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What changed in NU SKIN ENTERPRISES, INC.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of NU SKIN ENTERPRISES, INC.'s 2023 and 2024 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 2024 report.

+474 added−442 removedSource: 10-K (2025-02-14) vs 10-K (2024-02-15)

Top changes in NU SKIN ENTERPRISES, INC.'s 2024 10-K

474 paragraphs added · 442 removed · 342 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

71 edited+9 added−13 removed105 unchanged
Biggest changeYear Ended December 31, (U.S. dollars in millions) 2023 2022 2021 Nu Skin Americas $ 398.2 20 % $ 508.5 23 % $ 547.8 20 % Mainland China 298.1 15 360.4 16 568.8 21 Southeast Asia/Pacific 267.2 14 344.4 16 336.7 13 South Korea 236.1 12 268.7 12 354.3 13 Japan 207.8 10 224.9 10 266.2 10 Europe & Africa 192.4 10 204.3 9 283.2 11 Hong Kong/Taiwan 153.6 8 157.2 7 162.6 6 Other (0.9 ) — 4.0 — 3.5 — Total Nu Skin 1,752.5 89 2,072.4 93 2,523.1 94 Rhyz Manufacturing 181.4 9 149.5 7 172.1 6 Rhyz other 35.2 2 % 3.8 — 0.5 — Total Rhyz 216.6 11 153.3 7 172.6 6 Total $ 1,969.1 100 % $ 2,225.7 100 % $ 2,695.7 100 % Additional comparative revenue and related financial information is presented in Note 15 to the consolidated financial statements contained in this report.
Biggest changeYear Ended December 31, (U.S. dollars in millions) 2024 2023 2022 Nu Skin Americas $ 322.5 19 % $ 398.2 20 % $ 508.5 23 % Southeast Asia/Pacific 244.8 14 267.2 14 344.4 16 Mainland China 235.2 14 298.1 15 360.4 16 Japan 181.6 10 207.8 10 224.9 10 Europe & Africa 164.2 9 192.4 10 204.3 9 South Korea 163.7 9 236.1 12 268.7 12 Hong Kong/Taiwan 130.6 8 153.6 8 157.2 7 Other 2.9 — (0.9 ) — 4.0 — Total Nu Skin 1,445.5 83 1,752.5 89 2,072.4 93 Rhyz Manufacturing 201.4 12 181.4 9 149.5 7 Rhyz Other 85.2 5 % 35.2 2 % 3.8 — Total Rhyz 286.6 17 216.6 11 153.3 7 Total $ 1,732.1 100 % $ 1,969.1 100 % $ 2,225.7 100 % Additional comparative revenue and related financial information is presented in Note 16 to the consolidated financial statements contained in this report.
Sales Leader previews and other product introductions and promotions sometimes generate significant activity and a high level of purchasing, which can result in a higher-than-normal increase in revenue during the quarter and can skew year-over-year and sequential comparisons.
Sales Leader previews and other product introductions and promotions sometimes generate significant activity and a high level of purchasing, which can result in a higher-than-normal increase in revenue during the quarter and skew year-over-year and sequential comparisons.
In South Korea, all “functional” cosmetics are required to either undergo examination by or be reported to the Ministry of Food and Drug Safety. The sale of cosmetic products is regulated in the European Union (the “EU”) under the EU Cosmetics Regulation, which requires a uniform application for foreign companies placing finished beauty products on the EU market.
In South Korea, all “functional” cosmetics are required to either undergo examination by or be reported to the Ministry of Food and Drug Safety. The sale of cosmetic products is regulated in the European Union (the “EU”) under the EU Cosmetics Regulation, which requires a uniform application for foreign companies placing finished beauty products on the European market.
The product registration process for some categories of beauty products in Mainland China takes from three to six months to complete under the latest regulations governing cosmetics. Certain cosmetics are categorized as “special cosmetics” and carry a more unpredictable process and approval timing frequently in excess of two years.
The product registration process for some categories of beauty products in Mainland China takes three to six months to complete under the latest regulations governing cosmetics. Certain cosmetics are categorized as “special cosmetics” and carry a more unpredictable process and approval timing frequently in excess of two years.
Napierski has a Bachelor’s degree in business, a Master of Business Administration degree from Duke University and a Master’s degree in international business from Goethe Universitat in Germany. James D. Thomas has served as our Chief Financial Officer since July 2023.
Napierski has a Bachelor’s degree in business, a Master of Business Administration degree from Duke University and a Master’s degree in international business from Goethe Universitat in Germany. James D. Thomas has served as our Chief Financial Officer since 2023.
We make available, free of charge on our Investor Relations website, ir.nuskin.com, our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as soon as reasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission (the “SEC”).
We make available, free of charge on our Investor Relations website, ir.nuskin.com, our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as soon as reasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission (the "SEC").
We have divided our markets into seven segments: Mainland China; South Korea; Southeast Asia/Pacific, which includes Indonesia, Malaysia, the Philippines, Singapore, Thailand, Vietnam, Australia, New Zealand and other markets; Americas, which includes Canada, Latin America and the United States; Japan; Hong Kong/Taiwan, which also includes Macau; and Europe & Africa, which includes markets in Europe as well as South Africa.
We have divided these markets into seven segments: Mainland China; South Korea; Southeast Asia/Pacific, which includes Indonesia, Malaysia, the Philippines, Singapore, Thailand, Vietnam, Australia, New Zealand and other markets; Americas, which includes Canada, Latin America and the United States; Japan; Hong Kong/Taiwan, which also includes Macau; and Europe & Africa, which includes markets in Europe as well as South Africa.
It enables the FDA to focus more on preventing food safety problems rather than primarily reacting to problems after they occur. The law also provides the FDA with enforcement authorities designed to achieve higher rates of compliance with prevention- and risk-based food safety standards and to better respond to and contain problems when they do occur.
It enables the FDA to focus more on preventing food safety problems rather than primarily reacting to problems after they occur. The law also provides the FDA with enforcement authority designed to achieve higher rates of compliance with prevention- and risk-based food safety standards and to better respond to and contain problems when they do occur.
We have implemented policies that are designed to comply with these regulations and inform our sales force regarding the types of activities that are not permitted. However, we cannot assure that actions of our sales force will not violate local laws or regulations or our policies. Please refer to Item 1A.
We have implemented policies that are designed to comply with these regulations and inform our sales force regarding the types of activities that are not permitted. However, we cannot ensure that actions of our sales force will not violate local laws or regulations or our policies. Please refer to Item 1A.
Our Board’s committees engage with our senior management and head of Human Resources regarding human capital management on a regular basis. Working with management, our Board’s committees oversee and receive reports on matters including culture, compensation, benefits, key talent succession planning, employee engagement, and DEI.
Our Board’s committees engage with our senior management and head of Human Resources regarding human capital management on a regular basis. Working with management, our Board’s committees oversee and receive reports on matters including culture and inclusion, compensation, benefits, key talent succession planning and employee engagement.
Lund has served as Executive Chairman of our board of directors since 2012. Mr. Lund previously served as Vice Chairman of our board of directors from 2006 to 2012 and as President, Chief Executive Officer and a member of our board of directors from 1996, when we went public, until 2003. Mr.
Lund previously served as Vice Chairman of our board of directors from 2006 to 2012 and as President, Chief Executive Officer and a member of our board of directors from 1996, when we went public, until 2003. Mr.
It is possible that cosmetic product ingredients now commonly in use may be restricted or prohibited in the future as more is learned about such ingredients. In recent years, the FDA has issued warning letters to many cosmetic companies alleging improper structure/function claims regarding their cosmetic products, including, for example, product claims regarding gene activity, cellular rejuvenation, and rebuilding collagen.
It is possible that cosmetic product ingredients now commonly in use may be restricted or prohibited in the future as more is learned about such ingredients. 10 Table of Contents In recent years, the FDA has issued warning letters to many cosmetic companies alleging improper structure/function claims regarding their cosmetic products, including, for example, product claims regarding gene activity, cellular rejuvenation, and rebuilding collagen.
We cannot be sure that the FTC, or comparable foreign agencies, will not question our advertising or other operations in the future. 13 Table of Contents In recent years, the FTC has initiated numerous investigations of and actions against companies that sell dietary supplements and cosmetic products.
We cannot be sure that the FTC, or comparable foreign agencies, will not question our advertising or other operations in the future. In recent years, the FTC has initiated numerous investigations of and actions against companies that sell dietary supplements and cosmetic products.
We have implemented various measures to comply with these limits. 9 Table of Contents In some markets, regulations applicable to the activities of our Sales Leaders may affect our business because we are, or regulators may assert that we are, responsible for our Sales Leaders’ conduct.
We have implemented various measures to comply with these limits. In some markets, regulations applicable to the activities of our Sales Leaders may affect our business because we are, or regulators may assert that we are, responsible for our Sales Leaders’ conduct.
The timing of the launch of a particular product often varies from market to market depending on such factors as customer demand, product registration or other local legal requirements, and product availability in our supply chain.
The timing of the launch of a particular product often varies from market to market depending on such factors as customer demand, affiliate brand focus, product registration or other local legal requirements, and product availability in our supply chain.
Our employees also receive free product benefits, including our wellness products. Employees at our corporate headquarters also have access to an on-site gym, as well as our employee assistance program, which includes free counseling services. Employees in our global markets also receive benefits and other services focused on maintaining health and well-being.
Employees at our corporate headquarters also have access to an on-site gym, as well as our employee assistance program, which includes free counseling services. Employees in our global markets also receive benefits and other services focused on maintaining health and well-being.
Any amendments or waivers (including implicit waivers) regarding the Code of Conduct requiring disclosure under applicable SEC rules or NYSE listing standards will be disclosed in the same section of our website. 16 Table of Contents INFORMATION ABOUT OUR EXECUTIVE OFFICERS Our executive officers as of February 14, 2024 are as follows: Name Age Position Steven J.
Any amendments or waivers (including implicit waivers) regarding the Code of Conduct requiring disclosure under applicable SEC rules or NYSE listing standards will be disclosed in the same section of our website. INFORMATION ABOUT OUR EXECUTIVE OFFICERS Our executive officers as of February 14, 2025 are as follows: Name Age Position Steven J.
We have registered ageLOC Boost as a medical device in Thailand, and we are seeking medical device registration in Thailand for Nu Skin WellSpa iO . We have been subject to regulatory inquiries in the United States, Japan and other markets with respect to the status of the Pharmanex BioPhotonic Scanner as a non-medical device.
We have registered ageLOC Boost and Nu Skin WellSpa iO as medical devices in Thailand. We have been subject to regulatory inquiries in the United States, Japan and other markets with respect to the status of the Pharmanex BioPhotonic Scanner as a non-medical device.
Clark has served as our Executive Vice President and General Counsel since 2021. Mr. Clark joined our company in 2015 as Assistant General Counsel and later served as Vice President and Deputy General Counsel before beginning his current role. Prior to joining our company, he was a litigation attorney in private practice in Salt Lake City, Utah.
Clark joined our company in 2015 as Assistant General Counsel and later served as Vice President and Deputy General Counsel before beginning his current role. Prior to joining our company, he was a litigation attorney in private practice in Salt Lake City, Utah.
Our Rhyz businesses, which are reported in two segments, primarily consist of the following consumer, technology and manufacturing companies: Rhyz Manufacturing Segment: ● Elevate Nutraceuticals LLC, dba Elevate Health Sciences—a manufacturer of private-label dietary supplements. ● Ingredient Innovations International Company, dba 3i Solutions—a manufacturer of dietary supplements. ● L&W Holdings, Inc., dba CasePak—a packaging company that consults with product developers to design and develop custom packaging. ● Wasatch Product Development, LLC—a developer and manufacturer of personal care products, dietary supplements and functional foods.
Our Rhyz businesses, which are reported in two segments, primarily consist of the following consumer, technology and manufacturing companies: Rhyz Manufacturing Segment: ● Elevate Nutraceuticals LLC, dba Elevate Health Sciences—a manufacturer of private-label dietary supplements. ● Ingredient Innovations International Company, dba 3i Solutions—a manufacturing technology company, making ingredients more bioavailable and shelf stable across food, beverage, supplements and personal care products. ● L&W Holdings, Inc., dba CasePak—a packaging company that consults with product developers to design and develop custom packaging. ● Wasatch Product Development, LLC—a developer and manufacturer of personal care products, dietary supplements and functional foods.
In general, the regulatory environment is becoming more complex with increasingly stricter regulations each year. 12 Table of Contents Manufacturing Process. In 2008, and as subsequently updated under the regulations implementing the FSMA, the FDA established regulations to require current “good manufacturing practices” for dietary supplements and food products in the United States.
In general, the regulatory environment is becoming more complex with increasingly stricter regulations each year. Manufacturing Process. In 2007, and as subsequently updated under the regulations implementing the FSMA, the FDA established regulations to require current “good manufacturing practices” for dietary supplements and food products in the United States.
The labeling of cosmetic products is subject to the requirements of the Federal Food, Drug, and Cosmetic Act (“FDCA”), the Fair Packaging and Labeling Act and other FDA regulations. In 2024, the FDA will begin implementation of portions of the Modernization of Cosmetics Regulation Act of 2022 (“MoCRA”).
The labeling of cosmetic products is subject to the requirements of the Federal Food, Drug, and Cosmetic Act (“FDCA”), the Fair Packaging and Labeling Act and other FDA regulations. In 2024, the FDA began implementing portions of the Modernization of Cosmetics Regulation Act of 2022 (“MoCRA”).
From 2015 to 2018, he served as CEO of a nutritional supplement manufacturer that our company acquired in 2018, at which time he began serving as president until December 2020. Previously, he served as vice president of manufacturing and product innovation at Forever Living Products, and as CEO and president at Cornerstone Research and Development. 17 Table of Contents
From 2015 to 2018, he served as CEO of Elevate Health Sciences, a nutritional supplement manufacturer that our company acquired in 2018, at which time he began serving as President until December 2020. Previously, he served as vice president of manufacturing and product innovation at Forever Living Products, and as CEO and President at Cornerstone Research and Development. Justin S.
We believe our product launch process attracts new Customers, Paid Affiliates and Sales Leaders to our business, increases consumer trial, and provides us with important marketing and forecasting information about our products. Please refer to Item 1A.
We believe our product launch process attracts new Customers, Paid Affiliates and Sales Leaders to our business, increases consumer trial, and provides us with important marketing and forecasting information about our products. Please refer to Item 1A. Risk Factors for more information on risks related to our product launch process.
All of our full- and part-time employees are responsible for upholding the Nu Skin Code of Conduct and for striving to perpetuate the Nu Skin Way, our global culture aspiration, which includes the following principles: ● A force for good ● Direct and decisive ● Accountable and empowered ● Exceptional ● Bold innovators ● Fast speed ● Customer obsessed ● One global team 15 Table of Contents Hiring, Engagement, Development and Retention.
All of our full- and part-time employees are responsible for upholding the Nu Skin Code of Conduct and for striving to follow the Nu Skin Way, our global culture aspiration, which includes the following principles: ● A force for good ● Accountable and empowered ● Bold innovators ● Customer obsessed ● Direct and decisive ● Exceptional ● Fast speed ● One global team Inclusion.
This implementation will create a greater burden for cosmetic manufacturer facility registration and audits, mandate product notification for cosmetics, and mandate the reporting of serious adverse events to the FDA. Rollout of MoCRA is expected to continue for the coming years.
This implementation creates a greater burden for cosmetic manufacturer facility registration and audits, mandates product notifications for cosmetics, and mandates the reporting of serious adverse events to the FDA. Rollout of MoCRA is expected to continue for the coming years.
Such a determination might prevent the use of such a claim or result in additional FDA enforcement. We are aware of media reports regarding dietary supplements, which call for the repeal or amendment of DSHEA.
Such a determination might prevent the use of such a claim or result in additional FDA enforcement. From time to time, there are unfavorable media reports regarding dietary supplements, which call for the repeal or amendment of DSHEA.
Pursuant to FSMA, the FDA is authorized, among other things, to order mandatory recalls, issue “administrative detention” orders, and revoke manufacturing facility registrations (effectively preventing the operation of a food or dietary supplement manufacturing facility), and importers of foods and nutritional supplements are subject to Foreign Supplier Verification Program requirements.
Pursuant to FSMA, the FDA is authorized, among other things, to order mandatory recalls, issue “administrative detention” orders, and revoke manufacturing facility registrations (effectively preventing the operation of a food or dietary supplement manufacturing facility), and importers of foods and nutritional supplements are subject to Foreign Supplier Verification Program requirements. 11 Table of Contents The FDA regulates dietary supplements principally under the Dietary Supplement Health and Education Act of 1994 (“DSHEA”).
For example, the government’s scrutiny of activities within the health products and direct selling industries has been at higher levels since 2019, following negative media coverage about healthcare-related product claims made by another direct selling company in Mainland China.
For example, the government’s scrutiny of activities within the health products and direct selling industries has been at higher levels since 2019, when the government conducted a 100-day campaign to review and inspect the health products and direct selling industries following negative media coverage about healthcare-related product claims made by another direct selling company in Mainland China.
In the course of obtaining these approvals, the respective authorities under MOFCOM must also consult and seek opinions on our business operations from the Ministry of Public Security and the Administration for Market Regulation at both provincial and state levels.
In the course of obtaining these approvals, the respective authorities under MOFCOM must also consult and seek opinions on our business operations from the Ministry of Public Security and the Administration for Market Regulation at both provincial and state levels. Government authorities have not been issuing new licenses for direct selling since 2019.
As is the case with most companies in our industry, we receive inquiries from time to time from government regulatory authorities regarding the nature of our business and other issues, such as compliance with local direct selling, transfer pricing, customs, taxation, foreign exchange control, securities and other laws.
As is the case with most companies in our industry, we receive inquiries from time to time from government regulatory authorities regarding the nature of our business and other issues, such as compliance with local direct selling, transfer pricing, customs, taxation, foreign exchange control, securities and other laws. 8 Table of Contents Direct Selling Regulations Direct selling is regulated by various national, state and local government agencies in the United States and foreign markets.
Since joining Nu Skin in 2010, he also has served as Corporate Controller and as an Internal Auditor. Before joining Nu Skin, he worked as an assistant controller of another publicly reporting company and served in the assurance practice at PricewaterhouseCoopers LLP. Mr. Thomas holds B.S. and Master of Accounting degrees from Utah State University. Chayce D.
