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What changed in USANA HEALTH SCIENCES INC's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of USANA HEALTH SCIENCES INC's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+292 added−240 removedSource: 10-K (2025-03-12) vs 10-K (2024-02-27)

Top changes in USANA HEALTH SCIENCES INC's 2025 10-K

292 paragraphs added · 240 removed · 191 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeChina Strategy We will continue to increase and execute our strategic initiatives in China, some of which include: • Targeting a new customer demographic in China through simple, easy-to-use, digitally-based customer acquisition, fulfillment and service initiatives. • Enhancing our digital capabilities, which entails continued digital investments to improve the overall customer experience.
Biggest changeChina and Regional Support We will continue executing strategic initiatives to drive growth in China, including: targeting and expanding a new customer demographic through simple, easy-to-use, digitally-based customer acquisition, fulfillment, and service initiatives; enhancing our digital capabilities with continued investments aimed at improving the overall customer experience; expanding our market-leading training, development, and certification programs to empower Associates in 4 Table of Contents health, business, and personal growth, ensuring they have the tools needed to succeed; and enhancing our product portfolio with products specifically designed for the Chinese consumer.
BabyCare manufactures and produces the majority of its products in-house and maintains manufacturing and quality control facilities in Beijing, China and Tianjin, China. 7 Table of Contents Manufacturing Our production process uses automatic and semi-automatic equipment and includes the following activities by type: Tablet Manufacturing Foods Manufacturing Personal Care and Skincare Manufacturing Auditing and qualifying suppliers of raw materials x x x Acquiring raw materials x x x Analyzing raw material quality x x x Weighing or otherwise measuring raw materials x x x Mixing raw materials into batches x x x Forming mixtures into tablets x Converting batches into bars and/or finished powders x Coating and sorting the tablets x Analyzing tablet quality x Analyzing bars and/or finished powder quality x Analyzing liquid batch quality x Packaging finished products x x x Analyzing finished product quality x x x We conduct sample testing of raw materials, in-process materials, and finished products for purity, potency, and composition to determine whether our products conform to our internal specifications, and we maintain complete documentation for each of these tests.
BabyCare manufactures and produces the majority of its products in-house and maintains manufacturing and quality control facilities in Beijing, China and Tianjin, China. 8 Table of Contents Manufacturing Our production process uses automatic and semi-automatic equipment and includes the following activities by type: Tablet Manufacturing Foods Manufacturing Personal Care and Skincare Manufacturing Auditing and qualifying suppliers of raw materials x x x Acquiring raw materials x x x Analyzing raw material quality x x x Weighing or otherwise measuring raw materials x x x Mixing raw materials into batches x x x Forming mixtures into tablets x Converting batches into bars and/or finished powders x Coating and sorting the tablets x Analyzing tablet quality x Analyzing bars and/or finished powder quality x Analyzing liquid batch quality x Packaging finished products x x x Analyzing finished product quality x x x We conduct sample testing of raw materials, in-process materials, and finished products for purity, potency, and composition to determine whether our products conform to our internal specifications, and we maintain complete documentation for each of these tests.
When supplies of certain raw materials have tightened, we have been able to find alternative sources of raw materials, and believe we will be able to do so in the future, if the need arises. Distribution and Marketing General We distribute our products internationally through direct selling, which entails person-to-person marketing and selling of products.
When supplies of certain raw materials have tightened, we have been able to find alternative sources of raw materials, and believe we will be able to do so in the future, if the need arises. Distribution and Marketing General We distribute our products internationally primarily through direct selling, which entails person-to-person marketing and selling of products.
Celavive offers a comprehensive skincare regimen benefiting multiple skincare types and ethnicities, upgraded science, and more noticeable user benefits. 2023 – 5% 2022 – 5% 2021 – 6% Vitalizing Serum Protective Day Cream Replenishing Night Cream Protective Day Cream Perfecting Toner All Other Includes materials and online tools that are designed to assist our Associates in building their businesses and in marketing our products. 2023 – 1% 2022 – 1% 2021 – 1% Associate Starter Kit Product Brochures Logo Merchandise (1) Represents a product line consisting of multiple products.
Celavive offers a comprehensive skincare regimen benefiting multiple skincare types and ethnicities, upgraded science, and more noticeable user benefits. 2024 – 6% 2023 – 5% 2022 – 5% Vitalizing Serum Protective Day Cream Replenishing Night Cream Protective Day Cream Perfecting Toner All Other Includes materials and online tools that are designed to assist our Associates in building their businesses and in marketing our products. 2024 – 1% 2023 – 1% 2022 – 1% Associate Starter Kit Product Brochures Logo Merchandise (1) Represents a product line consisting of multiple products.
To calculate independent distributor compensation for these services, we (i) use our world-wide Compensation Plan to track sales volume, and other metrics for the group of CPCs, distributors and others in China to whom the independent distributor provides promotional, marketing and sales services on behalf of BabyCare; (ii) calculate the fee-based compensation for the various services performed by the distributor; and (iii) pay the corresponding service fee to the independent distributor in China on a monthly basis.
To calculate independent distributor compensation for these services, we (i) use our world-wide Compensation Plan to track sales volume, and other metrics for the group of Preferred Customers, CPCs, distributors and others in China to whom the independent distributor provides promotional, marketing and sales services on behalf of BabyCare; (ii) calculate the fee-based compensation for the various services performed by the distributor; and (iii) pay the corresponding service fee to the independent distributor in China on a monthly basis.
These products support needs such as cardiovascular health, skeletal/structural health, and digestive health and are intended to be used in conjunction with the Essentials/CellSentials 2023 – 71% 2022 – 70% 2021 – 68% Proflavanol ® CoQuinone ® 30 BiOmega-3™ Essentials/CellSentials ®(1) Includes core vitamin and mineral supplements that provide a foundation of advanced total body nutrition for every age group beginning with children 13 months of age. 2023 – 16% 2022 – 17% 2021 – 18% USANA CellSentials Essentials HealthPak 100™ Foods (2) Includes meal replacement shakes, snack bars, and other related products that promote healthy weight management, digestive health, energy and hydration through a holistic approach.
These products support needs such as cardiovascular health, skeletal/structural health, and digestive health and are intended to be used in conjunction with the Essentials/CellSentials 2024 – 71% 2023 – 71% 2022 – 70% Proflavanol ® CoQuinone ® 30 BiOmega-3™ Essentials/CellSentials ®(1) Includes core vitamin and mineral supplements that provide a foundation of advanced total body nutrition for every age group beginning with children 13 months of age. 2024 – 16% 2023 – 16% 2022 – 17% USANA CellSentials Essentials HealthPak 100™ Foods (2) Includes meal replacement shakes, snack bars, and other related products that promote healthy weight management, digestive health, energy and hydration through a holistic approach.
Geographic Presence We have ongoing operations in the following markets, which are presented in two geographic regions: (1) Asia Pacific, and (2) Americas and Europe. Asia Pacific is further divided into three sub-regions: (i) Greater China, (ii) Southeast Asia Pacific, and (iii) North Asia.
Geographic Presence We have ongoing operations in the following direct selling markets, which are presented in two geographic regions: (1) Asia Pacific, and (2) Americas and Europe. Asia Pacific is further divided into three sub-regions: (i) Greater China, (ii) Southeast Asia Pacific, and (iii) North Asia.
A CPC may become a direct seller or independent distributor (which we report collectively as Associates) in China by electing to do so and agreeing to adhere to BabyCare’s policies and procedures in China.
A Preferred Customer or CPC may become a direct seller or independent distributor (which we report collectively as Associates) in China by electing to do so and agreeing to adhere to BabyCare’s policies and procedures in China.
The R&D team is also involved in protecting our proprietary position with exclusive ingredients, proprietary formulations, product-specific scientific validation, and in some cases, patent protection. Research continues to support our proprietary InCelligence technology, advances in microbiome supplementation, immune system support, stress adaptation, healthy aging, and brain health.
The R&D team is also involved in protecting our proprietary position with exclusive ingredients, proprietary formulations, product-specific scientific validation, and in some cases, patent protection. Research continues to support our proprietary InCelligence technology, advances in women’s health, immune system support, stress adaptation, healthy aging, and brain health.
Product Line/Category Description Percent of Product Sales by Fiscal Year Product examples USANA ® Nutritionals Optimizers Consists of targeted supplements designed to meet individual health and nutritional needs.
Product Line/Category Description Percent of Direct Selling Product Sales by Fiscal Year Direct Selling Product examples USANA ® Nutritionals Optimizers Consists of targeted supplements designed to meet individual health and nutritional needs.
We believe that direct selling is an effective way to distribute our products because it allows person-to-person product education, as well as higher levels of customer service, all of which are not as readily available through other distribution channels. Structure of Direct Selling Program Overview.
We believe that direct selling is an effective way to distribute our products because it allows person-to-person product education, as well as higher levels of customer service, all of which are not as readily available through other distribution channels.
In fiscal years 2023, 2022, and 2021, we expended $11.4 million, $11.6 million, and $11.1 m illion, respectively, on product R&D activities. We expect to continue investing in R&D to advance our expertise and leadership in cellular nutrition, as well as overall health and wellness.
In fiscal years 2024, 2023, and 2022, we expended $11.6 million, $11.4 million, and $11.6 m illion, respectively, on product R&D activities. We expect to continue investing in R&D to advance our expertise and leadership in cellular nutrition, as well as overall health and wellness.
Associates who violate our policies are subject to discipline, which may include the termination of their purchase and distribution rights. New Associates are required to purchase a starter kit that includes a detailed manual describing our business and products, as well as our policies and procedures.
Associates who violate our policies are subject to discipline, which may include the termination of their purchase and distribution rights. New 10 Table of Contents Associates are required to purchase a starter kit that includes a detailed manual describing our business and products, as well as our policies and procedures.
These third-party suppliers and manufacturers produce and, in most cases, package these products according to formulations that have been developed by or in conjunction with our in-house product development team. These products include most of our gelatin-capsulated supplements, Rev3 Energy ® Drink, 8 Table of Contents Probiotics, and powdered drink mixes.
These third-party suppliers and manufacturers produce and, in most cases, package these products according to formulations that have been developed by or in conjunction with our in-house product development team. These products include most of our gelatin-capsulated supplements, Rev3 Energy ® 9 Table of Contents Drink, Probiotics, certain powdered drink mixes and Hiya's products.
Unless otherwise specified, current information reported in this Annual Report on Form 10-K for the fiscal year ended December 30, 2023 (this “report” or “Annual Report”) is as of or for the fiscal year ended December 30, 2023. We also discuss the development of our company and the geographic areas where we do business.
Unless otherwise specified, current information reported in this Annual Report on Form 10-K for the fiscal year ended December 28, 2024 (this “report” or “Annual Report”) is as of or for the fiscal year ended December 28, 2024. We also discuss the development of our company and the geographic areas where we do business.
Our facility in Beijing is audited regularly by various organizations and government agencies to assess, among other things, compliance with applicable GMPs, and with labeling claims. Third-Party Suppliers and Manufacturers We contract with third-party suppliers and manufacturers for the production of certain of our products, which account for approximately 33% o f our product sales.
Our facility in Beijing is audited regularly by various organizations and government agencies to assess, among other things, compliance with applicable GMPs, and with labeling claims. Third-Party Suppliers and Manufacturers We contract with third-party suppliers and manufacturers for the production of certain of our products, which accounted for approximately 31% o f our product sales in 2024.
We sell these kits at a nominal price averaging approximately $15 in each of our 9 Table of Contents markets and these kits are fully refundable under our return policy, which is described elsewhere in this report. No other direct investment is required to become an Associate.
We sell these kits at a nominal price averaging approximately $12 in each of our markets and these kits are fully refundable under our return policy, which is described elsewhere in this report. No other direct investment is required to become an Associate.
In 2024, our intention is to continue transitioning the production of our powdered drink mixes to our USANA North facility. Products manufactured by third-party suppliers at their locations must also pass through quality control and assurance procedures to ensure they are manufactured in conformance with our specifications.
In 2025, we plan to continue transitioning the production of our powdered drink mixes to our USANA North facility. Products manufactured by third-party suppliers at their locations must also pass through quality control and assurance procedures to ensure they are manufactured in conformance with our specifications.
CPCs are similar to Preferred Customers in our other markets, but CPCs may also refer other CPCs in China and receive free product value from us on future product purchases based on the volume of product purchased by CPCs they have referred.
CPCs are similar to traditional Preferred Customers, but CPCs may also refer other CPCs and Preferred Customers in China and receive product vouchers from us to redeem on future product purchases based on the volume of product purchased by customers they have referred.
These products can be used along with Essentials and Optimizers to provide a complete and healthy diet and sustained energy throughout the day. 2023 – 7% 2022 – 7% 2021 – 7% Nutrimeal Fibergy RESET™ weight-management program Personal care and Skincare Includes our premium science-based personal care products and Celavive, our innovative skincare system formulated with our USANA InCelligence Technology ® .
These products can be used along with Essentials and Optimizers to provide a complete and healthy diet and sustained energy throughout the day. 2024 – 6% 2023 – 7% 2022 – 7% Nutrimeal Fibergy RESET™ weight-management program 5 Table of Contents Product Line/Category Description Percent of Direct Selling Product Sales by Fiscal Year Direct Selling Product examples Personal care and Skincare Includes our premium science-based personal care products and Celavive, our innovative skincare system formulated with our USANA InCelligence Technology ® .
We will continue to pursue acquisition opportunities in the health and wellness space that strengthen, diversify, and grow our world-wide business by focusing on: (i) overall nutrition, (ii) vertical integration, (iii) product and category expansion, and (iv) geographic expansion. In 2022, we completed the acquisition of two companies, Rise Bar and Oola Global, LLC "(Oola").
We also expect to continue to pursue acquisition opportunities in the health and wellness space that strengthen, diversify, and grow our world-wide business by focusing on: (i) overall nutrition, (ii) vertical integration, (iii) product and category expansion, distribution channel expansion, and (iv) geographic expansion.
Associates are not required to recruit or sponsor new Associates and we do not compensate Associates for sponsoring or recruiting Associates. The sponsoring of new Associates results in the creation of multiple levels within our direct selling structure. Sponsored Associates are referred to as part of the sales organization of the sponsoring Associate.
The sponsoring of new Associates results in the creation of multiple levels within our direct selling structure. Sponsored Associates are referred to as part of the sales organization of the sponsoring Associate.
The Chinese government has also implemented a number of administrative and regulatory measures around direct selling to control these prohibited activities. To reduce the risk that the Chinese government might view BabyCare’s business model as conflicting with these laws and regulations, BabyCare utilizes a business model that is different from the model we use elsewhere in the world.
To reduce the risk that the Chinese government might view BabyCare’s business model as conflicting with these laws and regulations, BabyCare utilizes a business model that is different from the model we use elsewhere in the world.
Once a person becomes an Associate, she, he, or they may purchase products directly from us at wholesale prices for their personal use and for resale to customers. Our Associates are also entitled to build sales organizations by attracting, enrolling and selling product to new customers.
An Associate may purchase products directly from us at wholesale prices for their personal use and for resale to customers. Our Associates are also entitled to build sales organizations by attracting, enrolling and selling product to new customers. Associates are not required to recruit or sponsor new Associates and we do not compensate Associates for sponsoring or recruiting Associates.
(2) Includes our Active Nutrition line. In addition to the products described above, we offer products designed specifically for prenatal, infant, and young-child age groups in China.
(2) Includes our Active Nutrition line. In addition to the products described above, we offer products designed specifically for prenatal, infant, and young-child age groups in China. As we continue to focus on innovation, we will look for innovative product opportunities such as our Celavive and Active Nutrition product lines.
Neither Preferred Customers nor retail customers may resell or distribute our products, regardless of where they purchased them. To sell USANA products, a Preferred Customer or retail customer must become an Associate.
Neither Preferred Customers nor retail customers may resell or distribute our products, regardless of where they purchased them.
As we continue to focus on innovation, we will look for innovative product opportunities such as our Celavive and Active Nutrition product lines. 5 Table of Contents Total product sales, as a percentage of net sales, represented by our top-selling products for the last three fiscal years is as follows: Year Ended 2023 2022 2021 Key Product USANA Essentials/CellSentials (1) 10 % 11 % 12 % Proflavanol 10 % 10 % 10 % Probiotic 9 % 10 % 9 % (1) Represents specific products within the product line Essentials/CellSentials Other top-selling products include our Hepasil, Soy Lecithin, and HealthPak™.
