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What changed in HERBALIFE LTD.'s 10-K — 2024 vs 2025

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

+383 added−399 removedSource: 10-K (2026-02-18) vs 10-K (2025-02-19)

Top changes in HERBALIFE LTD.'s 2025 10-K

383 paragraphs added · 399 removed · 328 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

56 edited+5 added−5 removed145 unchanged
Biggest changeIn 2023 and continuing into 2024, we launched the “Industrial Athlete” program at our US Manufacturing and Distribution facilities targeted to help prevent musculoskeletal injuries. This initiative involves pre-shift exercise routines led by trained line leaders, ensuring all employees engage in light exercises before starting their shifts.
Biggest changeWe have continued to offer the “Industrial Athlete” program, which was launched in 2023 in the U.S. at our US Manufacturing and Distribution facilities, and have expanded this globally in 2025. This program is targeted to help prevent musculoskeletal injuries and improve how our manufacturing employees approach the way they move at work.
We have initial qualification methods of up to 12 months to encourage a more gradual qualification, which we believe has helped create sustainable growth.
We have initial qualification methods of up to 12 months to encourage a more gradual qualification, which we believe has helped create more sustainable growth.
Food and Drug Administration, or FDA, and strict Current Good Manufacturing Practice regulations, or CGMPs, for food, acidified foods, and dietary supplements. We also work closely with our third-party manufacturers to ensure high quality products are produced and tested through a vigorous quality control process at approved qualified contract manufacturer labs or third-party labs.
Food and Drug Administration, or FDA, and strict Current Good Manufacturing Practice regulations, or CGMPs, for foods, acidified foods, and dietary supplements. We also work closely with our third-party manufacturers to ensure high quality products are produced and tested through a vigorous quality control process at approved qualified contract manufacturer labs or third-party labs.
The Transformation Program was substantially completed in 2024 as described further in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations , of this Annual Report on Form 10-K and Note 14, Restructuring Activities , to the Consolidated Financial Statements included in Part IV, Item 15, Exhibits, Financial Statement Schedules , of this Annual Report on Form 10-K. 11 In addition, many Members rely on the use of technology to support their goals and businesses.
The Transformation Program was completed in 2024 as described further in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations , of this Annual Report on Form 10-K and Note 14, Restructuring Activities , to the Consolidated Financial Statements included in Part IV, Item 15, Exhibits, Financial Statement Schedules , of this Annual Report on Form 10-K. 11 In addition, many Members rely on the use of technology to support their goals and businesses.
Some later join Herbalife and become a Members themselves, which allows them to purchase products directly from us at a discount. Some Members are interested in the entrepreneurial opportunity to build a sustainable business and choose to become a distributor where they can earn compensation based on their sales and the sales of their team.
Some later join Herbalife and become a Member themselves, which allows them to purchase products directly from us at a discount. Some Members are interested in the entrepreneurial opportunity to build a sustainable business and choose to become a distributor where they can earn compensation based on their sales and the sales of their team.
ESFA’s opinions, which have been accepted by the European Commission, have limited the use of certain nutrition-specific claims made for foods and food supplements. Accordingly, we revised affected product labels to ensure regulatory compliance. U.S. FTC Consent Order We are subject to a Consent Order entered into between us and the FTC in July 2016 to resolve a multi-year investigation.
EFSA’s opinions, which have been accepted by the European Commission, have limited the use of certain nutrition-specific claims made for foods and food supplements. Accordingly, we revised affected product labels to ensure regulatory compliance. U.S. FTC Consent Order We are subject to a Consent Order entered into between us and the FTC in July 2016 to resolve a multi-year investigation.
Our manufacturing facilities, known as Herbalife Innovation and Manufacturing Facilities, or HIMs, include HIM Lake Forest and HIM Winston-Salem, located in the U.S., and HIM Suzhou and HIM Nanjing, located in China. Our U.S.
Our manufacturing facilities, known as Herbalife Innovation and Manufacturing Facilities, or HIMs, include HIM Lake Forest and HIM Winston-Salem, located in the U.S., and HIM Suzhou, located in China. Our U.S.
The SEC maintains an Internet website that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at www.sec.gov.
The SEC also maintains an Internet website that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at www.sec.gov.
These innovations have combined with global trends such as the obesity epidemic, increasing interest in fitness, living healthier, and the rise of entrepreneurship, to power our success for the last 45 years and we believe they will continue to power our growth in the future. OUR PRODUCTS Our science-backed products are the foundation of our business.
