA”). We are subject to anti-bribery laws, including the FCPA, which generally prohibit companies and their intermediaries from making improper payments for the purpose of obtaining or retaining business as well as requiring companies and their intermediaries to maintain accurate books and records.
We are subject to anti-bribery laws, including the Foreign Corrupt Practices Act. We are subject to anti-bribery laws, including the FCPA, which generally prohibit companies and their intermediaries from making improper payments for the purpose of obtaining or retaining business as well as requiring companies and their intermediaries to maintain accurate books and records.
Like many companies, our business is highly dependent upon our information technology infrastructure (websites, accounting and manufacturing applications and product and customer information databases) to manage effectively and efficiently our operations, including order entry, customer billing, accurate tracking of purchases and volume incentives and managing accounting, finance and manufacturing operations.
Like many companies, our business is highly dependent upon our information technology infrastructure (websites, accounting and manufacturing applications and product and customer information databases) effectively and efficiently manage our operations, including order entry, customer billing, accurate tracking of purchases and volume incentives and managing accounting, finance and manufacturing operations.
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.
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 will not engage in conduct in violation of such policies and procedures.
Additionally, we could also be subject to challenges by private parties in civil actions, including class action cases brought by plaintiffs’ lawyers. An investigation, adverse judgment or significant settlement from an enforcement acting or civil class action lawsuit, brought against us, could have a material adverse effect on our results of operations and financial condition.
Additionally, we could also be subject to challenges by private parties in civil actions, including class action cases brought by plaintiffs’ lawyers. An investigation, adverse judgment or significant settlement from an enforcement agency or a civil class action lawsuit brought against us could have a material adverse effect on our results of operations and financial condition.
For various reasons or circumstances, our employees may work remotely from time to time. During such times, remote access heightens the risk of a cyber-attack. Additionally, outside parties may attempt to fraudulently induce employees, users, or customers to disclose sensitive information to gain access to our data or our users’ or customers’ data.
For various reasons or circumstances, our employees may work remotely. During such times, remote access heightens the risk of a cyber-attack. Additionally, outside parties may attempt to fraudulently induce employees, users or customers to disclose sensitive information to gain access to our data or our users’ or customers’ data.
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 10 Table of Contents 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.
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.
These and similar disruptions could result in harm to our business, results of operations and financial condition. In addition, we rely upon independent land-based and air freight carriers for product shipments to our independent consultants and customers who purchase our products.
These and similar disruptions could result in harm to our business, results of operations and financial condition. In addition, we rely on independent land-based and air freight carriers for product shipments to our independent consultants and customers who purchase our products.
Our efforts to protect our intellectual property may be unsuccessful and third parties may assert claims against us for infringement of intellectual property rights, which could result in us being required to obtain costly licenses for such rights, to pay royalties or to terminate our manufacturing of infringing products, all of which could have a material adverse effect on our results of operations and financial condition.
Our efforts to protect our intellectual property may be unsuccessful and third parties may assert claims against us for infringement of intellectual property rights, which could result in 18 Table of Contents us being required to obtain costly licenses for such rights, to pay royalties or to terminate our manufacturing of infringing products, all of which could have a material adverse effect on our results of operations and financial condition.
Our reported earnings have in the past been, and are likely to continue to be, significantly affected by fluctuations in currency exchange rates, with net sales and earnings generally increasing with a weaker U.S. dollar and decreasing with a strengthening U.S. dollar. We could incur obligations resulting from the activities of our independent consultants.
Our reported earnings have in the past been, and are likely to continue to be, significantly affected by fluctuations in currency exchange rates with net sales and earnings generally increasing with a weaker U.S. dollar and decreasing with a strengthening U.S. dollar. 13 Table of Contents We could incur obligations resulting from the activities of our independent consultants.
Unfavorable economic conditions in the financial and credit markets, inflation, or other circumstances that adversely affect the ability of consumers to pay for our products could have a material adverse effect on our business, financial condition, cash flows and results of operations. Our manufacturing activity is subject to certain risks.
Unfavorable economic conditions in the financial and credit markets, inflation, or other circumstances that adversely affect the ability of consumers to pay for our products could have a material adverse effect on our business, financial condition, cash flows and results of operations. 14 Table of Contents Our manufacturing activity is subject to certain risks.
We carry product liability insurance coverage; however, such 12 Table of Contents insurance may not be sufficient to cover one or more large claims, or the insurer may successfully disclaim coverage as to a pending or future claim, which could have a material adverse effect on our results of operations and financial condition.
We carry product liability insurance coverage; however, such insurance may not be sufficient to cover one or more large claims, or the insurer may successfully disclaim coverage as to a pending or future claim, which could have a material adverse effect on our results of operations and financial condition.
We are eligible to receive foreign tax credits in the United States for certain foreign taxes paid abroad. In the event any audits or 16 Table of Contents assessments are concluded adversely to us, we may not be able to offset the consolidated effect of foreign income tax assessments through the use of U.S. foreign tax credits.
We are eligible to receive foreign tax credits in the United States for certain foreign taxes paid abroad. In the event any audits or assessments are concluded adversely to us, we may not be able to offset the consolidated effect of foreign income tax assessments through the use of U.S. foreign tax credits.
In the U.S., our products are sold principally as dietary supplements and cosmetics and are subject to rigorous FDA regulations limiting the types of therapeutic claims that can be made relating to the products. The treatment or cure of disease, for example, is not a permitted claim for our products.
In the U.S., our products are sold principally as dietary supplements and cosmetics and are subject to rigorous FDA regulations limiting the types of therapeutic claims that can be made relating to the products. The treatment or cure of disease, for example, are not permitted claims for our products.
We cannot guarantee that the privacy policies and other statements regarding our practices will be found to be sufficient to protect us from liability or adverse publicity relating to the privacy and security of personal information. Whether and how existing domestic and international privacy and consumer protection laws and regulations apply is still uncertain and may take years to resolve.
We cannot guarantee that the privacy policies and other statements regarding our practices will be found to be sufficient to protect us from liability or adverse publicity relating to the privacy and security of personal information. Whether and how existing domestic and international privacy and consumer protection laws and regulations apply is still uncertain.
We manufacture a significant portion of the products sold at our manufacturing facility located in Spanish Fork, Utah. As a result, we are dependent upon the uninterrupted and efficient operation of our manufacturing facility in Spanish Fork and our distribution facilities throughout the country.
We manufacture a significant portion of our products at our manufacturing facility located in Spanish Fork, Utah. As a result, we are dependent on the uninterrupted and efficient operation of our manufacturing facility in Spanish Fork and our distribution facilities throughout the country.
In addition, we may face potential for litigation or other disputes which may include, among others, claims invoking the federal and state securities laws, contractual claims or other claims arising from any restatement and material weaknesses in our internal controls over financial 17 Table of Contents reporting.
In addition, we may face potential for litigation or other disputes which may include, among others, claims invoking the federal and state securities laws, contractual claims or other claims arising from any restatement and material weaknesses in our internal controls over financial reporting.
The FTC in the United States, and similar government agencies in foreign jurisdictions, periodically investigate and bring enforcement actions against direct selling companies based on alleged pyramid selling activity and/or false and misleading claims made by the direct selling company or its independent consultants.
The FTC in the United States, and similar government agencies in foreign jurisdictions, periodically investigate and bring enforcement actions against direct selling companies based on alleged pyramid selling activity and/or false and 10 Table of Contents misleading claims made by the direct selling company or its independent consultants.
Violations could result from misconduct by an independent consultant, ambiguity in statutes, changes or new laws and regulations affecting our business and court-related decisions.
Violations could result from misconduct by an independent consultant, ambiguity in statutes, changes or new laws and regulations affecting our business, court-related decisions, or changes in regulatory interpretation or enforcement.
We may not be able to operate in many areas due to damage and safety concerns. Within Russia, we may need to further reduce our operations 14 Table of Contents due to sanctions and counter sanctions, currency or payment controls and supply chain challenges.
We may not be able to operate in many areas due to damage and safety concerns. Within Russia, we may need to further reduce our operations due to sanctions and counter sanctions, currency or payment controls and supply chain challenges.
Generally, we need to increase the productivity of our independent consultants and/or retain existing independent consultants and attract additional independent consultants to maintain and/or increase future sales.
Generally we need to increase the productivity of our 12 Table of Contents independent consultants and/or retain existing independent consultants and attract additional independent consultants to maintain and/or increase future sales.
In 2024, we recognized approximately 71.8 percent of our net sales in markets outside the United States, the majority of which were recognized in each market’s respective local currency. We purchase inventory from companies in foreign markets and in the United States, primarily in U.S. dollars.
In 2025, we recognized approximately 72.2 percent of our net sales in markets outside the United States, the majority of which were recognized in each market’s respective local currency. We purchase inventory from companies in foreign markets and in the United States, primarily in U.S. dollars.
In addition, a determination by a court or government agency that any of our practices, or those of our independent consultants, do not meet 18 Table of Contents these standards could result in liability or adverse publicity, which could have a material adverse effect on our results of operations and financial condition.
In addition, a determination by a court or government agency that any of our practices, or those of our independent consultants, do not meet these standards could result in liability or adverse publicity, which could have a material adverse effect on our results of operations and financial condition. System failures could adversely affect our results of operations and financial condition.