Before joining Nu Skin, he worked as an assistant controller of another publicly reporting company and served in the assurance practice at PricewaterhouseCoopers LLP. Mr. Thomas holds B.S. and Master of Accounting degrees from Utah State University. Chayce D. Clark has served as our Executive Vice President and General Counsel since 2021. Mr.
The laws and regulations in our current markets generally: ● impose requirements related to order cancellations, product returns, inventory buy-backs and cooling-off periods for our sales force and consumers; ● require us, or our sales force, to register with government agencies; ● impose limits on the amount and type of sales compensation we can pay; ● impose reporting requirements; and ● require that our sales force is compensated for sales of products and not for recruiting others. 8 Table of Contents The laws and regulations governing direct selling may be modified or reinterpreted from time to time, which may cause us to modify our sales compensation and business models.
The laws and regulations in our current markets generally: ● impose requirements related to order cancellations, product returns, inventory buy-backs and cooling-off periods for our sales force and consumers; ● require us, or our sales force, to register with government agencies; ● impose limits on the amount and type of sales compensation we can pay; ● impose reporting requirements; and ● require that our sales force is compensated for sales of products and not for recruiting others.
Risk Factors—“ Challenges to the form of our network marketing system or to our business practices could harm our business ” and “Laws and regulations may prohibit or severely restrict direct selling and cause our revenue and profitability to decline, and regulators could adopt new regulations that harm our business.” The regulatory environment in Mainland China is particularly complex and continues to evolve.
Risk Factors—“ Challenges to the form of our network marketing system or to our business practices have harmed and could continue to harm our business ” and “Direct selling laws and regulations vary globally, are subject to interpretation or change, and may prohibit or severely restrict direct selling and cause our revenue and profitability to decline.” The regulatory environment in Mainland China is particularly complex and continues to evolve.
Failure to respond timely to FDA inspection observations, a warning letter or other notice of noncompliance and to promptly come into compliance could result in the FDA bringing enforcement action against us, which could include the shutdown of our production facilities, denial of importation rights to the United States for products manufactured in overseas locations and criminal and civil fines.
Failure to respond timely to FDA inspection observations, a warning letter or other notice of noncompliance and to promptly come into compliance could result in the FDA bringing enforcement action against us, which could include the shutdown of our production facilities, denial of importation rights to the United States for products manufactured in overseas locations and criminal and civil fines. 14 Table of Contents Our Pharmanex BioPhotonic Scanner and our current and future device products may be subject to the regulations of various health, consumer-protection and other government authorities around the world.
Lund 70 Executive Chairman of the Board Ryan S. Napierski 50 President and Chief Executive Officer James D. Thomas 45 Executive Vice President and Chief Financial Officer Chayce D. Clark 41 Executive Vice President and General Counsel Steven K. Hatchett 52 Executive Vice President and Chief Product Officer Steven J.
Lund 71 Executive Chairman of the Board Ryan S. Napierski 51 President and Chief Executive Officer James D. Thomas 46 Executive Vice President and Chief Financial Officer Chayce D. Clark 42 Executive Vice President and General Counsel Steven K. Hatchett 53 Executive Vice President and Chief Product Officer Justin S.
In addition, our hiring and retention efforts must be consistent with our overall business size and strategy. During 2023, we engaged in restructuring initiatives, in which we canceled some open job positions and reduced our employee headcount to enable us to operate more efficiently. Developing our employees and keeping them engaged is crucial.
During 2024, we engaged in restructuring initiatives, in which we canceled some open job positions and reduced our employee headcount to enable us to operate more efficiently. Developing our employees and keeping them engaged is crucial.
In the United States, for example, federal law provides law enforcement agencies, such as the Federal Trade Commission (“FTC”), broad latitude in policing unfair or deceptive trade practices, but does not provide a bright-line test for identifying a pyramid scheme.
There is often ambiguity and uncertainty with respect to the state of direct selling and anti-pyramiding laws and regulations. In the United States, for example, federal law provides law enforcement agencies, such as the Federal Trade Commission (“FTC”), broad latitude in policing unfair or deceptive trade practices, but does not provide a bright-line test for identifying a pyramid scheme.
Lund is a trustee of the Nu Skin Force for Good Foundation, a charitable organization established in 1996 by our company to help encourage and drive the philanthropic efforts of our company and its sales force and employees to enrich the lives of others. Mr.
Lund is a trustee of the Nu Skin Force for Good Foundation, a charitable organization that our company established to help encourage and drive philanthropic efforts for our company, sales force and employees to enrich the lives of others. Mr. Lund worked as an attorney in private practice prior to joining our company as Vice President and General Counsel.
Napierski has fulfilled multiple leadership positions for Nu Skin since joining our company in 1995, including Vice President of Business Development for Nu Skin EMEA and General Manager of the United Kingdom. Mr.
Prior to serving in that position, he served as both President of our North Asia region since 2014 and President of Nu Skin Japan since 2010. Mr. Napierski has fulfilled multiple leadership positions for Nu Skin since joining our company in 1995, including Vice President of Business Development for Nu Skin EMEA and General Manager of the United Kingdom. Mr.
Employee Health and Well-Being. Our employees’ health and well-being is an essential component of our human capital management strategy. We established “The Best You” wellness program in the United States to improve the quality of each employee’s physical, emotional, intellectual and financial wellness by encouraging and incentivizing healthy lifestyle practices through health screenings, prevention programs and education.
We established “The Best You” wellness program in the United States to improve the quality of each employee’s physical, emotional, intellectual and financial wellness by encouraging and incentivizing healthy lifestyle practices through health screenings, prevention programs and education. Our employees also receive free product benefits, including our wellness products.
Because of negative publicity associated with some adulterated or misbranded supplements, including pharmaceutical drugs marketed as dietary supplements, there has been an increased movement in the United States and other markets to expand the regulation of dietary supplements, which could lead to additional restrictions or requirements in the future.
In some circumstances, the regulations in foreign markets may require us to obtain regulatory approval prior to introduction of a new product or limit our use of certain ingredients altogether. 12 Table of Contents Because of negative publicity associated with some adulterated or misbranded supplements, including pharmaceutical drugs marketed as dietary supplements, there has been an increased movement in the United States and other markets to expand the regulation of dietary supplements, which could lead to additional restrictions or requirements in the future.
Direct Selling Regulations Direct selling is regulated by various national, state and local government agencies in the United States and foreign markets. These laws and regulations are generally intended to prevent fraudulent or deceptive schemes, including “pyramid” schemes, which compensate participants primarily for recruiting additional participants without significant emphasis on product sales to consumers.
These laws and regulations are generally intended to prevent fraudulent or deceptive schemes, including “pyramid” schemes, which compensate participants primarily for recruiting additional participants without significant emphasis on product sales to consumers.
Rhyz Other Segment: ● Beauty Biosciences LLC—a beauty company that sells its products through digital and retail channels. ● LifeDNA, Inc.—a DNA assessment and recommendation technology company that we believe holds potential for our broader personalization strategy. ● MyFavoriteThings, Inc., dba Mavely—a social commerce platform that offers creators a suite of social selling tools to help them promote products from Mavely partner brands and retailers and earn a commission for their converted sales.
Rhyz Other Segment: ● Beauty Biosciences LLC—a beauty company that sells its products through digital and retail channels. ● LifeDNA, Inc.—a DNA assessment and recommendation technology company that we believe holds potential for our broader personalization strategy. 15 Table of Contents Until January 2025, the Rhyz Other segment additionally included MyFavoriteThings, Inc., dba Mavely, a social commerce platform.
Because the majority of our wellness products are regulated under DSHEA, we are generally not required to obtain regulatory approval prior to introducing a dietary supplement into the United States market.
Because most of our wellness products are regulated under DSHEA, we generally are not required to obtain regulatory approval prior to introducing a dietary supplement into the United States market. We are, however, obligated to notify the FDA, prior to marketing a product, of any structure/function claims that we intend to make about the product in any product-related materials.
Lund worked as an attorney in private practice prior to joining our company as Vice President and General Counsel. He received a B.A. degree from Brigham Young University and a J.D. degree from Brigham Young University’s J. Reuben Clark Law School. Ryan S. Napierski has served as our Company’s President since 2017 and as our CEO since 2021.
He received a B.A. degree from Brigham Young University and a J.D. degree from Brigham Young University’s J. Reuben Clark Law School. 17 Table of Contents Ryan S. Napierski has served as our Company’s President since 2017 and as our CEO since 2021. Previously, he served as President of Global Sales and Operations from 2015 to 2017.
The FTC, which exercises primary jurisdiction over the advertising of all of our products in the United States, has instituted enforcement actions against dietary supplement, food, and cosmetic companies for, among other things, deceptive advertising and lack of adequate scientific substantiation for claims.
Violations, alleged violations, or negative media attention related to our compliance with these restrictions could harm consumers’ perception of our business and products and could negatively impact the registration, licensing status and sales of our products. 13 Table of Contents The FTC, which exercises primary jurisdiction over the advertising of all of our products in the United States, has instituted enforcement actions against dietary supplement, food, and cosmetic companies for, among other things, deceptive advertising and lack of adequate scientific substantiation for claims.
Government authorities have not been issuing new licenses for direct selling since the beginning of the 100-day action in early 2019. Our operations in Mainland China are subject to significant government and media scrutiny and investigations. At times, investigations and other regulatory actions have limited our ability to conduct business in Mainland China.
Our operations in Mainland China are subject to significant government and media scrutiny and investigations. At times, investigations and other regulatory actions have limited our ability to conduct business in Mainland China.
This is particularly a challenge in Europe, where regulations often still differ from member state to member state, despite EU regulations designed to harmonize the laws of EU member states.
This is particularly a challenge in Europe, where regulations often still differ from member state to member state, despite EU regulations designed to harmonize the laws of EU member states. Recent activity to harmonize national laws governing maximum vitamin and mineral levels could restrict our ability to continue using the current formulations of our products.
OTC drug products may be marketed if they conform to the requirements of an FDA-established OTC drug monograph that is applicable to that drug. Drug products not conforming to monograph requirements require an approved New Drug Application (“NDA”) before marketing may begin.
Drug products not conforming to monograph requirements require an approved New Drug Application (“NDA”) before marketing may begin.
As a result, we often must modify the ingredients and/or the levels of ingredients in our products for certain markets or create unique formulations for multiple markets. In some circumstances, the regulations in foreign markets may require us to obtain regulatory approval prior to introduction of a new product or limit our use of certain ingredients altogether.
As a result, we often must modify the ingredients and/or the levels of ingredients in our products for certain markets or create unique formulations for multiple markets.
Violation of these consent decrees or orders could result in substantial financial or other penalties. The FTC also sends warning letters as it monitors companies’ activities.
Violation of these consent decrees or orders could result in substantial financial or other penalties. The FTC also sends warning letters as it monitors companies’ activities. In addition, during 2023, the FTC sent notices of penalty offense to nearly 700 companies, including us, regarding the requirement of sufficient substantiation for product claims.
We conduct a global employee experience survey every six months to obtain our employees’ feedback, which helps to guide our human capital initiatives and to maintain robust employee engagement. Diversity, Equity and Inclusion. We believe a diverse, equitable and inclusive work environment allows us to benefit from unique perspectives and provides vitality, creativity, new ideas and growth.
We conduct a global employee experience survey every six months to obtain our employees’ feedback, which helps to guide our human capital initiatives and to maintain robust employee engagement. Culture—A High-Performance and High-Engagement Work Environment.
Product Launch Process Prior to making a product generally available for purchase in a market, we often do one or more introductory offerings of the product, such as a preview of the product to our Sales Leaders or other product introduction or promotion.
In addition to rewarding performance, incentive trips provide Sales Leaders and the company opportunities to share best practices, set goals, generate alignment of Sales Leaders around key initiatives, and provide a high level of motivation and team building. 7 Table of Contents Product Launch Process Prior to making a product generally available for purchase in a market, we often do one or more introductory offerings of the product, such as a preview of the product to our Sales Leaders or other product introduction or promotion.
Several markets, including Mainland China, South Korea, Indonesia and Vietnam, impose limits on the amount of sales compensation we can pay to our sales force.
We face a risk that future investigations and other regulatory actions may result in fines, revocation of licenses or other significant sanctions. 9 Table of Contents Several markets, including Mainland China, South Korea, Indonesia and Vietnam, impose limits on the amount of sales compensation we can pay to our sales force.
In addition, plaintiffs’ lawyers have filed class action lawsuits against some of our competitors after our competitors received these FDA warning letters.
In addition, plaintiffs’ lawyers have filed class action lawsuits against some of our competitors after our competitors received these FDA warning letters. There can be no assurance that we will not be subject to government actions or lawsuits, which could harm our business.
Risk Factors for more information on risks related to our product launch process. 7 Table of Contents GEOGRAPHIC REGIONS We currently sell and distribute our Nu Skin business’s products in nearly 50 markets.
GEOGRAPHIC REGIONS We currently sell and distribute our Nu Skin business’s products in nearly 50 markets.
Prior to marketing a product, we are obligated to notify the FDA of any structure/function claims that we intend to make about the product in any product-related materials. 11 Table of Contents Generally, under DSHEA, dietary ingredients that were on the market before October 15, 1994 may be used in dietary supplements without notifying the FDA.
Generally, under DSHEA, dietary ingredients that were on the market before October 15, 1994 may be used in dietary supplements without notifying the FDA.
Immediately preceding his appointment as CFO in July 2023, he served as Interim CFO since March 2023 and as Senior Vice President and Chief Accounting Officer since 2019. He previously served as our Vice President of Finance and Accounting from 2017 until his promotion to Chief Accounting Officer.
He previously served as our Senior Vice President and Chief Accounting Officer from 2019 until 2023 and as Vice President of Finance and Accounting from 2017 until 2019. Since joining Nu Skin in 2010, he also has served as Corporate Controller and as an Internal Auditor.
These companies enable us to diversify our revenue mix, serve more customers where they shop, and create synergies for our owned and partner brands. HUMAN CAPITAL RESOURCES As of December 31, 2023, we had approximately 3,700 full- and part-time employees worldwide. This does not include approximately 11,500 sales employees in our Mainland China operations.
Rhyz is a key component of our business, and these companies enable us to reduce our cost of goods, improve lead times, diversify our revenue mix, and create synergies for our owned and partner brands. HUMAN CAPITAL RESOURCES As of December 31, 2024, we had approximately 3,100 full- and part-time employees worldwide.
We seek to hire and retain employees with the talents and capabilities to succeed at our company. The level of competition for qualified employees is high, owing to employment market trends both internationally and in Utah, where our corporate headquarters are located and which has one of the lowest unemployment rates in the United States.
The level of competition for qualified employees is high, owing to employment market trends both internationally and in Utah, where our corporate headquarters are located. These conditions have made it difficult to fill some job positions and retain employees.
These conditions have made it more difficult for us to fill some job positions and retain employees. We address this issue by building a strong employer brand, allowing remote work options to reach potential employees in other locations, and providing competitive compensation and benefits.
We address this issue by building a strong employer brand, allowing remote work options to reach potential employees in other locations, and providing competitive compensation and benefits. In addition, our hiring and retention efforts must be consistent with our overall business size and strategy.
Our competitors include a broad array of marketers of beauty and wellness products and pharmaceutical companies, many of which have longer operating histories and greater name recognition and financial resources than we do. We compete in these markets by emphasizing the innovation, value and premium quality of our products and the reach, convenience and customer servicing of our distribution system.
Risk Factors f or more information on the regulatory risks associated with our device products. COMPETITION Products The markets for our products are highly competitive. Our competitors include a broad array of marketers of beauty and wellness products and pharmaceutical companies, many of which have longer operating histories and greater name recognition and financial resources than we do.
These voluntary measures and the adverse publicity had a significant negative impact on our business. We face a risk that future investigations and other regulatory actions may result in fines, revocation of licenses or other significant sanctions.
These voluntary measures and the adverse publicity had a significant negative impact on our business.
We also incorporate DEI practices into our hiring process. We conduct training to create awareness of unintentional biases that may be present in the hiring process. We work to ensure the wording of our job postings is inclusive and utilize multiple broad-based candidate search engines to expand our talent pools and increase our access to diverse candidates.
We work to ensure the wording of our job postings is inclusive and utilize multiple broad-based candidate search engines to expand our talent pools and increase our access to diverse candidates. 16 Table of Contents Employee Health and Well-Being. Our employees’ health and well-being is an essential component of our human capital management strategy.
Our Healthy Workplace Policy also aims to cultivate a culture of mutual respect and to provide all employees a work environment free from harassment, discrimination and unprofessional behavior. Our employees receive training on their responsibility in this important area, and we make a Healthy Workplace Hotline available for employees to report concerns anonymously.
Our employees receive training on their responsibility in this important area, and we make a Healthy Workplace Hotline available for employees to report concerns anonymously. We also incorporate inclusion practices into our hiring process. We conduct training to create awareness of unintentional biases that may be present in the hiring process.
In almost all of our markets, regulations are subject to discretionary interpretation by regulators and judicial authorities. There is often ambiguity and uncertainty with respect to the state of direct selling and anti-pyramiding laws and regulations.
The laws and regulations governing direct selling may be modified or reinterpreted from time to time, which may cause us to modify our sales compensation and business models. In almost all of our markets, regulations are subject to discretionary interpretation by regulators and judicial authorities.
We aspire to be a global community where every employee, entrepreneur, and consumer knows and feels they belong.” We have established employee resource groups to help ensure that under-represented populations feel welcome at Nu Skin, including people of color, women and LGBTQIA+ individuals.
We have established employee resource groups to help ensure that under-represented populations feel welcome at Nu Skin, including people of color, women and LGBTQIA+ individuals. Our Healthy Workplace Policy also aims to cultivate a culture of mutual respect and to provide all employees a work environment free from harassment, discrimination and unprofessional behavior.
Although we have statutory employee representation obligations in certain markets, our employees are generally not represented by labor unions except where expressly required by law. We believe that our relationship with our employees is good, and we do not foresee a shortage in qualified personnel necessary to operate our business. Our human capital objectives include the following: Culture.