These innovations have combined with global trends such as the obesity epidemic, increasing interest in fitness, living healthier, and the rise of entrepreneurship, to power our success for the last 46 years and we believe they will continue to power our growth in the future. OUR PRODUCTS Our science-backed products are the foundation of our business.
In the United States, however, pursuant to a consent order we entered into with the Federal Trade Commission (FTC) in 2016 (“the Consent Order”), a Members does not receive Volume Points for a transaction until the product is sold to a customer at a profit and certain information is collected regarding the sale.
In the United States, however, pursuant to a consent order we entered into with the Federal Trade Commission (FTC) in 2016 (“the Consent Order”), a Member does not receive Volume Points for a transaction until the product is sold to a customer at a profit and certain information is collected regarding the sale.
Together, product returns and buybacks were approximately 0.1% of net sales for each of the years ended December 31, 2024, 2023, and 2022. Business in China Our business model in China includes unique features as compared to our traditional business model in order to ensure compliance with Chinese regulations.
Together, product returns and buybacks were approximately 0.1% of net sales for each of the years ended December 31, 2025, 2024, and 2023. Business in China Our business model in China includes unique features as compared to our traditional business model in order to ensure compliance with Chinese regulations.
Item 1. Business GENERAL Herbalife is a global health and wellness company, that, for 45 years, has empowered millions of people to reach their nutrition, health and wellness goals using our science-backed products and the individual coaching provided by our network of independent members.
Item 1. Business GENERAL Herbalife is a global health and wellness company, that, for 46 years, has empowered millions of people to reach their nutrition, health and wellness goals using our science-backed products and the individual coaching provided by our network of independent members.
We believe that the primary drivers for our success throughout our 45-year history have been a result of the innovations of our Members, which have helped us quickly adapt to changing market conditions and consumer preferences.
We believe that the primary drivers for our success throughout our 46-year history have been a result of the innovations of our Members, which have helped us quickly adapt to changing market conditions and consumer preferences.
These suppliers typically utilize similar quality processes, equipment, expertise, and having traceability as we do with our own modern quality processes. As part of our program to better ensure the procurement of high-quality ingredients, we also test our incoming ingredients and raw materials for compliance to potency, identity, and adherence to strict specifications.
These suppliers typically utilize quality processes, equipment, expertise, and having traceability similar to what we do with our own modern quality processes. As part of our program to ensure the procurement of high-quality ingredients, we test our incoming ingredients and raw materials for compliance to potency, identity, and adherence to strict specifications.
All HIM quality control labs contain similar modern analytical equipment and are backed by the expertise in testing and methods development of our scientists. In our U.S. HIM facilities, which manufacture products for the U.S. and most of our international markets, we operate and adhere to the regulations established by the U.S.
All HIM quality control labs contain modern analytical equipment, similar to each other and are backed by the expertise in testing and methods development of our trained scientists. In our U.S. HIM facilities, which manufacture products for the U.S. and most of our international markets, we operate and adhere to the regulations established by the U.S.
HUMAN CAPITAL At Herbalife, our commitment to improving lives and our communities is at the core of everything we do. This commitment also informs how we value and treat our employees. We seek to provide a work environment where employees can grow and thrive while supporting our Members and their customers.
HUMAN CAPITAL At Herbalife, our focus on improving lives and our communities is at the core of everything we do. This focus also informs how we value and treat our employees. We seek to provide a work environment where employees can grow and thrive while supporting our Members and their customers.
As of December 31, 2024, we had approximately 6.2 million total Members, including 3.0 million preferred members and 2.1 million distributors in the markets where we have established these two categories and 0.2 million sales representatives and independent service providers in China.
As of December 31, 2025, we had approximately 6.4 million total Members, including 3.1 million preferred members and 2.3 million distributors in the markets where we have established these two categories and 0.2 million sales representatives and independent service providers in China.
If for any reason a customer or preferred member is not satisfied with an Herbalife product, they may return it or any unused portion of the product within 30 days from the time of receipt for a full refund or credit toward the exchange of another Herbalife product.
If for any reason a customer or preferred member is not satisfied with an Herbalife product, they may return the product within 30 days from the time of receipt for a full refund or credit toward the exchange of another Herbalife product.
See the Our Network Marketing Program – Our Marketing Plan and Member Compensation section above for sales leader and requalification metrics and further discussion on our sales leaders. Available Information Our Internet website address is www.herbalife.com and our investor relations website is ir.herbalife.com.