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 voluntary disclosures of apparent trade controls violations to the U.S. Department of Commerce's Bureau of Industry and Security (“BIS”).
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.
On August 25, 2014, we completed a transaction with Shanghai Fosun Pharmaceutical (Group) Co., Ltd. (“Fosun Pharma”), which created a joint venture owned 80 percent by us and 20 percent by a wholly owned subsidiary of Fosun Pharma.
On August 25, 2014, we completed a transaction with Shanghai Fosun Pharmaceutical (Group) Co., Ltd. (“Fosun Pharma”), which created a joint venture owned 80 percent by us and 20 percent by a wholly owned subsidiary of Fosun Pharma. On June 30, 2025, we entered into share purchase agreements with Fosun Industrial Co., Ltd.
Although we take measures to protect the security, integrity and confidentiality of our data systems, we experience cyber-attacks of varying degrees and types on a regular basis. Our infrastructure may be vulnerable to these attacks, and in some cases, it could take time to discover them.
Although we take measures to protect the security, integrity 17 Table of Contents and confidentiality of our data systems, we experience cybersecurity threats of varying degrees and types. Our infrastructure may be vulnerable to these attacks, and in some cases, it could take time to discover them.
We may also experience significant interruptions of our manufacturing operations, delays in our ability to deliver products, increased costs or customer order cancellations as a result of: • the failure or inability to accurately forecast demand and obtain sufficient quantities of quality raw materials on a cost-effective basis; 15 Table of Contents • volatility in the availability and cost of materials or services, including rising prices due to inflation; • difficulties or delays in obtaining required import or export approvals; • shipment delays due to transportation interruptions or capacity constraints, such as reduced availability of air or ground transport or port closures; • information technology or infrastructure failures, including those of a third-party supplier or service provider; and • natural disasters or other events beyond our control (such as earthquakes, utility interruptions, tsunamis, hurricanes, typhoons, floods, storms or extreme weather conditions, fires, regional economic downturns, regional or global health epidemics, pandemics, geopolitical turmoil, increased trade restrictions between the U.S. and China and other countries, social unrest, political instability, terrorism, or acts of war) in locations where we or our customers or suppliers have manufacturing or other operations.
We may also experience significant interruptions of our manufacturing operations, delays in our ability to deliver products, increased costs or customer order cancellations as a result of: • the failure or inability to accurately forecast demand and obtain sufficient quantities of quality raw materials on a cost-effective basis; • volatility in the availability and cost of materials or services, including rising prices due to inflation; • difficulties or delays in obtaining required import or export approvals; • shipment delays due to transportation interruptions or capacity constraints, such as reduced availability of air or ground transport or port closures; • information technology or infrastructure failures, including those of a third-party supplier or service provider; and • natural disasters or other events beyond our control (such as earthquakes, utility interruptions, tsunamis, hurricanes, typhoons, floods, storms or extreme weather conditions, fires, regional economic downturns, regional or global health epidemics, pandemics, geopolitical turmoil, increased trade restrictions between the U.S. and China and other countries, social unrest, political instability, terrorism, or acts of war) in locations where we or our customers or suppliers have manufacturing or other operations. • a widespread pandemic and measures taken in response by governments and businesses worldwide to contain its spread, including quarantines, facility closures, travel and logistics restrictions, border controls and shelter in place or stay at home and social distancing orders. 15 Table of Contents Such adverse impacts on our supply chain could limit our ability to manufacture and sell our products on a timely and cost-effective basis, which could adversely affect our business and results of operations.
Our direct selling system could be challenged in one or more countries in which we do business. Legal and regulatory requirements concerning the direct selling industry generally do not include “bright line” rules and are inherently fact-based and subject to interpretation. As a result, regulators and courts often have discretion in their application of these laws and regulations.
Legal and regulatory requirements concerning the direct selling industry generally do not include “bright line” rules and are inherently fact-based and subject to interpretation. As a result, regulators and courts often have discretion in their application of these laws and regulations.
While we believe the amount of any fines or penalties would not be material to our financial condition and results of operation, we are unable to predict the outcome or to reasonably estimate the time it may take to resolve these matters.
While we believe the amount of any fines or penalties would not be material to our financial condition and results of operation, we are unable to predict the outcome or the timing of resolution of these matters.
These requirements for obtaining product registrations and/or licenses could involve extended periods of time that may delay us from offering products for sale or prevent us from launching new product initiatives in those countries in the same timelines as other markets with less time intensive registrations.
These requirements for obtaining product registrations and/or licenses could involve extended periods of time that may delay us from offering products for sale or prevent us from launching new product initiatives in those countries in the same timelines as other markets with less time intensive registrations. 11 Table of Contents Our direct selling system could be challenged in one or more countries in which we do business.
The loss or inactivity of one of these independent consultants who, together with their extensive sales network, generate a significant amount of our net sales could have a material adverse effect on our results of operations and financial condition. 13 Table of Contents Our expansion in China is subject to risks associated with operating a joint venture.
The loss or inactivity of one of these independent consultants who, together with their extensive sales network, generate a significant amount of our net sales could have a material adverse effect on our results of operations and financial condition. Our business in China is subject to risks associated with integration, compliance, purchase price obligations, and general China-related laws and regulations.
For example, in February 2023 we were targeted by a sophisticated social engineering attack, in which a third party fraudulently induced personnel at our wholly owned subsidiary in Japan to make wire transfers totaling $4.8 million. These and other attacks could result in additional losses and harm our business and results of operations.
For example, in February 2023 we were targeted by a sophisticated social engineering attack, in which a third party fraudulently induced personnel at our wholly owned subsidiary in Japan to make wire transfers. Similar incidents could occur in the future and could result in additional losses, regulatory inquiries, litigation or reputational harm.
If our independent consultants fail to comply with these restrictions, then we could be subjected to claims of false advertising, misrepresentation, significant financial penalties, costly mandatory product recalls and relabeling requirements, any of which could have a material adverse effect on our results of operations and financial condition. Product liability claims could adversely affect our business.
If regulators determine that we are responsible for such violations, we could be subjected to investigations, enforcement actions, significant financial penalties, costly mandatory product recalls or relabeling requirements, any of which could have a material adverse effect on our results of operations and financial condition. Product liability claims could adversely affect our business.
If we fail to maintain an effective system of internal controls, we may not be able to report our financial results accurately, may make a material misstatement in our financial statements, or may experience a financial loss.
We may need to adjust our operating procedures in response to these interpretational changes, and such changes could have a material adverse effect on our results of operations and financial condition. 16 Table of Contents If we fail to maintain an effective system of internal controls, we may not be able to report our financial results accurately, may make a material misstatement in our financial statements, or may experience a financial loss.
If the requirements in FTC settlements or judicial cases lead to new industry standards or rules, our business could be impacted, and we may need to amend our global sales compensation plan.
If the requirements in FTC settlements or judicial cases lead to new industry standards or rules, our business could be impacted, and we may need to amend one or more of our sales compensation plans. If we are required to make such changes, or if similar requirements are imposed through rulemaking or enforcement actions, our business could be materially harmed.
As the primary manufacturer of our own products, we are subject to FDA regulations on Good Manufacturing Practices (“GMP”), which require us to maintain good manufacturing processes, including ingredient identification, manufacturing controls and record keeping. 11 Table of Contents In the future, we may be subject to additional laws or regulations administered by the FDA or other federal, state, local or foreign regulatory authorities, the repeal or amendment of laws or regulations which we consider favorable and/or more stringent interpretations of current laws or regulations.
In the future, we may be subject to additional laws or regulations administered by the FDA or other federal, state, local or foreign regulatory authorities, the repeal or amendment of laws or regulations which we consider favorable and/or more stringent interpretations of current laws or regulations.
Some states’ attorneys general have, from time to time, demonstrated a focus on the manufacture and sale of various dietary supplements.
In addition, each state in the United States has an attorney general who is responsible for enforcing the laws of that state. Some states’ attorneys general have, from time to time, demonstrated a focus on the manufacture and sale of various dietary supplements.
The formulation, manufacturing, packaging, labeling, advertising, distribution and sales of each of our major product groups are subject to regulation by numerous domestic and foreign governmental agencies and authorities. In the U.S., these governmental agencies and authorities include the FDA, the FTC, the CPSC, the EPA, the USDA and state regulatory agencies.
Our products, business practices and manufacturing activities are subject to extensive government regulations and could be subject to additional laws and regulations. The formulation, manufacturing, packaging, labeling, advertising, distribution and sales of each of our major product groups are subject to regulation by numerous domestic and foreign governmental agencies and authorities.
Any disruption in relations, inability to work efficiently or disadvantageous treatment of the joint venture by the Chinese or other authorities could have a material adverse effect on our results of operations and financial condition. Currency exchange rate fluctuations could adversely affect our results of operation and financial condition.
Any failure to manage these risks effectively could have a material adverse effect on our business, results of operations, and financial condition. Currency exchange rate fluctuations could adversely affect our results of operation and financial condition.
The FTC and states’ attorneys general from time to time have initiated investigations and enforcement actions against direct selling companies alleging that the companies operated a pyramid scheme.