This does not include approximately 8,200 sales employees in our Mainland China operations. Although we have statutory employee representation obligations in certain markets, our employees are generally not represented by labor unions except where expressly required by law.
There can be no assurance that we will not be subject to government actions or lawsuits, which could harm our business. 10 Table of Contents Certain products, such as sunscreens and acne treatments, are classified as over-the-counter (“OTC”) drugs (and cosmetics, depending on claims) and have specific ingredient, labeling and manufacturing requirements.
Certain products, such as sunscreens and acne treatments, are classified as OTC drugs (and cosmetics, depending on claims) and have specific ingredient, labeling and manufacturing requirements. OTC drug products may be marketed if they conform to the requirements of an FDA-established OTC drug monograph that is applicable to that drug.
In 2023, the Rhyz companies generated $216.6 million, or 11%, of our 2023 reported revenue (excluding sales to our core Nu Skin business). Rhyz is a key component of our business, and we anticipate its continued growth in the coming years both on an absolute basis and as a percentage of our consolidated revenue.
As previously announced, we sold this business in January 2025. Mavely accounted for $69.6 million of our 2024 reported revenue. In 2024, the Rhyz companies generated $286.6 million, or 17%, of our 2024 reported revenue (excluding sales to our core Nu Skin business).
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In addition to rewarding performance, incentive trips provide Sales Leaders and the company opportunities to share best practices, set goals, generate alignment of Sales Leaders around key initiatives, and provide a high level of motivation and team building.
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In addition, in 2025, the FTC issued a Notice of Proposed Rulemaking (“NPR”) and an Advanced Notice of Proposed Rulemaking (“ANPR”) regarding potential rules governing earnings claims for multi-level marketers.
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In addition, during 2021 the FTC announced that it is initiating a review of its Business Opportunity Rule, which imposes certain obligations on business opportunity sellers in their dealings with prospective buyers; the FTC issued a request for public comment on this rule in November 2022. Currently, multi-level marketing companies have been deemed not covered by this rule.
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The NPR proposes to prohibit multi-level marketers from making deceptive earnings claims, and it would require them to have written substantiation to back up any earnings claims and make that substantiation available to consumers upon request. The ANPR indicates that the FTC is considering additional restrictions on earnings claims and recruiting by multi-level marketers.
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If this changes or if new regulations are adopted for multi-level marketing companies, it could negatively impact the growth of our sales force and our revenue. Also during 2021, the FTC sent a notice to more than 1,100 companies, including us, that outlined several practices that the FTC determined to be unfair or deceptive in prior administrative cases.
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We compete in these markets by emphasizing the innovation, value and premium quality of our products and the reach, convenience and customer servicing of our distribution system. The personal touch our sales force provides is a key differentiator in our approach to sharing products with and retaining consumers.
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These practices relate to earnings claims, other money-making opportunity claims, and endorsements and testimonials. Pursuant to the FTC’s “penalty offense authority,” companies that received the notice are expected to comply with the standards set in the prior administrative cases and could incur significant civil penalties if they or their representatives fail to do so.
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We believe that our relationship with our employees is good, and we do not foresee a shortage in qualified personnel necessary to operate our business. Our human capital priorities include the following: Capability—Hiring, Engagement, Development and Retention. We seek to hire and retain employees with the talents and capabilities to succeed at our company.
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In addition, during 2022, the FTC issued an Advanced Notice of Proposed Rulemaking (“ANPR”) indicating that it is considering proposing a rule regarding earnings claims. The ANPR also suggested, among other things, that the FTC would likely not consider a disclaimer (such as “results not typical”) to be sufficient to correct a misleading impression from an atypical earnings claim.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThe company agreed to a prohibition from engaging in multi-level marketing. ● During 2020 to 2022, the FTC issued letters that warned several direct-selling companies to remove and address claims that they or members of their sales force were making about their products’ ability to treat, cure or prevent COVID-19 and/or about the earnings that people who suffered the loss of a job or income could make. ● In 2021, the FTC sent a notice to more than 1,100 companies, including us, that outlined several practices that the FTC determined to be unfair or deceptive in prior administrative cases.
Biggest changeFor example, in 2021, the FTC sent a notice to more than 1,100 companies, including us, that outlined several practices that the FTC determined to be unfair or deceptive in prior administrative cases. These practices relate to earnings claims, other money-making opportunity claims, and endorsements and testimonials.
Risks Associated with Epidemics and Other Widespread Crises Epidemics and other crises have negatively impacted our business and may do so in the future.
Risks Associated with Epidemics and Other Widespread Crises Epidemics and other crises have negatively impacted our business and may do so in the future.
Our past acquisitions have, and future acquisitions could, entailed numerous risks, including: ● difficulties in integrating acquired operations or products; ● the difficulties of imposing financial and operating controls on the acquired companies and their management and the potential costs of doing so; ● the potential loss of key employees, customers, suppliers or distributors from acquired businesses; ● disruption to our direct selling channel; ● diversion of management’s and other employees’ attention from our core business; ● the failure to achieve the strategic objectives of these acquisitions; ● increased fixed costs; ● financing structures that dilute the interests of our stockholders and/or result in an increase in our indebtedness; ● the failure of the acquired businesses to achieve the results we have projected in either the near or long term; ● the assumption of unexpected liabilities, including litigation risks or compliance issues not discovered during pre-acquisition diligence; ● adverse effects on existing business relationships with our suppliers, sales force or consumers; ● the risk of being unable to protect intellectual property related to newly acquired technologies; and ● risks associated with entering markets or industries in which we have limited or no prior experience, including limited expertise in running the business, developing the technology, and selling and servicing the products.
Our past acquisitions have entailed, and future acquisitions could entail, numerous risks, including: ● difficulties in integrating acquired operations, employees or products; ● the difficulties of imposing financial and operating controls on the acquired companies and their management and the potential costs of doing so; ● the potential loss of key employees, customers, suppliers or distributors from acquired businesses; ● disruption to our direct selling channel; ● diversion of management’s and other employees’ attention from our core business; ● the failure to achieve the strategic objectives of these acquisitions; ● increased fixed costs; ● financing structures that dilute the interests of our stockholders and/or result in an increase in our indebtedness; ● the failure of the acquired businesses to achieve the results we have projected in either the near or long term; ● the assumption of unexpected liabilities, including litigation risks or compliance issues not discovered during pre-acquisition diligence; ● adverse effects on existing business relationships with our suppliers, sales force or consumers; ● the risk of being unable to protect intellectual property related to newly acquired technologies; and ● risks associated with entering markets or industries in which we have limited or no prior experience, including limited expertise in running the business, developing the technology, and selling and servicing the products.
International Risks ● Our ability to conduct business in international markets may be affected by political, legal, tax and regulatory risks. ● We are subject to financial risks as a result of our international operations, including exposure to foreign-currency fluctuations, currency controls and inflation in foreign markets, all of which could impact our financial position and results of operations. ● Potential changes to tariff and import/export regulations, and trade disputes between the United States and other jurisdictions may have a negative effect on global economic conditions and our business, financial results and financial condition.
International Risks ● Our ability to conduct business in international markets may be affected by political, legal, tax and regulatory risks. ● We are subject to financial risks as a result of our international operations, including exposure to foreign-currency fluctuations, currency controls and inflation in foreign markets, all of which could impact our financial position and results of operations. ● Changes to tariff and import/export regulations, and trade disputes between the United States and other jurisdictions may have a negative effect on global economic conditions and our business, financial results and financial condition.
Human Capital Risks ● If we are unable to retain our existing sales force and recruit additional people to join our sales force, our revenue may not increase and may even decline. ● We depend on our key personnel and Sales Leaders, and the loss of the services provided by any of our executive officers, other key employees or key Sales Leaders could harm our business and results of operations. 18 Table of Contents Risks Associated with Our Manufacturing and Operations ● Production difficulties, quality control problems, inaccurate forecasting, shortages in ingredients, and reliance on our suppliers could harm our business. ● The loss of or a disruption in our manufacturing, supply chain and distribution operations, or significant expenses or violations incurred by such operations, could adversely affect our business. ● Our business could be negatively impacted if we fail to execute our product launch process or ongoing product sales due to difficulty in forecasting or increased pressure on our supply chain, information systems and management. ● If we are unable to effectively manage our growth in certain markets, our business and operations could be harmed. ● System failures, capacity constraints and other information technology difficulties could harm our business. ● Any acquired companies or future acquisitions may expose us to additional risks.
Human Capital Risks ● If we are unable to retain our existing sales force and recruit additional people to join our sales force, our revenue may not increase and may even decline. ● We depend on our key personnel and Sales Leaders, and the loss of the services provided by any of our executive officers, other key employees or key Sales Leaders could harm our business and results of operations. 19 Table of Contents Risks Associated with Our Manufacturing and Operations ● Production difficulties, quality control problems, inaccurate forecasting, shortages in ingredients, and reliance on our suppliers could harm our business. ● The loss of or a disruption in our manufacturing, supply chain and distribution operations, or significant expenses or violations incurred by such operations, could adversely affect our business. ● Our business could be negatively impacted if we fail to execute our product launch process or ongoing product sales due to difficulty in forecasting or increased pressure on our supply chain, information systems and management. ● If we are unable to effectively manage our growth in certain markets, our business and operations could be harmed. ● System failures, capacity constraints and other information technology difficulties could harm our business. ● Any acquired companies or future acquisitions may expose us to additional risks.
To expand our direct selling model into additional provinces in Mainland China, we currently must obtain a series of approvals from district, city, provincial and national government agencies with respect to each province in which we wish to expand. Government authorities have not been issuing new licenses since the beginning of the 100-day action in early 2019.
To expand our direct selling model into additional provinces in Mainland China, we currently must obtain a series of approvals from district, city, provincial and national government agencies with respect to each province in which we wish to expand. Government authorities have not been issuing new licenses since the beginning of the 100-day action in 2019.
These mistakes by our sales force, or allegations of such mistakes, have, and may in the future, led to government reviews and investigations of our operations in Mainland China, as well as adverse publicity, reputational harm and adjustments or interruptions to our operations, all of which has and could in the future have a significant negative impact on our revenue and the number of Sales Leaders and Customers in the region.
These mistakes by our sales force, or allegations of such mistakes, have led, and may in the future lead, to government reviews and investigations of our operations in Mainland China, as well as adverse publicity, reputational harm and adjustments or interruptions to our operations, all of which has and could in the future have a significant negative impact on our revenue and the number of Sales Leaders and Customers in the region.
Legal, Regulatory and Compliance Risks ● We may become involved in legal proceedings and other matters that could adversely affect our operations or financial results. ● Non-compliance with anti-corruption laws could harm our business. ● A failure of our internal controls over financial reporting or our regulatory compliance efforts could harm our stock price and our financial and operating results or could result in fines or penalties.
Legal, Regulatory and Compliance Risks ● We may become involved in legal proceedings and other matters that could adversely affect our operations or financial results. ● Non-compliance or alleged non-compliance with anti-corruption laws could harm our business. ● A failure of our internal controls over financial reporting or our regulatory compliance efforts could harm our stock price and our financial and operating results or could result in fines or penalties.
We collect, transmit and/or store large volumes of company, employee, sales force, customer and guest data, including payment card information, personally identifiable information, health-related data and other personal information, for business purposes, including for transactional and promotional purposes, and our various information technology systems enter, process, summarize, report and transmit such data.
We collect, transmit and/or store large volumes of company, employee, sales force, customer and guest data, including payment card information, personally identifiable information, health-related data, biometric information and other personal information, for business purposes, including for transactional and promotional purposes, and our various information technology systems enter, process, summarize, report and transmit such data.
Difficult economic conditions, such as high unemployment levels, inflation, deflation, or recession, have in the past, and could continue to, adversely affect our business by causing a decline in demand for our products, particularly if the economic conditions are prolonged or worsen.
Difficult economic conditions could harm our business. Difficult economic conditions, such as high unemployment levels, inflation, deflation, or recession, have in the past, and could continue to, adversely affect our business by causing a decline in demand for our products, particularly if the economic conditions are prolonged or worsen.
T he process for registering products for the direct sales channel in Mainland China is subject to delays; in fact, g overnment authorities have not been processing new registrations for direct selling since the beginning of the 100-day action in early 2019 .
T he process for registering products for the direct sales channel in Mainland China is subject to delays; in fact, g overnment authorities have not been processing new registrations for direct selling since the beginning of the 100-day action in 2019 .
Cross-border e-commerce is separated from the direct selling sales channel in Mainland China. Our Sales Leaders can contract with the China entity, promote this cross-border e-commerce platform to introduce consumers to place orders on this platform, and receive compensation in return.
Cross-border e-commerce is separated from the direct selling sales channel in Mainland China. Our Sales Leaders can contract with the China entity, promote this cross-border e-commerce platform to introduce consumers to place orders on this platform, and receive limited compensation in return.
We have, and may in the future, failed to appropriately scale our system capacity and operations in response to unanticipated changes in demand for our existing products or to the demand for new products, which reduces our sales force’s confidence in our business and could harm our reputation and profitability.
We have failed, and may in the future fail, to appropriately scale our system capacity and operations in response to unanticipated changes in demand for our existing products or to the demand for new products, which reduces our sales force’s confidence in our business and could harm our reputation and profitability.
For example, some of our products, including ageLOC Meta and ageLOC Youth ( Youthspan or Y-Span in some markets), incorporate unique natural ingredients that are only harvested once per year and/or may have limited global supplies. If demand exceeds forecasts, we may have difficulties in obtaining additional supplies to meet the excess demand until the next growing season.
For example, some of our products, including ageLOC Meta and ageLOC Youth ( Youthspan or Y-Span in some markets), incorporate unique natural ingredients that may only be harvested once per year and/or may have limited global supplies. If demand exceeds forecasts, we may have difficulties in obtaining additional supplies to meet the excess demand until the next growing season.
Through this entity, the U.S. subsidiary sells ageLOC Meta , ageLOC Youth and certain other products, which are neither registered for retail sale in Mainland China nor registered specifically as direct selling products and, therefore, can only be sold to local consumers for their personal consumption and cannot be sold through the direct selling channel.
Through this entity, the U.S. subsidiary sells ageLOC Meta , ageLOC Youth and certain other overseas products, which are neither registered for retail sale in Mainland China nor registered specifically as direct selling products and, therefore, can only be sold to local consumers for their personal consumption, cannot be sold through the direct selling channel, and cannot be resold.
For example, data privacy laws in Mainland China and other jurisdictions place restrictions on the cross-border transmission of personal data, which could impede our ability to perform many business functions, including calculating and paying compensation to our sales force, absent significant changes to our information system architecture.
For example, data privacy laws in Mainland China, the European Union and other jurisdictions place restrictions on the cross-border transmission of personal data, which could impede our ability to perform many business functions, including calculating and paying compensation to our sales force, absent significant changes to our information system architecture.
These legal proceedings may include, among other things, claims alleging violation of the federal securities laws or state corporate laws, or claims related to employment matters, contracts, intellectual property, fair-competition/anti-trust laws, our products, business opportunity or advertising, defamation, negligence, data breaches, privacy compliance, or other matters.
These legal proceedings can include, among other things, claims alleging violation of the federal securities laws or state corporate laws, or claims related to employment matters, contracts, intellectual property, fair-competition/anti-trust laws, our products, business opportunity or advertising, defamation, negligence, data breaches, privacy compliance, or other matters.
While still in flux, if enacted in final form as proposed, this guidance could impose new and significant regulatory barriers for our nutritional supplement products or unique ingredients, which could delay or inhibit our ability to formulate, introduce and sell nutritional supplements as we have in the past.
While still in flux, if enacted as proposed, this guidance could impose new and significant regulatory barriers for our nutritional supplement products or unique ingredients, which could delay or inhibit our ability to formulate, introduce and sell nutritional supplements as we have in the past.
Although we believe we have significant competitive advantages, we cannot assure that we will be able to continue to successfully compete in this industry. 27 Table of Contents Adverse publicity concerning our business, marketing plan, products or people could harm our business and reputation.
Although we believe we have significant competitive advantages, we cannot assure that we will be able to continue to successfully compete in this industry. 26 Table of Contents Adverse publicity concerning our business, marketing plan, products or people could harm our business and reputation.
In addition to tariffs, any actions taken by the United States or by foreign countries to further implement trade policy changes, including limiting foreign investment or trade, increasing regulatory requirements, or other actions that impact our ability to obtain necessary licenses or approvals could negatively impact our business.
In addition to duties and tariffs, any actions taken by the United States or by foreign countries to further implement trade policy changes, including limiting foreign investment or trade, increasing regulatory requirements, or other actions that impact our ability to obtain necessary licenses or approvals could negatively impact our business.
We face the risk that we will ultimately be unable to develop these items, that their development will be more costly than anticipated, or that the applications and platforms we have and will develop will not meet the expectations of our sales force and/or consumers.
We face the risk that we will ultimately be unable to develop these items, that their development will be more costly or take longer than anticipated, or that the applications and platforms we have and will develop will not meet the expectations of our sales force and/or consumers.
In addition, there can be no assurance that we will be able to identify suitable acquisition candidates, consummate acquisitions on favorable terms or realize the anticipated benefits of an acquisition. Product Legal and Regulatory Risks Regulations governing our products, including the formulation, registration, pre-approval, marketing and sale of our products, could harm our business.
In addition, there can be no assurance that we will be able to identify suitable acquisition candidates, consummate acquisitions on favorable terms or realize the anticipated benefits of an acquisition. 35 Table of Contents Product Legal and Regulatory Risks Regulations governing our products, including the formulation, registration, pre-approval, marketing and sale of our products, could harm our business.
All of these factors and other events related to COVID-19 negatively impacted our sales and operations and could repeat in the event of future epidemics or other crises. In addition, during a widespread crisis, regulators are vigilant for companies that may be exploiting the crisis to the detriment of consumers.
All of these factors and other events related to COVID-19 negatively impacted our sales and operations and could repeat in the event of future epidemics or other crises. 29 Table of Contents In addition, during a widespread crisis, regulators are vigilant for companies that may be exploiting the crisis to the detriment of consumers.
We have, and may in the future, experienced difficulty effectively managing growth associated with these offerings and may face increased risk of improper sales force activities and related government scrutiny. In addition, the size and condensed schedule of these product offerings increase pressure on our supply chain and order processing systems.