Total product sales, as a percentage of net sales, represented by our top-selling products for the last three fiscal years is as follows: Year Ended 2024 2023 2022 Key Product USANA Essentials/CellSentials (1) 10 % 10 % 11 % Proflavanol 10 % 10 % 10 % Probiotic 8 % 9 % 10 % (1) Represents specific products within the product line Essentials/CellSentials Other top-selling products include our Hepasil, Soy Lecithin, and HealthPak™. 6 Table of Contents The following table summarizes information concerning the principal product lines of our Hiya direct-to-consumer segment.
In general, our operating results are affected positively by a weakening of the U.S. dollar and negatively by a strengthening of the U.S. dollar. In 2023, net sales outside of the United States represented approximately 89.6% of consolidated net sales.
In general, our operating results are affected positively by a weakening of the U.S. dollar and negatively by a strengthening of the U.S. dollar.
Our R&D activities include developing products that are new to USANA and new to the industry, updating existing USANA-brand formulas to keep them current with the latest science, and adapting existing formulas to meet ever-changing consumer preferences, and regulations in global markets.
Our R&D activities include identifying emerging trends, investigating new ingredients, developing products that are new to USANA and to the industry, and updating existing USANA-brand formulas to keep them current with the latest science and regulations in global markets, all of which ensure products are optimized to meet the changing, diverse needs of our global customer base.
Individuals who reside in China and who are interested in being part of our business in China may do so by enrolling with BabyCare. While the process for enrolling with BabyCare is similar to the process for joining our business in other markets, individuals must initially enroll with BabyCare as a China Preferred Customer ("CPC").
While the process for enrolling with BabyCare is similar to the process for joining our business in other markets, individuals must initially enroll with BabyCare as either a traditional Preferred Customer (as described previously in this report) or China Preferred Customer ("CPC").
Our business in China is conducted by BabyCare (ii) Southeast Asia Pacific – Australia, New Zealand, Singapore, Malaysia, the Philippines, Thailand, Indonesia, and India (2) (iii) North Asia – Japan and South Korea Americas and Europe (2) Americas and Europe – United States, Canada, Mexico, Colombia, and Europe (the United Kingdom, France, Germany, Spain, Italy, Romania, Belgium, and the Netherlands) (2) We commenced operation in this market near the end of the fourth quarter of 2023 Impact of Foreign Currency Exchange Because we have operations in multiple markets, with sales and expenses generated and incurred in multiple currencies, our reported U.S. dollar sales and earnings can be significantly affected by fluctuations in currency exchange rates.
Our business in China is conducted by BabyCare (ii) Southeast Asia Pacific – Australia, New Zealand, Singapore, Malaysia, the Philippines, Thailand, Indonesia, and India (1) (iii) North Asia – Japan and South Korea Americas and Europe (2) Americas and Europe – United States, Canada, Mexico, Colombia, and Europe (the United Kingdom, France, Germany, Spain, Italy, Romania, Belgium, and the Netherlands) (1) We commenced operations in India near the end of the fourth quarter of 2023 Hiya operates and sells products in the United States and may pursue geographic expansion into additional markets as a growth strategy in the future.
In 2019, we added a 54,000 square foot manufacturing facility located adjacent to our corporate headquarters, which expanded our manufacturing capabilities to allow us to manufacture our food products in-house. This adjacent facility started to produce product during the fourth quarter of 2020.
We have established and maintain a manufacturing and quality control facility at our corporate headquarters in Salt Lake City, Utah. In 2019, we added a 54,000 square foot manufacturing facility located adjacent to our corporate headquarters, which expanded our manufacturing capabilities to allow us to manufacture our food products in-house.
As explained above, the Chinese government maintains direct selling laws and regulations that differ materially from our other markets around the world. Although these laws and regulations permit direct selling, they impose a number of financial and operational restrictions, including a prohibition of pyramid selling and multi-level compensation systems.
Although these laws and regulations permit direct selling, they impose a number of financial and operational restrictions, including a prohibition of pyramid selling and multi-level compensation systems. The Chinese government has also implemented a number of administrative and regulatory measures around direct selling to control these prohibited activities.
These various customer programs give us access to a customer market that would otherwise be missed, by targeting consumers who enjoy USANA products, but who prefer not to maintain a distribution relationship with us. 10 Table of Contents Although our policies prohibit Preferred Customers and retail customers from engaging in retail sales of products, they may enroll as Associates at any time in the future, if they desire.
To sell USANA products, a Preferred Customer or retail customer must become an Associate. 11 Table of Contents These various customer programs give us access to a customer market that would otherwise be missed, by targeting consumers who enjoy USANA products, but who prefer not to maintain a distribution relationship with us.
Research and Development We focus our research and development (“R&D”) efforts on developing and bringing to market high quality, science-based products that promote long-term health and wellness.
In 2024, net sales outside of the United States represented approximately 89.3% of consolidated net sales. 7 Table of Contents Research and Development As a critical driver of our competitive advantage in the global nutritional supplement industry, we focus our research and development (“R&D”) efforts on developing and bringing to market high quality, science-based products that promote long-term health and wellness.
Affiliate program. We offer an Affiliate Program where Affiliates receive unique links to share with others. Affiliates earn a commission on all orders placed through their links, with commission percentages ranging from 15-20% of the product sale amount based on the product category. China Business.
Affiliates earn a commission on all orders placed through their links, with commission percentages ranging from 15-20% of the product sale amount based on the product category. China Business. As explained above, the Chinese government maintains direct selling laws and regulations that differ materially from our other markets around the world.
As Rise Bar and Oola continue to operate and grow independently of USANA, we will continue to leverage their knowledge, experience, and technology to grow USANA’s core business. We will also continue to utilize USANA's assets and resources to support growth objectives for Rise Bar and Oola.
Over the next several years, USANA and Hiya will work together to capitalize on identified synergies, assets and expertise across both companies to promote overall sales and customer growth. We also intend to continue to utilize USANA's assets and resources to grow Rise and Oola and leverage their knowledge, experience, and technology to grow USANA’s core business.
For the year ended December 30, 2023, there were no material changes to our corporate structure or our method of conducting business. Current Focus and Growth Strategy In 2024, we plan to continue to execute our global growth strategy which remains focused on increasing the number of active Customers in each of our markets.
For the year ended December 28, 2024, other than the Hiya Acquisition, there were no material changes to our corporate structure or our method of conducting business. Our Business We organize our business into two reportable segments: Direct selling and Hiya direct-to-consumer.
Rise Bar manufactures and sells high-quality protein bars that are formulated to help customers achieve their health goals through clean and simple ingredients. Oola is an emerging direct selling company that offers a personal development framework 4 Table of Contents that helps individuals create a life of balance, growth, and purpose.
Other : The customer base for our "other" category is comprised of customers of Rise Bar Wellness, Inc. ("Rise") and Oola Global, LLC "(Oola"), which are both businesses we acquired in 2022. Rise manufactures and sells high-quality protein bars and powdered drinks that are formulated to help customers achieve their health goals through clean and simple ingredients.
In 2024, we plan to shift spending towards increased investments into early stage research and scientific investigations as we believe our trusted history of scientifically-supported products is a sustainable competitive advantage that provides a substantial barrier to entry for competitors who wish to enter our space.
In 2025, we plan to continue our increased investments into early-stage research and scientific innovation as we believe these investments continue to provide a sustainable competitive advantage. Manufacturing and Quality Assurance We conduct manufacturing, production, and quality control operations for approximately 69% of our products in-house.
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We plan to do this by (i) increasing in-person and digital engagement with our Associates around the world; (ii) implementing and executing market specific promotional and incentive strategies; (iii) continuing to advance our digital commerce initiatives to support our business; (iv) introducing new products, and continuing to pursue product development and further leveraging our foods manufacturing facility; (v) focusing on our China market and our customer base in that market; (vi) pursuing growth in India and evaluating further international expansion; and (vii) advancing our business development strategy by evaluating new acquisition opportunities and growing the two companies we acquired in 2022.
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Direct selling : The customer base for our direct selling segment is primarily comprised of two types of customers" "Associates" and "Preferred Customers" referred to collectively as "active Customers." Our Associates also sell our products to retail customers.
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Further information on these strategies is set out below. Associate Engagement We will continue to offer, promote, and advance in-person engagement events, and incentive trips with our Associates.
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Associates share in our company vision by acting as independent distributors of our products, in addition to purchasing our products for their personal use. In 2023, we launched our Affiliate program in the United States, Canada, and Mexico and are evaluating introducing the program in other markets.
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Our engagement efforts will include an increase in smaller meetings and events in our various markets, as well as continuing to promote and offer our large scale events like our China National Meeting and Asia Pacific Convention. Our objective continues to be increasing and improving collaboration amongst our management team, Associates and their customers.
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This program offers another sales and compensation opportunity to individuals who are interested in selling USANA products. Affiliates are discussed and reported in this report as part of our Associates. Preferred Customers purchase our products strictly for personal use and are not permitted to resell or to distribute the products.
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We will also continue to simplify and condense our promotional and marketing messaging by supporting our Associates in focusing on the science-based differentiation of USANA's products, which includes our proprietary 3 Table of Contents InCelligence Technology®. InCelligence™ is our patented technology that supports the body's natural ability to nourish, protect and renew itself.
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We only count as active Customers those Associates and Preferred Customers who have purchased from us at any time during the most recent three-month period.
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Market-Specific Strategies We will continue to pursue market-specific strategies to facilitate customer growth and strengthen our business around the world. While we plan to increase the cadence of promotional and incentive activity across our regions, we will continue to execute strategically timed, market- and region-specific incentives in lieu of larger, world-wide incentive offerings.
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Hiya direct-to-consumer : The customer base for our Hiya direct-to-consumer segment is primarily comprised of customers purchasing Hiya products for personal use through a subscription model, which is intended to provide a steady, predictable income stream.
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We also plan to continue offering strategically timed product promotions to increase product demand and drive customer growth. Digital Commerce Initiatives We will continue to invest in, expand, and enhance our digital capabilities to increase our number of active Customers, increase Associate engagement and improve our overall customer experience.
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The ongoing nature of subscriptions fosters stronger relationships with customers by making it easier for them to receive products regularly, which leads to strong retention and loyalty. Hiya's subscription model also provides rich data on customer preferences and behaviors, which enables personalized offerings, efficient marketing and data-driven innovation insights.
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In particular, we will continue to enhance our digital tools surrounding the development of promotional and marketing assets for our Associates, our onboarding program, Affiliate program, shopping cart, and other key Associate resources. Product Development We will continue to invest in research and development and product innovation to ensure that USANA remains a leader in clinical nutrition.
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Oola is a direct selling company that offers a personal development framework and nutritional products that helps individuals create a life of balance, growth, and purpose. 3 Table of Contents For more information relating to our reportable segments, see Note M to our consolidated financial statements.
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We also plan to introduce new science-based products in 2024 and over the next several years. Our foods plant ("USANA North" facility) in Salt Lake City, UT, houses the manufacturing for our foods-related products. In 2023, we moved more of the production of our Active Nutrition products to USANA North and plan to do the same in 2024.
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Current Focus and Growth Strategy In 2025, we will continue executing on our global Associate-first growth strategy with a strong focus on increasing the number of active Customers in each of our markets.
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In 2023, we also moved the production of Rise Bar's products to USANA North to realize cost savings, increase production efficiency, and provide Rise Bar with increased capacity to grow its customer base. We plan to increase Rise Bar production in 2024.
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Our key priorities include: (i) enhancing the earning opportunity of our Associates by refining our compensation plan to prioritize sales, customer growth, and team building; (ii) accelerating the launch of new and upgraded products while driving innovative product development; (iii) strengthening our brand messaging to create a more compelling and consistent market presence; (iv) deepening engagement with our Associates through both in-person and digital initiatives around the world; (v) focusing on China while also implementing more tailored, decentralized solutions to meet the unique needs of each region; and (vi) supporting and expanding our acquired businesses, including the growth of our Hiya direct-to-consumer business.
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Overall, we believe our investment in USANA North allows us to be more agile and cost efficient in responding to both current and future opportunities.
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Further details on these strategies are outlined below. Enhancing the Earning Opportunity To enhance the earning opportunity for our Associates, we are refining our compensation plan to better reward sales, customer growth, and team building.
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These investments continue to target improving our (i) onboarding process; (ii) shopping experience and app; and (iii) promotional, marketing and training assets. • Expanding third-party research, collaborations, and partnerships, including those with the National Sports Training Bureau and Beijing University of Chinese Medicine (China).
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Our approach includes optimizing incentives to drive sustainable income, introducing targeted elements that reward sales, customer, and team growth early in the journey of a new Associate, and providing a more robust system of training, tools, and data to help Associates build and scale their businesses.
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India and International Expansion Late in the fourth quarter of 2023, we commenced operations in India and are optimistic about the long-term growth potential of this new market.
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By aligning our compensation structure with business growth objectives, we aim to create a more rewarding and financially empowering opportunity for our global Associate base.
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In 2024, we will continue to execute our post-launch market growth strategy by supporting our India team, expanding the portfolio of products we offer in India, and enhancing our promotional and marketing assets in the market. We continue to believe that growth opportunities exist in new international markets and will continue to evaluate new market opportunities for USANA's business.
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Product Development In 2025, we will strengthen our leadership in cellular nutrition by enhancing our core foundational and flagship products, developing more potent, unique, and differentiated formulations, and accelerating our speed to market for innovative new products.
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Business Development Our strong balance sheet and our willingness to invest in growth continues to allow us to pursue a wide-range of opportunities that are additive to our long-term success.
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Our three dedicated product teams will continue to focus on delivering world-class nutrition solutions that meet evolving consumer needs and set new standards in the industry. Through continued investment in research, development, and cutting-edge science, we will ensure that USANA remains at the forefront of clinical nutrition, providing products that support optimal health and wellness worldwide.
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When developing and manufacturing our products, we follow the highest applicable industry quality standards, as established by the U.S. Food and Drug Administration (“FDA”), U.S. Pharmacopeia (“USP”), and other leading non-governmental agencies (“NGO”).
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Strengthening our Brand We are enhancing and refining our brand messaging to create a more compelling, consistent, and globally recognized identity. Our focus is on clearly communicating our unique and differentiated commitment to world-class cellular nutrition, the strength of our science-backed products, and the life-changing opportunities we offer through our business model.
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Our ingredients are selected to meet a number of criteria and our quality control is maintained through controlled sourcing of raw ingredients, manufacturing, packaging and labeling, with testing occurring at multiple stages throughout the manufacturing process. 6 Table of Contents Our scientific staff includes experts on human nutrition, cellular biology, biochemistry, genetics, the microbiome, natural product chemistry, foods and cosmetic science, and clinical research.
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We will continue to elevate our brand presence across digital and traditional channels, ensuring that our messaging resonates with both new and existing customers. By sharpening our positioning and storytelling, we aim to deepen trust, increase brand loyalty, and further differentiate USANA in the health and wellness industry.
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These experts continually review the latest published research on nutrition, present their findings at scientific conferences, publish in scientific journals, and collaborate with third-party researchers and institutions to identify possible new products and product upgrade opportunities.
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Associate Engagement We are deepening our engagement with Associates worldwide by enhancing both in-person and digital interactions. Our goal is to create a more connected and empowered health community by providing better communication, more personalized support, and expanded training opportunities.
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In 2023, our research team experienced growth as we dedicated more resources to explore ingredients with a specific emphasis on cell-signaling. This expansion aims to uncover new leads for developing proprietary formulas intended to positively impact cellular health.
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We will continue investing in digital tools, events, and mentorship programs that help Associates build successful businesses and foster stronger relationships within their teams. By prioritizing engagement at every level, we aim to strengthen the Associate experience, increase retention, and drive long-term growth across all markets.
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Our in-house research team has established and maintained good working relationships with scientists at a number of universities and research institutes, including the University of Washington, the University of Utah, The Foods for Health Institute at The University of California Davis, Roseman University of Health Sciences, University of Memphis, Beijing University of Chinese Medicine (China) ("BUCM"), Peking University (China), Central Queensland University (Australia), University of Ghent (Belgium), and other academic institutions globally.