Improper or unsubstantiated product or earnings claims by independent consultants, even where contrary to our policies, may subject us to regulatory investigations, enforcement actions, fines, penalties, product relabeling requirements or reputational harm. The FTC and states’ attorneys general from time to time have initiated investigations and enforcement actions against direct selling companies alleging that the companies operated a pyramid scheme.
Generally, each international market in which we operate has regulatory agencies similar to the regulatory agencies in the U.S. In addition, each state in the United States has an attorney general who is responsible for enforcing the laws of that state.
In the U.S., these governmental agencies and authorities include the FDA, the FTC, the CPSC, the EPA, the USDA and state regulatory agencies. Generally, each international market in which we operate has regulatory agencies similar to the regulatory agencies in the U.S.
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If we are required to make changes, or if the FTC seeks to enforce similar measures in the industry, either through rulemaking or an enforcement action against our company, our business could be harmed. Our products, business practices and manufacturing activities are subject to extensive government regulations and could be subject to additional laws and regulations.
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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 Asset 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.
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Effective operation of the joint venture depends on good relations between us and Fosun Pharma, active synergies between the two companies and positive legal and regulatory recognition of the joint venture.
Added
As the primary manufacturer of our own products, we are subject to FDA regulations on Good Manufacturing Practices (“GMP”), which require us to maintain good manufacturing processes, including ingredient identification, manufacturing controls and record keeping.
Removed
A widespread pandemic and measures taken in response by governments and businesses worldwide to contain its spread, including quarantines, facility closures, travel and logistics restrictions, border controls and shelter in place or stay at home and social distancing orders, may adversely impact our supply chain, manufacturing, logistics, workforce and operations, as well as the operations of our customers and suppliers globally.
Added
Additionally, regulatory standards governing dietary supplements continue to evolve, and regulatory authorities may adopt more restrictive interpretations of existing laws and regulations.
Removed
Such adverse impacts on our supply chain could limit our ability to manufacture and sell our products on a timely and cost-effective basis, which could adversely affect our business and results of operations.
Added
(“Fosun Industrial,” an affiliate of Fosun Pharma) to purchase Fosun Industrial’s interests in our two joint ventures, Nature’s Sunshine Hong Kong Limited and Shanghai Nature’s Sunshine Health Products Co., Ltd., for cash consideration of $3.9 million and $3.1 million, respectively.
Removed
We may need to adjust our operating procedures in response to these interpretational changes, and such changes could have a material adverse effect on our results of operations and financial condition.
Added
On December 17, 2025, we completed these purchases, acquiring the interest in Nature’s Sunshine Hong Kong Limited for $3.1 million and the interest in Shanghai Nature’s Sunshine Health Products for total consideration consisting of $2.9 million paid at closing and an additional $1.0 million payable on December 17, 2027.
Removed
We continue to evaluate, design and work through the process of implementing controls and procedures under a remediation plan designed to address this material weakness, but there can be no assurance that we will be able to remediate this material weakness in a timely manner or at all.
Added
As a result of these transactions, we now face risks inherent in directly owning and operating these businesses in China (including Hong Kong), including: (i) integration risks as we transition to direct ownership; (ii) compliance risks related to Chinese licensing, regulatory approvals, product registrations, and ongoing regulatory requirements, including PRC laws applicable to Wholly Foreign-Owned Enterprises; (iii) risks related to our ability to satisfy the deferred purchase price obligation due December 17, 2027; and (iv) broader China-related risks, including changes in PRC laws or regulations, foreign exchange controls, restrictions on the repatriation of funds, and potential adverse treatment by Chinese or other authorities.
Removed
If our remediation measures are insufficient to address the material weaknesses, or if additional material weaknesses or significant deficiencies in our internal control are discovered or occur in the future, our financial statements may contain material misstatements, we could experience another financial loss or we could be required to restate our financial results, which could lead to substantial additional costs for accounting and legal fees and stockholder litigation.
Removed
System failures could adversely affect our results of operations and financial condition.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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“Risk Factors” for additional details regarding cybersecurity risks and potential impacts on our business. 19 Table of Contents Governance Our Board of Directors oversees our risk management process, including as it pertains to cybersecurity risks, which focuses on the most significant risks we face in the short-, intermediate- and long-term timeframe.
Governance Our Board of Directors oversees our risk management process, including as it pertains to cybersecurity risks, which focuses on the most significant risks we face in the short-, intermediate- and long-term timeframe.
See our risk factor “Cyber security risks and the failure to maintain the integrity of company, employee or guest data could expose us to data loss, litigation and liability, and our reputation could be significantly harmed” in Part I, Item 1A.
See our risk factor “Cybersecurity risks and the failure to maintain the integrity of data could expose us to data loss, litigation and liability, which could adversely affect our results of operations and financial condition” in Part I, Item 1A. “Risk Factors” for additional details regarding cybersecurity risks and potential impacts on our business.
Added
However, we cannot guarantee that cybersecurity incidents will not occur in the future or that any such incidents will not have a material adverse effect on our business strategy, results of operations or financial condition.

Item 2. Properties

Properties — owned and leased real estate

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For additional disclosure of leased properties, see Note 14, “Leases,” to our Consolidated Financial Statements, in Item 8, Part 2 of this report. We believe that our current facilities are adequate for our business operations. Item 3.
For additional disclosure of leased properties, see Note 14, “Leases,” to our Consolidated Financial Statements, in Item 8, Part 2 of this report. 19 Table of Contents We believe that our current facilities are adequate for our business operations. Item 3.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

7 edited+1 added−1 removed4 unchanged
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 and for any reason. 21 Table of Contents Performance Graph The graph below depicts our common stock as an index, assuming $100.00 was invested on December 31, 2019, along with the composite prices of companies listed on the NASDAQ Stock Market and a selection of our peer group.
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 and for any reason. 21 Table of Contents Performance Graph The graph below depicts our common stock as an index, assuming $100.00 was invested on December 31, 2020, along with the composite prices of companies listed on the Nasdaq Capital Market and a selection of our peer group.
Standard & Poor’s Investment Services provided this information. The comparisons in the graph are not intended to forecast or be indicative of the possible future performance of our common stock. The publicly-traded companies that comprise this peer group include Herbalife International, Ltd., LifeVantage Corporation, NuSkin Enterprises, Inc. and USANA Health Sciences, Inc.
Standard & Poor’s Investment Services provided this information. The comparisons in the graph are not intended to forecast or be indicative of the possible future performance of our common stock. The publicly-traded companies that comprise this peer group include Herbalife Ltd., LifeVantage Corporation, Nu Skin Enterprises, Inc. and USANA Health Sciences, Inc.
Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities Market and Share Prices Our common stock is traded on the NASDAQ Global Market (symbol “NATR”). The approximate number of our shareholders of record as of February 21, 2025, was 1,131.
Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities Market and Share Prices Our common stock is traded on the Nasdaq Capital Market (symbol “NATR”). The approximate number of our shareholders of record as of February 20, 2026, was 1,030.
Issuer Stock Purchases The following table summarizes the purchases of our common stock during the quarter ended December 31, 2024: 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) October 1, 2024 to October 31, 2024 29 12.89 29 November 1, 2024 to November 30, 2024 1 12.99 1 December 1, 2024 to December 31, 2024 — $ — — Total 30 30 $ 8,781 (1) On March 10, 2021, we announced a $15.0 million common share repurchase program.
Issuer Stock Purchases The following table summarizes the purchases of our common stock during the quarter ended December 31, 2025: 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) October 1, 2025 to October 31, 2025 65 $ 15.40 65 November 1, 2025 to November 30, 2025 66 13.93 66 December 1, 2025 to December 31, 2025 — $ — — Total 131 131 $ 17,350 (1) On March 10, 2021, we announced a $15.0 million common share repurchase program.
No dividend was paid for the year ended December 31, 2024.
No dividend was paid during the year ended December 31, 2025.
The material in this section captioned “Performance Graph” is being furnished and shall not be deemed “filed” with the SEC for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that section, nor shall the material in this section be deemed to be incorporated by reference in any registration statement or other document filed with the SEC under the Securities Act of 1933, except to the extent we specifically and expressly incorporate it by reference into such filing. 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 12/31/2024 Nature’s Sunshine Products, Inc. $ 100.00 $ 167.41 $ 218.75 $ 98.38 $ 204.44 $ 173.34 NASDAQ Index 100.00 144.92 177.06 119.45 172.77 223.87 Peer Group 100.00 107.57 102.17 55.76 43.88 23.64 Item 6. [Reserved]
The material in this section captioned “Performance Graph” is being furnished and shall not be deemed “filed” with the SEC for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that section, nor shall the material in this section be deemed to be incorporated by reference in any registration statement or other document filed with the SEC under the Securities Act of 1933, as amended (the “Securities Act”) except to the extent we specifically and expressly incorporate it by reference into such filing. 12/31/2020 12/31/2021 12/31/2022 12/31/2023 12/31/2024 12/31/2025 Nature’s Sunshine Products, Inc. $ 100.00 $ 130.66 $ 58.76 $ 122.12 $ 103.54 $ 152.42 Nasdaq Index 100.00 122.18 82.43 119.22 154.48 187.14 Peer Group 100.00 94.98 51.83 40.79 21.97 25.66 Item 6. [Reserved]
On March 8, 2022 we announced an amendment to the share repurchase program allowing the repurchase of an additional $30.0 million shares. The repurchases may be made from time to time as market conditions warrant and are subject to regulatory considerations. For the year ended December 31, 2024, we repurchased 540,000 shares of our common stock for $8.9 million.