We have, and may in the future, experienced difficulty effectively managing growth associated with these offerings and may face increased risk of improper sales force activities and related government scrutiny. 33 Table of Contents In addition, the size and condensed schedule of these product offerings increase pressure on our supply chain and order processing systems.
Changes in the law or in authorities’ interpretation of the law can materially increase our tax or customs expense and our effective tax rate. Due to the numerous jurisdictions in which our subsidiaries are organized and changes in laws and their interpretations, significant judgment is required in evaluating and estimating our provision for income taxes.
Changes in the law or in authorities’ interpretation of the law can materially increase our tax or customs expense and our effective tax rate. 40 Table of Contents Due to the numerous jurisdictions in which our subsidiaries are organized and changes in laws and their interpretations, significant judgment is required in evaluating and estimating our provision for income taxes.
Any such matters, or related corporate citizenship and sustainability matters, could have a material adverse effect on our business. Risks Related to Our Common Stock The market price of our Class A common stock is subject to significant fluctuations due to a number of factors that are beyond our control.
Any such matters, or related corporate citizenship and sustainability matters, could have a material adverse effect on our business. 44 Table of Contents Risks Related to Our Common Stock The market price of our Class A common stock is subject to significant fluctuations due to a number of factors that are beyond our control.
In some cases, such adverse publicity or allegations can lead to government and regulatory scrutiny. We continue to see adverse publicity regarding our company and the direct selling and healthcare products industries. We or others in our industry may receive similar negative publicity or allegations in the future, and it may harm our business and reputation.
In some cases, such adverse publicity or allegations can lead to government and regulatory scrutiny. We continue to see adverse publicity regarding our company and the direct selling and wellness industries. We or others in our industry may receive similar negative publicity or allegations in the future, and it may harm our business and reputation.
Similarly, f rom time to time, efforts are made by some individuals or groups to repeal the Dietary Supplement Health and Education Act of 1994 (“DSHEA”), the U.S. law that provides a separate body of regulations for dietary supplements as compared to drugs.
Similarly, from time to time, efforts are made by some individuals or groups to repeal the Dietary Supplement Health and Education Act of 1994 (“DSHEA”), the U.S. law that provides a separate body of regulations for dietary supplements as compared to drugs.
These risks include the following: Risks Associated with Direct Selling and Our Sales Force ● Challenges to the form of our network marketing system or to our business practices could harm our business. ● Laws and regulations may prohibit or severely restrict direct selling and cause our revenue and profitability to decline, and regulators could adopt new regulations that harm our business. ● Improper sales force actions could harm our business. ● Social media platforms’ decisions to prohibit, block or decrease the prominence of our sales force’s content could harm our business. ● If our business practices or policies or the actions of our sales force are deemed to be in violation of applicable local regulations regarding foreigners, then we could be sanctioned and/or required to change our business model, which could significantly harm our business. ● Our sales compensation plans or other incentives could be viewed negatively by some of our sales force, could be restricted by government regulators, and could fail to achieve desired long-term results and have a negative impact on revenue. ● Limits on the amount of sales compensation we pay could inhibit our ability to attract and retain our sales force, negatively impact our revenue and cause regulatory risks. ● We may be held responsible for certain taxes, assessments and other requirements relating to the activities of our sales force, which could harm our financial condition and operating results.
These risks include the following: Risks Associated with Direct Selling and Our Sales Force ● Challenges to the form of our network marketing system or to our business practices have harmed and could continue to harm our business. ● Direct selling laws and regulations vary globally, are subject to interpretation or change, and may prohibit or severely restrict direct selling and cause our revenue and profitability to decline. ● Improper sales force actions could harm our business. ● Social media platforms’ decisions to prohibit, block or decrease the prominence of our sales force’s content could harm our business. ● If our business practices or policies or the actions of our sales force are deemed to be in violation of applicable local regulations regarding foreigners, then we could be sanctioned and/or required to change our business model, which could significantly harm our business. ● Our sales compensation plans or other incentives could be viewed negatively by some of our sales force, could be restricted by government regulators, and could fail to achieve desired long-term results and have a negative impact on revenue. ● Limits on the amount of sales compensation we pay could inhibit our ability to attract and retain our sales force, negatively impact our revenue and cause regulatory risks. ● We may be held responsible for certain taxes, assessments and other requirements relating to the activities of our sales force, which could harm our financial condition and operating results.
As a result, we may also be required to develop alternative non-infringing technology, which could require significant effort and expense and/or cause us to alter our products or services, which could negatively affect our business. We employ individuals who were previously employed at other beauty or wellness product companies, including our competitors or potential competitors.
As a result, we may also be required to develop alternative non-infringing technology, which could require significant effort and expense and/or cause us to alter our products or services, which could negatively affect our business. 41 Table of Contents We employ individuals who were previously employed at other beauty or wellness product companies, including our competitors or potential competitors.
We also plan to begin selling additional products through this channel.
We also plan to begin selling additional overseas products through this channel.
We dedicate time and resources to internal investigations of any allegation that we are not or may not be in compliance with anti-corruption laws. Such allegations, even if untrue, may result in a government investigation by a foreign or U.S. regulator, including the U.S. Department of Justice and the Securities and Exchange Commission.
We dedicate time and resources to internal investigations of any allegation that we are not or may not be in compliance with the FCPA or other applicable international anti-corruption laws. Such allegations, even if untrue, may result in a government investigation by a foreign or U.S. regulator, including the U.S. Department of Justice and the Securities and Exchange Commission.
Sales force activities that violate applicable laws, regulations or policies, or that are alleged to do so, have, and could in the future, harmed our business and reputation and resulted in government or third-party actions against us.
Improper sales force actions could harm our business. Sales force activities that violate applicable laws, regulations or policies, or that are alleged to do so, have harmed our business and reputation and resulted in government or third-party actions against us, and they could do so in the future.
Our ability to improve our financial performance largely depends on our ability to proactively anticipate, gauge and react in a timely and effective manner to changes in consumer spending patterns and preferences regarding products, platforms, and business opportunities in the affiliate gig and sharing economy .
Our ability to improve our financial performance largely depends on our ability to anticipate and/or react in a timely and effective manner to changes in consumer spending patterns and preferences regarding products, platforms, and business opportunities in the affiliate gig and sharing economy .
Critics of our industry, consumer protection groups, short sellers and other individuals have in the past and may in the future utilize the internet, the press and other means to publish criticisms of the industry, our company and our competitors, or make allegations regarding our business and operations, or the business and operations of our competitors.
Critics of our industry, consumer protection groups, short sellers and other individuals have in the past and may in the future utilize the internet, social media, the media and other means to publish criticisms of the industry, our company and our competitors, or make allegations regarding our business and operations, or the business and operations of our competitors.
Although we have implemented anti-corruption policies, controls and training globally to maintain a sufficient system of books and records and internal accounting controls, we have in the past and may in the future have regulatory investigations and penalties. We cannot guarantee that our compliance efforts will prevent future investigations, fines or penalties under the FCPA or other anti-corruption laws.
Although we have implemented anti-corruption policies, controls and training globally to maintain an adequate system of books and records and internal accounting controls, we have in the past and may in the future have regulatory investigations and penalties. We cannot guarantee that our compliance efforts will prevent future investigations, fines or penalties under the FCPA or other anti-corruption laws.
We are subject to financial risks as a result of our international operations, including exposure to foreign-currency fluctuations, currency controls and inflation in foreign markets, all of which could impact our financial position and results of operations. In 2023, approximately 74% of our sales occurred in markets outside of the United States in each market’s respective local currency.
We are subject to financial risks as a result of our international operations, including exposure to foreign-currency fluctuations, currency controls and inflation in foreign markets, all of which could impact our financial position and results of operations. In 2024, approximately 70% of our sales occurred in markets outside of the United States in each market’s respective local currency.
These production difficulties and quality problems have in the past, and could in the future, result in stock outages or shortages in our markets with respect to such products, harm our sales, or create inventory write-downs for unusable products. In addition, we and manufacturers in our supply chain acquire ingredients, components, products, and packaging from third-party suppliers and manufacturers.
These production difficulties and quality problems have in the past resulted, and could in the future result, in stock outages or shortages in our markets with respect to such products, harm our sales, or create inventory write-downs for unusable products. 32 Table of Contents In addition, we and manufacturers in our supply chain acquire ingredients, components, products and packaging from third-party suppliers and manufacturers.
While we have not been required to register our device products as medical devices in most markets, we have registered some of them in some markets, including ageLOC Boost in Thailand and our ageLOC Galvanic Facial Spa and ageLOC Body Spa systems in Indonesia, Thailand, Peru and Colombia.
While we have not been required to register our device products as medical devices in most markets, we have registered some of them in some markets, including ageLOC Boost and Nu Skin Wellspa iO in Thailand and our ageLOC Galvanic Facial Spa and ageLOC Body Spa systems in Indonesia, Thailand, Peru and Colombia.
It is possible that, over time, increasing negative perceptions about business opportunities that involve multi-level compensation programs, particularly as affiliate marketing programs gain greater prominence in the gig economy, could develop and increase among these younger demographics, which would be detrimental to our business if we are unable to adapt.
It is possible that, over time, increasing negative perceptions about business opportunities that involve multi-level compensation programs, particularly as affiliate marketing programs gain greater prominence in the gig economy, could develop and increase among these younger demographics, which would be detrimental to our business if we are unable to adapt and offer similar opportunities and rewards while still differentiating our business.
Likewise, if we are unable to anticipate changes in the affiliate marketing, gig and sharing economies and adapt our business opportunity accordingly, our ability to capture growth trends in the social commerce marketplace could be materially adversely affected.
Likewise, if we are unable to anticipate or adapt to changes in the affiliate marketing, gig and sharing economies, our ability to capture growth trends in the social commerce marketplace could be materially adversely affected.
If we are not able to successfully retain existing personnel and identify, hire and integrate new personnel, our business and growth prospects could be harmed. The success of our business also depends on our key Sales Leaders. For the three months ended December 31, 2023, we had approximately 44,059 Sales Leaders.
If we are not able to successfully retain existing personnel and identify, hire and integrate new personnel, our business and growth prospects could be harmed. The success of our business also depends on our key Sales Leaders. For the three months ended December 31, 2024, we had approximately 36,912 Sales Leaders.
In the event we are unable to maintain or renew our contracts with any of these suppliers, manufacturers or other third parties, we may need to discontinue some products or develop substitute products, which could harm our revenue.
We also license the right to distribute some of our products from third parties. In the event we are unable to maintain or renew our contracts with any of these suppliers, manufacturers or other third parties, we may need to discontinue some products or develop substitute products, which could harm our revenue.
In the United States, congressional committees have held preliminary hearings about the advisability of a federal data privacy law, but it is uncertain whether the federal government will adopt such a law and whether it would preempt state data privacy laws.
We believe these trends will continue. In the United States, congressional committees have held preliminary hearings about the advisability of a federal data privacy law, but it is uncertain whether the federal government will adopt such a law and whether it would preempt state data privacy laws.
For example, if a member of our sales force makes an improper claim about our products or business opportunity on social media, or if a critic of our company posts negative information about our company on social media, it is more likely to be disseminated widely and potentially noticed by the media or regulators.
For example, if a member of our sales force makes an improper claim about our products or business opportunity on social media, or if a critic of our company posts negative information about our company on social media, it has the potential to be disseminated widely and noticed by the media or regulators.
The number and productivity of our sales force is negatively impacted by several additional factors, including: ● any adverse publicity or negative public perception regarding us, our products or ingredients, our distribution channel, or our industry or competitors; ● lack of interest in, dissatisfaction with, or the technical failure of, our products or digital tools; ● lack of compelling products or income opportunities, including through our sales compensation plans and incentive trips and other offerings; ● negative sales force reaction to changes in our sales compensation plans or to our failure to make changes that would be necessary to keep our compensation competitive with the market; ● interactions with our company, including our actions to enforce our policies and procedures and the quality of our customer service; ● any regulatory actions or charges against us or others in our industry, as well as regulatory changes that impact product formulations and sales viability; ● general economic, business, public health and geopolitical conditions, including employment levels, employment trends such as the gig and sharing economies and affiliate marketing, pandemics or other conditions that curtail person-to-person interactions, and the ongoing conflicts in Russia/Ukraine and Israel/Hamas which have caused distraction to our sales force; ● changes in the policies of social media platforms used to prospect or recruit potential consumers and sales force participants; ● recruiting efforts of our competitors and changes in consumer-loyalty trends; ● potential saturation or maturity levels in a given market, which could negatively impact our ability to attract and retain our sales force in such market ; ● growing gig economy competition which may draw away potential product sellers, affiliates, and influencers; ● our sales force’s increased use of social sharing channels, which may enable them to more easily engage their consumers and sales network in other opportunities; ● lack of sufficient tools to create customer interest in our products and to manage and build a personalized business; and ● our and our sales force’s ability to implement social commerce and other selling platforms that appeal to consumers. 30 Table of Contents We depend on our key personnel and Sales Leaders, and the loss of the services provided by any of our executive officers, other key employees or key Sales Leaders could harm our business and results of operations.
If our business, products and initiatives do not drive growth and/or sales productivity in Sales Leaders, Paid Affiliates and Customers, our operating results could be further harmed. 31 Table of Contents The number and productivity of our sales force is negatively impacted by several additional factors, including: ● any adverse publicity or negative public perception regarding us, our products or ingredients, our distribution channel, or our industry or competitors; ● lack of interest in, dissatisfaction with, or the technical failure of, our products or digital tools; ● lack of compelling products or income opportunities, including through our sales compensation plans and incentive trips and other offerings; ● negative sales force reaction to changes in our sales compensation plans or our failure to make changes that would be necessary to keep our compensation competitive with the market; ● interactions with our company, including our actions to enforce our policies and procedures and the quality of our customer service; ● any regulatory actions or charges against us or others in our industry, as well as regulatory changes that impact product formulations and sales viability; ● general economic, business, public health and geopolitical conditions, including employment levels, employment trends such as the gig and sharing economies and affiliate marketing, pandemics or other conditions that curtail person-to-person interactions, and the ongoing conflicts in Russia/Ukraine and Israel/Hamas which have caused distraction to our sales force; ● changes in the policies of social media platforms and product marketplaces used to prospect or recruit potential consumers and sales force participants; ● recruiting efforts of our competitors and changes in consumer-loyalty trends; ● potential saturation or maturity levels in a given market, which could negatively impact our ability to attract and retain our sales force in such market ; ● growing gig economy competition which may draw away potential product sellers, affiliates, and influencers; ● our sales force’s increased use of social sharing channels, which may enable them to more easily engage their consumers and sales network in other opportunities; ● lack of sufficient tools to create customer interest in our products and to manage and build a personalized business; and ● our and our sales force’s ability to implement social commerce and other selling platforms that appeal to consumers.
Broad market fluctuations could also lower the market price of our Class A common stock regardless of our actual operating performance. 42 Table of Contents
Broad market fluctuations could also lower the market price of our Class A common stock regardless of our actual operating performance.
The markets for our products are intensely competitive. The success of our products is dependent on our ability to anticipate and respond to market trends and changes in consumer preferences and to maintain a product offering and pipeline that is relevant and priced accessibly to consumers.
The success of our products is dependent on our ability to anticipate and respond to market trends and changes in consumer preferences and to maintain a product offering and pipeline that is relevant and priced accessibly to consumers.
For example, in January 2024, the U.S. Department of Labor adopted a regulation that alters the employee vs. independent contractor analysis under the Fair Labor Standards Act in a way that could potentially cause more workers to be classified as employees.
For example, in March 2024, a regulation of the U.S. Department of Labor went into effect that alters the employee vs. independent contractor analysis under the Fair Labor Standards Act in a way that could potentially cause more workers to be classified as employees.
As of December 31, 2023, approximately 294 Sales Leaders occupied the highest levels under our global sales compensation plan, and in Mainland China approximately 98 key Sales Leaders were playing a significant role in managing, training and servicing our sales force in that market and driving sales .
As of December 31, 2024, approximately 253 Sales Leaders occupied the highest levels under our global sales compensation plan, and in Mainland China approximately 72 key Sales Leaders were playing a significant role in managing, training and servicing our sales force in that market and driving sales .
Any of these results may adversely affect our financial condition. 39 Table of Contents As a result of claims against us regarding suspected infringement, our technologies may be subject to injunction, we may be required to pay damages, or we may have to seek a license to continue certain practices (which may not be available on reasonable terms, if at all), all of which may significantly increase our operating expenses or may require us to restrict our business activities and limit our ability to deliver our products and services and/or certain features, integrations, and capabilities of our platform.
As a result of claims against us regarding suspected infringement, our technologies may be subject to injunction, we may be required to pay damages, or we may have to seek a license to continue certain practices (which may not be available on reasonable terms, if at all), all of which may significantly increase our operating expenses or may require us to restrict our business activities and limit our ability to deliver our products and services and/or certain features, integrations, and capabilities of our platform.
This transformation involves the development of new and enhanced digital tools for our Sales Leaders and consumers, including new digital apps and an improved website design and functionality, as well as new products, including connected devices. Our digital transformation will require significant expenditures over the next several years.
This transformation involves the development of new and enhanced digital tools for our Sales Leaders and consumers, including new digital apps and an improved website design and e-commerce functionality, as well as new products, including connected devices. Our digital transformation has required significant expenditures, and it will continue to require significant expenditures over the next several years.
If media or regulatory scrutiny of our business in Mainland China results in significant delays in obtaining licenses elsewhere in Mainland China, or if the current processes for obtaining approvals are delayed further for any reason or are changed or interpreted differently than currently understood, our ability to receive direct selling licenses in Mainland China and our growth prospects in this market could be negatively impacted. 25 Table of Contents If we are not able to register products for sale in Mainland China, our business could be harmed.
If media or regulatory scrutiny of our business in Mainland China results in significant delays in obtaining licenses elsewhere in Mainland China, or if the current processes for obtaining approvals are delayed further for any reason or are changed or interpreted differently than currently understood, our ability to receive direct selling licenses in Mainland China and our growth prospects in this market could be negatively impacted.
We face lengthy timelines with respect to product registrations in Mainland China. The process for obtaining product permits and licenses may require extended periods of time that may prevent us from launching new product initiatives in Mainland China on the same timelines as other markets around the world.