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Beyond China, we are strengthening our regional approach by empowering local leaders to develop winning strategies tailored to their unique cultures and market conditions. By providing them with greater authority and influence over product development and incentive creation, we are fostering a more agile, market-responsive organization.
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These relationships help us continue to advance our knowledge, expertise and leadership in several areas of applied human nutrition. Working with these partners, we select products at all stages of development for preclinical and clinical studies, including funding multiple studies through BUCM.
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In India, following our market entry at the end of 2023, we continue to execute our long-term growth strategy by expanding our product portfolio, strengthening local marketing efforts, and supporting our Associates with enhanced tools and training. Additionally, we remain committed to evaluating new international markets for potential expansion, ensuring sustainable global growth for USANA.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeWe own 30 trademarks that are registered with the U.S. Patent and Trademark Office.
Biggest changeWe have developed and use registered trademarks in our business, particularly relating to our product names. We own 30 trademarks that are registered with the U.S. Patent and Trademark Office. Additionally, as disclosed elsewhere in this report, we completed the Hiya Acquisition on December 23, 2024, and Hiya owns five trademarks registered with the U.S. Patent and Trademark Office.
No single Associate or Preferred Customer accounted for 10% or more of net sales in any of the last three fiscal years. Notwithstanding the foregoing, the nature of our business model results in a significant amount of sales to several different Associate leaders and their sales organizations.
No single Associate, Preferred Customer, or retail customer accounted for 10% or more of net sales in any of the last three fiscal years. Notwithstanding the foregoing, the nature of our business model results in a significant amount of sales to several different Associate leaders and their sales organizations.
We believe that our ability to manufacture our own products in-house is a significant competitive advantage for the following reasons: • We can better control the quality of raw materials and finished products; • We can more reliably monitor the manufacturing process to better guarantee potency and bioavailability and to reduce the risk of product contamination; • We can better control production schedules to increase the likelihood of maintaining an uninterrupted supply of products for our customers; • We are able to produce most of our own prototypes in the research phase of product development; and 12 Table of Contents • We are better able to manage the underlying costs associated with manufacturing our products.
We believe that our ability to manufacture our own products in-house is a significant competitive advantage for the following reasons: • We can better control the quality of raw materials and finished products; 13 Table of Contents • We can more reliably monitor the manufacturing process to better guarantee potency and bioavailability and to reduce the risk of product contamination; • We can better control production schedules to increase the likelihood of maintaining an uninterrupted supply of products for our customers; • We are able to produce most of our own prototypes in the research phase of product development; and • We are better able to manage the underlying costs associated with manufacturing our products.
We will continue to invest in this program, and strive to make our company an inclusive, equitable and welcoming place for all. 20 Table of Contents We understand the value of developing employees at every level. Our leaders actively participate in leadership development programs that include mentorship and coaching, online learning, and regular company and industry specific training programs.
We will continue to invest in this program, and strive to make our company an inclusive, equitable and welcoming place for all. 22 Table of Contents We understand the value of developing employees at every level. Our leaders actively participate in leadership development programs that include mentorship and coaching, online learning, and regular company and industry specific training programs.
However, these efforts do not completely eliminate the significant risks associated with BabyCare’s operations in China. Associate Training and Motivation. Initial training of Associates about USANA, our products and Compensation Plan, and global direct selling in general, is provided primarily by an Associate’s sponsor and others in the Associate’s 11 Table of Contents sales organization.
However, these efforts do not completely eliminate the significant risks associated with BabyCare’s operations in China. 12 Table of Contents Associate Training and Motivation. Initial training of Associates about USANA, our products and Compensation Plan, and global direct selling in general, is provided primarily by an Associate’s sponsor and others in the Associate’s sales organization.
Our strategy is to capitalize on our operating strengths, which include (i) a strong R&D program; (ii) significant in-house manufacturing capability; (iii) high quality science-based products; (iv) an equitable Associate Compensation Plan; (v) a scalable business model; and (vi) an experienced management team. Emphasis on Research and Development.
Our strategy is to capitalize on our operating strengths, which include (i) a strong R&D program; (ii) significant in-house manufacturing capability; (iii) high quality science-based products; (iv) a rewarding Associate Compensation Plan; (v) a scalable business model; and (vi) an experienced management team. Emphasis on Research and Development.
It is through our internal R&D efforts, as well as our relationships with outside research organizations and health care providers, that we can provide what we believe to be among the highest quality health products in the industry. In-house Manufacturing. We manufacture products that account for approximate ly 67% of our product sales.
It is through our internal R&D efforts, as well as our relationships with outside research organizations and health care providers, that we can provide what we believe to be among the highest quality health products in the industry. In-house Manufacturing. We manufacture products that account for approximate ly 69% of our product sales.
Strategic Pillars Tier One Topics Tier Two Topics Products • Product quality and safety • Responsible sourcing • Health and nutrition • Affordable and accessible products People • Talent management and development • Employee health, safety, and well-being • Diversity, equity, and inclusion • Human rights Planet • Sustainable packaging • Waste management • Greenhouse gas management • Biodiversity and environmental conservation • Energy management • Water management We encourage you to review our most recent Sustainability Report available on our investor relations website https://ir.usana.com/ for more detailed information regarding our human capital programs and initiatives.
Strategic Pillars Tier One Topics Tier Two Topics Products • Product quality and safety • Responsible sourcing • Health and nutrition • Affordable and accessible products People • Talent management and development • Employee health, safety, and well-being • Inclusion and belonging • Human rights Planet • Sustainable packaging • Waste management • Greenhouse gas management • Biodiversity and environmental conservation • Energy management • Water management We encourage you to review our most recent Sustainability Report available on our investor relations website https://ir.usana.com/ for more detailed information regarding our human capital programs and initiatives.
In 2023, the USANA Foundation: • Provided over 30 million meals; • Provided aid and grants to partner charities around the world; • Distributed backpacks of food for at risk children in local schools to take home on the weekend and during long holiday breaks; and • Gifted bottles of children's vitamins to s ome of the most malnourished children around the world.
In 2024, the USANA Foundation: • Provided over 30 million meals; • Provided aid and grants to partner charities around the world; • Distributed backpacks of food for at risk children in local schools to take home on the weekend and during long holiday breaks; and • Gifted bottles of children's vitamins to s ome of the most malnourished children around the world.
We compete with these entities by emphasizing to our Associates, Preferred Customers, and potential customers the strengths of our business, as described in the "Operating Strengths" section above. Product Returns Product returns have not been a material factor in our business, totaling approximately 0.6%, 0.7%, and 0.6% of net sales in 2023, 2022, and 2021, respectively.
We compete with these entities by emphasizing to our Associates, Preferred Customers, and potential customers the strengths of our business, as described in the "Operating Strengths" section above. Product Returns Product returns have not been a material factor in our business, totaling approximately 0.6%, 0.6%, and 0.7% of net sales in 2024, 2023, and 2022, respectively.
In our R&D laboratories, our scientists and researchers: • Investigate activities of natural extracts and formulated products in laboratory and clinical settings; • Identify and research combinations of nutrients that may be candidates for new products; • Develop new nutritional ingredients for use in supplements; • Study the metabolic activities of existing and newly identified nutritional ingredients; • Enhance existing USANA brand products, as new discoveries in nutrition, personal care and skincare are made; • Formulate products to meet diverse regulatory requirements across all of our markets; and • Investigate processes for improving the production of our formulated products.
In our R&D laboratories, our scientists and researchers: • Investigate activities of natural extracts and formulated products in laboratory and clinical settings; • Identify and research combinations of nutrients that may be candidates for new products; • Study the metabolic activities of existing and newly identified nutritional ingredients; • Enhance existing USANA brand products, as new discoveries in nutrition, personal care and skincare are made; • Formulate products to meet diverse regulatory requirements across all of our markets; and • Investigate processes for improving the production of our formulated products.
We make available, free of charge at our corporate website, copies of our reports filed with the SEC under the Exchange Act, including our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, proxy statements, and all amendments to such reports, as soon as reasonably practicable after such reports or other 22 Table of Contents material have been electronically filed with or furnished to the SEC pursuant to Section 13(a) or 15(d) of the Exchange Act.
We make available, free of charge at our corporate website, copies of our reports filed with the SEC under the Exchange Act, including our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, proxy statements, and all amendments to such reports, as soon as reasonably practicable after such reports or other material have been electronically filed with or furnished to the SEC pursuant to Section 13(a) or 15(d) of the Exchange Act.
Equitable Associate Compensation Plan and Support. We are committed to increasing our product sales by providing a competitive compensation plan that attracts and retains Associates who constitute our sales force. We motivate our Associates by paying incentives on a weekly basis, in most markets.
Rewarding Associate Compensation Plan and Support. We are committed to increasing our product sales by providing a competitive compensation plan that attracts and retains Associates who constitute our sales force. We motivate our Associates by paying incentives on a weekly basis, in most markets.
A health clinic located on the campus of our corporate headquarters provides medical and mental health care, and is actively engaged in the health of about 52% of our eligible employees. We recognize that a strong commitment to community is essential to all stakeholders.
A health clinic located on the campus of our corporate headquarters provides medical and mental health care, and is actively engaged in the health of about 54% of our eligible employees. We recognize that a strong commitment to community is essential to all stakeholders.
Our strategy in 2024, and going forward, is to offer in-person meetings and events with our Associates to the extent health and safety practices make it possible. Our plan is to continue to leverage a virtual meeting element as a component of our in-person meetings.
Our strategy in 2025, and going forward, is to offer in-person meetings and events with our Associates to the extent health and safety practices make it possible. Our plan is to continue to leverage a virtual meeting element as a component of our in-person meetings.
We understand that being a successful USANA Associate requires hard work and dedication, and we celebrate key achievements and rank advancements of our Associates. We believe that our recognition programs greatly contribute to our ability to retain our Associates. Business Model.
We understand that being a successful USANA Associate requires hard work and dedication, and we celebrate key achievements and rank advancements of our Associates. We believe that our recognition programs greatly contribute to our ability to retain our Associates. Direct Selling Business Model.
For information regarding technology-related risks, see the information in “Item 1A: Risk Factors.” Regulatory Matters General. In every jurisdiction in which we operate, our business is subject to extensive governmental regulation. These regulations exist at various national and local levels and pertain to our products, direct selling, and other aspects of our business.
For information regarding technology-related risks, see the information in “Item 1A: Risk Factors.” 16 Table of Contents Regulatory Matters General. In every jurisdiction in which we operate, our business is subject to extensive governmental regulation. These regulations exist at various national and local levels and pertain to our products, direct selling, and other aspects of our business.
Nothing on our website, including our Sustainability Report or sections thereof, is deemed incorporated by reference into this Report. Human Capital We believe that "creating the healthiest family on earth by empowering the individual" starts with our employees.
Nothing on our website, including our Sustainability Report or sections thereof, is deemed incorporated by reference into this Report. Human Capital We believe that "creating the healthiest family on earth" starts with our employees.
As noted above, the Chinese government has adopted direct selling laws and regulations that contain a number of financial and operational restrictions on direct selling companies, as well as prohibitions on pyramid selling and multi-level compensation. These regulations are subject to discretionary interpretation and enforcement by various municipal, provincial and state officials in China.
“Risk Factors.” As noted above, the Chinese government has adopted direct selling laws and regulations that contain a number of financial and operational restrictions on direct selling companies, as well as prohibitions on pyramid selling and multi-level compensation. These regulations are subject to discretionary interpretation and enforcement by various municipal, provincial, and state officials in China.
Corporate Sustainability The Sustainability Committee of the Board of Directors oversees and advises on all matters related to corporate sustainability, including ESG. The Sustainability Committee is composed of directors Peggie Pelosi, Chair; John Fleming; Frederic Winssinger; Tim Wood; and J. Scott Nixon.
Corporate Sustainability The Sustainability Committee of the Board of Directors oversees and advises on all matters related to corporate sustainability. The Sustainability Committee is composed of directors Peggie Pelosi, Chair; John Fleming; Frederic Winssinger; Tim Wood; and J. Scott Nixon.
We believe that our direct-selling business model provides, among others, the following advantages: • No requirement for a company-employed sales force to sell our products, with a relatively low incremental cost to add a new active Customer; • Commissions paid to our Associates are tied to sales performance; • Accounts receivable are minimal because payment is required at the time an active Customer purchases product; • A stream of recurring revenue generated from our monthly product subscription program known as “Auto Order,” which we utilize in all of our markets (this program offers a 10% price discount and represented 65% of our product sales volume for the year ended December 30, 2023); and • The ability to expand into new international markets with moderate investment because we generally maintain only warehouse facilities, customer support, and minimal administrative facilities in those international markets.
We believe that our direct selling business model provides, among others, the following advantages: • No requirement for a company-employed sales force to sell our products, with a relatively low incremental cost to add a new active Customer; • Commissions paid to our Associates are tied to sales performance; • Accounts receivable are minimal because payment is required at the time a customer purchases product; • A stream of recurring revenue generated from our monthly product subscription program known as “Auto Order,” which we utilize in all of our markets (this program offers a 10% price discount and represented 63% of our product sales volume for the year ended December 28, 2024); and • The ability to expand into new international markets with moderate investment because we generally maintain only warehouse facilities, customer support, and minimal administrative facilities in those international markets.
We continually monitor and review our Associates’ compliance with our policies and procedures as well as the laws and regulations applicable to our business around the world. Part of this review entails an assessment of our Associates’ sales activities to ensure that they are actually selling products to consumers.
We continually monitor and review our Associates’ compliance with our policies and procedures as well as the laws and regulations applicable to our business around the world. Part of this review entails an assessment of our Associates’ sales activities to 15 Table of Contents ensure that they are actually selling products to consumers.
Additionally, we continued our support of programs that foster career development and help to ensure that all employees have the opportunity to reach their full potential. In addition to these internal initiatives, we also partner with other organizations to help achieve our DEI goals.
Additionally, we continued our support of programs that foster career development and help to ensure that all employees have the opportunity to reach their full potential. In addition to these internal initiatives, we also partner with other organizations to help achieve our inclusion and belonging goals.
Additionally, our global employee population is engaged in online learning platforms and, more than 400 participants have completed our mentorship and coaching program.
Additionally, our global employee population is engaged in online learning platforms and, more than 445 participants have completed our mentorship and coaching program.
Jones received a B.S. in finance from Utah State University and M.A. in organizational management from the University of Phoenix. P. Joshua Foukas has served as our Chief Legal Officer and Corporate Secretary since 2018. Mr. Foukas received a B.A. from the University of Utah and a J.D. from the University of Idaho. Daniel A.
Jones received a B.S. in finance from Utah State University and M.A. in organizational management from the University of Phoenix. 23 Table of Contents P. Joshua Foukas has served as our Chief Legal Officer and Corporate Secretary since 2018. Mr. Foukas received a B.A. from the University of Utah and a J.D. from the University of Idaho.
We have adopted transfer prices, which are supported by formal transfer pricing studies for the sale of products to our subsidiaries in accordance with applicable transfer pricing laws.
We have adopted transfer prices, which are supported by formal transfer pricing studies, for 19 Table of Contents the sale of products to our subsidiaries in accordance with applicable transfer pricing laws.
From time to time, we become involved 14 Table of Contents in litigation with Associates whose purchase and distribution rights have been terminated. We consider such litigation to be routine and incidental to our business and we will continue to be aggressive in ensuring that our Associates comply with our policies and procedures.
From time to time, we become involved in litigation with Associates whose purchase and distribution rights have been terminated. We consider such litigation to be routine and incidental to our business and we will continue to be aggressive in ensuring that our Associates comply with our policies and procedures.
The majority of our employee population resides in the United States ( 46%) and China (28%). Approximately 58% of our world-wide employee population is female. We are actively working through initiatives such as our Women in Leadership Program, along with formal and informal mentorship programs, to continue promoting and hiring talented and capable women into management roles.
The majority of our employee population resides in the United States (45%) and China (29%). Approximately 57% of our world-wide employee population is female. We are actively working through initiatives such as our Women in Leadership Program, along with formal and informal mentorship programs, to continue promoting and hiring talented and capable women into management roles.