See the Our Network Marketing Program – Our Marketing Plan and Member Compensation section above for sales leader and re-qualification metrics and further discussion on our sales leaders. Available Information Our Internet website address is www.herbalife.com and our investor relations website is ir.herbalife.com.
Globally, we have contract manufacturers strategically located in countries such as India, Italy, U.S., Brazil, South Korea, Taiwan, Germany, and the Netherlands. During 2024, based on our total products produced and then sold worldwide, we purchased approximately 23% of our products from our top three third-party manufacturers.
Globally, we have contract manufacturers strategically located in countries such as India, Italy, U.S., Brazil, South Korea, Taiwan, Germany, and the Netherlands. During 2025, based on our total products produced and then sold worldwide, we purchased approximately 22% of our products from our top three third-party manufacturers.
Second, Members who build a sales team may earn additional income based on the sales activity of their team, which may include commissions and bonuses that we call royalty overrides, production bonuses, and other bonuses. Members earning such compensation have generally attained the level of sales leader as described below.
Second, Members who build a sales team may earn additional income based on the sales activity of their team, which may include commissions and bonuses that we call royalty overrides, production bonuses, and other bonuses in our Marketing Plan. Members earning such compensation have generally attained the level of sales leader as described below.
In aggregate, we have approximately 1,000 distribution points and partner retail locations around the world. During 2024, the Company strategically consolidated many of its distribution points in its Mexico market in order to increase the distribution efficiency.
In aggregate, we have approximately 900 distribution points and partner retail locations around the world. During 2024, the Company strategically consolidated many of its distribution points in its Mexico market in order to increase the distribution efficiency.
Examples of these programs include the following: • Training Programs – We provide our employees access to an internal learning management system, Herbalife University, which provides professional development courses, technical training, and compliance training to all employees globally. • Educational Assistance – Another way we support employees’ professional development is by offsetting a portion of the cost of higher education.
Examples of these programs include the following: • Training Programs – We provide our employees access to external self-directed learning programs as well as an internal learning management system, Herbalife University, which provides professional development courses, technical training, and compliance training to all employees globally. • Educational Assistance – Another way we support employees’ professional development is by offsetting a portion of the cost of higher education.
COMPETITION The nutrition industry is highly competitive. Nutrition products are sold through a number of distribution channels, including direct selling, online retailers, specialty retailers, and the discounted channels of food, drug and mass merchandise. Our competitors include companies such as BellRing Brands, Inc., Conagra Brands, Inc., The Hain Celestial Group, Inc., Post Holdings, Inc., and The Simply Good Foods Company.
COMPETITION The nutrition industry is highly competitive. Nutrition products are sold through a number of distribution channels, including direct selling, online retailers, specialty retailers, and the discounted channels of food, drug and mass merchandise. Our competitors include companies such as BellRing Brands, Inc., The Hain Celestial Group, Inc., Nestlé S.A., and The Simply Good Foods Company.
Segmentation In many of our markets, including our largest markets of United States, India and Mexico, we have segmented our Member base into two categories: "preferred members" – who are consumers who wish to purchase product for their own household use, and "distributors" – who are Members who also wish to resell products or build a sales organization.
Segmentation In many of our markets, including our largest markets of United States, India and Mexico, we have segmented our Member base into two categories: “preferred members” – who are consumers who wish to purchase product for their own household use, and “distributors” – who are Members who also wish to resell products or build a sales organization.
Also, for each of the years presented, the retention results exclude certain markets for which, due to local operating conditions, sales leaders were not required to requalify.
Also, for each of the years presented, the retention results exclude certain markets for which, due to local operating conditions, sales leaders were not required to re-qualify.
In China, our independent service providers are compensated for marketing, sales support, and other services, instead of the Member allowances and royalty overrides utilized in our global Marketing Plan.
In China, our independent service providers are compensated for marketing, sales support, and other services, instead of the Member allowances and marketing plan payments utilized in our global Marketing Plan.
Herbalife is committed to making great products with integrity and ensuring we utilize efficient and effective processes. 10 Our finished products are analyzed for label claims and tested for microbiological purity, thereby verifying that our products comply with food safety standards, meet label claims and have met other quality standards.
Herbalife is committed to making great products with integrity, quality and utilizing efficient and effective processes. 10 Our finished products are analyzed for label claims and tested for microbiological purity, thereby verifying that our products comply with food safety standards, meet label claims and have met many other quality standards.