The repurchases may be made from time to time as market conditions warrant and are subject to regulatory considerations. For the year ended December 31, 2025, we repurchased 1,260,000 shares of our common stock for $16.3 million. At December 31, 2025, the remaining balance available for repurchases under the program was $17.4 million.
Removed
At December 31, 2024, the remaining balance available for repurchases under the program was $8.8 million.
Added
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.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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RESULTS OF OPERATIONS The following table summarizes our consolidated net income (loss) from continuing operations results as a percentage of net sales for the periods indicated: Year Ended December 31, 2024 2023 Net sales 100.0 % 100.0 % Cost of sales (28.5) (27.9) Gross profit 71.5 72.1 Operating expenses: Volume incentives 30.9 30.4 Selling, general and administrative 36.1 37.5 Operating income 4.5 4.2 Other income (expense): Interest and other income, net — 0.1 Interest expense — — Foreign exchange gains (losses), net (0.4) 0.2 (0.4) 0.3 Income before provision for income taxes 4.1 4.5 Provision for income taxes 2.3 0.9 Net income 1.8 % 3.6 % Net Sales International operations have provided, and are expected to continue to provide, a significant portion of our total net sales.
RESULTS OF OPERATIONS The following table summarizes our consolidated net income from continuing operations results as a percentage of net sales for the periods indicated: Year Ended December 31, 2025 2024 Net sales 100.0 % 100.0 % Cost of sales (27.6) (28.5) Gross profit 72.4 71.5 Operating expenses: Volume incentives 30.1 30.9 Selling, general and administrative 37.2 36.1 Operating income 5.1 4.5 Other income (expense): Interest and other income, net 0.1 — Interest expense — — Foreign exchange gains (losses), net 0.9 (0.4) 1.0 (0.4) Income from operations before provision for income taxes 6.1 4.1 Provision for income taxes 1.9 2.3 Net income 4.2 % 1.8 % Net Sales International operations have provided, and are expected to continue to provide, a significant portion of our total net sales.
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.
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 26 Table of Contents 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.
When a loss is considered probable in connection with litigation or non-income tax contingencies and when such loss can be reasonably estimated, we recognize a liability within a best estimate range related to the contingency. If there is no best estimate, we record the minimum of the range.
When a loss is considered probable in connection with litigation or non-income tax contingencies and when such loss can be reasonably estimated with a range, we record our best estimate within the range related to the contingency. If there is no best estimate, we record the minimum of the range.
Most of our sales to independent consultants outside the United States are made in the respective local currencies. In preparing our consolidated financial statements, sales are translated into U.S. dollars using average exchange rates. 25 Table of Contents Additionally, the majority of our purchases from suppliers are generally made in U.S. dollars.
Most of our sales to independent consultants outside the United States are made in the respective local currencies. In preparing our consolidated financial statements, sales are translated into U.S. dollars using average exchange rates. Additionally, the majority of our purchases from suppliers are generally made in U.S. dollars.
At December 31, 2024, we had $25.0 million available under this facility. At December 31, 2024, there was no outstanding balance under the Credit Agreement.
At December 31, 2025, we had $25.0 million available under this facility. At December 31, 2025, there was no outstanding balance under the Credit Agreement.
Because of the high degree of uncertainty regarding the timing of future cash outflows associated with the product liability obligations, we are unable to estimate the years in which cash settlement may occur. (2) At December 31, 2024, there were $0.9 million of liabilities. We provide a non-qualified deferred compensation plan for our officers and certain key employees.
Because of the high degree of uncertainty regarding the timing of future cash outflows associated with the product liability obligations, we are unable to estimate the years in which cash settlement may occur. (2) At December 31, 2025, there were $1.1 million of liabilities. We provide a non-qualified deferred compensation plan for our officers and certain key employees.
Year Ended December 31, 2023, as Compared to the Year Ended December 31, 2022 For a discussion regarding our financial condition and results of operations for fiscal 2023 compared to fiscal 2022, see Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on March 12, 2024.
Year Ended December 31, 2024, as Compared to the Year Ended December 31, 2023 For a discussion regarding our financial condition and results of operations for fiscal 2024 compared to fiscal 2023, see Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on March 11, 2025.
We retain a significant portion of the risks associated with certain employee medical benefits and product liability insurance. Recorded liabilities for self-insured risks are 30 Table of Contents calculated using actuarial methods and are not discounted. Amounts for self-insurance obligations are included in accrued liabilities and long-term other liabilities on the consolidated balance sheet.
We retain a significant portion of the risks associated with certain employee medical benefits and product liability insurance. Recorded liabilities for self-insured risks are calculated using actuarial methods and are not discounted. Amounts for self-insurance obligations are included in accrued liabilities and other liabilities on the consolidated balance sheet.
Because of the high degree of uncertainty regarding the timing of future cash outflows associated with these liabilities, if any, we are unable to estimate the years in which cash settlement may occur with the respective tax authorities.
Because of the high degree of uncertainty regarding the timing of future cash outflows associated with these liabilities, if any, we are unable to estimate the years in which cash settlement may occur with the respective tax authorities, aside from the current portion.
The increase was related to product sales increases in our Asia and Europe operating segments. Excluding the impact of foreign currency exchange rate fluctuations, consolidated net sales for the year ended December 31, 2024 would have increased by 3.8 percent from 2023.
The increase was related to product sales increases in our Asia, Europe and North America operating segments. Excluding the impact of foreign currency exchange rate fluctuations, consolidated net sales for the year ended December 31, 2025 would have increased by 5.3 percent from 2024.
LIQUIDITY AND CAPITAL RESOURCES Our principal use of cash is to pay for operating expenses and costs, including volume incentives, inventory and raw material purchases, capital assets and funding of international expansion. As of December 31, 2024, working capital was $94.9 million, compared to $89.1 million as of December 31, 2023.
LIQUIDITY AND CAPITAL RESOURCES Our principal use of cash is to pay for operating expenses and costs, including volume incentives, inventory and raw material purchases, capital assets and funding of international expansion. As of December 31, 2025, working capital was $100.3 million, compared to $94.9 million as of December 31, 2024.
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. 2024 Performance In 2024, we experienced an increase in our consolidated net sales of 2.0 percent (or 3.8 percent in local currencies) compared to 2023.
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. 2025 Performance In 2025, we experienced an increase in our consolidated net sales of 5.7 percent (or 5.3 percent in local currencies) compared to 2024.
We had accrued incentive trip costs of approximately $5.2 million and $4.8 million at December 31, 2024 and 2023, respectively, which are included in accrued liabilities in the consolidated balance sheets. 24 Table of Contents Contingencies We are involved in certain legal proceedings.
We had accrued incentive trip costs of approximately $4.8 million and $5.2 million at December 31, 2025 and 2024, respectively, which are included in accrued liabilities in the consolidated balance sheets. Contingencies We are involved in certain legal proceedings and disputes.
Europe Net sales related to Europe were $84.8 million for the year ended December 31, 2024, compared to $81.1 million for 2023, an increase of 4.6 percent. The functional currency for many of these markets is the U.S. dollar which reduces the effect from foreign currency fluctuations.
Europe Net sales related to Europe were $93.1 million for the year ended December 31, 2025, compared to $84.8 million for 2024, an increase of 9.8 percent. The functional currency for many of these markets is the U.S. dollar which reduces the effect from foreign currency fluctuations.
Other income (loss), for the year ended December 31, 2024 primarily consisted of foreign exchange losses in Latin America and Europe, partially offset by foreign exchange gains in Asia, that resulted from net changes in foreign currencies. 28 Table of Contents Income Taxes Our effective tax rate was 57.2 percent for 2024 compared to 18.7 percent for 2023.
Other income, for the year ended December 31, 2025 primarily consisted of foreign exchange gains in Europe and Asia, partially offset by foreign exchange losses in North America and Latin America and Other, that resulted from net changes in foreign currencies. Income Taxes Our effective tax rate was 31.4 percent for 2025 compared to 57.2 percent for 2024.
Volume Incentives Volume incentives as a percent of net sales increased to 30.9 percent in 2024, compared to 30.4 percent in 2023. The increase was primarily due to changes in market mix and the timing of promotional incentives. These payments are designed to provide incentives for reaching certain sales levels.
Volume Incentives Volume incentives as a percent of net sales decreased to 30.1 percent in 2025, compared to 30.9 percent in 2024. The decrease was primarily due to changes in market mix and the timing of promotional incentives. These payments are designed to provide incentives for reaching certain sales levels.
Department of Commerce's Bureau of Industry and Security (“BIS”). We estimate that such potential violations being investigated 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.
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.
Latin America and Other net sales decreased approximately 1.2 percent (or 0.9 percent in local currencies) compared to 2023. The strengthening of the U.S. dollar versus the local currencies, primarily in our Asian markets, resulted in an approximate 1.8 percent, or $7.7 million, decrease of our net sales during the year ended December 31, 2024.