Neidig received a B.S. in accounting and M.B.A. from the University of Utah. Board of Directors The following table sets forth certain information regarding our Directors as of the date of this Annual Report. Name Age Position Kevin Guest 61 Executive Chairman of the Board Gilbert A. Fuller 83 Director Xia Ding 53 Director Peggie J.
Neidig received a B.S. in accounting and M.B.A. from the University of Utah. Board of Directors The following table sets forth certain information regarding our Directors as of the date of this Annual Report. Name Age Position Kevin Guest 62 Executive Chairman of the Board Gilbert A. Fuller 84 Director Xia Ding 54 Director Peggie J.
Douglas Hekking became our Chief Financial Officer in May 2017. Mr. Hekking received a B.S. in accounting from the University of Utah and an M.B.A. from Brigham Young University. Paul A. Jones has been our Chief People Officer since 2021. From 2015 to 2021, Mr. Jones was Chief Leadership Development Officer. Mr.
Hekking received a B.S. in accounting from the University of Utah and an M.B.A. from Brigham Young University. Paul A. Jones has been our Chief People Officer since 2021. From 2015 to 2021, Mr. Jones was Chief Leadership Development Officer. Mr.
We also believe that the manner in which we address issues related to workforce demographics, diversity, equity, and inclusion, community involvement, talent management, compensation and benefits, and employee health and safety directly correlates to our success as a business. As of February 23, 2024, we had approximately 1,800 employees working in 22 countries worldwide, as measured by full-time equivalency.
We also believe that the manner in which we address issues related to workforce demographics, inclusion and belonging, community involvement, talent management, compensation and benefits, and employee health and safety directly correlates to our success as a business. As of December 28, 2024, we had approximately 1,700 employees working in 22 countries worldwide, as measured by full-time equivalency.
Pelosi 68 Director Frederic J. Winssinger 55 Director Timothy Wood 75 Director John T. Fleming 80 Director J. Scott Nixon 64 Director Additional Available Information We maintain our corporate headquarters, executive offices, and principal facilities at 3838 West Parkway Boulevard, Salt Lake City, Utah 84120. Our telephone number is (801) 954-7100. Our website address is www.usana.com .
Pelosi 69 Director Frederic J. Winssinger 56 Director Timothy Wood 76 Director John T. Fleming 81 Director J. Scott Nixon 65 Director Additional Available Information We maintain our corporate headquarters, executive offices, and principal facilities at 3838 West Parkway Boulevard, Salt Lake City, Utah 84120. Our telephone number is (801) 954-7100. Our website address is www.usana.com .
During 2020, for example, the FTC sent warning letters to several nutrition companies and direct-selling companies in connection with advertising claims that the companies and/or their distributor sales people were making about the respective company's product's ability to prevent or treat COVID-19. Failure to adhere to FTC warning letters or other orders can result in substantial financial or other penalties.
During 2020, for example, the FTC sent warning letters to several nutrition companies and direct selling companies in connection with advertising claims that the companies and/or their distributor sales people were making about the respective company's product's ability to prevent or treat COVID-19.
To achieve our goals, we plan to continue fortifying each pillar, to deliver meaningful progress while evolving our efforts to ensure our business becomes more sustainable day by day.
To achieve our objectives, we plan to continue fortifying each 21 Table of Contents pillar, to deliver meaningful progress while evolving our efforts to ensure our business becomes more sustainable day by day.
The letter did not accuse any recipient company, including USANA, of engaging in unlawful conduct. But if the FTC later alleges that we have engaged in acts or practices found to be unfair, deceptive, or unlawful in the actions referenced in the letters, we could be at risk of penalties and other potential liability.
But if the FTC later alleges that we have engaged in acts or practices found to be unfair, deceptive, or unlawful in the actions referenced in the letters, we could be at risk of penalties and other potential liability.
Even where these agreements exist, there can be no assurance that these agreements will not be breached, that we would have adequate remedies for any breach, or that our trade secrets will not otherwise become known to or independently developed by competitors.
Even where these agreements exist, there can be no assurance that these agreements will not be breached, that we would have adequate remedies for any breach, or that our trade secrets will not otherwise become known to or independently developed by competitors. Our proprietary product formulations are generally considered trade secrets, but are not otherwise protected under intellectual property laws.
By working together with other companies, community groups, and non-profits, we are able to amplify our impact and create a more inclusive and equitable society for all. Our DEI program is a key component of our company culture.
By working together with other companies, community groups, and non-profits, we are able to amplify our impact and create a more inclusive and equitable society for all. Our inclusion and belonging program is a key component of our company culture and enables us to create a more vibrant and innovative workplace that benefits all of our employees, customers, and stakeholders.
In October 2021, the FTC, pursuant to its Penalty Offense Authority under the FTC Act, sent letters to over 1,100 companies, including USANA, warning them that the FTC could seek penalties of up to $43,792 per violation for conduct determined to be unfair, deceptive, or otherwise unlawful in certain prior FTC actions.
In 2021, the FTC sent letters to over 1,100 companies, including USANA, warning them that the FTC could, pursuant to its Penalty Offense Authority, seek penalties for conduct determined to be unfair, deceptive, or otherwise unlawful in certain prior FTC actions. The letter did not accuse any recipient company, including USANA, of engaging in unlawful conduct.
There can be no assurance, however, that we will continue to be found to be operating in compliance with transfer pricing regulations or that those laws will not be modified, which may require that we change our operating procedures. Intellectual Property Trademarks. We have developed and use registered trademarks in our business, particularly relating to our product names.
There can be no assurance, however, that we will continue to be found to be operating in compliance with transfer pricing regulations or that those laws will not be modified, which may require that we change our operating procedures.
Future changes could include requirements for the reformulation of certain products to meet new standards, the recall or discontinuation of certain products that cannot be reformulated, additional record keeping, expanded documentation of the properties of certain products, expanded or different labeling, and additional scientific substantiation. 16 Table of Contents Any or all of these requirements could have a material adverse effect on our business, financial condition, and operating results.
Future changes could include requirements for the reformulation of certain products to meet new standards, the recall or discontinuation of certain products that cannot be reformulated, additional record keeping, expanded documentation of the properties of certain products, expanded or different labeling, and additional scientific substantiation.
The Dietary Supplement & Nonprescription Drug Consumer Protection Act requires manufacturers of dietary supplements and over-the-counter (“OTC”) products to notify the FDA when they receive reports of serious adverse events occurring within the United 15 Table of Contents States.
We are audited annually by the FDA, specifically for dietary supplements, and have been found in compliance with GMPs for dietary supplements. The Dietary Supplement & Nonprescription Drug Consumer Protection Act requires manufacturers of dietary supplements and over-the-counter (“OTC”) products to notify the FDA when they receive reports of serious adverse events occurring within the United States.
Our DEI council focuses on education and awareness, access to developmental programs, and community engagement. One of the key elements of our DEI program is our commitment to volunteerism and charitable action. In 2023, we spent more than 2,900 hours volunteering, working with local organizations to help promote diversity, equity and inclusion in the communities where we operate .
One of the key elements of our inclusion and belonging program is our commitment to volunteerism and charitable action. In 2024, we spent more than 2,600 hours volunteering, working with local organizations to help promote inclusion and belonging in the communities where we operate .
Additionally, we offer a 100% refund of the sales price on all product orders that are unused and resalable up to one year from the date of purchase. This standard policy differs slightly in a few of our international markets due to applicable regulations in those markets.
Additionally, we offer a 100% refund of the sales price on all product orders by Associates that are unused and resalable up to one year from the date of purchase.
This team is responsible for supporting growth, R&D, international expansion, strengthening our financial condition, and improving our internal controls. Competition Our industry is very competitive and the barriers to entry are not significant. We compete with manufacturers, distributors, and retailers of nutritional products in many channels, including global direct selling, specialty retail stores, wholesale stores, and the internet generally.
Competition Our industry is very competitive and the barriers to entry are not significant. We compete with manufacturers, distributors, and retailers of nutritional products in many channels, including global direct selling, direct-to-consumer, specialty retail stores, wholesale stores, e-commerce businesses such as Amazon, and the internet generally.
To avoid manipulation of our Compensation Plan, return of product when the purchase amount exceeds $100 and the product was not damaged at the time of receipt by the Associate may result in cancellation of an Associate’s distributorship. Major Customers We sell product to independent Associates, Preferred Customers, and retail customers.
To avoid manipulation of our Compensation Plan, return of product when the purchase amount exceeds $100 and the product was not damaged at the time of receipt by the Associate may result in cancellation of an Associate’s distributorship. This standard policy differs slightly in a few of our international markets due to applicable regulations in those markets.
We are committed to fostering a diverse, inclusive and equitable workplace. Our diversity, equity and inclusion (“DEI”) program is designed to promote representation and engagement at all levels of the organization. Through our mentorship program and Women in Leadership initiative, we are working to increase representation of underrepresented groups in leadership positions.
Our inclusion and belonging program is designed to promote representation and engagement at all levels of the organization. Through our mentorship program and Women in Leadership initiative, we are working to increase representation of underrepresented groups in leadership positions. Our inclusion and belonging council focuses on education and awareness, access to developmental programs, and community engagement.
These meetings are designed to assist Associates in business development and to provide a forum for interaction with some of our Associate leaders and with members of our management team.
To support our Associates, we sponsor virtual and in-person meetings and events throughout the year, where we offer information about our products and our global direct selling system. These meetings are designed to assist Associates in business development and to provide a forum for interaction with some of our Associate leaders and with members of our management team.
We have also increased the number of women in senior leadership roles over the past several years. Our employees are not currently represented by a collective bargaining agreement, and we have not experienced work stoppages as a result of labor disputes. We believe that we have a good relationship with our employees.
Our employees are not currently represented by a collective bargaining agreement, and we have not experienced work stoppages as a result of labor disputes. We believe that we have a good relationship with our employees. We are committed to fostering a diverse, inclusive and equitable workplace.
We will continue to incorporate and advance sustainability-related best practices across all of our markets as part of our commitment to improving the health and wellness of individuals, families and communities around the world. 19 Table of Contents Our ESG strategy centers on three main pillars - products, people, and planet - that encompass where we are focusing our sustainability efforts now and in the future.
We will continue to incorporate and advance sustainability-related best practices across all of our markets as part of our commitment to improving the health and wellness of individuals, families and communities around the world.
Consequently, we may become involved from time to time in litigation to determine the enforceability, scope, and validity of any of the foregoing proprietary rights. Any intellectual property litigation could result in substantial cost and divert the efforts of management and technical personnel.
We intend to protect our legal rights concerning intellectual property by taking all appropriate legal action. Consequently, we may become involved from time to time in litigation to determine the enforceability, scope, and validity of any of the foregoing proprietary rights.
Brown received a bachelor’s degree with a double major in computer science and math, and an M.B.A. from Francis Marion University in Florence, South Carolina. 21 Table of Contents Kevin G. Guest was appointed Executive Chairman of the Board in July 2023. From 2020 to July 2023 Mr. Guest served as Chairman of the Board and Chief Executive Officer.
Brown also served as Chief Operating Officer. Mr. Brown received a bachelor’s degree with a double major in computer science and math, and an M.B.A. from Francis Marion University in Florence, South Carolina. G. Douglas Hekking became our Chief Financial Officer in May 2017. Mr.
Direct Selling Regulation. Various laws and regulations in all of our markets regulate direct selling. These laws and regulations exist at many levels of government in many different forms, including statutes, rules, regulations, judicial decisions, and administrative orders. Direct selling regulations are inherently fact-based and often do not include “bright line” rules.
Any or all of these requirements could have a material adverse effect on our business, financial condition, and operating results. Direct Selling Regulation. Various laws and regulations in all of our markets regulate direct selling. These laws and regulations exist at many levels of government in many different forms, including statutes, rules, regulations, judicial decisions, and administrative orders.
Historically, there have been instances when inquiries or complaints about BabyCare’s business resulted in warnings from the Chinese government, as well as the payment of fines by BabyCare or its distributors. 17 Table of Contents BabyCare has obtained direct selling licenses in certain provinces and municipalities in China, but must obtain others from additional provinces and municipalities if it is to continue to expand its direct selling business model in China.
Historically, there have been instances when inquiries or complaints about BabyCare’s business resulted in warnings from the Chinese government, as well as the payment of fines by BabyCare or its distributors.
In most of our markets, these regulations are subject to discretionary interpretation by regulators and respective legal authorities. Consequently, the regulations, or a regulator’s interpretation and enforcement of the regulations, could change at any time. If that were to occur, we may be required to change our business model in the respective market in an effort to comply.
Direct selling regulations are inherently fact-based and often do not include “bright line” rules. In most of our markets, these regulations are subject to discretionary interpretation by regulators and respective legal authorities. Consequently, the regulations, or a regulator’s interpretation and enforcement of the regulations, could change at any time.
Larger markets, including China, however, require more significant local investment. Experienced Management Team. Our management team includes individuals with expertise in various scientific and managerial disciplines, including global direct selling, nutrition, product research and development, international development, marketing, sales, information technology, manufacturing, accounting and finance, legal, regulatory, and 13 Table of Contents operations.
Our management team includes individuals with expertise in various scientific and managerial disciplines, including global direct selling, nutrition, product research and development, international development, marketing, sales, information technology, manufacturing, accounting and finance, legal, regulatory, and operations. This team is responsible for supporting growth, R&D, international expansion, strengthening our financial condition, and improving our internal controls.
Name Age Position Jim H. Brown (1) 55 Chief Executive Officer and President Kevin G. Guest (1) 61 Executive Chairman of the Board G. Douglas Hekking 54 Chief Financial Officer Paul A. Jones 60 Chief People Officer P. Joshua Foukas 48 Chief Legal Officer, General Counsel and Corporate Secretary Daniel A.
Name Age Position Jim H. Brown 56 Chief Executive Officer and President G. Douglas Hekking 55 Chief Financial Officer Paul A. Jones 62 Chief People Officer P.
Although we provide leadership training and sales tools, we ultimately rely on our Associates to sell our products, attract new customers to purchase our products, and to educate and train new Associates regarding our products and Compensation Plan. Operating Strengths Our principal objective is to improve the overall health and nutrition of individuals and families around the world.
Although we provide leadership training and sales tools, we ultimately rely on our Associates to sell our products, attract new customers to purchase our products, and to educate and train new Associates regarding our products and Compensation Plan. Structure of Hiya Direct-to-Consumer Selling Program Hiya operates through a subscription-based direct-to-consumer business model.
In the United States, the FTC has jurisdiction to regulate direct selling companies under the FTC Act.
If that were to occur, we may be required to change our business model in the respective market in an effort to comply. In the United States, the FTC has jurisdiction to regulate direct selling companies under the FTC Act.
Seasonality We experience variations in the activity of our customers in many of our markets in the first and fourth quarters around major cultural events such as Lunar New Year and Christmas. Backlog Our products are typically shipped within 72 hours after receipt of an order. As of February 23, 2024, we had no significant backlog of orders.
Backlog Our products are typically shipped within 72 hours after receipt of an order. As of March 7, 2025, we had no significant backlog of orders.
Removed
In China, we pay Associates on a monthly basis. To support our Associates, we sponsor virtual and in-person meetings and events throughout the year, where we offer information about our products and our global direct selling system.
Added
A customer's initial order from Hiya comes with a sustainable, refillable glass bottle that kids can personalize and additional orders come with educational material and games. Hiya also utilizes social media to promote sales across various platforms through brand-focused content and influencer partnerships.
Removed
Throughout the COVID-19 pandemic, we held meetings and events with our Associates using a predominantly virtual meeting strategy; however, in markets where health and safety best practices have allowed us to safely do so, we have held in-person meetings.
Added
Hiya's diversified marketing also utilizes internet and social media keyword searches, influencers and paid advertisements, podcasts, advertorial publishing and direct mail campaigns. Operating Strengths Our vision is to improve the overall health and nutrition of individuals and families around the world.
Removed
We are audited annually by the FDA, specifically for dietary supplements and have been found in compliance with GMPs for dietary supplements.
Added
In China, we pay Associates on a monthly basis. We plan to make certain modifications to our Associate compensation plan to enhance the earning opportunity for Associates and to prioritize sales and customer growth under the plan.