The process for obtaining product permits and licenses may require extended periods of time that may prevent us from launching new product initiatives in Mainland China on the same timelines as other markets around the world.
Claims of intellectual property infringement also might require us to redesign affected products, enter into costly settlement or license agreements, pay costly damage awards, or face a temporary or permanent injunction prohibiting us from marketing or selling certain of our products.
Claims of intellectual property infringement also might require us to redesign affected products, enter into costly settlement or license agreements, pay costly damage awards, or face a temporary or permanent injunction prohibiting us from marketing or selling certain of our products. Any of these results may adversely affect our financial condition.
For example, product claims made by some of our sales force in 1990 and 1991 led to a FTC investigation that resulted in our entering into two consent agreements with the FTC and various agreements with state regulatory agencies.
However, given the size of our sales force, we experience problems from time to time. For example, product claims made by some of our sales force in 1990 and 1991 led to a FTC investigation that resulted in our entering into two consent agreements with the FTC and various agreements with state regulatory agencies.
The FTC has been active in its enforcement activities, and any adverse rulings or legal actions could impact our business if direct selling laws or anti-pyramid laws are interpreted more narrowly or in a manner that results in additional burdens or restrictions on direct selling companies.
Any adverse rulings or legal actions could impact our business if direct selling laws or anti-pyramid laws are interpreted more narrowly or in a manner that results in additional burdens or restrictions on direct selling companies.
If our business practices or policies or the actions of our sales force are deemed to be in violation of applicable local regulations regarding foreigners, then we could be sanctioned and/or required to change our business model, which could significantly harm our business.
Our reputation could also be harmed if our sales force violates any social media platform’s community guidelines. If our business practices or policies or the actions of our sales force are deemed to be in violation of applicable local regulations regarding foreigners, then we could be sanctioned and/or required to change our business model, which could significantly harm our business.
In 2011, the FDA proposed draft guidance to clarify the FDA’s interpretation of the dietary ingredient notification requirements, and in 2016, the FDA issued a revised draft guidance that superseded the 2011 version.
In 2011, the FDA proposed draft guidance to clarify the FDA’s interpretation of the dietary ingredient notification requirements, and in 2016, the FDA issued revised draft guidance that superseded the 2011 version. In April 2024, the FDA issued new draft guidance replacing and expanding on the 2016 revised guidance.
With a majority of our revenue in the United States coming from sales to retail customers and preferred customers, we believe that we can demonstrate consumer demand for our products, but we continue to monitor developments to assess whether we should make any changes to our business or global sales compensation plan.
With a majority of our revenue in the United States coming from sales to retail customers and preferred customers, we believe that we can demonstrate consumer demand for our products, but this may not be sufficient under the FTC’s increasingly restrictive view of multi-level marketing and we continue to monitor developments to assess whether we should make any changes to our business or global sales compensation plan.
In addition, economic conditions may adversely impact access to capital for us and our suppliers, may decrease the ability of our sales force and consumers to obtain or maintain credit cards, and may otherwise adversely impact our operations and overall financial condition.
In addition, economic conditions may adversely impact access to capital for us and our suppliers, may decrease the ability of our sales force and consumers to obtain or maintain credit cards, may cause governments to increase their regulatory enforcement activity to alleviate budget shortfalls, and may otherwise adversely impact our operations and overall financial condition.
As of December 31, 2023, we had $31.8 million in cash denominated in Chinese RMB, and our intercompany receivable with our Argentina subsidiary was $17.7 million. In addition, high levels of inflation and currency devaluations in any of our markets could negatively impact our balance sheet and results of operations.
As of December 31, 2024, we had $27.4 million in cash denominated in Chinese RMB, and our intercompany receivable with our Argentina subsidiary was $22.4 million. 30 Table of Contents In addition, high levels of inflation and currency devaluations in any of our markets could negatively impact our balance sheet and results of operations.
These laws and regulations can, and often do, have several impacts on our business, including but not limited to: ● delays, or altogether prohibitions, in introducing or selling a product or ingredient in one or more markets; ● d elays and expenses associated with the registration and approval process for a product; ● limitations on our ability to import products into a market; ● delays and expenses associated with compliance, such as record keeping, documentation of the properties of certain products, labeling, and scientific substantiation; ● limitations on the claims we can make regarding our products; and ● product reformulations, or the recall or discontinuation of certain products that cannot be reformulated to comply with new regulations. 34 Table of Contents We have observed a general increase in regulatory activity and activism in the United States and across many markets globally where we operate, and the regulatory landscape is becoming more complex with increasingly strict requirements.
These laws and regulations can, and often do, have several impacts on our business, including but not limited to: ● delays in, or altogether prohibitions on, introducing or selling a product or ingredient in one or more markets; ● d elays and expenses associated with the registration and approval process for a product; ● limitations on our ability to import products into a market; ● delays and expenses associated with compliance, such as record keeping, documentation of the properties of certain products, labeling, and scientific substantiation; ● limitations on the claims we can make regarding our products; and ● product reformulations, or the recall or discontinuation of certain products that cannot be reformulated to comply with new regulations.
Some of these factors include: ● fluctuations in our operating results; ● government investigations of our business; ● trends or adverse publicity related to our business, products, industry or competitors; ● the sale of shares of Class A common stock by significant stockholders; ● demand, and general trends in the market, for our products; ● acquisitions by us or our competitors; ● economic or currency exchange issues in markets in which we operate; ● changes in estimates of our operating performance or changes in recommendations by securities analysts; ● speculative trading, including short selling and options trading; and ● general economic, business, regulatory and political conditions.
Some of these factors include: ● fluctuations in our operating results; ● government investigations of our business; ● trends or adverse publicity related to our business, products, industry or competitors; ● the sale of shares of Class A common stock by significant stockholders; ● our dividend policy; ● demand, and general trends in the market, for our products; ● acquisitions by us or our competitors; ● economic or currency exchange issues in markets in which we operate; ● changes in estimates of our operating performance or changes in recommendations by securities analysts; ● speculative trading, including short selling and options trading, as well as stockholder activism and takeover activity, all of which may be more likely after a stock price decline such as ours in recent years; and ● general economic, business, regulatory and political conditions.
In addition, our ability to develop and introduce new products could be impacted by, among other things, government regulations, changing policies in social media and other communications platforms, the inability to attract and retain qualified staff, the termination of third-party research and collaborative arrangements, intellectual property of competitors that may limit our ability to offer innovative products or that challenge our own intellectual property, problems related to manufacturing or quality control, and difficulties in anticipating changes in consumer tastes and buying preferences.
The introduction of a new product or key initiative can also negatively impact other product lines to the extent our Sales Leaders focus their efforts on the new product or initiative. 25 Table of Contents In addition, our ability to develop and introduce new products could be impacted by, among other things, government regulations, changing policies in social media and other communications platforms, the inability to attract and retain qualified staff, the termination of third-party research and collaborative arrangements, intellectual property of competitors that may limit our ability to offer innovative products or that challenge our own intellectual property, problems related to manufacturing or quality control, and difficulties in anticipating changes in consumer tastes and buying preferences.
Similarly, we face the risk that we could fail to make changes to our compensation plans that would be necessary to keep our compensation competitive with the market, compliant with changing regulations, and allow us to attract new opportunity seekers or segments of opportunity seekers, which could have a negative impact on our sales force.
Similarly, we face the risk that we could fail to make changes to our compensation plans that would be necessary to keep our compensation competitive with the market, compliant with changing regulations, and allow us to attract new opportunity seekers or segments of opportunity seekers, which could have a negative impact on our sales force. 23 Table of Contents Limits on the amount of sales compensation we pay could inhibit our ability to attract and retain our sales force, negatively impact our revenue and cause regulatory risks.
Since 2019, we have been receiving and addressing an increased number of government reviews, inspections, and inquiries and consumer complaints in Mainland China; our ability to hold certain business meetings has been limited; and negative media coverage has spread to include additional companies, including ours.
Since 2019, we have been receiving and addressing an increased number of government reviews, inspections, and inquiries and consumer complaints in Mainland China; our ability to hold certain business meetings has been limited; and negative media coverage has spread to include additional companies, including ours. 27 Table of Contents Government regulators frequently make inquiries into our business activities and investigate complaints from consumers and others regarding our business.
If we are not able to successfully retain existing personnel and identify, hire and integrate new personnel, our business and growth prospects could be harmed. 32 Table of Contents In addition, to the extent we expand into new markets, our efforts might not be successful in driving growth.
In addition, we need to continue to attract and develop qualified management personnel to sustain growth. If we are not able to successfully retain existing personnel and identify, hire and integrate new personnel, our business and growth prospects could be harmed. In addition, to the extent we expand into new markets, our efforts might not be successful in driving growth.
It is not possible to predict the final resolution of any legal proceeding to which we may become party, and the impact of these matters on our business, results of operations and financial condition could be material. Non-compliance with anti-corruption laws could harm our business. Our international operations are subject to various anti-corruption laws, including principally the U.S.
It is not possible to predict the final resolution of any legal proceeding to which we may become party, and the impact of these matters on our business, results of operations and financial condition could be material. 39 Table of Contents Non-compliance or alleged non-compliance with anti-corruption laws could harm our business.
From time to time, we initiate further investigations into our business operations to further bolster our regulatory compliance efforts or based on the results of our internal and external audits or on complaints, questions or allegations made by employees or other parties regarding our business practices and operations.
From time to time, we initiate investigations into our business operations to improve our regulatory compliance efforts or based on the results of our internal and external audits or on complaints, questions or allegations made by employees or other parties regarding our business practices and operations. In addition, our business and operations may be investigated by applicable government authorities.
However, we cannot be certain that our efforts will successfully prevent regulatory actions against us, including fines, suspensions or other sanctions, or that the company and the direct selling industry will not receive further negative media attention, all of which could harm our business. 21 Table of Contents Except in Mainland China, members of our sales force are not employees and act independently of us.
However, we cannot be certain that our efforts will successfully prevent regulatory actions against us, including fines, suspensions or other sanctions, or that the company and the direct selling industry will not receive further negative media attention, all of which could harm our business.
Other parties in the transactions or potential transactions, or other parties involved in the businesses themselves, could bring claims against us. For example, from 2019 until January 2023, w e were in litigation with a dairy farmer who claimed he was a general partner in our former indoor-growing business and related businesses. He also sought damages exceeding $250 million.
For example, from 2019 until January 2023, w e were in litigation with a dairy farmer who claimed he was a general partner in our former indoor-growing business and related businesses. He also sought damages exceeding $250 million.
The defendants were permanently barred from engaging in multi-level marketing programs. Although we take steps to educate our sales force on proper claims, if members of our sales force make improper claims, or if regulators determine we are making any improper claims, this could lead to an FTC investigation and could harm our business.
Although we take steps to educate our sales force on proper claims, if members of our sales force make improper claims, or if regulators determine we are making any improper claims, this could lead to an FTC investigation and could harm our business.
For example, we believe inflation had a negative impact on our 2022 and 2023 sales by curbing the discretionary spending of our consumers. Inflation also has increased the cost of our inventory and shipping expenses. Higher interest rates have increased our interest expense, as our credit facility entails variable-rate interest.
For example, we believe inflation had a negative impact on our 2022 and 2023 sales by curbing the discretionary spending of our consumers. Inflation also has increased the cost of our inventory and shipping expenses.
Laws and regulations in the United States, Japan, South Korea, Vietnam and Mainland China are particularly stringent and subject to broad discretion in enforcement by regulators.
Various government agencies throughout the world regulate direct sales practices. Laws and regulations in the United States, Japan, South Korea, Vietnam and Mainland China are particularly stringent and subject to broad discretion in enforcement by regulators.
If we are unable to obtain necessary licenses and certifications within required deadlines or continue business in existing markets or commence operations in new markets because of these laws, our revenue and profitability may decline. Any delay could negatively impact our revenue. Improper sales force actions could harm our business.
In addition, markets where we currently do business could change their laws or regulations to prohibit direct selling. If we are unable to obtain necessary licenses and certifications within required deadlines or continue business in existing markets or commence operations in new markets because of these laws, our revenue and profitability may decline. Any delay could negatively impact our revenue.
Management’s Discussion and Analysis of Financial Condition and Results of Operations. 19 Table of Contents Risks Associated with Direct Selling and Our Sales Force Challenges to the form of our network marketing system or to our business practices could harm our business. We may be subject to challenges by government regulators regarding the form of our network marketing system.
Management’s Discussion and Analysis of Financial Condition and Results of Operations. 20 Table of Contents Risks Associated with Direct Selling and Our Sales Force Challenges to the form of our network marketing system or to our business practices have harmed and could continue to harm our business.
If we are required to make changes or if the FTC seeks to enforce similar measures in the industry, either through rulemaking or an enforcement action against our company, our business could be harmed. 20 Table of Contents From time to time, we also are subject to challenges by private parties in civil actions.
If we are required to make changes due to either rulemaking or an enforcement action against our company, our business could be harmed. From time to time, we also are subject to challenges by private parties in civil actions.
The various mobile applications, connected beauty and wellness devices, and other connected tools that we have developed or are developing also collect data. The integrity and protection of this data is critical to our business.
The various mobile applications, connected beauty and wellness devices, and other connected tools that we have developed or are developing also collect data.
Limits on the amount of sales compensation we pay could inhibit our ability to attract and retain our sales force, negatively impact our revenue and cause regulatory risks. Several markets, including Mainland China, South Korea, Indonesia and Vietnam, impose limits on the amount of sales compensation we can pay to our sales force.
Several markets, including Mainland China, South Korea, Indonesia and Vietnam, impose limits on the amount of sales compensation we can pay to our sales force.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeWe engage third-party cybersecurity experts to provide independent assessments of our cybersecurity readiness and control effectiveness. Our goal in collaborating with external cybersecurity firms is to gain insights and knowledge into emerging threats and vulnerabilities, industry trends and best practices to inform our risk remediation efforts.
Biggest changeOur goal in collaborating with external cybersecurity firms is to gain insights and knowledge into emerging threats and vulnerabilities, industry trends and best practices to inform our risk remediation efforts. Additionally, we engage with our internal teams to perform tabletop exercises that inform our cybersecurity response capabilities and resilience.
Top risks, key initiatives, material cyber incidents, remediation activity and security metrics are shared to report the overall loss potential, program effectiveness, risk management conditions and current threat landscape. Our Board of Directors is committed to maintaining a well-informed and security-aware business by regularly engaging through updates on the organization’s roadmap and evolving threat landscape.
Top risks, key initiatives, any material cyber incidents, remediation activity and security metrics are shared to report the overall loss potential, program effectiveness, risk management conditions and current threat landscape. Our Board of Directors is committed to maintaining a well-informed and security-aware business by regularly engaging through updates on the organization’s roadmap and evolving threat landscape.
ITEM 1C. CYBERSECURITY Our company is exposed to a variety of evolving cybersecurity risks. We invest in our cybersecurity program to proactively manage and mitigate these risks. On an annual basis, we utilize our Enterprise Risk Management (“ERM”) program to estimate our annual loss potential based on our defined control framework and its overall effectiveness.
ITEM 1C. CYBERSECURITY Our company is exposed to a variety of evolving cybersecurity risks. We invest in our cybersecurity program to manage and mitigate these risks. On an annual basis, we utilize our Enterprise Risk Management (“ERM”) program to estimate our annual loss potential based on our defined control framework and its overall effectiveness.
In addition, we undergo an annual third-party external penetration test, as well as third-party attack-surface monitoring to understand our potential vulnerabilities, threat vectors, and additional impacts to critical assets and operations. In addition, our cybersecurity team performs procedures to identify risks that inform our annual security roadmap.
In addition, we undergo an annual third-party external PCI penetration test, as well as third-party attack-surface monitoring to understand our potential vulnerabilities, threat vectors, and additional impacts to critical assets and operations. In addition, our cybersecurity team performs procedures to identify risks that inform our annual security roadmap.
For more information regarding the risks we face from cybersecurity threats, please see Item 1A. Risk Factors. Our management plays a pivotal role in assessing and managing material risks from cybersecurity threats. Our management has implemented a broad and continuous process for cyber event monitoring, analysis of emerging threats, and the development and implementation of risk mitigation strategies.
For more information regarding the risks we face from cybersecurity threats, please see Item 1A. Risk Factors. 45 Table of Contents Our management plays a pivotal role in assessing and managing material risks from cybersecurity threats.
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Additionally, we engage with our externally retained incident response team and select internal teams to perform tabletop exercises that inform our cybersecurity response capabilities and resilience.
Added
We also periodically review our cybersecurity policies and require cybersecurity training for our employees. We periodically engage third-party cybersecurity experts to provide independent assessments of our cybersecurity readiness and control effectiveness.
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Our management has implemented a broad and continuous process for cyber event monitoring, analysis of emerging threats, and the development and implementation of risk mitigation strategies.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeResearch and Development Centers We operate research and development centers in Provo, Utah and Shanghai, China. 43 Table of Contents Manufacturing Facilities We operate manufacturing facilities in Mainland China, and two of our Rhyz companies (Manufacturing segment) operate manufacturing facilities in Provo, Utah, Draper, Utah and West Valley City, Utah.
Biggest changeResearch and Development Centers We operate research and development centers in Provo, Utah and Shanghai, China. Manufacturing Facilities We operate manufacturing facilities in Mainland China, and two of our Rhyz companies (Manufacturing segment) operate manufacturing facilities in Provo, Utah, Draper, Utah and West Valley City, Utah.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeCOMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN Among Nu Skin Enterprises, Inc., the S&P 500 Index, the S&P SmallCap 600 Consumer Staples Index, and the S&P MidCap 400 Consumer Staples Index Measured Period Nu Skin S&P 500 Index S&P MidCap 400 Consumer Staples Index S&P SmallCap 600 Consumer Staples Index December 31, 2018 100.00 100.00 100.00 100.00 December 31, 2019 68.99 131.49 110.85 116.91 December 31, 2020 95.75 155.68 135.49 129.93 December 31, 2021 91.60 200.37 149.15 167.35 December 31, 2022 78.83 164.08 148.00 156.52 December 31, 2023 38.56 207.21 171.24 179.98 The stock performance graph above shall not be deemed to be “soliciting material” or to be “filed” with the U.S.