Latin America and Other net sales decreased approximately 5.5 percent (or 4.2 percent in local currencies) compared to 2024. The strengthening of the U.S. dollar versus the local currencies, primarily in our Europe and Asia markets, resulted in an approximate 0.4 percent, or $1.8 million, increase of our net sales during the year ended December 31, 2025.
We specifically analyze incentive trip accruals based on historical and current sales trends as well as contractual obligations when evaluating the adequacy of the incentive trip accrual. Actual results could generate liabilities in amounts greater or less than the amounts recorded.
Expenses associated with incentive trips are accrued over qualification periods as the trips are earned. We specifically analyze incentive trip accruals based on historical and current sales trends as well as contractual obligations when evaluating the adequacy of the incentive trip accrual. Actual results could generate liabilities in amounts greater or less than the amounts recorded.
Fluctuations in foreign exchange rates had a $0.2 million unfavorable impact on net sales for the year ended December 31, 2024. Excluding the impact of fluctuations in foreign exchange rates, local currency net sales in North America decreased by 0.6 percent from 2023.
Fluctuations in foreign exchange rates had a $0.3 million unfavorable impact on net sales for the year ended December 31, 2025. Excluding the impact of fluctuations in foreign exchange rates, local currency net sales in Latin America and Other decreased by 4.2 percent from 2024.
Quantitative and Qualitative Disclosures About Market Risk . 26 Table of Contents Year Ended December 31, 2024, as Compared to the Year Ended December 31, 2023 Net Sales 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 years ended December 31, 2024 and 2023 (dollar amounts in thousands).
Year Ended December 31, 2025, as Compared to the Year Ended December 31, 2024 Net Sales 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 years ended December 31, 2025 and 2024 (dollar amounts in thousands).
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.
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.
Asia Net sales related to Asia for the year ended December 31, 2024, were $207.8 million compared to $201.3 million for 2023, an increase of 3.3 percent. In local currency, net sales increased by 7.5 percent compared to 2023. Fluctuations in foreign exchange rates had an $8.5 million unfavorable impact on net sales for the year ended December 31, 2024.
Asia Net sales related to Asia for the year ended December 31, 2025, were $221.8 million compared to $207.8 million for 2024, an increase of 6.7 percent. In local currency, net sales increased by 6.4 percent compared to 2024. Fluctuations in foreign exchange rates had an $0.7 million favorable impact on net sales for the year ended December 31, 2025.
Notable activity in the following markets contributed to the results of Asia: In our Taiwan market, net sales increased approximately $8.9 million, or 14.4 percent, for the year ended December 31, 2024, compared to 2023. Fluctuations in foreign exchange rates had a $2.2 million unfavorable impact on net sales for the year ended December 31, 2024.
Notable activity in the following markets contributed to the results of Asia: In our Taiwan market, net sales decreased approximately $3.3 million, or 4.7 percent, for the year ended December 31, 2025, compared to 2024. Fluctuations in foreign exchange rates had a $2.0 million favorable impact on net sales for the year ended December 31, 2025.
To estimate any necessary adjustments, various assumptions are made in regard to excess or slow-moving inventories, non-conforming inventories, expiration dates, current and future product demand, production planning and market conditions. If future demand and market conditions are less favorable than our assumptions, additional inventory adjustments could be required.
To estimate any necessary adjustments, various assumptions are made in regard to excess or slow-moving inventories, non-conforming inventories, expiration dates, current and future product demand, production planning and market conditions.
We have entered into long-term agreements with third-parties in the ordinary course of business, in which we have agreed to pay a percentage of net sales in certain regions in which we operate or royalties on certain products. In 2024 and 2023, the aggregate amounts of these payments were $8,000 and $8,000, respectively.
We have entered into long-term agreements with third-parties in the ordinary course of business, in which we have agreed to pay a percentage of net sales in certain regions in which we operate or royalties on certain products.
Asia net sales increased approximately 3.3 percent (or 7.5 percent in local currencies) compared to 2023. Europe net sales increased approximately 4.6 percent (or 3.3 percent in local currencies) compared to 2023. North America net sales decreased approximately 0.7 percent (or 0.6 percent in local currencies) compared to 2023.
Asia net sales increased approximately 6.7 percent (or 6.4 percent in local currencies) compared to 2024. Europe net sales increased approximately 9.8 percent (or 7.8 percent in local currencies) compared to 2024. North America net sales increased approximately 3.4 percent (or 3.6 percent in local currencies) compared to 2024.
Our gross profit consists of net sales less cost of sales, which represents our manufacturing costs, the price we pay to raw material suppliers and manufacturers of our products and duties and tariffs, as well as shipping and handling costs related to product shipments and distribution to our independent consultants.
Our gross profit consists of net sales less cost of sales, which represents our manufacturing costs, the price we pay to raw material suppliers and manufacturers of our products and duties and tariffs, as well as shipping and handling costs related to product shipments and distribution to our independent consultants. 25 Table of Contents Volume incentives are a significant part of our direct sales marketing program and represent commission payments made to our independent consultants.
As we cannot easily determine when our officers and key employees will separate from us, we are unable to estimate the years in which cash settlement may occur. (3) At December 31, 2024, there were $0.6 million of liabilities.
As we cannot easily determine when our officers and key employees will separate from us, we are unable to estimate the years in which cash settlement may occur.
Fluctuations in foreign exchange rates had a $1.1 million favorable impact on net sales for the year ended December 31, 2024.
Fluctuations in foreign exchange rates had a $0.6 million favorable impact on net sales for the year ended December 31, 2025. In local currency, net sales increased 26.1 percent for the year ended December 31, 2025, compared to 2024.
Selling, general and administrative expenses decreased by $3.1 million to $164.0 million for the year ended December 31, 2024. Selling, general and administrative expenses were 36.1 percent and 37.5 percent of net sales for the years ended December 31, 2024 and 2023, respectively.
Selling, general and administrative expenses increased by $14.4 million to $178.4 million for the year ended December 31, 2025. Selling, general and administrative expenses were 37.2 percent and 36.1 percent of net sales for the years ended December 31, 2025 and 2024, respectively.
At December 31, 2024, there were no outstanding balances under the Credit Agreement or the Capital Credit Agreement. Our debt obligations are discussed in greater detail in Note 7, “Revolving Credit Facility and Other Obligations,” to our Condensed Consolidated Financial Statements in Part II, Item 8 of this report.
Our debt obligations are discussed in greater detail in Note 7, “Revolving Credit Facility and Other Obligations,” to our Condensed Consolidated Financial Statements in Part II, Item 8 of this report.
Deferred income taxes arise from temporary differences between the tax and financial statement recognition of revenue and expense. In evaluating our ability to recover deferred tax assets, we consider all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and recent financial operations.
In evaluating our ability to recover our deferred tax assets, management considers all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and recent financial operations.
In our Japan market, net sales increased approximately $2.9 million, or 7.1 percent, for the year ended December 31, 2024, compared to 2023. Fluctuations in foreign exchange rates had a $3.5 million unfavorable impact on net sales for the year ended December 31, 2024.
In our China market, net sales increased approximately $6.0 million, or 16.9 percent, for the year ended December 31, 2025, compared to 2024. Fluctuations in foreign exchange rates had minimal impact on net sales for the year ended December 31, 2025.
Please see “Cautionary Note Regarding Forward-Looking Statements” for the risks, uncertainties and assumptions associated with these forward-looking statements. 22 Table of Contents OVERVIEW Our Business, Industry and Target Market We are a natural health and wellness company primarily engaged in the manufacture and sale of nutritional and personal care products.
Please see “Cautionary Note Regarding Forward-Looking Statements” for the risks, uncertainties and assumptions associated with these forward-looking statements. 22 Table of Contents OVERVIEW Our Business, Industry and Target Market We are a global leader in manufacturing and marketing high-quality herbal and nutritional supplements.
Net Sales by Operating Segment 2024 2023 Percent Change Impact of Currency Exchange Percent Change Excluding Impact of Currency Asia $ 207,794 $ 201,251 3.3 % $ (8,548) 7.5 % Europe 84,837 81,101 4.6 % 1,085 3.3 % North America 138,849 139,804 (0.7) % (162) (0.6) % Latin America and Other 22,884 23,164 (1.2) % (70) (0.9) % $ 454,364 $ 445,320 2.0 % $ (7,695) 3.8 % Consolidated net sales for the year ended December 31, 2024, were $454.4 million compared to $445.3 million in 2023, or an increase of approximately 2.0 percent.
Net Sales by Operating Segment 2025 2024 Percent Change Impact of Currency Exchange Percent Change Excluding Impact of Currency Asia $ 221,777 $ 207,794 6.7 % $ 668 6.4 % Europe 93,133 84,837 9.8 % 1,682 7.8 % North America 143,611 138,849 3.4 % (210) 3.6 % Latin America and Other 21,623 22,884 (5.5) % (295) (4.2) % $ 480,144 $ 454,364 5.7 % $ 1,845 5.3 % Consolidated net sales for the year ended December 31, 2025, were $480.1 million compared to $454.4 million in 2024, or an increase of approximately 5.7 percent.
The net operating losses will expire at various dates from 2025 through 2035, with the exception of those in some foreign jurisdictions where there is no expiration. As of December 31, 2024, we had approximately $12.4 million of foreign tax and withholding credits.