As of December 31, 2024, we sold approximately 140 product types, which fall into the following categories: Percentage of Net Sales 2024 2023 2022 Description Representative Products Weight Management 55.4% 56.3% 56.8% Meal replacement, protein shakes, drink mixes, weight loss supplements, healthy snacks, and metabolism boosting teas Formula 1 Healthy Meal, Herbal Tea Concentrate, Protein Drink Mix, Personalized Protein Powder, Total Control ® , Formula 2 Multivitamin Complex, Prolessa ™ Duo , and Protein Bars Targeted Nutrition 29.7% 29.2% 29.1% Functional beverages and dietary and nutritional supplements containing quality herbs, vitamins, minerals and other natural ingredients Herbal Aloe Concentrate, Active Fiber Complex, Niteworks ® , and Herbalifeline ® Energy, Sports, and Fitness 11.5% 11.1% 10.6% Products that support a healthy active lifestyle Herbalife24 ® product line, N-R-G Tea, and Liftoff ® energy drink Outer Nutrition 1.7% 1.7% 1.6% Facial skin care, body care, and hair care Herbalife SKIN line and Herbal Aloe Bath and Body Care line Literature, Promotional, and Other 1.7% 1.7% 1.9% Start-up kits, sales tools, and educational materials Herbalife Member Packs and BizWorks 5 Our Formula 1 Nutritional Shake Mix, our best-selling product line, approximated 26% of our net sales for the year ended December 31, 2024.
As of December 31, 2025, we sold 144 product types, which fall into the following categories: Percentage of Net Sales 2025 2024 2023 Description Representative Products Weight Management 54.5% 55.4% 56.3% Meal replacement, protein shakes, drink mixes, weight loss supplements, healthy snacks, and metabolism boosting teas Formula 1 Healthy Meal, Herbal Tea Concentrate, Protein Drink Mix, Personalized Protein Powder, Total Control ® , Formula 2 Multivitamin Complex, Prolessa ™ Duo , and Protein Bars Targeted Nutrition 30.0% 29.7% 29.2% Functional beverages and dietary and nutritional supplements containing quality herbs, vitamins, minerals and other natural ingredients Herbal Aloe Concentrate, Active Fiber Complex, Niteworks ® , and Herbalifeline ® Energy, Sports, and Fitness 12.2% 11.5% 11.1% Products that support a healthy active lifestyle Herbalife24 ® product line, N-R-G Tea, and Liftoff ® energy drink Outer Nutrition 1.7% 1.7% 1.7% Facial skin care, body care, and hair care Herbalife SKIN line, Herbal Aloe Bath and Body Care line, Vritilife ® , skincare line, and HL/SKIN line Literature, Promotional, and Other 1.6% 1.7% 1.7% Start-up kits, sales tools, and educational materials Herbalife Member Packs and BizWorks 5 Our Formula 1 Nutritional Shake Mix, our best-selling product line, approximated 25% of our net sales for the year ended December 31, 2025.
We make available free of charge on our website our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, proxy statements, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, as soon as reasonably practical after we file such material with, or furnish it to, the Securities and Exchange Commission, or SEC.
We make available free of charge on our website our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, proxy statements, and amendments to those reports, as soon as reasonably practical after we file or furnish them to the Securities and Exchange Commission, or SEC, pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, or the Exchange Act.
Our investment in technology infrastructure helps support our capacity to grow. In 2021, we also initiated a global transformation program to optimize global processes for future growth, or the Transformation Program. The Transformation Program involves the investment in certain new technologies and the realignment of infrastructure and the locations of certain functions to better support distributors and customers.
In 2021, we also initiated a global transformation program to optimize global processes for future growth, or the Transformation Program. The Transformation Program involves the investment in certain new technologies and the realignment of infrastructure and the locations of certain functions to better support distributors and customers.
The table below reflects sales leader requalification rates by year and by region, which we refer to as sales leader retention: Sales Leader Retention Rate 2025 2024 2023 North America 75.4 % 70.3 % 69.7 % Latin America 76.3 % 70.4 % 71.6 % EMEA 65.6 % 66.9 % 64.6 % Asia Pacific 68.8 % 67.4 % 66.6 % Total sales leaders 70.3 % 68.3 % 67.6 % The Company has adjusted the re-qualification criteria from time to time in response to evolving business objectives and market conditions.
The table below reflects sales leader re-qualification rates by year and by region, which we refer to as sales leader retention: Sales Leader Retention Rate 2026 2025 2024 North America 77.8 % 75.4 % 70.3 % Latin America 72.8 % 76.3 % 70.4 % EMEA 66.5 % 65.6 % 66.9 % Asia Pacific 69.4 % 68.8 % 67.4 % Total sales leaders 70.3 % 70.3 % 68.3 % The Company has adjusted the re-qualification criteria from time to time in response to evolving business objectives and market conditions.