Biggest changeCOMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN Among Nu Skin Enterprises, Inc., the S&P 500 Index, and the S&P SmallCap 600 Consumer Staples Index Measured Period Nu Skin S&P 500 Index S&P SmallCap 600 Consumer Staples Index December 31, 2019 100.00 100.00 100.00 December 31, 2020 138.78 118.40 111.14 December 31, 2021 132.76 152.39 143.15 December 31, 2022 114.25 124.79 133.89 December 31, 2023 55.88 157.59 153.95 December 31, 2024 20.30 197.02 155.83 The stock performance graph above shall not be deemed to be “soliciting material” or to be “filed” with the U.S.
Purchases of Equity Securities by the Issuer (a) (b) (c) (d) Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in millions) (1) October 1 – 31, 2023 — $ — — $ 162.4 November 1 – 30, 2023 — — — $ 162.4 December 1 – 31, 2023 — — — $ 162.4 Total — $ — — (1) In August 2018, we announced that our board of directors approved a stock repurchase plan.
Purchases of Equity Securities by the Issuer (a) (b) (c) (d) Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in millions) (1) October 1 – 31, 2024 — $ — — $ 162.4 November 1 – 30, 2024 — — — $ 162.4 December 1 – 31, 2024 — — — $ 162.4 Total — $ — — (1) In August 2018, we announced that our board of directors approved a stock repurchase plan.
Recent Sales of Unregistered Securities None. 44 Table of Contents Stock Performance Graph The following graph shows the changes in value over the five-year period ended December 31, 2023 of an assumed $100 investment in our Class A common stock, the S&P SmallCap 600 Consumer Staples Index (the “SmallCap Index”) and the S&P 500 Index.
Recent Sales of Unregistered Securities None. 47 Table of Contents Stock Performance Graph The following graph shows the changes in value over the five-year period ended December 31, 2024 of an assumed $100 investment in our Class A common stock, the S&P SmallCap 600 Consumer Staples Index (the “SmallCap Index”) and the S&P 500 Index.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information and Holders Our Class A common stock is listed on the New York Stock Exchange and trades under the symbol “NUS.” The approximate number of holders of record of our Class A common stock as of January 31, 2024 was 210.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information and Holders Our Class A common stock is listed on the New York Stock Exchange and trades under the symbol “NUS.” The approximate number of holders of record of our Class A common stock as of January 31, 2025 was 207.
Removed
The stock performance graph in our Annual Report on Form 10-K for the 2022 fiscal year included the S&P MidCap 400 Consumer Staples Index (the “MidCap Index”). We have determined to begin including the SmallCap Index rather than the MidCap Index because we believe the SmallCap Index is better reflective of our current market cap.
Removed
As required by SEC rules, we include the MidCap Index in the graph below because we included it for the immediately preceding fiscal year.

Item 7. Management's Discussion & Analysis

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

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Biggest changeThree Months Ended December 31, 2023 2022 Change Customers Americas 231,183 299,287 (23 )% Mainland China 207,276 202,933 2 % Southeast Asia/Pacific 106,471 141,183 (25 )% South Korea 103,151 123,749 (17 )% Japan 113,670 119,152 (5 )% Europe & Africa 163,178 197,917 (18 )% Hong Kong/Taiwan 52,110 62,903 (17 )% Total Customers 977,039 1,147,124 (15 )% Paid Affiliates Americas 31,910 42,633 (25 )% Mainland China 25,889 23,436 10 % Southeast Asia/Pacific 34,404 38,653 (11 )% South Korea (1) 22,166 45,058 (51 )% Japan (1) 22,417 38,021 (41 )% Europe & Africa (1) 18,888 31,869 (41 )% Hong Kong/Taiwan (1) 11,212 17,286 (35 )% Total Paid Affiliates 166,886 236,956 (30 )% Sales Leaders Americas 7,126 9,594 (26 )% Mainland China 11,296 12,359 (9 )% Southeast Asia/Pacific 6,418 6,999 (8 )% South Korea 5,249 6,094 (14 )% Japan 7,086 5,936 19 % Europe & Africa 3,968 4,740 (16 )% Hong Kong/Taiwan 2,916 3,015 (3 )% Total Sales Leaders 44,059 48,737 (10 )% (1) The December 31, 2023 number is affected by a change in eligibility requirements for receiving certain rewards within our compensation structure, to more narrowly focus on those affiliates who are actively building a consumer base.
Biggest changeThree Months Ended December 31, 2024 2023 Change Customers Americas 227,556 231,183 (2 )% Southeast Asia/Pacific 82,956 106,471 (22 )% Mainland China 150,731 207,276 (27 )% Japan 110,069 113,670 (3 )% Europe & Africa 133,306 163,178 (18 )% South Korea 81,301 103,151 (21 )% Hong Kong/Taiwan 46,053 52,110 (12 )% Total 831,972 977,039 (15 )% Paid Affiliates Americas 28,361 31,910 (11 )% Southeast Asia/Pacific (1) 26,310 34,404 (24 )% Mainland China 22,125 25,889 (15 )% Japan 22,318 22,417 — Europe & Africa 16,860 18,888 (11 )% South Korea (1) 17,939 22,166 (19 )% Hong Kong/Taiwan 10,961 11,212 (2 )% Total 144,874 166,886 (13 )% Sales Leaders Americas 6,778 7,126 (5 )% Southeast Asia/Pacific 5,288 6,418 (18 )% Mainland China 8,969 11,296 (21 )% Japan 6,780 7,086 (4 )% Europe & Africa 3,343 3,968 (16 )% South Korea 3,343 5,249 (36 )% Hong Kong/Taiwan 2,411 2,916 (17 )% Total 36,912 44,059 (16 )% (1) The December 31, 2024 number is affected by a change in eligibility requirements for receiving certain rewards within our compensation structure, to more narrowly focus on those affiliates who are actively building a consumer base.
Sales Leader previews and other product introductions and promotions sometimes generate significant activity and a high level of purchasing, which can result in a higher-than-normal increase in revenue during the quarter and can skew year-over-year and sequential comparisons.
Sales Leader previews and other product introductions and promotions sometimes generate significant activity and a high level of purchasing, which can result in a higher-than-normal increase in revenue during the quarter and skew year-over-year and sequential comparisons.
Undistributed earnings that we have indefinitely reinvested aggregate to $60.0 million as of December 31, 2023. If this amount were repatriated to the United States, the amount of incremental taxes would be approximately $6.0 million. The company operates in and files income tax returns in the U.S. and numerous foreign jurisdictions, which are subject to examination by tax authorities.
Undistributed earnings that we have indefinitely reinvested aggregate to $60.0 million as of December 31, 2024. If this amount were repatriated to the United States, the amount of incremental taxes would be approximately $6.0 million. The company operates in and files income tax returns in the U.S. and numerous foreign jurisdictions, which are subject to examination by tax authorities.
See Note 6 and Note 7 to the consolidated financial statements contained in this report for our future cash requirements related to our debt principal repayment and our maturities of lease liabilities. We intend to fund the aforementioned cash requirements with our cash from operations and draw on our revolving credit facility, as needed, to address any short-term funding requirements.
See Note 7 and Note 8 to the consolidated financial statements contained in this report for our future cash requirements related to our debt principal repayment and our maturities of lease liabilities. We intend to fund the aforementioned cash requirements with our cash from operations and draw on our revolving credit facility, as needed, to address any short-term funding requirements.
We believe that constant-currency revenue change is useful to investors, lenders, and analysts because such information enables them to gauge the impact of foreign-currency fluctuations on our revenue from period to period. Contingent Liabilities Please refer to Note 16 to the consolidated financial statements contained in this report for information regarding our contingent liabilities.
We believe that constant-currency revenue change is useful to investors, lenders, and analysts because such information enables them to gauge the impact of foreign-currency fluctuations on our revenue from period to period. Contingent Liabilities Please refer to Note 17 to the consolidated financial statements contained in this report for information regarding our contingent liabilities.
With a few exceptions, we are no longer subject to state and local income tax examination by tax authorities for the years before 2020. Foreign jurisdictions, have varying lengths of statutes of limitations for income tax examinations. Some statutes are as short as three years and in certain markets may be as long as ten years.
With a few exceptions, we are no longer subject to state and local income tax examination by tax authorities for the years before 2021. Foreign jurisdictions have varying lengths of statutes of limitations for income tax examinations. Some statutes are as short as three years and in certain markets may be as long as ten years.
We also anticipate paying quarterly cash dividends throughout 2024, approximating $ 3 million per quarter depending on the number of shares outstanding as of record date. Additional details about our dividends and term loan are provided below. For 2024 and onward, we currently expect the above material cash requirements will remain.
We also anticipate paying quarterly cash dividends throughout 2025, approximating $3 million per quarter depending on the number of shares outstanding as of record date. Additional details about our dividends and term loan are provided below. For 2025 and onward, we currently expect the above material cash requirements will remain.
Similar to other companies in our industry, we experience relatively high turnover among our sales force. 46 Table of Contents To enhance customer retention, we have developed product subscription and loyalty programs that provide incentives for consumers to commit to purchase a specific amount of product on a monthly basis.
Similar to other companies in our industry, we experience relatively high turnover among our sales force. 49 Table of Contents To enhance customer retention, we have developed product subscription and loyalty programs that provide incentives for consumers to commit to purchase a specific amount of product on a monthly basis.
Given the size of our sales force and the various components of our compensation and incentive programs, selling expenses as a percentage of revenue typically fluctuate plus or minus approximately 100 basis points from period to period. Our selling expenses is also impacted by the growth within our Manufacturing segment, which has minimal selling expenses.
Given the size of our sales force and the various components of our compensation and incentive programs, selling expenses as a percentage of revenue typically fluctuate plus or minus approximately 100 basis points from period to period. Our selling expenses are also impacted by the growth within our Manufacturing segment, which has minimal selling expenses.
Years open to examination contain matters that could be subject to differing interpretations of applicable tax laws and regulations related to the amount and/or timing of income, deductions, and tax credits. We account for uncertain tax positions in accordance with Accounting Standards Codification (“ASC”) 740, Income Taxes.
Years open to examination contain matters that could be subject to differing interpretations of applicable tax laws and regulations related to the amount and/or timing of income, deductions, and tax credits. We account for uncertain tax positions in accordance with Accounting Standards Codification ("ASC") 740, Income Taxes.
Provision for income taxes depends on the statutory tax rates and the withholding taxes in each of the jurisdictions in which we operate. For example, statutory tax rates in 2023 were approximately 17% in Hong Kong, 20% in Taiwan, 21% in South Korea, 32% in Japan and 25% in Mainland China.
Provision for income taxes depends on the statutory tax rates and the withholding taxes in each of the jurisdictions in which we operate. For example, statutory tax rates in 2024 were approximately 17% in Hong Kong, 20% in Taiwan, 21% in South Korea, 32% in Japan and 25% in Mainland China.
We use segment contribution to measure the portion of profitability that the segment managers have the ability to control for their respective segments. For additional information regarding our segments and the calculation of segment contribution, see Note 15 to the consolidated financial statements contained in this report.
We use segment contribution to measure the portion of profitability that the segment managers have the ability to control for their respective segments. For additional information regarding our segments and the calculation of segment contribution, see Note 16 to the consolidated financial statements contained in this report.
For 2024, we currently expect that our material cash requirements will include the following: ● Cash requirements for operating activities. Our operating expenses typically total approximately 85%-90% of our revenue, with compensation to our sales force constituting 40%-43% of our core Nu Skin revenue.
For 2025, we currently expect that our material cash requirements will include the following: ● Cash requirements for operating activities. Our operating expenses typically total approximately 85%-90% of our revenue, with compensation to our sales force constituting 40%-43% of our core Nu Skin revenue.
Income Statement Presentation We report revenue in nine segments, and we translate revenue from each market’s local currency into U.S. dollars using weighted-average exchange rates. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring products. All revenue is recognized when we satisfy our performance obligations under the contract.
Income Statement Presentation We report revenue in nine segments, and we translate revenue from each market’s local currency into U.S. dollars using weighted-average exchange rates. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring products. All revenue associated with a contract is recognized when we satisfy our performance obligations under the contract.
During 2023, we incurred charges to be settled in cash of $4.0 million in severance charges, $1.9 million in lease termination cost, and $2.2 million in other associated cost, and non-cash charges of $1.7 million in accelerated depreciation.
During 2023, we incurred charges to be settled in cash of $4.0 million in severance charges, $1.9 million in lease termination cost, and $2.2 million in other associated cost, and non-cash charges of $1.7 million in accelerated depreciation. 2023 restructuring plan .
Under our global sales compensation plan, Sales Leaders can earn “multi-level” compensation, where they earn commissions for product sales to their consumer groups as well as the product sales made through the sales network they have developed and trained. We do not pay commissions on sales materials.
Under our global sales compensation plan, Sales Leaders can earn “multi-level” compensation, where they earn commissions for product sales to their consumer groups as well as the product sales made through the sales network they have developed and trained. We do not pay commissions on business portfolios.
If under the quantitative assessment the fair value of a reporting unit is less than its carrying amount, then the amount of the impairment loss, if any, must be measured. We elected to perform the quantitative assessment for fiscal years 2022 and we used the qualitative assessment for fiscal years 2023 and 2021.
If under the quantitative assessment the fair value of a reporting unit is less than its carrying amount, then the amount of the impairment loss, if any, must be measured. We elected to perform the quantitative assessment for fiscal year 2022 and we used the qualitative assessment for fiscal year 2023.
However, the continued declaration of dividends is subject to the discretion of our board of directors and will depend upon various factors, including our net earnings, financial condition, cash requirements, future prospects and other relevant factors. Cash from foreign subsidiaries .
However, the continued declaration of dividends is subject to the discretion of our board of directors and will depend upon various factors, including our net earnings, financial condition, cash requirements, future prospects and other relevant factors. 62 Table of Contents Cash from foreign subsidiaries .
The timing of the launch of a particular product often varies from market to market depending on such factors as customer demand, product registration or other local legal requirements, and product availability in our supply chain.
The timing of the launch of a particular product often varies from market to market depending on such factors as customer demand, affiliate brand focus, product registration or other local legal requirements, and product availability in our supply chain.
As of December 31, 2023, all open tax years except 2021 have been audited and are effectively closed to further examination.
As of December 31, 2024, all open tax years except 2021 have been audited and are effectively closed to further examination.
The carrying value of the debt also reflects debt issuance costs of $ 2.0 million and $2.5 million as of December 31, 2023 and 2022, respectively, related to the Credit Agreement. The Credit Agreement requires us to maintain a consolidated leverage ratio not exceeding 2.25 to 1.00 and a consolidated interest coverage ratio of no less than 3.00 to 1.00.
The carrying value of the debt also reflects debt issuance costs of $1.4 million and $2.0 million as of December 31, 2024 and 2023, respectively, related to the Credit Agreement. The Credit Agreement requires us to maintain a consolidated leverage ratio not exceeding 2.25 to 1.00 and a consolidated interest coverage ratio of no less than 3.00 to 1.00.
For example, in Mainland China, we are unable to repatriate cash from current operations in the form of dividends until we file the necessary statutory financial statements for the relevant period. As of December 31, 2023 and 2022, we had $31.8 million and $33.4 million, respectively, in cash denominated in Chinese RMB.
For example, in Mainland China, we are unable to repatriate cash from current operations in the form of dividends until we file the necessary statutory financial statements for the relevant period. As of December 31, 2024 and 2023, we had $27.4 million and $31.8 million, respectively, in cash denominated in Chinese RMB.
Both facilities bear interest at the Secured Overnight Financing Rate (“SOFR”) , plus a margin based on our consolidated leverage ratio.
Both facilities bear interest at the Secured Overnight Financing Rate ("SOFR") , plus a margin based on our consolidated leverage ratio.
Total charges incurred under the program were approximately $53.3 million, with $40.8 million in cash charges of severance and lease termination cost and approximately $12.5 million of non-cash charges of impairment of fixed assets, acceleration of depreciation and impairment of other intangibles related to our footprint optimization.
The global program included workforce reductions and footprint optimization. Total charges incurred under the program were approximately $53.3 million, with $40.8 million in cash charges of severance and lease termination cost and approximately $12.5 million of non-cash charges of impairment of fixed assets, acceleration of depreciation and impairment of other intangibles related to our footprint optimization.
Because our gross margins vary from product to product and due to higher pricing in some markets, changes in product mix and geographic revenue mix can impact our gross margin on a consolidated basis. 47 Table of Contents Selling expenses are our most significant expense and are classified as operating expenses.
Because our gross margins vary from product to product and due to higher pricing in some markets, changes in product mix and geographic revenue mix can impact our gross margin on a consolidated basis. Selling expenses are our most significant expense and are classified as operating expenses.
In most markets, we offer a return policy that allows our sales force to return unopened and unused product for up to 12 months subject to a 10% restocking fee. Reported revenue is net of returns, which have historically been less than 5% of annual revenue.
In most markets, we offer a return policy that allows our sales force to return unopened and unused product for up to 30 days for a full refund, or 12 months subject to a 10% restocking fee. Reported revenue is net of returns, which have historically been less than 5% of annual revenue.
When we determine that there is sufficient taxable income to utilize the foreign tax credits, the research and development credits, or the net operating losses, the valuation allowances will be released.
When we determine that there is sufficient taxable income to utilize the foreign tax credits or the net operating losses, the valuation allowances will be released.
We pay income taxes in many foreign jurisdictions based on the profits realized in those jurisdictions, which can be significantly impacted by terms of intercompany transactions between Nu Skin affiliates around the world. Deferred tax assets and liabilities are created in this process. As of December 31, 2023, we had net deferred tax assets of $105.0 million.
We pay income taxes in many foreign jurisdictions based on the profits realized in those jurisdictions, which can be significantly impacted by terms of intercompany transactions between Nu Skin affiliates around the world. Deferred tax assets and liabilities are created in this process. As of December 31, 2024, we had net deferred tax assets of $173.9 million.
These segments consist of our seven geographic Nu Skin segments—Americas, Mainland China, Southeast Asia/Pacific, South Korea, Japan, Europe & Africa, and Hong Kong/Taiwan—and our two Rhyz segments—Manufacturing and Rhyz other. The Nu Skin Other category includes miscellaneous corporate revenue and related adjustments.