Removed
Our proprietary product formulations are generally considered trade secrets, but are not otherwise protected under intellectual property laws. 18 Table of Contents We intend to protect our legal rights concerning intellectual property by taking all appropriate legal action.
Added
Larger markets, including China, however, require more significant local investment. 14 Table of Contents Hiya Direct-to-Consumer Business Model.
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By fostering diversity, equity, and inclusion, we are able to create a more vibrant and innovative workplace that benefits all of our employees, customers, and stakeholders.
Added
We believe that our Hiya direct-to-consumer business model provides, among others, the following advantages: • Subscriptions provide a steady, predictable income stream, making it easier to manage cash flow and plan for growth; • The ongoing nature of subscriptions fosters stronger relationships with customers making it easier for them to receive products regularly, which leads to higher retention rates and loyalty; • Focus on retaining existing subscribers which lowers expenses on acquiring new customers; • Subscription model provides rich data on customer preferences and behaviors, which enables personalized offerings, efficient marketing and data-driven innovation insights; and • Accounts receivable are minimal because payment is required at the time of online purchase Experienced Management Team.
Removed
Macuga 54 Chief Communications and Marketing Officer Robert Sinnott 59 Chief Scientific Officer Walter Noot 58 Chief Operating Officer David Mulham 63 Chief Sales Officer Brent Neidig 40 Chief Commercial Officer (1) As announced on February 13, 2023, effective July 1, 2023, Jim H.
Added
It also differs from our Hiya direct-to-consumer segment for which returns are allowed only in specific situations. To be considered, a return must be unopened in its original packaging postmarked within 10 days of the original delivery date. Major Customers We sell product to independent Associates, Preferred Customers, and retail customers.
Removed
Brown was appointed as the Company's Chief Executive Officer, at which time Kevin Guest transitioned to Executive Chairman of the Board. Jim H. Brown was appointed President in 2016 and Chief Executive Officer in July 2023. From 2016 to 2019 Mr. Brown also served as Chief Operating Officer. Mr.
Added
In 2023, the FTC sent letters to nearly 700 companies, including USANA, warning them that the FTC, pursuant to its Penalty Offense Authority, could seek penalties for a company's failure to adequately substantiate product claims. The letter did not accuse any recipient company, including USANA, of engaging in unlawful conduct.
Removed
From 2016 to 2020 Mr. Guest served as Chief Executive Officer. Mr. Guest's important role as the leading force of our management and sales efforts, and his talent as a motivating leader, qualify him to serve as a member of the Board. Mr. Guest earned a B.A. in Communications from Brigham Young University. G.
Added
But if the FTC later alleges that we have not adequately substantiated our product claims, we could be at risk of penalties and other 17 Table of Contents potential liability. Failure to adhere to FTC warning letters or other orders can result in substantial financial or other penalties.
Removed
Macuga, Jr. became Chief Communications and Marketing Officer of USANA in 2017. Mr. Macuga received a B.A. in communications from the University of California, San Diego. Robert A. Sinnott, M.N.S., Ph.D. joined USANA as Chief Scientific Officer in August 2016. Dr.
Added
In 2025, the FTC issued a Notice of Proposed Rulemaking ("NPR") and an Advanced Notice of Proposed Rulemaking ("ANPR") regarding potential rules for earnings claims for direct selling companies.
Removed
Sinnott holds a B.S. in Biological Sciences, an M.S. in Natural Science, and a Ph.D. in Plant Sciences from Arizona State University, in Tempe, Arizona. His focus was on applied biological sciences, including biotechnology and plant medicinal chemistry.
Added
The NPR would, among 18 Table of Contents other things, prohibit direct selling companies from making deceptive earnings claims, and require them to maintain written substantiation to support any earnings claims and make that substantiation available to consumers upon request.
Added
Additionally, the FTC is considering, under the ANPR, additional restrictions on earnings claims and recruiting by direct selling companies that, if adopted, could harm our business. For more information about these risks and the other risks with the regulation of our overall business, direct selling business model, and compensation plan in this Annual Report, please see “Item 1A.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeItem 1C. Cybersecurity Overview . We have implemented and maintain a cybersecurity risk management program, which consists of, among other things, comprehensive processes to identify, assess, manage, and mitigate material cybersecurity threats as part of our broader enterprise risk management program. We utilize an internal team of cybersecurity professionals and, to some extent, data privacy professionals to oversee this program.
Biggest changeItem 1C. Cybersecurity Overview . We have implemented and maintain a cybersecurity risk management program, which consists of, among other things, comprehensive processes to identify, assess, manage, and mitigate material cybersecurity threats as part of our broader enterprise risk management program. We utilize an internal team of cybersecurity professionals and data privacy professionals to oversee this program.
Our Vice President of Information Security and Disaster Recovery has a bachelor’s degree in computer information systems, multiple university certifications in advanced cybersecurity, and over 30 years’ experience in cybersecurity and technology roles at various companies.
Our Executive Vice President of Information Security and Disaster Recovery has a bachelor’s degree in computer information systems, multiple university certifications in advanced cybersecurity, and over 30 years’ experience in cybersecurity and technology roles at various companies.
The leadership of these teams is comprised of various professionals with cybersecurity expertise, including our Vice President of Information Security and Disaster Recovery, who reports to our Chief Operating Officer.
The leadership of these teams is comprised of various professionals with cybersecurity expertise, including our Executive Vice President of Information Security and Disaster Recovery, who reports to our Chief Operating Officer.
Our cybersecurity and data privacy professionals regularly discuss cyber risks and trends and, should they arise, any material incidents with management and the Governance, Risk and Nominating Committee. Material Risks from Cybersecurity Threats . 39 Table of Contents As a global company with operations and customers in 25 markets, we encounter a variety of cybersecurity threats.
Our cybersecurity and data privacy professionals regularly discuss cyber risks and trends and, should they arise, any material incidents with management and the Governance, Risk and Nominating Committee. Material Risks from Cybersecurity Threats . As a global company with operations and customers in 25 markets, we encounter a variety of cybersecurity threats.
We consult with outside cybersecurity and data privacy consultants and legal counsel as appropriate, including on cyber incident significance and/or materiality analysis and disclosure matters, and designated members of our management team make the final materiality determinations and disclosure and other compliance decisions.
We consult with outside cybersecurity and data privacy consultants and legal 44 Table of Contents counsel as appropriate, including on cyber incident significance and/or materiality analysis and disclosure matters, and designated members of our management team make the final materiality determinations and disclosure and other compliance decisions.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeInformation with respect to legal proceedings may be found in Note K to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report, which is incorporated herein by reference.
Biggest changeInformation with respect to legal proceedings may be found in Note K to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report, which is incorporated herein by reference. 45 Table of Contents

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe Peer Group includes the following companies: Nu Skin Enterprises, Inc., Herbalife Nutrition Ltd., LifeVantage Corporation, Medifast, Inc., Nature's Sunshine Products, Inc., and Mannatech, Inc. 41 Table of Contents USNA Russell 2000 Peer Group Dec 2018 $100 $100 $100 Dec 2019 $67 $124 $100 Dec 2020 $65 $146 $80 Dec 2021 $86 $166 $111 Dec 2022 $45 $131 $114 Dec 2023 $46 $150 $65
Biggest changeThe Peer Group includes the following companies: Nu Skin Enterprises, Inc., Herbalife Nutrition Ltd., LifeVantage Corporation, Medifast, Inc., Nature's Sunshine Products, Inc., and Mannatech, Inc. 47 Table of Contents USNA Russell 2000 Peer Group Dec 2019 $100 $100 $100 Dec 2020 $98 $118 $128 Dec 2021 $129 $135 $134 Dec 2022 $68 $106 $91 Dec 2023 $69 $121 $65 Dec 2024 $45 $135 $109
The data shown assumes an investment on December 31, 2018, of $100 in our common stock and each of the other equities and reinvestment of all dividends into additional shares of the same class of equity, if applicable to the stock or index.
The data shown assumes an investment on December 31, 2019, of $100 in our common stock and each of the other equities and reinvestment of all dividends into additional shares of the same class of equity, if applicable to the stock or index.
“ Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. ” Share Repurchases Our share repurchase plan has been ongoing since the fourth quarter of 2000, with our Board of Directors periodically approving additional dollar amounts for share repurchases under the plan. There were no share repurchases made during the quarter ended December 30, 2023.
“ Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. ” Share Repurchases Our share repurchase plan has been ongoing since the fourth quarter of 2000, with our Board of Directors periodically approving additional dollar amounts for share repurchases under the plan. There were no share repurchases made during the quarter ended December 28, 2024.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock trades on the NYSE under the symbol “USNA.” As of February 23, 2024, we had approximately 237 holders of record of our common stock. We have never declared or paid cash dividends on our common stock.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock trades on the NYSE under the symbol “USNA.” As of March 7, 2025, we had approximately 230 holders of record of our common stock. We have never declared or paid cash dividends on our common stock.
As of December 30, 2023, the remaining authorized repurchase amount under the stock repurchase plan was $71.2 million inclusive of accrued excise tax. There is no expiration date on the remaining approved repurchase amount and no requirement for future share repurchases.
As of December 28, 2024, the remaining authorized repurchase amount under the stock repurchase plan was $61.7 million inclusive of accrued excise tax. There is no expiration date on the remaining approved repurchase amount and no requirement for future share repurchases.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Biggest changeThe decrease in net earnings was primarily the result of decreased sales and higher relative operating expenses. 44 Table of Contents Fiscal Year 2023 compared to Fiscal Year 2022 Net Sales The following table summarizes the changes in our net sales by geographic region for the fiscal years ended December 30, 2023, and December 31, 2022: Net Sales by Region (in thousands) Change from prior year Percent change Currency impact on sales Percent change excluding currency impact Twelve Months Ended December 30, 2023 December 31, 2022 Asia Pacific Greater China $ 475,099 51.6 % $ 502,486 50.3 % $ (27,387) (5.5) % $ (22,498) (1.0) % Southeast Asia Pacific 163,890 17.8 % 190,478 19.1 % (26,588) (14.0) % (4,376) (11.7) % North Asia 101,446 11.0 % 108,952 10.9 % (7,506) (6.9) % (1,774) (5.3) % Asia Pacific Total 740,435 80.4 % 801,916 80.3 % (61,481) (7.7) % (28,648) (4.1) % Americas and Europe 180,575 19.6 % 196,685 19.7 % (16,110) (8.2) % 882 (8.6) % $ 921,010 100.0 % $ 998,601 100.0 % $ (77,591) (7.8) % $ (27,766) (5.0) % Asia Pacific: The decrease in constant currency net sales in Greater China was primarily the result of a sales decline in China and Taiwan where local currency net sales decreased 0.6% and 3.9%, respectively.
Biggest changeThe decrease in net earnings attributable to USANA was primarily the result of decreased sales, higher relative operating expenses, and a higher effective tax rate. 50 Table of Contents Fiscal Year 2024 compared to Fiscal Year 2023 Net Sales The following table summarizes the changes in our net sales by geographic region for the fiscal years ended December 28, 2024, and December 30, 2023: Net Sales by Region (in thousands) Change from prior year Percent change Currency impact on sales Percent change excluding currency impact Twelve Months Ended December 28, 2024 December 30, 2023 Asia Pacific Greater China $ 457,976 53.6 % $ 475,099 51.6 % $ (17,123) (3.6) % $ (7,263) (2.1) % Southeast Asia Pacific 146,795 17.2 % 163,890 17.8 % (17,095) (10.4) % (1,593) (9.5) % North Asia 78,214 9.1 % 101,446 11.0 % (23,232) (22.9) % (3,461) (19.5) % Asia Pacific Total 682,985 79.9 % 740,435 80.4 % (57,450) (7.8) % (12,317) (6.1) % Americas and Europe 171,518 20.1 % 180,575 19.6 % (9,057) (5.0) % (1,247) (4.3) % $ 854,503 100.0 % $ 921,010 100.0 % $ (66,507) (7.2) % $ (13,564) (5.7) % Asia Pacific: The decrease in constant currency net sales in Greater China was primarily the result of a sales decline in China and Taiwan where local currency net sales decreased 1.7% and 3.9%, respectively.
We believe our current liquidity is adequate to meet our cash requirements and sustain our operations through cash flow from operations. Maintaining a capital structure that emphasizes sufficient liquidity and adaptability in the prevailing economic climate is our top priority. We actively assess potential acquisition opportunities and investments in complementary ventures.
We believe our current liquidity, through cash flow from operations, is adequate to meet our cash requirements and sustain our operations. Maintaining a capital structure that emphasizes sufficient liquidity and adaptability in the prevailing economic climate is our top priority. We actively assess potential acquisition opportunities and investments in complementary ventures.
Customers Because we sell our products to a customer base of independent Associates and Preferred Customers, we increase our sales by increasing the number of our active Customers, the amount they spend on average, or both. Our primary focus continues to be increasing the number of active Customers.
Customers Because we primarily sell our products to a customer base of independent Associates and Preferred Customers, we increase our sales by increasing the number of our active Customers, the amount they spend on average, or both. Our primary focus continues to be increasing the number of active Customers.
Results of Operations Summary of 2023 Financial Results Our discussion and analysis is focused on our 2023 and 2022 financial results, including comparisons of our year-over-year performance between these years. Discussion and analysis of our 2021 fiscal year specifically, as well as the year-over-year comparison of our 2022 financial performance to 2021, are located in Part II, Item 7.
Results of Operations Summary of 2024 Financial Results Our discussion and analysis is focused on our 2024 and 2023 financial results, including comparisons of our year-over-year performance between these years. Discussion and analysis of our 2022 fiscal year specifically, as well as the year-over-year comparison of our 2023 financial performance to 2022, are located in Part II, Item 7.
Increases or decreases in product sales are typically the result of variations in the volume of product sold relating to fluctuations in the number of active Customers purchasing our products. The number of active Associates and 42 Table of Contents Preferred Customers is therefore used by management as a key non-financial indicator to evaluate our operational performance.
Increases or decreases in product sales are typically the result of variations in the volume of product sold relating to fluctuations in the number of active Customers purchasing our products. The number of active Associates and Preferred Customers is therefore used by management as a key non-financial indicator to evaluate our operational performance.
The table below summarizes the change in our active Customer base by geographic region, rounded to the nearest thousand, as of the dates indicated.
The table below summarizes the change in our direct selling active Customer base by geographic region, rounded to the nearest thousand, as of the dates indicated.
Additionally, unfavorable changes in currency exchange rates, have impacted cash and cash equivalents, and restricted cash by an estimated $2.5 million.
Additionally, unfavorable changes in currency exchange rates, have impacted cash and cash equivalents, and restricted cash by an estimated $6.2 million.
We believe this focus is consistent with our vision of improving the overall health and nutrition of individuals and families around the world. Sales to Associates account for approxim ately 52% of Direct-selling segment product sales during 2023, with the remainder of our sales being to Preferred Customers.
We believe this focus is consistent with our 48 Table of Contents vision of improving the overall health and nutrition of individuals and families around the world. Sales to Associates account for approxim ately 52% of direct selling segment product sales during 2024, with the remainder being to Preferred Customers.
“ Management’s Discussion and Analysis of Financial Condition and Results of Operations ” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on February 28, 2023, which is available on our investor relations website at https://ir.usana.com or the SEC’s website at www.sec.gov.
“ Management’s Discussion and Analysis of Financial Condition and Results of Operations ” in our Annual Report on Form 10-K for the fiscal year ended December 30, 2023, filed with the SEC on February 27, 2024, which is available on our investor relations website at https://ir.usana.com or the SEC’s website at www.sec.gov.
Preferred Customers purchase our products strictly for personal use and are not permitted to resell or to distribute the products. We only count as active Customers those Associates and Preferred Customers who have purchased from us at any time during the most recent three-month period. As of December 30, 2023, we had approximately 483,000 active Customers worldwide.
Preferred Customers purchase our products strictly for personal use and are not permitted to resell or to distribute the products. We only count as active Customers those Associates and Preferred Customers who have purchased from us at any time during the most recent three-month period. As of December 28, 2024, we had approximately 454,000 direct selling active Customers worldwide.