As of December 31, 2024, prior to our February re-qualification process, as described in more detail below, approximately 733,000 of our Members have attained the level of sales leader, of which approximately 705,000 have attained this level in the 94 markets where we use our Marketing Plan and 28,000 have attained this level as independent service providers operating in our China business.
As of December 31, 2025, prior to our February re-qualification process, as described in more detail below, approximately 750,000 of our Members have attained the level of sales leader, of which approximately 723,000 have attained this level in the 94 markets where we use our Marketing Plan and 27,000 have attained this level as independent service providers operating in our China business.
We monitor the talent needs of our departments and functions with particular focus on the areas where human capital resources are important to daily operations to ensure we can timely manufacture, distribute, and sell products to our Members. As of December 31, 2024, we had approximately 8,600 employees, of which approximately 2,300 were located in the United States.
We monitor the talent needs of our departments and functions with particular focus on the areas where human capital resources are important to daily operations to allow us to timely manufacture, distribute, and sell products to our Members. As of December 31, 2025, we had approximately 8,500 employees, of which approximately 2,200 were located in the United States.
We provide competitive base pay that aligns with employee positions, skill levels, experience, contributions, and geographic location. In addition to base pay, we seek to reward employees with annual incentive awards, recognition programs, and equity awards for employees at certain job grades.
We provide competitive base pay aligned to employee positions, skill levels, experience, contributions, and geographic location. In addition to base pay, we seek to reward employees with annual incentive awards based on a pay-for-performance philosophy, recognition programs, and equity awards for employees at certain job grades.
Other Regulations of our Network Marketing Program On January 4, 2018, the FTC released its nonbinding Business Guidance Concerning Multi-Level Marketing, or MLM Guidance.
Other Regulations of our Network Marketing Program On January 4, 2018, the FTC released its nonbinding Business Guidance Concerning Multi-Level Marketing, or MLM Guidance, which was updated in April 2024.
We believe that direct selling is ideally suited for our business because our Members provide personalized support, coaching, and education to their customers, and also join a supportive and understanding community of like-minded people who prioritize health and nutrition.
We further discuss the segmentation of our Members in Our Network Marketing Program – Segmentation, section below. We believe that direct selling is ideally suited for our business because our Members provide personalized support, coaching, and education to their customers, and also join a supportive and understanding community of like-minded people who prioritize health and nutrition.
RESOURCES We seek to provide the highest quality products to our Members and their customers through our “seed to feed” strategy, which includes significant investments in obtaining quality ingredients from traceable sources, qualified by scientific personnel through product testing, and increasing the amount of self-manufacturing of our products.
RESOURCES We seek to provide the highest quality products to our Members and their customers through our “seed to feed” strategy, which includes significant investments in obtaining and approving quality ingredients from traceable sources, conducted by scientific personnel through product testing, documentation review and managing the manufacturing process of our products.
Our Members We are dependent on our Members to sell and promote our products to their customers. We frequently interact and work directly with our sales leaders to explore ways to support our and our Members’ businesses, and their customers’ personal goals of living a healthier and more active lifestyle.
We frequently interact and work directly with our sales leaders to explore ways to support our and our Members’ businesses, and their customers’ personal goals of living a healthier and more active lifestyle.
We also make available free of charge on our investor relations website at ir.herbalife.com our Principles of Corporate Governance, our Code of Conduct, and the Charters of our Audit Committee, Nominating and Corporate Governance Committee, Compensation Committee, and ESG Committee of our board of directors.
In addition to the above-mentioned filings, we make available free of charge on our investor relations website at ir.herbalife.com our Principles of Corporate Governance, our Code of Conduct, and the Charters of our Audit Committee, Nominating and Corporate Governance Committee, Compensation Committee, and Sustainability Committee of our board of directors.
Our employee wellness program is a critical part of our employer brand and aligns with our identity as a leader in the health and wellness industry. In 2024, our “Wellness For Life” program offered employees a suite of activities to achieve wellness through quarterly fitness challenges and movement conditioning routines, nutrition, intellectual well-being and financial literacy.
Our employee wellness program is a critical part of our employer brand and aligns with our identity as a leader in the health and wellness industry. In 2025, we extended our wellness program globally, offering employees a suite of activities to achieve wellness through fitness challenges and movement conditioning routines, nutrition education, intellectual well-being and financial literacy.