At December 31, 2025, foreign subsidiaries had unused operating loss carryovers for tax purposes of approximately $5.1 million. The net operating losses will expire at various dates from 2026 through 2036, with the exception of those in some foreign jurisdictions where there is no expiration.
Cost of sales increased $5.5 million during 2024, compared to the same period in 2023, and as a percentage of net sales were 28.5 percent and 27.9 percent for 2024 and 2023, respectively. The increase in cost of sales percentage is primarily due to inflation and unfavorable foreign exchange which more than offset our savings initiatives.
Cost of sales increased $2.7 million during 2025, compared to the same period in 2024, and as a percentage of net sales, were 27.6 percent and 28.5 percent for 2025 and 2024, respectively. The decrease in cost of sales percentage is primarily due to cost savings initiatives and market mix.
Fluctuations in foreign exchange rates had a $2.2 million unfavorable impact on net sales for the year ended December 31, 2024. In local currency, net sales increased 7.5 percent compared to 2023. We attribute the growth in net sales primarily to improved customer acquisition that was bolstered by higher average order values.
Fluctuations in foreign exchange rates had a $2.2 million unfavorable impact on net sales for the year ended December 31, 2025. In local currency, net sales increased 3.2 percent compared to 2024. The increase in net sales in local currency was primarily the result of greater average order value.
Latin America and Other Net sales related to Latin America and Other markets for the year ended December 31, 2024, were $22.9 million, compared to $23.2 million for 2023, a decrease of 1.2 percent. Fluctuations in foreign exchange rates had a $0.1 million unfavorable impact on net sales for the year ended December 31, 2024.
North America Net sales related to North America for the year ended December 31, 2025, were $143.6 million, compared to $138.8 million for 2024, an increase of 3.4 percent. Fluctuations in foreign exchange rates had a $0.2 million unfavorable impact on net sales for the year ended December 31, 2025.
Our consultants in our Eastern Europe market, a market within our Europe business segment that includes Russia, Ukraine, Belarus and other Common Independent States in the region, 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.
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.
As additional information becomes available, we assess the liability related to the contingency and revise the estimate. Revisions in estimates of the liabilities could materially affect our results of operations in the period of adjustment. Contingencies are discussed in further detail in Note 11, “Commitments and Contingencies,” to our Consolidated Financial Statements, in Item 8, Part 2 of this report.
As additional information becomes available, we assess the potential liability related to the contingency and revise the estimates. Revisions in estimates of the potential liabilities could materially affect our results of operations in the period of adjustment.
CONTRACTUAL OBLIGATIONS The following table summarizes information about contractual obligations as of December 31, 2024 ( in thousands ): Total Less than 1 year 1-3 years 3-5 years After 5 years Operating lease obligations $ 15,586 $ 4,519 $ 7,580 $ 3,487 $ — Self-insurance reserves (1) 948 948 — — Other long-term liabilities reflected on the balance sheet (2) 915 — — — 915 Unrecognized tax benefits(3) 628 — — — 628 Revolving credit facility (4) — — — — — Total $ 18,077 $ 5,467 $ 7,580 $ 3,487 $ 1,543 _______________________________________ (1) At December 31, 2024, there were $1.2 million of liabilities.
CONTRACTUAL OBLIGATIONS The following table summarizes information about contractual obligations as of December 31, 2025 ( in thousands ): Total Less than 1 year 1-3 years 3-5 years After 5 years Operating lease obligations $ 23,239 $ 3,963 $ 7,536 $ 3,544 $ 8,196 Self-insurance reserves (1) 647 647 — — Other liabilities reflected on the balance sheet (2) 2,132 — 1,000 — 1,132 Unrecognized tax benefits(3) 448 20 — — 428 Revolving credit facility (4) — — — — — Total $ 26,466 $ 4,630 $ 8,536 $ 3,544 $ 9,756 _______________________________________ (1) At December 31, 2025, there were $0.9 million of liabilities.
These assumptions require significant judgment about the forecasts of future taxable income and are consistent with the plans and estimates that we are using to manage the underlying businesses. Valuation allowances are recorded as reserves against net deferred tax assets when it is determined that net deferred tax assets are not likely to be realized in the foreseeable future.
These assumptions require significant judgment about the forecasts of future taxable income and are consistent with the plans and estimates that we are using to manage the underlying businesses.
Volume incentives are a significant part of our direct sales marketing program and represent commission payments made to our independent consultants. These payments are designed to provide incentives for reaching higher sales levels through their own sales and the sales of independent consultants in their sales organization.
These payments are designed to provide incentives for reaching higher sales levels through their own sales and the sales of independent consultants in their sales organization. Volume incentives vary slightly, on a percentage basis, by product due to our pricing policies and commission plans in place in various operations.
Operating income related to Eastern Europe for the years ended December 31, 2024 and 2023, were $4.2 million and $3.1 million, respectively. As of December 31, 2024, Eastern Europe had assets of $7.2 million, net of working capital reserves related to inventories.
Net sales related to Eastern Europe for the years ended December 31, 2025 and 2024, were $60.0 million and $54.8 million, respectively. Operating income related to Eastern Europe for the years ended December 31, 2025 and 2024, were $4.7 million and $4.2 million, respectively.
Income Taxes Our income tax expense, deferred tax assets and liabilities and contingent reserves reflect our best assessment of estimated future taxes to be paid. We are subject to income taxes in both the United States and numerous foreign jurisdictions. Significant judgments and estimates are required in determining consolidated income tax expense.
We are subject to income taxes in both the United States and numerous foreign jurisdictions. Significant judgments and estimates are required in determining consolidated income tax expense. Deferred income taxes arise from temporary differences between the tax and financial statement recognition of revenue and expense.
Cost of Sales Cost of sales as a percent of net sales increased to 28.5 percent in 2024, compared to 27.9 percent in 2023. The increase in cost of sales percentage is primarily due to inflation and unfavorable foreign exchange which more than offset our savings initiatives.
Cost of Sales Cost of sales as a percent of net sales decreased to 27.6 percent in 2025, compared to 28.5 percent in 2024. The decrease in cost of sales percentage is primarily due to cost savings initiatives and market mix.
At December 31, 2024, we had $84.7 million in cash and cash equivalents, of which $71.5 million was held in our 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. 29 Table of Contents Our net consolidated cash inflows (outflows) are as follows ( in thousands ): Year Ended December 31, 2024 2023 Operating activities $ 25,298 $ 41,226 Investing activities (10,971) (10,478) Financing activities (9,905) (7,956) Operating Activities For the year ended December 31, 2024, operating activities provided cash in the amount of $25.3 million compared to $41.2 million in 2023.
At December 31, 2025, we had $93.9 million in cash and cash equivalents, of which $87.5 million was held in our 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.
Income tax positions must meet a more-likely-than-not recognition threshold to be recognized. PRESENTATION Net sales represents gross sales including shipping and handling offset by discounts and volume rebates given to independent consultants. Volume rebates as a percentage of retail sales may vary by country, depending upon regulatory restrictions that limit or otherwise restrict rebates.
The calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax laws and regulations in a multitude of jurisdictions across our global operations. Income tax positions must meet a more-likely-than-not recognition threshold to be recognized. PRESENTATION Net sales represents gross sales including shipping and handling offset by discounts and volume rebates given to independent consultants.
In local currency, net sales increased 17.9 percent for the year ended December 31, 2024, compared to 2023. We attribute the growth in net sales primarily to strong growth in consultant activity and total orders. In our South Korea market, net sales increased approximately $1.5 million, or 3.0 percent, for the year ended December 31, 2024, compared to 2023.
The increase in net sales was primarily the result of strong field fundamentals that drove greater customer acquisition, total orders and average order value. In our South Korea market, net sales decreased approximately $0.5 million, or 1.0 percent, for the year ended December 31, 2025, compared to 2024.
The dollar decrease was primarily related to the streamlining of our global overhead expenses and reduced service fees due to China's lower net sales. Other Income (Loss), Net Other income (loss), net, for the years ended December 31, 2024 and 2023, was losses of $1.7 million and gains of $1.5 million, respectively.
The increase was primarily related to the timing of compensation costs, incremental investment in digital marketing and consultant events, increased service fees due to China’s higher net sales, as well as other non-recurring expenses. 28 Table of Contents Other Income (Loss), Net Other income (loss), net, for the years ended December 31, 2025 and 2024, were gains of $5.1 million and losses of $1.7 million, respectively.
Incentive Trip Accrual We accrue expenses associated with our direct sales program, which rewards independent consultants with paid attendance for incentive trips, including our conventions and meetings. Expenses associated with incentive trips are accrued over qualification periods as the trips are earned.
If future demand and market conditions are less favorable than our assumptions, additional inventory adjustments could be required. 24 Table of Contents Incentive Trip Accrual We accrue expenses associated with our direct sales program, which rewards independent consultants with paid attendance for incentive trips, including our conventions and meetings.
In absolute terms, selling, general and administrative expenses decreased $3.1 million during 2024, and as a percentage of net sales were 36.1 percent and 37.5 percent for 2024 and 2023, respectively. The decrease was primarily related to the streamlining of our global overhead expenses and reduced service fees due to China’s lower net sales.