Net cash flow provided by operating activities totaled $70.6 million in 2023. Net earnings combined with adjustments of non-cash items contributed positively to our net cash flow provided by operating activities, partially offset by changes in working capital.
Net cash flow provided by operating activities totaled $61.0 million in 2024. Net earnings combined with adjustments of non-cash items contributed positively to our net cash flow provided by operating activities, partially offset by changes in working capital.
The following table below presents concentrations of cash and cash equivalents by market for the periods indicated: Cash and cash equivalents (in Millions) As of December 30, 2023 As of December 31, 2022 United States $ 169.9 $ 114.1 China $ 111.0 $ 129.8 All other markets $ 49.5 $ 44.5 Total Cash and cash equivalents $ 330.4 $ 288.4 Cash Flows Provided by Operations and Significant Uses of Cash As discussed above, our principal source of liquidity comes from cash flows from operations.
The following table below presents concentrations of cash and cash equivalents by market for the periods indicated: Cash and cash equivalents (in millions) As of December 28, 2024 As of December 30, 2023 United States $ 40.1 $ 169.9 China 101.2 111.0 All other markets 40.5 49.5 Total Cash and cash equivalents $ 181.8 $ 330.4 Cash Flows Provided by Operations and Significant Uses of Cash As discussed above, our principal source of liquidity comes from cash flows from operations.
The decrease in constant currency net sales is largely the result of sales declines in the United States and Canada, which had local currency net sales declines of 12.1%, and 7.2%, respectively Gross Profit Gross profit increased 20 basis points to 80.8% of net sales, up from 80.6% in 2022.
The decrease in constant currency net sales is largely the result of sales declines in the United States and Canada, which had local currency net sales declines of 7.8%, and 6.0%, respectively. Gross Profit Gross profit increased 30 basis points to 81.1% of net sales, up from 80.8% in 2023.
Total Active Customers by Region Change from Prior Year Percent Change As of December 30, 2023 As of December 31, 2022 Asia Pacific: Greater China 255,000 52.8 % 244,000 49.8 % 11,000 4.5 % Southeast Asia Pacific 80,000 16.6 % 87,000 17.8 % (7,000) (8.0 %) North Asia 48,000 9.9 % 53,000 10.8 % (5,000) (9.4 %) Asia Pacific Total 383,000 79.3 % 384,000 78.4 % (1,000) (0.3 %) Americas and Europe 100,000 20.7 % 106,000 21.6 % (6,000) (5.7 %) 483,000 100.0 % 490,000 100.0 % (7,000) (1.4 %) Presentation Product sales along with the shipping and handling fees billed to our customers are recorded as revenue net of applicable sales discounts when, or as control of, the promised product is transferred to the customer, which is at the time of delivery to the third party carrier for shipment.
Total Active Customers by Region Change from Prior Year Percent Change As of December 28, 2024 As of December 30, 2023 Asia Pacific: Greater China 246,000 54.2 % 255,000 52.8 % (9,000) (3.5 %) Southeast Asia Pacific 77,000 16.9 % 80,000 16.6 % (3,000) (3.8 %) North Asia 38,000 8.4 % 48,000 9.9 % (10,000) (20.8 %) Asia Pacific Total 361,000 79.5 % 383,000 79.3 % (22,000) (5.7 %) Americas and Europe 93,000 20.5 % 100,000 20.7 % (7,000) (7.0 %) 454,000 100.0 % 483,000 100.0 % (29,000) (6.0 %) Presentation Product sales along with the shipping and handling fees billed to our customers are recorded as revenue net of applicable sales discounts when, or as control of, the promised product is transferred to the customer, which is at the time of delivery to the third party carrier for shipment.
The increase in gross profit margin can be attributed to decreased inventory valuation adjustments, and the impact of modest price increases that occurred throughout the year. These increases were partially offset by higher material costs, unfavorable changes in currency exchange rates, and loss of leverage on lower sales.
The increase in gross profit margin can be attributed to favorable changes in market and product sales mix, lower inventory scrap, the impact of modest price increases that occurred throughout the year, and lower material costs in China. These increases were partially offset by unfavorable changes in currency exchange rates.
Those estimates and assumptions are derived and are continually evaluated based on our historical experiences, current facts and circumstances, and on changes in the business environment. Actual results, however, may sometimes differ materially from estimates under different conditions.
GAAP requires management to make estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and accompanying notes. Those estimates and assumptions are derived and are continually evaluated based on our historical experiences, current facts and circumstances, and on changes in the business environment. Actual results, however, may sometimes differ materially from estimates under different conditions.
Associate Incentives Associate incentives decreased 70 basis points to 42.8% of net sales in 2023, compared with 43.5% in the prior year. The relative decrease can primarily be attributed to decreased spend on promotional and program incentives, as well as modest price increases that occurred throughout the year.
Associate Incentives Associate incentives decreased 20 basis points to 42.6% of net sales in 2024, compared with 42.8% in the prior year. The relative decrease can primarily be attributed to benefits from modest price increases that occurred throughout the year, was well as decreased spend on Associate incentive promotions.
Additionally, cash used to repurchase and retire shares was $25.4 million for 2022. 46 Table of Contents Line of Credit Information with respect to our line of credit may be found in Note J to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report, which is incorporated by reference.
Line of Credit Information with respect to our line of credit may be found in Note J to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report, which is incorporated by reference.
There were local currency declines in all markets in the Southeast Asia Pacific sub-region, most notable in the Philippines and Australia, which had local currency net sales declines of 25.7% and 8.4%, respectively. The decrease in constant currency net sales in North Asia was most notable in South Korea, which had a local currency net sales decline of 5.6%.
The decrease in constant currency net sales in North Asia was most notable in South Korea, which had a local currency net sales decline of 19.5%. Americas and Europe : There were local currency sales declines in all markets in this region.
That information is incorporated by reference into this report. Net sales in 2023 decreased 7.8%, or $77.6 million, to $921.0 million, compared with 2022.
That information is incorporated by reference into this report. Net sales in 2024 decreased 7.2%, or $66.5 million, to $854.5 million, compared with 2023.
Deferred revenue is recognized when or as the related performance obligation is satisfied. On the occasion that will-call orders are not picked up by customers, we periodically assess the likelihood that customers will exercise their contractual right to pick up orders and recognize revenue when the likelihood that customers will pick up orders becomes remote. Inventory Valuation.
On the occasion that will-call orders are not picked up by customers, we periodically assess the likelihood that customers will exercise their contractual right to pick up orders and recognize revenue when the likelihood that customers will pick up orders becomes remote. 54 Table of Contents Business Combinations.
With the exception of China, our raw material purchases from suppliers and product purchases from third-party manufacturers are transacted in U.S. dollars. Consequently, our net sales and earnings are affected by changes in currency exchange rates. In general, our operating results are affected positively by a weakening U.S. dollar and negatively by a strengthening U.S. dollar.
Consequently, our net sales and earnings are affected by changes in currency exchange rates. In general, our operating results are affected positively by a weakening U.S. dollar and negatively by a strengthening U.S. dollar.
Cash and Cash Equivalents Cash and cash equivalents increased to $330.4 million at December 30, 2023, from $288.4 million at December 31, 2022. Cash flow provided by operating activities was $70.6 million partially offset by cash used in financing activities of $14.2 million, and cash used in investing activities of $12.0 million.
Cash and Cash Equivalents Cash and cash equivalents decreased to $181.8 million at December 28, 2024, from $330.4 million at December 30, 2023. Cash flow provided by operating and financing activities was $61.0 million and $9.6 million, respectively, offset by cash used in investing activities of $213.1 million.
Other significant uses of cash included an investment of $14.5 million to purchase property and equipment primarily related to our digital commerce initiatives and our India operations. Additionally, cash used to repurchase and retire shares totaled $11.6 million for 2023. Net cash flow provided by operating activities totaled $103.9 million in 2022.
Net earnings combined with adjustments of non-cash items contributed positively to our net cash flow provided by operating activities, partially offset by $14.5 million in cash used to purchase property and equipment primarily related to our digital commerce initiatives and our India operations and cash used to repurchase and retire shares of $11.6 million.
Contractual Obligations and Commercial Contingencies The following table summarizes our contractual obligations and commitments as of December 30, 2023, and the effect such obligations and commitments are expected to have on our liquidity and cash flow in future periods: Payments Due By Period (in thousands) Contractual Obligations Total Less than 1 year 1 - 3 years 3 - 5 years More than 5 years Operating Leases $ 12,900 $ 7,609 $ 5,170 $ 121 $ — Other Commitments 31,771 21,438 10,282 51 — Total Contractual Obligations $ 44,671 $ 29,047 $ 15,452 $ 172 $ — “Operating Leases” generally provide that property taxes, insurance, and maintenance expenses are our responsibility.
Contractual Obligations and Commercial Contingencies The following table summarizes our contractual obligations and commitments as of December 28, 2024, and the effect such obligations and commitments are expected to have on our liquidity and cash flow in future periods: Payments Due By Period (in thousands) Contractual Obligations Total Less than 1 year 1 - 3 years 3 - 5 years More than 5 years Operating Leases $ 17,824 $ 6,742 $ 6,982 $ 4,074 $ 26 Other Commitments 31,363 20,493 9,675 1,166 29 Total Contractual Obligations $ 49,187 $ 27,235 $ 16,657 $ 5,240 $ 55 “Operating Leases” generally provide that property taxes, insurance, and maintenance expenses are our responsibility.
Selling, General and Administrative Expenses Selling, general and administrative expenses increased 160 basis points relative to net sales and decreased $5.3 million in absolute terms. The relative increase can be attributed to leverage lost on lower net sales.
These improvements were partially offset by an unfavorable shift in market sales mix and higher spending on distributor trips and events. Selling, General and Administrative Expenses Selling, general and administrative expenses increased 280 basis points relative to net sales and increased $6.3 million in absolute terms. The relative increase can be attributed to leverage lost on lower net sales.
Consequently, we experienced a decline in active Customers of 1.4% compared to the prior year. Additionally, unfavorable changes in currency exchange rates decreased net sales for the year by an estimated $27.8 million. Net earnings decreased 8.0% to $63.8 million in 2023, when compared with 2022.
Additionally, unfavorable changes in currency exchange rates decreased net sales for the year by an estimated $13.6 million. Net earnings attributable to USANA decreased 34.1% to $42.0 million in 2024, when compared with 2023.
These inflationary pressures, including margin pressure from inflation as well as the cost of capital could continue to grow in 2024. 47 Table of Contents Critical Accounting Policies and Estimates Our Consolidated Financial Statements included in this report have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
Critical Accounting Policies and Estimates Our Consolidated Financial Statements included in this report have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Our significant accounting policies are described in the Consolidated Financial Statements included herein. The preparation of financial statements in accordance with U.S.
Significant depreciation and amortization expense is incurred as a result of investments in physical facilities, computer and information technology infrastructure to support our international operations. 43 Table of Contents Sales to customers outside the United States are transacted in the respective local currencies and translated to U.S. dollars at weighted-average currency exchange rates for each monthly accounting period to which they relate.
Sales to customers outside the United States are transacted in the respective local currencies and translated to U.S. dollars at weighted-average currency exchange rates for each monthly accounting period to which they relate. With the exception of China, our raw material purchases from suppliers and product purchases from third-party manufacturers are transacted in U.S. dollars.
Additionally, throughout the year we will enter into various short-term contracts, mostly for services related to events that we hold for our Associates. Information with respect to our Unconditional Purchase Obligations may be found in Note K to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report, which is incorporated by reference.
Information with respect to our unconditional purchase obligations may be found in Note K to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report, which is incorporated by reference. 53 Table of Contents Inflation Like many other global companies, we are facing significant inflationary pressures in the world economy.
The decrease in net sales was primarily the result of a challenging economic environment in many of our key markets, which had varying degrees of impact on attracting new customers as well as consumer purchasing behavior of our products throughout the year. In some markets, we recognized our consumers were faced with an increasingly challenging economic environment.
The decrease in net sales was primarily the result of a decrease in average spend per Customer and a decrease in active Customers, due to a challenging economic environment in many of our key markets, which had varying degrees of impact on attracting new customers. We experienced a decline in active Customers of 6.0% compared to the prior year.
Inflation Like many other global companies, we are facing significant inflationary pressures in the world economy. Inflationary pressures are growing as we renew pricing arrangements, notably for certain direct materials, wages, energy, and transportation costs.
Inflationary pressures are growing as we renew pricing arrangements, notably for certain direct materials, wages, energy, and transportation costs. These inflationary pressures, including margin pressure from inflation as well as the cost of capital could continue to grow in 2025.
The effective tax rate increase is due primarily to a change in the market mix of pre-tax book income. 45 Table of Contents Diluted Earnings Per Share Diluted EPS decreased to $3.30 in 2023 from $3.59 in 2022. This decrease can be attributed to lower net earnings.
This increase was offset, in part, by a change in U.S. tax law for foreign currency conversion of foreign branch operations. Diluted Earnings Per Share Attributable to USANA Diluted earnings per share attributable to USANA decreased to $2.19 in 2024 from $3.30 in 2023. This decrease can be attributed to lower net earnings.
Removed
Wages and benefits represent the largest component of selling, general and administrative expenses.
Added
In addition, on December 23, 2024, we acquired a 78.85% controlling ownership interest in Hiya, a leading provider of high-quality children's health and wellness products through which we operate our direct-to-consumer business.
Removed
Americas and Europe : There were local currency sales declines in all markets in this region.
Added
Wages and benefits represent the largest component of selling, general and administrative expenses. Significant 49 Table of Contents depreciation and amortization expense is incurred as a result of investments in physical facilities, computer and information technology infrastructure to support our international operations.
Removed
The decreased expense in absolute terms can be primarily attributed to a decrease in variable operating expenses as well as the capitalization of expenses associated with our digital commerce initiatives . Income Taxes Income taxes increased to 37.7% of pre-tax earnings in 2023, up from 36.2% of pre-tax earnings in 2022.
Added
There were local currency declines in most markets in the Southeast Asia Pacific sub-region, most notable in the Philippines, Malaysia, and Singapore, which had local currency net sales declines of 18.6%, 9.4%, and 14.0%, respectively.
Removed
Net earnings combined with adjustments of non-cash items contributed positively to our net cash flow provided by operating activities, partially offset by cash used to payout the annual employee bonus, reduce accruals related to inventories, and a reduction in trade payables.
Added
The increased expense in absolute terms can be primarily attributed to an increase in spending for legal and other professional services, which can be attributed to acquisition related costs of $8.2 million.
Removed
Our significant accounting policies are described in the Consolidated Financial Statements included herein. The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and accompanying notes.
Added
This increase was partially offset by a decrease in spending for employee related costs. 51 Table of Contents Income Taxes Income taxes increased to 44.9% of pre-tax earnings in 2024, up from 37.7% of pre-tax earnings in 2023. The higher effective tax rate is primarily attributable to the distribution of pre-tax earnings between markets.
Removed
Inventories are stated at the lower of cost or net realizable value. Cost is determined using a standard costing system, which approximates the first-in, first-out method. The components of inventory cost include raw materials, labor, and overhead.
Added
Other significant uses of cash included the Hiya Acquisition of $203.3 million, net of cash acquired, and an investment of $10.1 million to purchase property and equipment. Additionally, cash used to repurchase and retire shares totaled $9.4 million in 2024. 52 Table of Contents Net cash flow provided by operating activities totaled $70.6 million in 2023.
Removed
Net realizable value is determined using various assumptions with regard to excess or slow-moving inventories, non-conforming inventories, expiration dates, current and future product demand, production planning, and market conditions. The forecasted future product demand for excess or slow-moving inventories is based on judgment 48 Table of Contents and available information.
Added
Additionally, throughout the year we will enter into various short-term contracts, mostly for services related to events that we hold for our Associates.
Removed
A change in any valuation assumptions could result in an adjustment to inventory. However, the reported carrying value of inventory is not highly sensitive to reasonable changes in individual assumptions.
Added
Deferred revenue is recognized when or as the related performance obligation is satisfied.
Added
To record the value of assets acquired, liabilities assumed, and noncontrolling interest as a result of our acquisition of Hiya on December 23, 2024, we have performed a purchase price allocation utilizing the best information available to management.