Such laws, regulations and other constraints exist at the federal, state or local levels in the United States and at all levels of government in foreign jurisdictions, and include regulations pertaining to: (1) the formulation, manufacturing, packaging, labeling, distribution, importation, sale, and storage of our products; (2) product claims and advertising, including direct claims and advertising by us, as well as claims and advertising by Members, for which we may be held responsible; (3) our network marketing program; (4) transfer pricing and similar regulations that affect the level of U.S. and foreign taxable income and customs duties; (5) taxation of our Members (which in some instances may impose an obligation on us to collect the taxes and maintain appropriate records); (6) our international operations, such as import/export, currency exchange, repatriation and anti-bribery regulations; (7) antitrust issues; (8) privacy and data protection; and (9) the independent contractor status of our Members.
REGULATION General In markets where we operate, we are affected by extensive laws, governmental regulations, administrative determinations and guidance, court decisions and other similar constraints that pertain to: (1) the formulation, manufacturing, packaging, labeling, distribution, importation, sale, and storage of our products; (2) product claims and advertising, including direct claims and advertising by us, as well as claims and advertising by Members, for which we may be held responsible; (3) our network marketing program; (4) transfer pricing and similar regulations that affect the level of U.S. and foreign taxable income and customs duties; (5) taxation of our Members (which in some instances may impose an obligation on us to collect the taxes and maintain appropriate records); (6) our international operations, such as import/export, currency exchange, repatriation and anti-bribery regulations; (7) antitrust issues; (8) privacy and data protection; and (9) the independent contractor status of our Members.
The re-qualification requirement does not apply to new sales leaders. 8 For the latest twelve-month re-qualification period ending January 2025, approximately 70.3% of our sales leaders, excluding China, re-qualified, versus 68.3% for the twelve-month period ended January 2024.
The re-qualification requirement does not apply to new sales leaders. 8 For the twelve-month re-qualification periods ending January 2026 and January 2025, approximately 70.3% of our sales leaders, excluding China, re-qualified.
The table below reflects the number of sales leaders as of the end of February of the year indicated (subsequent to the annual re-qualification process) and by region: Number of Sales Leaders 2024 2023 2022 North America 58,782 69,586 80,278 Latin America 107,247 118,605 125,726 EMEA 162,424 170,202 183,056 Asia Pacific 242,792 223,714 201,137 Total sales leaders 571,245 582,107 590,197 China 22,794 38,317 33,486 Worldwide total sales leaders 594,039 620,424 623,683 The number of sales leaders as of December 31 will exceed the number immediately subsequent to the preceding re-qualification period because sales leaders qualify throughout the year but sales leaders who do not re-qualify are removed from the rank of sales leader the following February.
The table below reflects the number of sales leaders as of the end of February of the year indicated (subsequent to the annual re-qualification process) and by region: Number of Sales Leaders 2025 2024 2023 North America 52,939 58,782 69,586 Latin America 115,471 107,247 118,605 EMEA 154,482 162,424 170,202 Asia Pacific 257,725 242,792 223,714 Total sales leaders 580,617 571,245 582,107 China 22,091 22,794 38,317 Worldwide total sales leaders 602,708 594,039 620,424 The number of sales leaders as of December 31 will exceed the number immediately subsequent to the preceding re-qualification period because sales leaders qualify throughout the year but sales leaders who do not re-qualify are removed from the rank of sales leader the following February.
For example, we are currently modernizing our product packaging which includes implementing solutions to reduce usage of waste-prone materials (such as single-use plastics) and incorporate the usage of recycled materials.
For example, we are currently modernizing certain of our product packaging which includes implementing solutions to reduce usage of virgin and single-use plastics while incorporating the use of recycled materials.
Our procurement process for many of our botanical products now stretches back to the farms and includes self-processing of teas and herbal ingredients into finished raw materials at our own facilities.
Some of our procurement processes for our botanical ingredients stretch back to the farms and includes self-processing of teas and herbal ingredients into finished raw materials at our own facility.
To qualify for a higher level within our Marketing Plan, Members must achieve specified Volume Point thresholds of product sales or earn certain amounts of royalty overrides during specified time periods and generally must re-qualify each year. Qualification criteria vary somewhat by market.
To qualify for a higher level within our Marketing Plan, Members must achieve specified sales thresholds based on their own and/or their team’s performance during specified time periods and generally must re-qualify each year. Qualification criteria vary somewhat by market.