In absolute terms, selling, general and administrative expenses increased $14.4 million during 2025, and as a percentage of net sales, were 37.2 percent and 36.1 percent for 2025 and 2024, respectively.
In local currency, net sales increased 15.6 percent for the year ended December 31, 2024, compared to 2023. The growth in net sales was primarily the result of improved consultant activity and order growth. In our China market, net sales decreased approximately $7.0 million, or 16.3 percent, for the year ended December 31, 2024, compared to 2023.
In local currency, net sales decreased 7.5 percent for the year ended December 31, 2025, compared to 2024. We attribute the decrease in net sales primarily to slower customer acquisition and a reduction in average order value. In our Japan market, net sales increased approximately $12.1 million, or 27.6 percent, for the year ended December 31, 2025, compared to 2024.
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. 23 Table of Contents In addition, in November 2024 we began an internal investigation regarding our past compliance with relevant U.S. trade controls and made voluntary disclosures of apparent trade controls violations to the U.S.
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.
At December 31, 2024, the remaining balance available for repurchases under the program was $8.8 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").
(the “Credit Agreement”), as well as a credit agreement with Banc of America Leasing and Capital, LLC (the “Capital Credit Agreement”). At December 31, 2025, there were no outstanding balances under the Credit Agreement or the Capital Credit Agreement.
Investing Activities Cash used in investing activities includes cash paid for capital expenditures related to the purchase of equipment, computer systems and software. For the years ended December 31, 2024 and 2023, these amounts were $11.0 million and $10.5 million, respectively.
For the years ended December 31, 2025 and 2024, these amounts were $6.5 million and $11.0 million, respectively. 29 Table of Contents Financing Activities For the year ended December 31, 2025, financing activities used $23.8 million in cash, compared to $9.9 million in cash used for the same period in 2024.
Operating cash flows decreased primarily due to the timing of payments for accrued liabilities, income taxes payable, accrued volume incentives and service fees, lease liabilities and timing of receipts of accounts receivable, partially offset by a reduction in inventories.
Operating cash flows increased primarily due to improved net income, the timing of payments for accrued liabilities, accrued volume incentives and service fees, and deferred revenue, partially offset by an increase in inventories. Investing Activities Cash used in investing activities includes cash paid for capital expenditures related to the purchase of equipment, computer systems and software.
We also offer reduced volume rebates with respect to certain products and promotions worldwide.
Volume rebates as a percentage of retail sales may vary by country, depending upon regulatory restrictions that limit or otherwise restrict rebates. We also offer reduced volume rebates with respect to certain products and promotions worldwide.
Fluctuations in foreign exchange rates had a $0.5 million unfavorable impact on net sales for the year ended December 31, 2024. In local currency, net sales decreased 15.0 percent for the year ended December 31, 2024, compared to 2023. The decrease in net sales was primarily the result of challenging macroeconomic factors and lower consultant activity.
Excluding the impact of fluctuations in foreign exchange rates, local currency net sales in North America increased by 3.6 percent from 2024. In the United States, net sales increased $5.5 million, or 4.3 percent, for the year ended December 31, 2025, compared to 2024.
While we believe the amount of any fines or penalties would not be material to our financial condition and results of operation, we are unable to predict the outcome or to reasonably estimate the time it may take to resolve these matters. Inflation Like many other companies, we are facing significant inflationary pressures in the global economy.
While we believe the amount of any fines or penalties would not be material to our financial condition and results of operation we are unable to predict the outcome or the timing of resolution of these matters. China Joint Ventures On June 30, 2025, we entered into share purchase agreements with Fosun Industrial Co., Ltd.
Of the $12.4 million credits, $12.1 million are foreign tax credits, many of which we do not expect to use before expiration and are offset by a valuation allowance. The calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax laws and regulations in a multitude of jurisdictions across our global operations.
As of December 31, 2025, we had approximately $14.8 million of foreign tax and withholding credits. Of the $14.8 million credits, $14.7 million are foreign tax credits, which we do not expect to use before expiration and are offset by a valuation allowance.
Financing Activities For the year ended December 31, 2024, financing activities used $9.9 million in cash, compared to $8.0 million in cash used for the same period in 2023. For the year ended December 31, 2024, we used cash to repurchase 540,000 shares of our common stock under the share repurchase program for $8.9 million.
For the year ended December 31, 2025, we used cash to repurchase 1,260,000 shares of our common stock under the share repurchase program for $16.3 million. At December 31, 2025, the remaining balance available for repurchases under the program was $17.4 million. We maintain a revolving credit agreement with Bank of America, N.A.
We attribute the increase in net sales in local currency primarily due to the increased focus on our field activation initiatives. 27 Table of Contents North America Net sales related to North America for the year ended December 31, 2024, were $138.8 million, compared to $139.8 million for 2023, a decrease of 0.7 percent.
The increase was primarily due to improved customer acquisition through our digital channels with a notable increase in subscription sales. Latin America and Other Net sales related to Latin America and Other markets for the year ended December 31, 2025, were $21.6 million, compared to $22.9 million for 2024, a decrease of 5.5 percent.
As of December 31, 2024 and 2023, we had recorded valuation allowances of $18.9 million and $18.5 million, respectively, as offsets to deferred tax assets. At December 31, 2024, foreign subsidiaries had unused operating loss carryovers for tax purposes of approximately $5.4 million.
Valuation allowances are recorded as reserves against net deferred tax assets by us when it is determined that net deferred tax assets are not likely to be realized in the foreseeable future. As of December 31, 2025 and 2024, we had recorded valuation allowances of $20.9 million and $18.9 million, respectively, as offsets to deferred tax assets.
Removed
There continues to be sustained conflict and disruption in the region, which is expected to endure for the foreseeable future.
Added
The increase was primarily related to the timing of compensation costs, incremental investment in digital marketing and consultant events, increased service fees due to China’s higher net sales, as well as other non-recurring expenses. As an international business, we have significant sales and costs denominated in currencies other than the U.S. Dollar.
Removed
We will continue monitoring the social, political, regulatory and economic environment in Ukraine and Russia and will consider further actions as appropriate. Net sales related to Eastern Europe for the years ended December 31, 2024 and 2023, were $54.8 million and $54.3 million, respectively.
Added
As of December 31, 2025, Eastern Europe had assets of $5.0 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.
Removed
Our operations have been, and may continue to be, adversely impacted by inflation, primarily from higher costs of raw materials, labor, production, distribution and transportation costs.
Added
Department of Commerce's 23 Table of Contents Bureau of Industry and Security (“BIS”). In addition, in April 2025, we filed an initial voluntary self-disclosure with the Office of Foreign Asset 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.
Removed
Volume incentives vary slightly, on a percentage basis, by product due to our pricing policies and commission plans in place in various operations.
Added
(“Fosun Industrial,” an affiliate of Fosun Pharma) to purchase Fosun Industrial’s interest in our two joint ventures, Nature’s Sunshine Hong Kong Limited and Shanghai Nature’s Sunshine Health Products Co., Ltd., for cash consideration in the amount of $3.9 million and $3.1 million, respectively. On December 17, 2025, we completed the purchase of Fosun Industrial’s interests in both joint ventures.
Removed
In the United States, net sales decreased $2.0 million, or 1.6 percent, for the year ended December 31, 2024, compared to 2023. The decrease was primarily due to lower activity rates.
Added
We acquired the interests in Nature’s Sunshine Hong Kong Limited for cash consideration of $3.1 million and acquired the interest in Shanghai Nature’s Sunshine Health Products for total consideration consisting of $2.9 million paid at closing and an additional $1.0 million payable on December 17, 2027.
Removed
Excluding the impact of fluctuations in foreign exchange rates, local currency net sales in Latin America and Other decreased by 0.9 percent from 2023.
Added
Tariffs While we did not experience material impacts as a result of tariffs in 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 will continue to adversely affect our costs in 2026.
Removed
The increase in the effective rate from 2023 to 2024 was primarily attributable to taxes paid in foreign jurisdictions. We expect to be limited in our ability to offset these foreign taxes with U.S. foreign tax credits.
Added
Our contingencies are discussed in further detail in Note 11, “Commitments and Contingencies,” to our Consolidated Financial Statements, in Item 8, Part 2 of this report. Income Taxes Our income tax expense, deferred tax assets and liabilities and contingent reserves reflect our best assessment of estimated future taxes to be paid.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

11 edited+1 added−0 removed13 unchanged
During the years ended December 31, 2024 and 2023, we did not operate in any countries considered to be highly inflationary. Interest Rate Risk On December 31, 2024, we did not have any available for sale investments. On December 31, 2024, we had no outstanding balance on our revolving credit line. 33 Table of Contents
During the years ended December 31, 2025 and 2024, we did not operate in any countries considered to be highly inflationary. Interest Rate Risk On December 31, 2025, we did not have any available for sale investments. On December 31, 2025, we had no outstanding balance on our revolving credit line. 33 Table of Contents
None of our liabilities that are denominated in a local currency other than the U.S. dollar and that are subject to exchange rate risk represent a significant concentration upon translation into U.S. dollars. We use the spot exchange rate for 32 Table of Contents translating balance sheet items from local currencies into our reporting currency.