Added
Assets acquired, liabilities assumed, and noncontrolling interests as part of a business acquisition are generally recorded at their fair value at the date of acquisition. The excess of purchase price over the fair value of assets acquired, liabilities assumed, and noncontrolling interest is recorded as goodwill.
Added
The acquisition method requires management to make assumptions and apply judgment, particularly for those assets acquired, liabilities assumed, and noncontrolling interest for which inputs are unobservable, such as trade name and customer relationship intangible assets. The fair value for the acquired trade name intangible asset was estimated utilizing an income approach, specifically the multi-period excess earnings method.
Added
The fair value for the acquired customer relationship intangible asset was estimated utilizing an income approach, specifically the with-and-without method. Both methods involve the use of significant estimates and assumptions including related to projected revenue growth rates, projected earnings before interest, taxes, depreciation and amortization (“EBITDA”) margins, and discount rates.
Added
Intangible assets estimated and recognized as a result of the Hiya Acquisition are based upon assumptions and inputs which have inherent estimation uncertainty. These estimates may be adjusted as more current information becomes available, and any adjustment could be material.

Item 7. Management's Discussion & Analysis

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

46 edited+30 added−9 removed148 unchanged
Biggest changeIn markets outside the United States, prior to commencing operations or marketing our products, we may be required to obtain approvals, licenses, or certifications from a country’s ministry of health or a comparable agency. Approvals or licensing may be conditioned on reformulation of products or may be unavailable with respect to certain products or product ingredients.
Biggest changeNevertheless, any action by the FDA in response to a serious adverse event report that may be filed by us could materially and adversely affect our ability to market our products successfully. 33 Table of Contents In markets outside the United States, prior to commencing operations or marketing our products, we may be required to obtain approvals, licenses, or certifications from a country’s ministry of health or a comparable agency.
These required changes to Compensation Plan, including compensation limits, may also be viewed as limiting the incentive for people to join our Associate sales force and may reduce the competitive advantage of our Associate Compensation Plan. Risks Related to Our China Business Our Greater China region accounts for a significant part of our business and expected growth.
These required changes to our Compensation Plan, including compensation limits, may also be viewed as limiting the incentive for people to join our Associate sales force and may reduce the competitive advantage of our Associate Compensation Plan. Risks Related to Our China Business Our Greater China region accounts for a significant part of our business and expected growth.
Increases in prices, including as a result of inflation and rising interest rates, for commodities, raw materials or other inputs that we and our suppliers use in manufacturing products, systems, components and ingredients or other similar raw materials, or increases in logistics and related costs, have led and may continue to lead to higher production costs for our products.
Increases in prices, including as a result of inflation and rising interest rates, for commodities, raw materials or other inputs that we and our suppliers use in manufacturing products, systems, components and ingredients or other similar raw materials, or increases in logistics and related costs, have led and may continue to lead to higher costs for our products.
Because 30 Table of Contents we do not control the actual production of certain raw materials, we are also subject to delays caused by any interruption in the production of these materials, based on conditions not within our control, including those related to the COVID-19 pandemic, weather, crop conditions, transportation interruptions, strikes by supplier employees, and natural disasters (the nature and severity of which may be impacted by climate change) or other catastrophic events.
Because we do not control the actual production of certain raw materials, we are also subject to delays caused by any interruption in the production of these materials, based on conditions not within our control, including those related to the COVID-19 pandemic, weather, crop conditions, transportation interruptions, strikes by supplier employees, and natural disasters (the nature and severity of which may be impacted by climate change) or other catastrophic events.
Any or all of these requirements could have a material adverse effect on our business, financial condition, or results of operations. Our in-house manufacturing activity is subject to certain risks. We manufacture approximately 67% of the products sold to our customers.
Any or all of these requirements could have a material adverse effect on our business, financial condition, or results of operations. Our in-house manufacturing activity is subject to certain risks. We manufacture approximately 69% of the products sold to our customers.
Those settlements resulted from enforcement actions brought by the FTC involving a variety of alleged violations of consumer protection laws, including misleading earnings representations and legal compliance of those companies’ business models and distributor compensation plans.
Those settlements resulted from enforcement actions brought by the FTC involving a variety of alleged violations of consumer protection laws, including misleading product claims, misleading earnings representations and legal compliance of those companies’ business models and distributor compensation plans.
If we are not successful in growing BabyCare’s sales and customer base in China, our consolidated growth as a company will be negatively affected and our business, financial condition, results of operations and cash flows may be harmed. 25 Table of Contents BabyCare must comply with significant operational, financial, and other regulatory requirements to engage in direct selling in China.
If we are not successful in growing BabyCare’s sales and customer base in China, our consolidated growth as a company will be negatively affected and our business, financial condition, results of operations and cash flows may be harmed. BabyCare must comply with significant operational, financial, and other regulatory requirements to engage in direct selling in China.
It is difficult to predict how any changes to the plan will be viewed by Associates and whether such changes will achieve their desired results. For example, in 2023 we launched our Affiliate program in three markets and this program creates a new and different element of our Compensation Plan.
It is difficult to predict how any changes to the plan will be viewed by Associates and whether such changes will 28 Table of Contents achieve their desired results. For example, in 2023 we launched our Affiliate program in three markets and this program creates a new and different element of our Compensation Plan.
In light of the factors listed above, and the other risks to our business, there can be no assurance that we will be successful in increasing sales and customers in China through BabyCare. Our operations in China are subject to significant government regulation, as well as a variety of legal, political, and economic risks.
In light of the factors listed above, and the other risks to our business, there can be no assurance that we will be successful in increasing sales and customers in China through BabyCare. 29 Table of Contents Our operations in China are subject to significant government regulation, as well as a variety of legal, political, and economic risks.
If we are found to be liable for violations of these acts (either due to our own acts or our inadvertence or due to the acts or inadvertence of others), we could incur severe criminal or civil penalties or other sanctions, which could have a material adverse effect on our 32 Table of Contents reputation, business, results of operations or cash flows.
If we are found to be liable for violations of these acts (either due to our own acts or our inadvertence or due to the acts or inadvertence of others), we could incur severe criminal or civil penalties or other sanctions, which could have a material adverse effect on our reputation, business, results of operations or cash flows.
If this happens, we may take disciplinary action against the breaching Associate. This disciplinary action is based on the facts and circumstances of the particular case and may include anything from warnings 31 Table of Contents for minor violations to termination of the Associate’s purchase and distribution rights for more serious violations.
If this happens, we may take disciplinary action against the breaching Associate. This disciplinary action is based on the facts and circumstances of the particular case and may include anything from warnings for minor violations to termination of the Associate’s purchase and distribution rights for more serious violations.
Our international business is subject to various anti-corruption laws, including principally the U.S. Foreign Corrupt Practices Act. In recent years, there have been an increasing number of investigations and other enforcement activities under these laws, including a voluntary investigation we concluded several years ago concerning our China operations.
Our international business is subject to various anti-corruption laws, including principally the U.S. Foreign Corrupt Practices Act ("FCPA"). In recent years, there have been an increasing number of investigations and other enforcement activities under these laws, including a voluntary investigation we concluded several years ago 36 Table of Contents concerning our China operations.
These potential effects could include, however, requirements for the reformulation of certain products to meet new standards, the recall or discontinuance of certain products, additional record keeping and reporting requirements, expanded documentation of the properties of certain products, expanded or different labeling, or additional scientific 29 Table of Contents substantiation.
These potential effects could include, however, requirements for the reformulation of certain products to meet new standards, the recall or discontinuance of certain products, additional record keeping and reporting requirements, expanded documentation of the properties of certain products, expanded or different labeling, or additional scientific substantiation.
The review required applicable companies such as BabyCare to conduct a self-assessment of the regulatory compliance of their business and to provide information to the government regarding the same. The review also entailed a review of a company’s regulatory compliance by various departments of the Chinese government.
The review required applicable companies such 30 Table of Contents as BabyCare to conduct a self-assessment of the regulatory compliance of their business and to provide information to the government regarding the same. The review also entailed a review of a company’s regulatory compliance by various departments of the Chinese government.
In addition, there are numerous risks inherent in conducting our business internationally, including, but not limited to, potential instability in international markets, changes in regulatory 27 Table of Contents requirements applicable to international operations, currency fluctuations in foreign countries, political, economic and social conditions in foreign countries and complex U.S. and foreign laws and treaties.
In addition, there are numerous risks inherent in conducting our business internationally, including, but not limited to, potential instability in international markets, changes in regulatory requirements applicable to international operations, currency fluctuations in foreign countries, political, economic and social conditions in foreign countries and complex U.S. and foreign laws and treaties.
We must overcome significant regulatory and legal barriers before we can begin marketing in any international market. In addition, before marketing commences in a new country or market, it is difficult to assess the extent to which our products and sales techniques will be accepted or successful in any given country.
We must overcome significant regulatory and legal barriers before we can begin marketing in any international market. In addition, 31 Table of Contents before marketing commences in a new country or market, it is difficult to assess the extent to which our products and sales techniques will be accepted or successful in any given country.
Additionally, transferring our third-party manufacturing business to another contract manufacturer can be expensive, time-consuming, result in delays in our production or shipping, reduce our net sales, damage our relationship with customers and damage our reputation in the marketplace.
Additionally, transferring our third-party manufacturing business to another contract manufacturer can be expensive, time-consuming, 34 Table of Contents result in delays in our production or shipping, reduce our net sales, damage our relationship with customers and damage our reputation in the marketplace.
Consequently, exchange rate fluctuations have, and will continue to have, a significant effect on our sales and earnings. If exchange rates fluctuate dramatically, it may become uneconomical for us to establish or to continue activities in certain countries.
Consequently, exchange rate fluctuations have, and will continue to have, a significant effect on our sales 32 Table of Contents and earnings. If exchange rates fluctuate dramatically, it may become uneconomical for us to establish or to continue activities in certain countries.
Additionally, in 2019, our sales and active Customer counts in both the Greater China region and our China market declined, largely because of a challenging operating environment in China, following the China’s governments inquiry into and review of the health foods industry in China.
Prior to that, in 2019, our sales and active Customer counts in both the Greater China region and our China market declined, largely because of a challenging operating environment in China, following the China’s governments inquiry into and review of the health foods industry in China.
Modifying our Compensation Plan directly affects the incentives we pay as a percentage of net sales. There can be no assurance that changes to the Compensation Plan will be successful in achieving target levels of Associate incentives as a percentage of net sales. Furthermore, such changes may make it difficult to attract and retain qualified and motivated Associates.
There can be no assurance that changes to the Compensation Plan will be successful in achieving target levels of Associate incentives as a percentage of net sales. Furthermore, such changes may make it difficult to attract and retain qualified and motivated Associates.
Our reliance on third parties to manufacture and supply certain of our products may harm our business, financial condition and operating results. We contract with third-party suppliers and manufacturers for the production of certain of our products, which accounted for approximately 33% of our product sales for the year ended December 30, 2023.
Our reliance on third parties to manufacture and supply certain of our products may harm our business, financial condition and operating results. We contract with third-party suppliers and manufacturers for the production of certain of our products, which accounted for approximately 31% of our product sales for the year ended December 28, 2024.
Fluctuation in the value of currency exchange rates with the U.S. dollar affects our operations and our net sales and earnings. For the year ended December 30, 2023, 89.6% of our total net sales were generated in markets outside of the United States.
Fluctuation in the value of currency exchange rates with the U.S. dollar affects our operations and our net sales and earnings. For the year ended December 28, 2024, 89.3% of our total net sales were generated in markets outside of the United States.
In 2021, the FTC, pursuant to its Penalty Offense Authority under the FTC Act, sent letters to over 1,100 companies, including USANA, warning them that the FTC could seek penalties of up to $43,792 per violation for conduct determined to be unfair, deceptive, or otherwise unlawful in certain prior FTC actions.
In 2021, the FTC sent letters to over 1,100 companies, including USANA, warning them that the FTC, pursuant to its Penalty Offense Authority, could seek penalties for conduct determined to be unfair, deceptive, or otherwise unlawful in certain prior FTC actions.
If BabyCare’s model were deemed to be in violation of applicable regulations, as they are now or may in the future be interpreted or enforced, BabyCare could be subject to fines, penalties or suspension of its business in China or, ultimately, have its direct selling license revoked by the Chinese government, all of which could have a material adverse impact on our business in China. 26 Table of Contents BabyCare’s operations in China, and direct selling companies in general, are subject to significant government oversight, scrutiny and monitoring.
If BabyCare’s model were deemed to be in violation of applicable regulations, as they are now or may in the future be interpreted or enforced, BabyCare could be subject to fines, penalties or suspension of its business in China or, ultimately, have its direct selling license revoked by the Chinese government, all of which could have a material adverse impact on our business in China.
Our international growth strategy has focused largely on growing our China business. For the last three years, health officials in Greater China have responded to the COVID-19 pandemic, which has created a challenging operating environment for our business in China and has negatively impacted our sales and customer results.
Our international growth strategy has focused largely on growing our China business. For the last several years, officials in Greater China have responded to the COVID-19 pandemic and, more recently, overall economic conditions in China, all of which have created a challenging operating environment for our business in China and negatively impacted our sales and customer results.
Although we strive to ensure that our business model and compensation plan are compliant with applicable laws and regulations, as well as regulatory guidance, in each of our markets, we cannot assure you that a regulator, if it were to review our business, would agree with our assessment and would not require us to change one or more aspects of our operations.
Additionally, while we strive to ensure that our compensation plan is compliant with applicable laws and regulatory guidance in each of our markets, we cannot assure you that a 27 Table of Contents regulator, if it were to review our business, would agree with our assessment and would not require us to change one or more aspects of our operations.
In the United States, the FTC is one of many regulators who regulate direct selling. The FTC has actively warned various direct selling companies and the industry as a whole about certain business practices associated with direct selling and entered into settlements with several direct selling companies that required those companies to modify their compensation plans and business models.
The FTC has actively warned various direct selling companies and the industry as a whole about certain business practices associated with direct selling and entered into settlements with several direct selling companies that required those companies to modify their compensation plans and business models.
There have been consistent, ongoing discussions and activities that raise concern in this regard. Additionally, any actions taken by the Chinese government, or the government in our other markets, to implement further trade policy changes, financial restrictions, or increased regulatory scrutiny on U.S. companies could negatively impact our business, financial condition, and results of operations.
Additionally, any actions taken by the Chinese government, or the government in our other markets, to implement further trade policy changes, financial restrictions, or increased regulatory scrutiny on U.S. companies could negatively impact our business, financial condition, and results of operations.
There can be no assurance that changes to our Associate Compensation Plan will allow us to successfully attract new Associates or retain existing Associates, nor can we assure that any changes we make to our Compensation Plan will achieve our desired results. Additionally, the payment of Associate incentives under our Compensation Plan is our most significant expense.
There can be no assurance that changes to our Associate Compensation Plan will allow us to successfully attract new Associates or retain existing Associates, nor can we assure that any changes we make to our Compensation Plan will achieve our desired results.
We have identified material weaknesses in our internal control over financial reporting. If we fail to properly remediate the material weaknesses or to maintain an effective system of internal controls, we may not be able to accurately report our financial results or prevent fraud. As more fully disclosed in Item 9A.
If we fail to maintain an effective system of internal controls, we may not be able to accurately report our financial results or prevent fraud. As more fully disclosed in Item 9A.
Although these material weaknesses did not result in any errors to the financial statements, and there were no changes to previously released financial results, the applicable control deficiencies were not remediated as of December 30, 2023, and, consequently, there was a reasonable possibility that it could have resulted in a material misstatement in the Company's financial statements that would not have been detected.
Although these material weaknesses did not result in any errors to the financial statements, and there were no changes to previously released financial results, the applicable control deficiencies were not remediated as of December 30, 2023, and, consequently, there was a reasonable possibility that it could have resulted in a material misstatement in the Company's financial statements that would not have been detected. 37 Table of Contents The Company’s management, under the oversight of the Audit Committee, has completed a remediation plan for these material weaknesses as described more fully in
We must also comply with product labeling and packaging regulations that vary from country to country. These activities are also subject to regulation by various agencies of the countries in which our products are sold.
Approvals or licensing may be conditioned on reformulation of products or may be unavailable with respect to certain products or product ingredients. We must also comply with product labeling and packaging regulations that vary from country to country. These activities are also subject to regulation by various agencies of the countries in which our products are sold.