We have a total of eight laboratories, including five quality control laboratories located in Southern California; Changsha, China; Winston-Salem, North Carolina; Suzhou, China; and Nanjing, China, as well as three Centers of Excellence laboratories located in Southern California, Changsha, China, and Bangalore, India.
In our HIM facilities we have fully-equipped, modern quality control laboratories in the U.S. and China. We have a total of seven laboratories, including four quality control laboratories located in Southern California; Changsha, China; Winston-Salem, North Carolina; and Suzhou, China, as well as three Centers of Excellence laboratories located in Southern California; Changsha, China; and Bangalore, India.
Our benefit programs are designed to enhance employee well-being and assist employees in the event of illness, injury, or disability. To this end, we offer benefits that vary worldwide, but may include health insurance, retirement savings programs, and wellness incentives designed to promote a healthy and active lifestyle.
Our benefit programs are designed to enhance employee well-being and assist employees in various life events including illness, injury, or disability. We offer benefits that vary worldwide, but may include health insurance, retirement savings programs, employee assistance programs, and a global wellness program designed to promote holistic health and well-being.
We will continue to build on these platforms to take advantage of the rapid development of technology around the globe to support a more robust Member and customer experience. In addition, we leverage an Oracle business suite platform to support our business operations, improve productivity and support our strategic initiatives.
We will continue to build on these platforms to take advantage of the rapid development of technology around the globe to support a more robust Member and customer experience.
Members include consumers who purchase products for their own personal use and distributors who wish to resell products or build a sales organization. We further discuss the segmentation of our Members in Our Network Marketing Program – Segmentation, section below.
We use a direct-selling business model to distribute and market our nutrition products to and through a global network of Members. Members include consumers who purchase products for their own personal use and distributors who wish to resell products or build a sales organization.
We are the number one active and lifestyle nutrition brand in the world and sell the number one protein shake in the world. We provide weight management, targeted nutrition and sports nutrition products in 95 markets around the world. We use a direct-selling business model to distribute and market our nutrition products to and through a global network of Members.
We are the number one active and lifestyle nutrition brand in the world and sell the number one protein shake in the world. We provide weight management, targeted nutrition, energy, sports and fitness, and outer nutrition products in 95 markets around the world.
Outside of the United States and China, a Member accumulates Volume Points when they buy the product from us.
Our Marketing Plan uses point values, known as Volume Points, to each of our products to determine a Member’s level. Outside of the United States and China, a Member accumulates Volume Points when they buy the product from us.
See Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations , of this Annual Report on Form 10-K for a further description of Volume Points and royalty overrides.
We believe that the opportunity for Members to earn this Member compensation contributes significantly to our ability to retain our most active and productive Members. See Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations , of this Annual Report on Form 10-K for a further description of Member compensation.
The basis for calculating Marketing Plan payouts varies depending on product and market: for 2024, we utilized on a weighted-average basis approximately 90% of suggested retail price, to which we applied discounts of up to 50% for distributor allowances and payout rates of up to 15% for royalty overrides, up to 7% for production bonuses, and approximately 1% for a cash bonus known as the Mark Hughes bonus.
For 2025, we utilized on a weighted-average basis approximately 90% of suggested retail price, to which we applied discounts of up to 50% for distributor allowances and paid commissions and bonuses that total up to 22% in the aggregate, and allocated approximately 1% for an additional bonus known as the Mark Hughes bonus.
The Company plans to integrate its HIM Nanjing facility with its HIM Suzhou facility in order to streamline its production process in China prior to the HIM Nanjing lease expiring in June 2025. In addition to streamlining certain of our manufacturing processes, we are also exploring methods to reduce costs relating to our packaging and handling materials.
Together, our HIM facilities produce approximately 46% of our inner nutrition products sold worldwide. In addition to streamlining certain aspects of our manufacturing processes, we are also exploring methods to reduce costs related to our packaging and handling materials.
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For instance, to accommodate growing customer demand for plant-based products, in 2023 we launched a new vegan product line in North America, Herbalife V, which is certified vegan, organic, and non-GMO. In 2024, we introduced two chewable gel supplements in Europe that are gluten-free, sugar-free, and use natural colors and flavors.
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For instance, in 2025, we launched HL/Skin, a new skincare line in Europe and Africa, leveraging advanced Korean skincare science. We also expanded into healthy snacking options with the recent launch of Protein Gelato in Brazil. In North America, as part of our mission to lead innovation in metabolic health and weight-loss supplements, we introduced MultiBurn.
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We believe that the opportunity for Members to earn royalty overrides and production bonuses contributes significantly to our ability to retain our most active and productive Members. Our Marketing Plan uses point values, known as Volume Points, to each of our products to determine a Member’s level.