None of our liabilities that are denominated in a local currency other than the U.S. dollar and that are subject to exchange rate risk represent a significant concentration upon translation into U.S. dollars. We use the spot exchange rate for translating balance sheet items from local currencies into our reporting currency.
It is noted that individual net sales, cost and expense components and operating income were equally sensitive to increases in the strength of the U.S. dollar against every other fluctuating currency in which we conduct business. Exchange rate sensitivity for the year ended December 31, 2024 ( dollar amounts in thousands ): With Strengthening of U.S.
It is noted that individual net sales, cost and expense components and operating income were equally sensitive to increases in the strength of the U.S. dollar against every other fluctuating currency in which we conduct business. 31 Table of Contents Exchange rate sensitivity for the year ended December 31, 2025 ( dollar amounts in thousands ): With Strengthening of U.S.
Exchange Rate Sensitivity of financial assets and liabilities as of December 31, 2024 ( dollar amounts in thousands ): With Strengthening of U.S.
Exchange Rate Sensitivity of financial assets and liabilities as of December 31, 2025 ( dollar amounts in thousands ): With Strengthening of U.S.
The respective spot exchange rate for each such local currency meeting the foregoing thresholds is provided in the table as well. Translation of Cash Amounts Denominated in Local Currency as of December 31, 2024 ( dollar amounts in thousands ): Translated into U.S. Dollars At Spot Exchange Rate per One U.S.
The respective spot exchange rate for each such local currency meeting the foregoing thresholds is provided in the table as well. 32 Table of Contents Translation of Cash Amounts Denominated in Local Currency as of December 31, 2025 ( dollar amounts in thousands ): Translated into U.S. Dollars At Spot Exchange Rate per One U.S.
Year ended December 31, 2024 2023 Canada (Dollar) 1.4 1.3 China (Yuan Renminbi) 7.2 7.1 European Markets (Euro) 0.9 0.9 Japan (Yen) 151.3 140.1 South Korea (Won) 1,362.6 1,305.6 Poland (Zloty) 4.0 4.2 Taiwan (Dollar) 32.1 31.1 The local currency of the foreign subsidiaries is used as the functional currency, except for where our operations are served by a U.S. based subsidiary (for example, Russia and Ukraine).
Year ended December 31, 2025 2024 Canada (Dollar) 1.4 1.4 China (Yuan Renminbi) 7.2 7.2 European Markets (Euro) 0.9 0.9 Japan (Yen) 149.5 151.3 South Korea (Won) 1,421.2 1,362.6 Poland (Zloty) 3.8 4.0 Taiwan (Dollar) 31.1 32.1 The local currency of the foreign subsidiaries is used as the functional currency, except for where our operations are served by a U.S. based subsidiary (for example, Russia and Ukraine).
Foreign Currency Risk During the year ended December 31, 2024, approximately 71.8 percent of our net sales and approximately 62.5 percent of our operating expenses were realized outside of the United States. Inventory purchases are transacted primarily in U.S. dollars from vendors located in the United States. The local currency of each international subsidiary is generally the functional currency.
Foreign Currency Risk During the year ended December 31, 2025, approximately 72.2 percent of our net sales and approximately 62.5 percent of our operating expenses were realized outside of the United States. Inventory purchases are transacted primarily in U.S. dollars from vendors located in the United States. The local currency of each international subsidiary is generally the functional currency.
Additional discussion of the impact on the effect of currency fluctuations has been included in Management’s Discussion and Analysis included in Part II, Item 7 of this report. 31 Table of Contents The following table sets forth a composite sensitivity analysis of net sales, costs and expenses and operating income in connection with the strengthening of the U.S. dollar (our reporting currency) by 10%, 15% and 25% against every other fluctuating functional currency in which we conduct business.
The following table sets forth a composite sensitivity analysis of net sales, costs and expenses and operating income in connection with the strengthening of the U.S. dollar (our reporting currency) by 10%, 15% and 25% against every other fluctuating functional currency in which we conduct business.
Dollar Cash and Cash Equivalents China (Yuan Renminbi) $ 29,314 7.3 Taiwan (Dollar) 11,421 32.8 South Korea (Won) 6,678 1,472.4 Japan (Yen) 5,842 157.5 Poland (Zloty) 3,893 4.1 Canada (Dollar) 2,664 1.4 Other 8,219 Varies Total foreign denominated cash and cash equivalents 68,031 U.S. dollars held by foreign subsidiaries 3,429 Total cash and cash equivalents held by foreign subsidiaries $ 71,460 Finally, the following table sets forth the annual weighted-average of fluctuating currency exchange rates of each of the local currencies per one U.S. dollar for each of the local currencies in which annualized net sales would exceed $10.0 million during any of the two periods presented.
Dollar Cash and Cash Equivalents China (Yuan Renminbi) $ 41,090 7.0 Taiwan (Dollar) 14,983 31.3 Japan (Yen) 8,599 156.2 Poland (Zloty) 3,665 3.6 South Korea (Won) 3,624 1440.3 Canada (Dollar) 2,750 1.4 Other 5,737 Varies Total foreign denominated cash and cash equivalents 80,448 U.S. dollars held by foreign subsidiaries 7,037 Total cash and cash equivalents held by foreign subsidiaries $ 87,485 Finally, the following table sets forth the annual weighted-average of fluctuating currency exchange rates of each of the local currencies per one U.S. dollar for each of the local currencies in which annualized net sales would exceed $10.0 million during any of the two periods presented.
Dollar by: 10% 15% 25% (Loss) ($) (Loss) (%) (Loss) ($) (Loss) (%) (Loss) ($) (Loss) (%) Financial Assets Included in Current Assets Subject to Exchange Rate Risk Cash and cash equivalents $ 84,700 $ (6,185) (7.3) % $ (8,874) (10.5) % $ (13,606) (16.1) % Accounts receivable, net 9,477 (508) (5.4) % (729) (7.7) % (1,118) (11.8) % Financial Liabilities Included in Current Liabilities Subject to Exchange Rate Risk Accounts payable 8,912 (364) (4.1) % (523) (5.9) % (801) (9.0) % Net Financial Assets Subject to Exchange Rate Risk $ 85,265 $ (6,329) (7.4) % $ (9,080) (10.6) % $ (13,923) (16.3) % The following table sets forth the local currencies other than the U.S. dollar in which our assets that are subject to exchange rate risk were denominated as of December 31, 2024, and represent a significant concentration upon translation into U.S. dollars.
Dollar by: 10% 15% 25% (Loss) ($) (Loss) (%) (Loss) ($) (Loss) (%) (Loss) ($) (Loss) (%) Financial Assets Included in Current Assets Subject to Exchange Rate Risk Cash and cash equivalents $ 93,891 $ (7,313) (7.8) % $ (10,493) (11.2) % $ (16,090) (17.1) % Accounts receivable, net 8,602 (512) (6.0) % (734) (8.5) % (1,126) (13.1) % Financial Liabilities Included in Current Liabilities Subject to Exchange Rate Risk Accounts payable 8,021 (268) (3.3) % (385) (4.8) % (591) (7.4) % Net Financial Assets Subject to Exchange Rate Risk $ 94,472 $ (7,557) (8.0) % $ (10,842) (11.5) % $ (16,625) (17.6) % The following table sets forth the local currencies other than the U.S. dollar in which our assets that are subject to exchange rate risk were denominated as of December 31, 2025, and represent a significant concentration upon translation into U.S. dollars.
Dollar by: 10% 15% 25% ($) (%) ($) (%) ($) %) Net sales $ 454,364 $ (23,758) (5.2) % $ (34,087) (7.5) % $ (52,267) (11.5) % Cost and expenses: Cost of sales 129,676 (6,546) (5.0) % (9,392) (7.2) % (14,400) (11.1) % Volume incentives 140,589 (8,389) (6.0) % (12,037) (8.6) % (18,456) (13.1) % Selling, general and administrative 164,004 (4,249) (2.6) % (6,097) (3.7) % (9,349) (5.7) % Operating income $ 20,095 $ (4,574) (22.8) % $ (6,561) (32.6) % $ (10,062) (50.1) % Certain of our operations, including Russia and Ukraine, are served by a U.S. branch through third-party entities, for which all business is conducted in U.S. dollars.
Dollar by: 10% 15% 25% ($) (%) ($) (%) ($) %) Net sales $ 480,144 $ (25,140) (5.2) % $ (36,071) (7.5) % $ (55,309) (11.5) % Cost and expenses: Cost of sales 132,420 (6,741) (5.1) % (9,672) (7.3) % (14,830) (11.2) % Volume incentives 144,591 (8,727) (6.0) % (12,521) (8.7) % (19,198) (13.3) % Selling, general and administrative 178,390 (4,542) (2.5) % (6,517) (3.7) % (9,992) (5.6) % Operating income $ 24,743 $ (5,130) (20.7) % $ (7,361) (29.7) % $ (11,289) (45.6) % Certain of our operations, including Russia and Ukraine, are served by a U.S. branch through third-party entities, for which all business is conducted in U.S. dollars.
Added
Additional discussion of the impact on the effect of currency fluctuations has been included in Management’s Discussion and Analysis included in Part II, Item 7 of this report.

Other NATR 10-K year-over-year comparisons