These segments consist of our seven geographic Nu Skin segments—Americas, Southeast Asia/Pacific, Mainland China, Japan, Europe & Africa, South Korea, and Hong Kong/Taiwan—and our two Rhyz segments—Manufacturing and Rhyz Other. The Nu Skin Other category includes miscellaneous corporate revenue and related adjustments. The Rhyz Other segment includes other investments by our Rhyz business arm.
In addition to our core Nu Skin business, we also explore new areas of synergistic and adjacent growth through our business arm known as Rhyz Inc. Our Rhyz businesses primarily consist of consumer, technology and manufacturing companies. In 2023, the Rhyz companies generated $216.6 million, or 11% of our 2023 reported revenue (excluding sales to our core Nu Skin business).
In addition to our core Nu Skin business, we also explore new areas of synergistic and adjacent growth through our business arm known as Rhyz Inc. Our Rhyz businesses primarily consist of consumer, technology and manufacturing companies. In 2024, the Rhyz companies generated $286.6 million, or 17% of our 2024 reported revenue (excluding sales to our core Nu Skin business).
Business Overview Our Products Nu Skin Enterprises, Inc. develops and distributes a comprehensive line of premium-quality beauty and wellness solutions in nearly 50 markets worldwide. In 2023, our revenue of $2.0 billion was primarily generated by our three primary brands: our beauty brand, Nu Skin; our wellness brand, Pharmanex; and our anti-aging brand, ageLOC.
Business Overview Our Products Nu Skin Enterprises, Inc. develops and distributes a comprehensive line of premium-quality beauty and wellness solutions in nearly 50 markets worldwide. In 2024, our revenue of $1.7 billion was primarily generated by our three primary brands: our beauty brand, Nu Skin; our wellness brand, Pharmanex; and our anti-aging brand, ageLOC.
Given the size of our international operations, our results, as reported in U.S. dollars, are often impacted by foreign-currency fluctuations; in 2023, our revenue was negatively impacted 3% from foreign-currency fluctuations compared to 2022. In addition, our results can be impacted by global economic, political, demographic and business trends and conditions.
Given the size of our international operations, our results, as reported in U.S. dollars, are often impacted by foreign-currency fluctuations; in 2024, our revenue was negatively impacted 4% from foreign-currency fluctuations compared to 2023. Our results also can be impacted by global economic, political, demographic and business trends and conditions.
In certain jurisdictions, valuation allowances have been recorded against the deferred tax assets specifically related to use of foreign tax credits, research and development credits and net operating losses. The valuation allowance assessment requires estimates as to future operating results.
In certain jurisdictions, valuation allowances have been recorded against the deferred tax assets specifically related to use of foreign tax credits for branch income and net operating losses. The valuation allowance assessment requires estimates as to future operating results.
These audits may result in additional tax liabilities. We account for such contingent liabilities in accordance with relevant accounting standards and believe we have appropriately provided for income taxes for all years. Several factors drive the calculation of our tax reserves.
We account for such contingent liabilities in accordance with relevant accounting standards and believe we have appropriately provided for income taxes for all years. Several factors drive the calculation of our tax reserves.
We did not recognize any impairment charges for goodwill or intangible assets during 2023. 50 Table of Contents Results of Operations The following table sets forth our operating results as a percentage of revenue for the periods indicated: Year Ended December 31, 2023 2022 2021 Revenue 100.0 % 100.0 % 100.0 % Cost of sales 31.1 28.3 25.0 Gross profit 68.9 71.7 75.0 Operating expenses: Selling expenses 37.7 39.5 40.1 General and administrative expenses 27.8 25.0 24.3 Restructuring and impairment expenses 1.0 2.2 2.0 Total operating expenses 66.5 66.7 66.3 Operating income 2.4 5.0 8.7 Other income (expense), net (1.1 ) (1.0 ) (0.1 ) Income before provision for income taxes 1.3 4.0 8.6 Provision (benefit) for income taxes 0.9 (0.7 ) 3.1 Net income 0.4 % 4.7 % 5.5 % 2023 Compared to 2022 Overview Revenue in 2023 decreased 12% to $1.97 billion from $2.23 billion in 2022.
We did not recognize any impairment charges for goodwill or intangible assets during 2023. 54 Table of Contents Results of Operations The following table sets forth our operating results as a percentage of revenue for the periods indicated: Year Ended December 31, 2024 2023 2022 Revenue 100.0 % 100.0 % 100.0 % Cost of sales 31.8 31.1 28.3 Gross profit 68.2 68.9 71.7 Operating expenses: Selling expenses 37.6 37.7 39.5 General and administrative expenses 27.7 27.8 25.0 Restructuring and impairment expenses 11.7 1.0 2.3 Total operating expenses 77.0 66.5 66.7 Operating income (loss) (8.8 ) 2.4 5.0 Interest expense 1.5 1.3 0.6 Other income (expense), net 0.2 0.2 (0.4 ) Income (loss) before provision for income taxes (10.1 ) 1.3 4.0 Provision (benefit) for income taxes (1.6 ) 0.9 (0.7 ) Net income (loss) (8.5 )% 0.4 % 4.7 % 2024 Compared to 2023 Overview Revenue in 2024 decreased 12% to $1.73 billion from $1.97 billion in 2023.
While our actual cash usage may vary based on the timing of payments, we currently expect these approximate percentages and payment practices to continue in 2024. In addition, we expect our 2024 lease payments will be approximately $27.2 million. ● Cash requirements for investing activities.
While our actual cash usage may vary based on the timing of payments, we currently expect these approximate percentages and payment practices to continue in 2025. In addition, we expect our 2025 lease payments will be approximately $21.5 million. ● Cash requirements for investing activities.
In comparison, at December 31, 2022, we had $23.1 million in unrecognized tax benefits of which $23.1 million, if recognized, would affect the effective tax rate. We recognized an increase of approximately $0.6 million in interest and penalties expense during the year ended December 31, 2023 and $5.7 million in interest and penalties during the year ended December 31, 2022.
In comparison, at December 31, 2023, we had $22.0 million in unrecognized tax benefits of which $22.0 million, if recognized, would affect the effective tax rate. We recognized an increase of approximately $0.7 million in interest and penalties expense during the year ended December 31, 2024 and $0.6 million in interest and penalties during the year ended December 31, 2023.
Our Global Operations In 2023, we generated approximately 26% of our revenue from the United States (consisting of our Nu Skin United States and Rhyz businesses) and the remainder from our international markets.
Our Global Operations In 2024, we generated approximately 30% of our revenue from the United States (consisting of our Nu Skin United States and Rhyz businesses) and the remainder from our international markets.
Due to potential changes in unrecognized tax benefits from the multiple jurisdictions in which we operate, as well as the expiration of various statutes of limitation, it is reasonably possible that our gross unrecognized tax benefits, net of foreign currency adjustments, may increase within the next 12 months by a range of approximately $2.0 to $3.0 million. 49 Table of Contents At December 31, 2023, we had $22.0 million in unrecognized tax benefits of which $22.0 million, if recognized, would affect the effective tax rate.
Due to potential changes in unrecognized tax benefits from the multiple jurisdictions in which we operate, as well as the expiration of various statutes of limitation, it is reasonably possible that our gross unrecognized tax benefits, net of foreign currency adjustments, may decrease within the next 12 months by a range of approximately $1.0 to $2.0 million. 52 Table of Contents At December 31, 2024, we had $25.9 million in unrecognized tax benefits of which $25.9 million, if recognized, would affect the effective tax rate.
Management’s Discussion and Analysis of Financial Condition and Results of Operations beginning on page 44 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, as filed with the SEC on February 16, 2023.
Management’s Discussion and Analysis of Financial Condition and Results of Operations beginning on page 46 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, as filed with the SEC on February 15, 2024.
T he IRS has developed a new pilot phase called “Bridge Plus.” Under Bridge Plus the taxpayer is required to provide book-to-tax reconciliations, credit utilization and other supporting documentation shortly after their audited financial statement is finalized . The company was selected for Bridge Plus for the 2022, 2023 and 2024 tax years.
In 2022, t he IRS developed a new phase of CAP called "Bridge Plus." Under Bridge Plus the taxpayer is required to provide book-to-tax reconciliations, credit utilization and other supporting documentation shortly after their audited financial statement is finalized . The company was selected for the Bridge Plus phase for the 2023, 2024, and 2025 tax years.
As of December 31, 2023, $162.4 million was available for repurchases under the plan. Our stock repurchases are used primarily to offset dilution from our equity incentive plans and for strategic initiatives. Dividends . In February, May, July and October 2023, our board of directors declared quarterly cash dividends of $0.39 per share.
As of December 31, 2024, $162.4 million was available for repurchases under the plan. Our stock repurchases are used primarily to offset dilution from our equity incentive plans and for strategic initiatives. Dividends . In February, May, August and November 2024, our board of directors declared quarterly cash dividends of $0.06 per share.
A Global Network of Customers, Paid Affiliates and Sales Leaders As of December 31, 2023, we had 977,039 persons who purchased directly from the company during the previous three months (“Customers”).
A Global Network of Customers, Paid Affiliates and Sales Leaders As of December 31, 2024, we had 831,972 persons who purchased directly from the company during the previous three months (“Customers”).
As discussed in more detail below, our capital expenditures are expected to be $ 40 - 60 million for 2024. ● Cash requirements for financing activities. In 2024 we are obligated to make a total of $25.0 million in quarterly principal payments plus the associated interest on our term loan.
As discussed in more detail below, our capital expenditures are expected to be $45-65 million for 2025. ● Cash requirements for financing activities. In 2025 we are obligated to make a total of $20.0 million in quarterly principal payments plus the associated interest on our term loan.
We also have experienced delays in repatriating cash from Argentina. As of December 31, 2023 and 2022, we had $17.7 million and $14.9 million, respectively, in intercompany receivable with our Argentina subsidiary.
We also have experienced delays in repatriating cash from Argentina. As of December 31, 2024 and 2023, we had $22.4 million and $17.7 million, respectively, in intercompany receivable with our Argentina subsidiary.
Accordingly, we have accrued the necessary withholding taxes related to the non-U.S. earnings. 58 Table of Contents We currently believe that existing cash balances, future cash flows from operations and existing lines of credit will be adequate to fund our cash needs on both a short- and long-term basis.
Repatriation of non-U.S. earnings is subject to withholding taxes in certain foreign jurisdictions. Accordingly, we have accrued the necessary withholding taxes related to the non-U.S. earnings. We currently believe that existing cash balances, future cash flows from operations and existing lines of credit will be adequate to fund our cash needs on both a short- and long-term basis.
As of December 31, 2023 and 2022, we had $ 120.0 million and $10.0 million of outstanding borrowings under our revolving credit facility, and $ 385.0 million and $395.0 million on our term loan facility.
As of December 31, 2024 and 2023, we had $35.0 million and $120.0 million of outstanding borrowings under our revolving credit facility, and $360.0 million and $385.0 million on our term loan facility.
See “Non-GAAP Financial Measures,” below. The table below sets forth segment contribution for the years ended December 31, 2023 and 2022 for each of our reportable segments (U.S. dollars in thousands). Segment contribution excludes certain intercompany charges, specifically royalties, license fees, transfer pricing and other miscellaneous items.
See "Non-GAAP Financial Measures," below. The tables below set forth summarized financial information for each of our reportable segments for the years ended December 31, 2024 and 2023 (U.S. dollars in thousands). Segment contribution excludes certain intercompany charges, specifically royalties, license fees, transfer pricing and other miscellaneous items.
In the event we were to determine that we would not be able to realize all or part of our deferred tax assets in the future, an adjustment to the deferred tax assets would be charged to earnings in the period such determination was made. We evaluate our indefinite reinvestment assertions with respect to foreign earnings for each period.
In the event we were to determine that we would not be able to realize all or part of our deferred tax assets in the future, an adjustment to the deferred tax assets would be charged to earnings in the period such determination was made.
Our 2023 revenue was negatively impacted 3% from foreign-currency fluctuations. As of the end of the fourth quarter of 2023, Customers decreased 15%, Paid Affiliates decreased 30% and Sales Leaders decreased 10% compared to the prior year.
Our 2024 revenue was negatively impacted 4% from foreign-currency fluctuations. As of the end of the fourth quarter of 2024, Customers decreased 15%, Paid Affiliates decreased 13% and Sales Leaders decreased 16% compared to the prior year.
Capital expenditures . Capital expenditures in 2023 totaled $58.5 million. W e expect that our capital expenditures in 2024 will be primarily related to: ● Rhyz plant expansion to increase capacity and capabilities; ● purchases and expenditures for computer systems and equipment, software, and application development; and ● the expansion and upgrade of facilities in our various markets.
Capital expenditures . Capital expenditures in 2024 totaled $41.6 million. As with 2024, we expect that the capital expenditures in 2025 will be primarily related to: ● Rhyz plant expansion to increase capacity and capabilities; ● purchases and expenditures for computer systems and equipment, software, and application development; and ● the expansion and upgrade of facilities in our various markets.
In addition, our Earnings per share was impacted by an increase in our effective tax rate for 2023. Segment Results We report our business in nine segments to reflect our current management approach.
Our earnings per share was also impacted by a decrease in our effective tax rate for 2024. Segment Results We report our business in nine segments to reflect our current management approach.
Our core Nu Skin business’s selling expense as a percentage of revenue decreased 1.2 percentage points to 41.1% for 2023, compared to 42.3% for 2022. Selling expenses for our core Nu Skin business are driven by the specific performance of our individual Sales Leaders.
Our core Nu Skin business’s selling expense as a percentage of revenue increased 0.8 percentage points to 41.9% for 2024, compared to 41.1% for 2023. Selling expenses for our core Nu Skin business are driven by the specific performance of our individual Sales Leaders.
We had approximately $13.0 million, $12.4 million and $6.7 million of accrued interest and penalties related to uncertain tax positions at December 31, 2023, 2022 and 2021, respectively. Interest and penalties related to uncertain tax positions are recognized as a component of income tax expense. We are subject to regular audits by federal, state and foreign tax authorities.
We had approximately $13.7 million, $13.0 million and $12.4 million of accrued interest and penalties related to uncertain tax positions at December 31, 2024, 2023 and 2022, respectively. Interest and penalties related to uncertain tax positions are recognized as a component of income tax expense.
Our future effective tax rates could fluctuate significantly, being affected by numerous factors, such as intercompany transactions, changes in our business operations, foreign audits, increases in uncertain tax positions, acquisitions, entry into new markets, the amount of our foreign earnings, including earnings being lower than anticipated in jurisdictions where we have a lower statutory rate and higher than anticipated in jurisdictions where we have a higher statutory rate, losses incurred in jurisdictions, the inability to realize tax benefits, withholding taxes, changes in foreign currency exchange rates, changes in our stock price, changes in our deferred tax assets and liabilities and their valuation. 56 Table of Contents Net income As a result of the foregoing factors, net income in 2023 decreased to $8.6 million, compared to $104.8 million in 2022. 2022 Compared to 2021 For a comparison of our operating results for 2022 compared to 2021, see Item 7.
Our future effective tax rates could fluctuate significantly, being affected by numerous factors, such as intercompany transactions, changes in our business operations, foreign audits, increases in uncertain tax positions, acquisitions, entry into new markets, the amount of our foreign earnings, including earnings being lower than anticipated in jurisdictions where we have a lower statutory rate and higher than anticipated in jurisdictions where we have a higher statutory rate, losses incurred in jurisdictions, the inability to realize tax benefits, withholding taxes, changes in foreign currency exchange rates, changes in our stock price, changes in our deferred tax assets and liabilities and their valuation.
In each of these areas, management makes estimates based on historical results, current trends and future projections. 48 Table of Contents Income Taxes . We account for income taxes in accordance with the Income Taxes Topic of the Financial Accounting Standards Codification .
Management considers our critical accounting policies to be accounting for income taxes and accounting for intangible assets. In each of these areas, management makes estimates based on historical results, current trends and future projections. Income Taxes . We account for income taxes in accordance with the Income Taxes Topic of the Financial Accounting Standards Codification .
Our global sales force helps us to rapidly introduce products and penetrate our markets with modest up-front promotional expense. We rely on our sales force to create consumer demand for our products, as opposed to a traditional approach of advertising-generated consumer awareness. Our approach is particularly effective with products that benefit from personal education and demonstration.
We rely on our sales force to create consumer demand for our products, as opposed to a traditional approach of advertising-generated consumer awareness. Our approach is particularly effective with products that benefit from personal education and demonstration.
As a percentage of revenue, general and administrative increased 2.8 percentage points to 27.8% for 2023, compared to 25.0% for 2022. Restructuring and impairment expenses In the third quarter of 2022, we adopted a strategic plan to focus resources on our strategic priorities and optimize future growth and profitability. The global program included workforce reductions and footprint optimization.
As a percentage of revenue, general and administrative decreased 0.1 percentage points to 27.7% for 2024, compared to 27.8% for 2023. Restructuring and impairment expenses 2022 restructuring plan . In the third quarter of 2022, we adopted a strategic plan to focus resources on our strategic priorities and optimize future growth and profitability.
See “South Korea,” “Japan,” “Europe & Africa,” and “Hong Kong/Taiwan,” below. We plan to implement these changes in additional segments over the next several quarters. 53 Table of Contents Following is a narrative discussion of our results in each segment, which supplements the tables above. Americas .
See "Southeast Asia/Pacific," and "South Korea," below. We plan to implement these changes in additional segments over the next several quarters. 57 Table of Contents Following is a narrative discussion of our results in each segment, which supplements the tables above. Americas .
As of December 31, 2023 and 2022, we held $267.8 million and $278.5 million, respectively, in cash and cash equivalents, including current investments. These amounts include $213.7 million and $223.0 million as of December 31, 2023 and 2022, respectively, held in our operations outside of the United States.
As of December 31, 2024 and 2023, we held $198.0 million and $267.8 million, respectively, in cash and cash equivalents, including current investments. These amounts include $154.1 million and $222.4 million as of December 31, 2024 and 2023, respectively, held in our operations outside of the United States.