“Controls and Procedures,” we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures and internal control over financial reporting. Based on that evaluation, we have concluded that our disclosure controls and procedures were not effective as of December 30, 2023, due to material weaknesses in internal control over financial reporting.
“Controls and Procedures,” in 2024 we concluded that our disclosure controls and procedures were not effective as of December 30, 2023, due to material weaknesses in internal control over financial reporting.
Although we believe that all of our products are safe when taken as directed, there is little long-term experience with human consumption of certain of these product ingredients or combinations of ingredients in concentrated form. We conduct research and test the formulation and production of our products, but we have performed or sponsored only limited clinical studies.
Although we believe that all of our products are safe when taken as directed, there is little long-term experience with human consumption of certain of these product ingredients or combinations of ingredients in concentrated form.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations ” of this report, as well as in the other filings we make from time to time with the SEC, in evaluating us, our business and an investment in our securities.
Management’s Discussion and Analysis of Financial Condition and Results of Operations ” of this report, as well as in the other filings we make from time to time with the SEC, in evaluating us, our business and an investment in our securities. 24 Table of Contents Below is a summary of the principal factors that make an investment in the common stock of the Company risky or speculative.
Chinese regulators regularly monitor and make inquiries about the business activities of direct sellers in China and have done so with BabyCare.
BabyCare’s operations in China, and direct selling companies in general, are subject to significant government oversight, scrutiny and monitoring. Chinese regulators regularly monitor and make inquiries about the business activities of direct sellers in China and have done so with BabyCare.
For example, several markets 28 Table of Contents in which we conduct business, including China, require that we file the necessary statutory financial statements for the relevant period as a prerequisite to repatriating cash in the form of a dividend.
We do not use derivative instruments for speculative purposes. A foreign government may impose, and some have imposed, foreign currency remittance restrictions. For example, several markets in which we conduct business, including China, require that we file the necessary statutory financial statements for the relevant period as a prerequisite to repatriating cash in the form of a dividend.
There can be no assurance, however, that our efforts in this regard will be sufficient to accomplish this objective. In the past, we have experienced adverse publicity both within and outside of our sales force for enforcing our Associate policies and procedures.
In the past, we have experienced adverse publicity both within and outside of our sales force for enforcing our Associate policies and procedures.
For example, in January 2024, the Department of Labor (DOL) issued a final rule regarding the classification of workers as employees vs. independent contractors under the Fair Labor Standards Act.
In March 2024, a new Department of Labor (DOL) rule regarding the classification of workers as employees vs. independent contractors under the Fair Labor Standards Act went into effect but became subject to litigation.
These products include most of our gelatin-capsulated supplements, Rev3 Energy Drink, Probiotic, our powdered drink mixes, foods, and certain of our personal care products, including our Celavive line for markets outside of China. Products manufactured by third-party suppliers at their locations must also pass through quality control and assurance procedures to ensure they are manufactured in conformance with our specifications.
These products include most of our gelatin-capsulated supplements, Rev3 Energy Drink, Probiotic, our powdered drink mixes, foods, and certain of our personal care products, including our Celavive line for markets outside of China. Hiya also utilizes third-party manufacturers for their products.
We take what we believe to be commercially reasonable steps to (i) regularly train our Associates, and (ii) monitor the activities of our Associates to guard against misrepresentation and other illegal or unethical conduct by Associates and to assure compliance with our policies.
While we take what we believe to be commercially reasonable steps to regularly train our Associates, and monitor their activities to promote compliance with our policies and guard against illegal or unethical conduct by Associates, there can be no assurance that our efforts will be sufficient to accomplish this objective.
These laws and regulations exist at many levels of government in many different forms, are inherently fact-based, and often do not include “bright line” rules. We are also subject to the risk that the laws and regulations, or a regulator’s interpretation and enforcement of the laws and regulations, could change.
Various laws and regulations in the United States and other countries regulate direct selling. These laws and regulations exist at many levels of government in many different forms, are inherently fact-based, and often do not include “bright line” rules.
We have an internal adverse event reporting system that has been in place for several years and believe that we comply with this new law. Nevertheless, any action by the FDA in response to a serious adverse event report that may be filed by us could materially and adversely affect our ability to market our products successfully.
We have an internal adverse event reporting system that has been in place for several years and believe that we comply with this new law.
The FTC is currently advocating and considering certain legal and regulatory changes that, if implemented, could have a material adverse effect on our business.
Under the ANPR, the FTC is considering additional restrictions on earnings claims and recruiting by direct selling companies that, if adopted, could have a material adverse effects on our business.
The letter did not accuse any recipient company, including USANA, of engaging in unlawful conduct. But if the FTC later alleges that we have engaged in acts or practices found to be unfair, deceptive, or unlawful in the actions referenced in the letters, we could be at risk of penalties and other potential liability.
But if the FTC later alleges that we have engaged in the actions referenced in the 2021 or 2023 letters, we could be at risk of penalties and other potential liability. In 2025, the FTC issued a Notice of Proposed Rulemaking ("NPR") and an Advanced Notice of Proposed Rulemaking ("ANPR") regarding potential rules for earnings claims for direct selling companies.
Risk Associated with Direct Selling Direct selling is subject to intense government scrutiny, and regulation and changes in the law, or the interpretation and enforcement of the law, might adversely affect our business. Various laws and regulations in the United States and other countries regulate direct selling.
We are also subject to the risk that the laws and regulations, or a regulator’s interpretation and enforcement of the laws and regulations, could change. In the United States, the FTC is one of many regulators who regulate direct selling.
Removed
For example, in 2022 the FTC issued an Advanced Notice of Proposed 23 Table of Contents Rulemaking for a proposed rule concerning deceptive earnings claims that would further regulate how companies like USANA advertise and represent their business.
Added
This summary does not address all of the risks we face. Unless otherwise indicated or otherwise required by the context, the terms “we,” “our,” “it,” “its,” “Company,” and “USANA” refer to USANA Health Sciences, Inc. and its wholly owned subsidiaries.
Removed
The FTC is also currently reviewing the Business Opportunity Rule, which requires business opportunity sellers to give prospective buyers specific information to help them evaluate a business opportunity or work-at-home program.
Added
Risks Associated with Direct Selling • Direct selling is subject to intense government scrutiny, and regulation and changes in the law, or the interpretation and enforcement of the law, might adversely affect our business. • The violation of marketing or advertising laws by Associates in connection with the sale of our products or the improper promotion of our Compensation Plan could adversely affect our business. • We may have or could incur obligations relating to the activities of our Associates. • Our Associate Compensation Plan, or changes we make to it, may be viewed negatively by some Associates, could fail to achieve our desired objectives, and could have a negative impact on our business. • Changes we are required to make to our Associate Compensation Plan in certain markets, including limits on the amount of Associate compensation we can pay, may hurt our ability to attract and retain Associates, result in regulatory risk and affect our operating results.
Removed
Direct sellers like USANA are currently exempt from the Business Opportunity Rule, but the FTC could include direct sellers within the scope of the rule as a result of the review.
Added
Risks Related to Our China Business • Our Greater China region accounts for a significant part of our business and expected growth.
Removed
If direct sellers become subject to the rule, we will have to comply with disclosure requirements that could significantly increase the cost of doing business and have other material adverse effects on our business.
Added
A decline in sales or customers in this region would harm our business, financial condition and results of operations. • Our operations in China are subject to significant government regulation, as well as a variety of legal, political, and economic risks.
Removed
The final rule, which becomes effective March 11, 2024, is significantly different from the 2021 rule 24 Table of Contents issued by the DOL and requires companies and courts to consider the totality of six economic factors when deciding whether a worker is an employee or independent contractor.
Added
If the Chinese government modifies its direct selling laws and regulations, or interprets and enforces these laws and regulations in a manner that is adverse to our business in China, our consolidated business and results of operations may be materially harmed. • Although BabyCare Holdings, Ltd.
Removed
We do not use derivative instruments for speculative purposes. A foreign government may impose, and some have imposed, foreign currency remittance restrictions.
Added
(“BabyCare”) utilizes a business model that has been developed specifically for China’s laws and regulations, the Chinese government has not approved BabyCare’s model, compensation plan, and operations. • BabyCare’s operations in China, and direct selling companies in general, are subject to significant government oversight, scrutiny and monitoring. • BabyCare must apply for and receive government approval to expand its business in China and the failure to obtain such approvals could negatively impact its ability to expand and grow its business.
Removed
As a result, we did not maintain effective ITGCs in the areas of user access, program change management, and computer operations over the information technology (IT) systems that support our financial reporting processes.
Added
Risk Associated with Our International Operations • Risks associated with operating in international markets could restrict our ability to expand globally and harm our business and prospects. • Trade policies, disputes, tariffs or other international disputes could harm our business and operating results. • Because some of our customers and suppliers are based in China, our business, financial condition, and results of operations could be adversely affected by the political and economic tensions between the United States and China. • We are subject to various governmental export control and trade sanctions laws and regulations that could impair our ability to compete in international markets or subject us to liability if we violate these controls. • Fluctuation in the value of currency exchange rates with the U.S. dollar affects our operations and our net sales and earnings. • Inflationary pressures and persistently high prices and uncertain availability of commodities, raw materials or other inputs used by us and our suppliers, or instability in logistics and related costs, could negatively impact our profitability.
Removed
Process-level automated controls that are dependent on the affected ITGCs and manual controls that rely on the integrity of data or reports from the affected systems across substantially all of our processes were also deemed ineffective because they could have been adversely impacted.
Added
Risks Related to Our Products, Manufacturing and Operations • Our products and manufacturing activities are subject to extensive government regulation, which could limit or prevent the sale of our products in some markets. • Our in-house manufacturing activity is subject to certain risks. • Our reliance on third parties to manufacture and supply certain of our products may harm our business, financial condition and operating results. • The inability to obtain adequate supplies of raw materials for products at favorable prices, or at all, could have a material adverse effect on our business, financial condition, or operating results. • Delays and disruptions to transporting and distributing our products may adversely affect our results. • We may incur liability with respect to our products. • Nutritional supplement products may be supported by only limited availability of conclusive clinical studies. 25 Table of Contents Legal, Regulatory, Compliance and Tax Risks • Legal action by former Associates or third parties against us could harm our business. • We may incur liability under our “Athlete Guarantee” program. • Failure to comply with anti-corruption laws could adversely affect our business. • We could be subject to adverse changes in tax laws, regulations and interpretations or challenges to our tax positions. • If we fail to maintain an effective system of internal controls, we may not be able to accurately report our financial results or prevent fraud. • Environmental, Social, and Governance ("ESG") issues may have an adverse effect on our reputation, business, financial condition or results of operations.
Removed
While the Company’s management, under the oversight of the Audit Committee, has begun taking steps to implement our remediation plan as described more fully in
Added
Risk Associated with Information Technology, Data Security and Data Privacy • A failure or interruption of our information technology systems would harm our business. • We rely on information technology to support our operations and reporting environments.
Added
A data breach involving that technology or the data stored in it, could disrupt our ability to operate our businesses effectively, adversely affect our reported financial results and our reputation, and expose us to significant potential liability, government investigations, fines or litigation. • We are subject to data privacy and security laws and regulations, and our actual or perceived failure to comply with them could adversely affect our business and operating results.
Added
Human Capital Risks Associated with our Business • If we are unable to attract and retain active Associates and Preferred Customers, our business may be harmed. • The loss of key management personnel could adversely affect our business.
Added
Risks Associated with Business Development Activities and Acquisitions • Growth through acquisitions is part of our strategy, and we may not successfully integrate, operate or realize the anticipated benefits of our acquisitions. • The Hiya Acquisition may not be accretive, and may be dilutive, to our earnings per share, which may negatively affect the market price of our common stock. • Although we expect that the Hiya acquisition will result in synergies and other benefits to us, we may not realize those benefits because of challenges inherently associated with integration, performance and the achievement of synergies. • The Hiya Acquisition and integration may result in additional costs and expenses. • The Hiya Acquisition may be viewed negatively by our Associates.
Added
General Economic, Publicity, Competitive, and Intellectual Property Risks Associated with our Business • Difficult economic conditions may adversely affect our business. • Our business is subject to the effects of adverse publicity and negative public perception. • Our business is subject to the risks associated with intense competition from larger, wealthier, and more established competitors. • Our business is subject to particular intellectual property risks.
Added
Risks Related to Public Health Crises • Pandemics, epidemics, disease outbreaks and other public health crises, such as the COVID-19 pandemic, have disrupted our business and operations, and future public health crises could materially adversely impact our business, financial condition, liquidity and results of operations.
Added
Risks Related to Our Common Stock • The beneficial ownership of a significant percentage of our common stock gives our founder and parties related to or affiliated with him effective control, and limits the influence of other shareholders on important policy and management issues. • Sales by our shareholders of a substantial number of shares of our common stock in the public market could adversely affect the market price of our common stock. • The market price of our common stock may be influenced by many factors, some of which are beyond our control. 26 Table of Contents Risk Associated with Direct Selling Direct selling is subject to intense government scrutiny, and regulation and changes in the law, or the interpretation and enforcement of the law, might adversely affect our business.
Added
In 2023, the FTC sent letters to nearly 700 companies, including USANA, warning them that the FTC, pursuant to its Penalty Offense Authority, could seek penalties for a company's failure to adequately substantiate its product claims. The 2021 and 2023 letters did not accuse any recipient company, including USANA, of engaging in unlawful conduct.
Added
The NPR would, among other things, prohibit direct selling companies from making misleading earnings claims, and require them to maintain written substantiation to support any earnings claims and make that substantiation available upon request.
Added
Additionally, the FTC’s increased scrutiny of earnings claims, as reflected in the NPR and ANPR, could lead to new industry standards, other new rules, or more FTC actions regarding misleading claims, all of which could limit our ability to advertise and negatively impact our business.
Added
While we maintain a robust Associate compliance program and strive to educate our Associates on compliant claims, if a regulator determines we are making misleading claims, this could lead to an FTC investigation, which could harm our business operations.
Added
In 2025, we are also making certain modifications to our Compensation Plan to enhance the earning opportunity for Associates and prioritize sales and customer growth.
Added
We may also face legal challenges and disputes from our Associates in one or more markets regarding changes to the Compensation Plan. Additionally, the payment of Associate incentives under our Compensation Plan is our most significant expense. Modifying our Compensation Plan directly affects the incentives we pay as a percentage of net sales.
Added
In 2025, there have been increased, consistent, ongoing discussions and activities from the new U.S. presidential administration that raise concern in this regard.
Added
We are subject to various governmental export control and trade sanctions laws and regulations that could impair our ability to compete in international markets or subject us to liability if we violate these controls. In some cases, our products are subject to export control laws and regulations, including the Export Administration Regulations administered by the U.S.
Added
Department of Commerce, and our activities may be subject to trade and economic sanctions, including those administered by the United States Department of the Treasury’s Office of Foreign Assets Control, or OFAC (collectively, “Trade Controls”).
Added
As such, a license may be required to export or re-export our products, or provide related services, to certain countries and end-users, and for certain end-uses. The process for obtaining necessary licenses may be time-consuming or unsuccessful, potentially causing delays in sales or losses of sales opportunities and these licenses may not be issued.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeThere can be no assurance that our practices will be successful in eliminating all or substantially all of the risks that we may encounter in connection with our currency transactions. Interest Rate Risks. As of December 30, 2023, we had an immaterial amount of outstanding debt on a local line of credit and no outstanding debt on our credit facility.
Biggest changeThere can be no assurance that our practices will be successful in eliminating all or substantially all of the risks that we may encounter in connection with our currency transactions. Interest Rate Risks. As of December 28, 2024, we had $23 million of outstanding debt on our credit facility.
Based on this limited activity our exposure to interest rate risk is immaterial. It may become necessary to borrow in the future in order to meet our financing needs. In the event that it becomes necessary to borrow, there can be no assurance that we will be able to borrow, or at favorable rates.
Based on this limited activity our exposure to interest rate risk is immaterial. It may become necessary to borrow more in the future in order to meet our financing needs. In the event that it becomes necessary to borrow, there can be no assurance that we will be able to borrow, or at favorable rates.

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