These offerings sometimes generate significant activity and a high level of purchasing, which can result in a higher-than-normal increase in revenue, Sales Leaders, Paid Affiliates and/or Customers during the quarter and can skew year-over-year and sequential comparisons. Recent Accounting Pronouncements A description of new accounting pronouncements is contained in Note 2 to consolidated financial statements contained in this report.
These offerings sometimes generate significant activity and a high level of purchasing, which can result in a higher-than-normal increase in revenue, Sales Leaders, Paid Affiliates and/or Customers during the quarter and skew year-over-year and sequential comparisons.
General and administrative expenses General and administrative expenses decreased to $546.9 million in 2023, compared to $555.8 million in 2022. The $8.9 million decrease primarily was from contraction in labor expense and occupancy related expenses, both attributable to our 2022 restructuring in which we reduced our physical footprint and headcount.
General and administrative expenses General and administrative expenses decreased to $479.0 million in 2024, compared to $546.9 million in 2023. The $67.9 million decrease primarily was from a $48.1 million reduction in labor expense and $16.0 million reduction in occupancy related expenses, both attributable to our recent restructuring plans, in which we reduced our physical footprint and headcount.
We are subject to taxation in the United States at the statutory corporate federal tax rate of 21% in 2023, and we pay taxes in multiple states within the United States at various tax rates. Our overall effective tax rate was 67.7% for the year ended December 31, 2023.
We are subject to taxation in the United States at the statutory corporate federal tax rate of 21% in 2024, and we pay taxes in multiple states within the United States at various tax rates.
Cost of sales primarily consists of: ● cost of products purchased from third-party vendors; ● cost of self-manufactured products; ● cost of adjustments to inventory carrying value; ● freight cost of shipping products to our sales force and import duties for the products; and ● royalties and related expenses for licensed technologies.
Cost of sales primarily consists of: ● cost of products purchased from third-party vendors; ● cost of self-manufactured products; ● cost of adjustments to inventory carrying value; ● freight cost of shipping products to our sales force and import duties for the products; and ● royalties and related expenses for licensed technologies. 50 Table of Contents For markets other than Mainland China, in 2024, we sourced most of our beauty products and wellness products from trusted third-party suppliers and manufacturers.
Our sales force is increasingly using social media to market and sell our products. To continue to leverage social media, it is imperative that we develop demonstrable products that are unique and engaging to younger consumers.
Our sales force is increasingly using social media to market and sell our products. To continue to leverage social media, it is imperative that we develop demonstrable products that are unique and engaging to younger consumers. We strive to strike a balance between the expenses associated with our scientific expertise and sales compensation with a competitive price point.
The decline in revenue, Customers, Paid Affiliates and Sales Leaders for 2023 is partially attributable to slowing momentum from the general macroeconomic factors in the markets along with price increases that we implemented to address inflation.
The decline in revenue, Customers, Paid Affiliates and Sales Leaders for 2024 is partially attributable to slowing momentum from the general macroeconomic factors in the markets along with price increases that we implemented to address inflation. During the second half of 2024, we began to see year-over-year improvements in many of our markets, but our Indonesia market remains challenging.
For markets other than Mainland China, in 2023, we sourced most of our beauty products and wellness products from trusted third-party suppliers and manufacturers. In Mainland China, we operate manufacturing facilities where we produce the majority of our beauty and wellness products sold in Mainland China. We also produce some products at these facilities that are exported to other markets.
In Mainland China, we operate manufacturing facilities where we produce the majority of our beauty and wellness products sold in Mainland China. We also produce some products at these facilities that are exported to other markets. In addition, our Rhyz Manufacturing entities in the United States are producing some of our products.
Our Paid Affiliates were also negatively impacted by a change in eligibility requirements for receiving certain rewards within our compensation structure. We estimate the change in eligibility requirements resulted in a reduction of approximately 3 thousand Paid Affiliates for the fourth quarter of 2023.
Our Paid Affiliates were negatively impacted by a change in eligibility requirements in our Pacific markets for receiving certain rewards within our compensation structure. We estimate the change in eligibility requirements resulted in a reduction of approximately 1,500 Paid Affiliates for the three months ended December 31, 2024.
We expect to see future fluctuations in our selling expenses as a result of growth in the Rhyz segments and varying level of selling expenses by entity. For example, as discussed above, Manufacturing has minimal selling expenses, and within Rhyz other, Mavely has selling expenses of approximately 80% and BeautyBio and LifeDNA are minimal.
We expect to see future fluctuations in our selling expenses as a result of growth in the Rhyz segments and varying level of selling expenses by entity.
The year-over-year decrease in our 2023 revenue was primarily driven by the continued macroeconomic pressures we’ve been facing in our markets, which have negatively impacted consumer spending and customer acquisition. In addition, while we continue to make progress on our long-term vision, we have experienced headwinds from the transformation process.
The year-over-year decrease in our 2024 revenue was primarily driven by the continued macroeconomic pressures we've been facing in our markets, which have negatively impacted consumer spending and customer acquisition.
Our Europe & Africa segment was previously Europe, Middle East and Africa (“EMEA”), but was changed following the June 2023 closure of the Israel market. 51 Table of Contents The following table sets forth revenue for the years ended December 31, 2023 and 2022 for each of our reportable segments (U.S. dollars in thousands): Constant Year Ended December 31, Currency 2023 2022 Change Change (1) Nu Skin Americas $ 398,222 $ 508,537 (22 )% (18 )% Mainland China 298,079 360,389 (17 )% (13 )% Southeast Asia/Pacific 267,206 344,411 (22 )% (21 )% South Korea 236,099 268,707 (12 )% (11 )% Japan 207,833 224,896 (8 )% (1 )% Europe & Africa 192,352 204,275 (6 )% (8 )% Hong Kong/ Taiwan 153,589 157,197 (2 )% 1 % Other (858 ) 3,959 (122 )% (122 )% Total Nu Skin 1,752,522 2,072,371 (15 )% (13 )% Rhyz Manufacturing 181,395 149,458 21 % 21 % Rhyz Other 35,214 3,830 819 % 819 % Total Rhyz 216,609 153,288 41 % 41 % Total $ 1,969,131 $ 2,225,659 (12 )% (9 )% (1) Constant-currency revenue change is a non-GAAP financial measure.
Our Europe & Africa segment was previously Europe, Middle East and Africa ("EMEA"), but was changed following the June 2023 closure of the Israel market. 55 Table of Contents The following table sets forth revenue for the years ended December 31, 2024 and 2023 for each of our reportable segments (U.S. dollars in thousands): Constant Year Ended December 31, Currency 2024 2023 Change Change (1) Nu Skin Americas $ 322,516 $ 398,222 (19.0 )% (8.2 )% Southeast Asia/Pacific 244,846 267,206 (8.4 )% (6.4 )% Mainland China 235,235 298,079 (21.1 )% (19.7 )% Japan 181,557 207,833 (12.6 )% (5.9 )% Europe & Africa 164,164 192,352 (14.7 )% (14.6 )% South Korea 163,706 236,099 (30.7 )% (27.7 )% Hong Kong/Taiwan 130,610 153,589 (15.0 )% (13.3 )% Other 2,832 (858 ) (431.2 )% (430.3 )% Total Nu Skin 1,445,466 1,752,522 (17.5 )% (13.2 )% Rhyz Manufacturing 201,430 181,395 11.0 % 11.0 % Rhyz Other 85,188 35,214 141.9 % 142.0 % Total Rhyz 286,618 216,609 32.3 % 32.3 % Total $ 1,732,084 $ 1,969,131 (12.0 )% (8.2 )% (1) Constant-currency revenue change is a non-GAAP financial measure.
In 2018, our board of directors approved a stock repurchase plan authorizing us to repurchase up to $500.0 million of our outstanding shares of Class A common stock on the open market or in private transactions. During 2023, we repurchased approximately 0.6 million shares of our Class A common stock under the plan for $13.0 million.
Our interest expense may increase after our interest rate swaps expire in July 2025. Stock repurchase plan . In 2018, our board of directors approved a stock repurchase plan authorizing us to repurchase up to $500.0 million of our outstanding shares of Class A common stock on the open market or in private transactions. During 2024, we made no repurchases.
With the year-over-year growth within our Manufacturing segment, their revenue represented a higher proportion of our overall consolidated revenue for the year ended December 31, 2023 than in the prior-year. 55 Table of Contents Selling expenses Selling expenses as a percentage of revenue decreased to 37.7% in 2023, compared to 39.5% for 2022.
With the year-over-year growth within our Manufacturing segment, their revenue represented a higher proportion of our overall consolidated revenue for the year ended December 31, 2024 than in the prior-year.
South Korea . Our South Korea market was challenged by difficult macroeconomic trends, including inflationary pressures, and our associated price increases which negatively impacted our revenue, Customers, Paid Affiliates and Sales Leaders for the year ended December 31, 2023. Our Paid Affiliates were also negatively impacted by a change in eligibility requirements for receiving certain rewards within our compensation structure.
Our South Korea market was challenged by difficult macroeconomic trends, including inflationary pressures, and our associated price increases which negatively impacted our revenue, Customers, Paid Affiliates and Sales Leaders for the year ended December 31, 2024. During the fourth quarter of 2024, we introduced our enhancements to the sales performance plan in South Korea.
These quarterly cash dividends of $19.4 million, $19.5 million, $19.5 million and $19.3 million were paid on March 8, 2023, June 7, 2023, September 6, 2023 and December 6, 2023 to stockholders of record on February 27, 2023, May 26, 2023, August 25, 2023 and November 24, 2023.
The quarterly cash dividends of $3.0 million were paid on March 6, 2024, June 12, 2024, September 11, 2024 and December 11, 2024 to stockholders of record on February 26, 2024, May 31, 2024, August 30, 2024 and November 29, 2024.
In February 2024, our board of directors declared a reduced quarterly cash dividend of $ 0.06 per share to be paid on March 6, 2024 to stockholders of record on February 26, 2024.
In February 2025, our board of directors declared a quarterly cash dividend of $0.06 per share to be paid on March 5, 2025 to stockholders of record on February 24, 2025. During 2023, we paid quarterly cash dividends of $0.39 per share. The decrease in the quarterly dividend in 2024 preserved approximately $65.0 million of capital in 2024.
In addition, because we purchase a significant amount of our goods in U.S. dollars and recognize revenue in local currencies, our gross margin is subject to exchange rate risks.
Cost of sales and gross profit, on a consolidated basis, may fluctuate as a result of changes in the ratio between self-manufactured products and products sourced from third-party vendors. In addition, because we purchase a significant amount of our goods in U.S. dollars and recognize revenue in local currencies, our gross margin is subject to exchange rate risks.
In the fourth quarter of 2023, we adopted another strategic plan to focus resources on our global priorities and optimize future growth and profitability. The global program includes workforce reductions. We estimate total charges under the program will approximate $15–$25 million in severance charges, which will be paid in cash.
In the fourth quarter of 2023, we adopted another strategic plan to focus resources on our global priorities and optimize future growth and profitability. The global program includes workforce reductions and fixed asset impairments associated with our consolidation of technology assets.
Our global sales compensation plan, which we employ in all our markets except Mainland China, is an important factor in our ability to attract and retain our Sales Leaders.
Selling expenses do not include amounts we pay to our sales force based on their personal purchases; rather, such amounts are reflected as reductions to revenue. Our global sales compensation plan, which we employ in all our markets except Mainland China, is an important factor in our ability to attract and retain our Sales Leaders.
We entered into these interest rate swap arrangements during the third quarter of 2020 to hedge the variable cash flows associated with our variable-rate debt under the Credit Agreement. Stock repurchase plan .
As of December 31, 2024, we had four interest rate swaps, with a total notional principal amount of $200 million and a maturity date of July 31, 2025. We entered into these interest rate swap arrangements during the third quarter of 2020 to hedge the variable cash flows associated with our variable-rate debt under the Credit Agreement.

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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 changeFollowing are the weighted-average currency exchange rates of U.S. $1 into local currency for each of our international or foreign markets in which revenue exceeded U.S. $5.0 million for at least one of the quarters listed: 2023 2022 4 th Quarter 3 rd Quarter 2 nd Quarter 1 st Quarter 4 th Quarter 3 rd Quarter 2 nd Quarter 1 st Quarter Argentina 429.5 295.7 232.9 190.2 162.6 136.8 118.6 107.0 Australia 1.5 1.5 1.5 1.5 1.5 1.5 1.4 1.4 Canada 1.4 1.3 1.3 1.4 1.4 1.3 1.3 1.3 Chile 896.1 847.7 800.2 810.3 915.8 930.6 840.9 809.1 Eurozone countries 0.9 0.9 0.9 0.9 1.0 1.0 0.9 0.9 Hong Kong 7.8 7.8 7.8 7.8 7.8 7.8 7.8 7.8 Indonesia 15,605 15,229 14,885 15,235 15,553 14,933 14,536 14,344 Japan 147.6 144.8 137.4 132.4 140.8 138.1 129.5 116.2 Mainland China 7.2 7.2 7.0 6.9 7.1 6.8 6.6 6.3 Malaysia 4.7 4.6 4.5 4.4 4.6 4.5 4.3 4.2 Mexico 17.5 17.1 17.6 18.7 19.7 20.2 20.0 20.5 Philippines 56.0 56.0 55.6 54.8 57.2 56.3 52.7 51.6 Singapore 1.4 1.3 1.3 1.3 1.4 1.4 1.4 1.4 South Korea 1,321.1 1,316.6 1,314.5 1,283.0 1,358.2 1,342.2 1,262.1 1,206.2 Taiwan 31.7 31.8 30.7 30.4 31.1 30.4 29.4 28.0 Thailand 35.6 35.2 34.4 34.0 36.2 36.4 34.5 33.0 Vietnam 24,374 23,926 23,478 23,587 24,303 23,463 23,081 22,770 Interest Rate Risk We are exposed to risks related to fluctuations in interest rates on our outstanding variable rate debt.
Biggest changeFollowing are the weighted-average currency exchange rates of U.S. $1 into local currency for each of our international or foreign markets in which revenue exceeded U.S. $5.0 million for at least one of the quarters listed: 2024 2023 4 th Quarter 3 rd Quarter 2 nd Quarter 1 st Quarter 4 th Quarter 3 rd Quarter 2 nd Quarter 1 st Quarter Argentina 1,000.8 948.8 888.9 821.9 429.5 295.7 232.9 190.2 Australia 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5 Canada 1.4 1.4 1.4 1.3 1.4 1.3 1.3 1.4 Eurozone countries 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9 Hong Kong 7.8 7.8 7.8 7.8 7.8 7.8 7.8 7.8 Indonesia 15,839 15,805 16,167 15,664 15,605 15,229 14,885 15,235 Japan 152.4 148.8 156.0 148.5 147.6 144.8 137.4 132.4 Mainland China 7.2 7.2 7.2 7.2 7.2 7.2 7.0 6.9 Malaysia 4.4 4.5 4.7 4.7 4.7 4.6 4.5 4.4 Mexico 20.1 18.9 17.3 17.0 17.5 17.1 17.6 18.7 Singapore 1.3 1.3 1.4 1.3 1.4 1.3 1.3 1.3 South Korea 1,399.1 1,351.9 1,371.7 1,330.0 1,321.1 1,316.6 1,314.5 1,283.0 Taiwan 32.4 32.2 32.4 31.5 31.7 31.8 30.7 30.4 Vietnam 25,282 25,046 25,363 24,568 24,374 23,926 23,478 23,587 Interest Rate Risk We are exposed to risks related to fluctuations in interest rates on our outstanding variable rate debt.
As of December 31, 2023 and 2022, we did not hold any forward contracts designated as foreign-currency cash flow hedges. We continue to evaluate our foreign currency hedging policy.
As of December 31, 2024 and 2023, we did not hold any forward contracts designated as foreign-currency cash flow hedges. We continue to evaluate our foreign currency hedging policy.
As of December 31, 2023, we had $503.0 million outstanding on the term loan, net of unamortized debt issuance cost and outstanding borrowings on our revolving credit facility. Our four interest rate swaps reduce our exposure to interest rate risk on our term loan by $200.0 million as of December 31, 2023.
As of December 31, 2024, we had $393.6 million outstanding on the term loan, net of unamortized debt issuance cost and outstanding borrowings on our revolving credit facility. Our four interest rate swaps reduce our exposure to interest rate risk on our term loan by $200.0 million as of December 31, 2024.
For additional information about our market risk see Note 14 to the consolidated financial statements contained in this report. 60 Table of Contents
For additional information about our market risk see Note 15 to the consolidated financial statements contained in this report. 64 Table of Contents
We do not use derivative financial instruments for trading or speculative purposes. We regularly monitor our foreign currency risks and periodically take measures to reduce the impact of foreign exchange fluctuations on our operating results. As of December 31, 2023, and 2022, we did not hold non-designated mark-to-market forward derivative contracts to hedge foreign-denominated intercompany positions or third-party foreign debt.
We regularly monitor our foreign currency risks and periodically take measures to reduce the impact of foreign exchange fluctuations on our operating results. As of December 31, 2024, and 2023, we did not hold non-designated mark-to-market forward derivative contracts to hedge foreign-denominated intercompany positions or third-party foreign debt.
As a result, the total variable debt of $303.0 million was exposed to market risks as of December 31, 2023. A hypothetical one percentage point increase (decrease) in interest rates on our variable rate debt would increase (decrease) our annual interest expense by approximately $3.0 million.
As a result, the total variable debt of $193.6 million was exposed to market risks as of December 31, 2024. A hypothetical one percentage point increase (decrease) in interest rates on our variable rate debt would increase (decrease) our annual interest expense by approximately $1.9 million.
As of December 31, 2023, our Argentina subsidiary had a small net peso monetary position.
As of December 31, 2024, our Argentina subsidiary had a small net peso monetary position. Net sales of Argentina were less than 2% of our consolidated net sales for 2024, 2023 and 2022.
Net sales of Argentina were less than 2% of our consolidated net sales for 2023, 2022 and 2021. 59 Table of Contents We may seek to reduce our exposure to fluctuations in foreign currency exchange rates through the use of foreign currency exchange contracts and through intercompany loans of foreign currency.
We may seek to reduce our exposure to fluctuations in foreign currency exchange rates through the use of foreign currency exchange contracts and through intercompany loans of foreign currency. We do not use derivative financial instruments for trading or speculative purposes.

Other NUS 10-K year-over-year comparisons