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In addition, to address the fast-growing consumer demand, we also have launched a healthy lifespan brand in North America, Life I/O™, with the initial product, Baseline, designed to support cellular health.
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Together, our HIM facilities produce approximately 47% of our inner nutrition products sold worldwide. Self-manufacturing also allows us to maintain control over our efforts to reduce the negative environmental impact of our operations and supply chain and to help mitigate climate risk.
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For a separate discussion related to the Member compensation and service fees in China, refer to the “ Business in China ” section below. The basis for calculating Marketing Plan payouts, or compensation to our Members, varies depending on product and market.
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For self-manufactured products, we conduct our testing in-house at our fully-equipped, modern quality control laboratories in the U.S. and China.
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In addition, we leverage an Oracle business suite platform to support our business operations, improve productivity and support our strategic initiatives, and we are currently implementing Software-as-a-Service (SaaS) solutions, such as Oracle Fusion Cloud applications. Our investment in technology infrastructure helps support our capacity to grow.
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REGULATION General In our United States and foreign markets, we are affected by extensive laws, governmental regulations, administrative determinations and guidance, court decisions and similar constraints that regulate the conduct of our business.
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This initiative includes pre-shift exercise routines led by trained line leaders, enabling employees to engage in light exercises before beginning their shifts and use proper techniques while performing their work duties. Our Members We are dependent on our Members to sell and promote our products to their customers.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIf we fail or succeed, or are perceived to fail or succeed, to achieve any goals, targets, or objectives we may set with respect to ESG matters, if we do not meet or comply with new regulations or evolving consumer, investor, industry, or stakeholder expectations and standards, including those related to reporting, or if we are perceived to have not responded appropriately to the growing concern for ESG matters or are unable to satisfy all stakeholders, we may face legal or regulatory actions, the imposition of fines, penalties, or other sanctions, adverse publicity, and decreased demand from consumers who may stop purchasing our products, or the price of our common shares could decline, any of which could materially harm our reputation or have a material adverse effect on our business, financial condition, or operating results.
Biggest changeIf we fail or succeed, or are perceived to fail or succeed, to achieve or maintain any goals, targets, or objectives we may set with respect to ESG matters, if we do not meet or comply with new regulations or evolving consumer, investor, industry, or stakeholder expectations and standards, including those related to reporting, if consumers or investors disagree with our actions or failure to act with respect to ESG matters, including whether we set goals, targets or objectives, or if we are perceived to have not responded appropriately to the concern for ESG matters or are unable to satisfy all stakeholders, we may face legal or regulatory actions, the imposition of fines, penalties, or other sanctions, adverse publicity, and decreased demand from consumers who may stop purchasing our products, or the price of our common shares could decline, any of which could materially harm our reputation or have a material adverse effect on our business, financial condition, or operating results. 27 Risks Related to Regulatory and Legal Matters Our products are affected by extensive regulations and our failure or our Members’ failure to comply with any regulations could lead to significant penalties or claims, which could materially harm our financial condition and operating results.
This perception is dependent upon opinions concerning a number of factors, including: • the safety, quality, and efficacy of our products, as well as those of similar companies; • our Members; • our network marketing program or the attractiveness or viability of the financial opportunities it may provide; • the direct-selling business generally; • actual or purported failure by us or our Members to comply with applicable laws, rules, and regulations, including those regarding product claims and advertising, good manufacturing practices, the regulation of our network marketing program, the registration of our products for sale in our target markets, or other aspects of our business; 20 • our commitment to ESG matters and our ESG practices; • the security of our information technology infrastructure; and • actual or alleged impropriety, misconduct, or fraudulent activity by any person formerly or currently associated with our Members or us.
This perception is dependent upon opinions concerning a number of factors, including: • the safety, quality, and efficacy of our products, as well as those of similar companies; • our Members; • our network marketing program or the attractiveness or viability of the financial opportunities it may provide; 20 • the direct-selling business generally; • actual or purported failure by us or our Members to comply with applicable laws, rules, and regulations, including those regarding product claims and advertising, good manufacturing practices, the regulation of our network marketing program, the registration of our products for sale in our target markets, or other aspects of our business; • our commitment to ESG matters and our ESG practices; • the security of our information technology infrastructure; and • actual or alleged impropriety, misconduct, or fraudulent activity by any person formerly or currently associated with our Members or us.
Risks Related to Our Common Shares • Holders of our common shares may face difficulties in protecting their interests because we are incorporated under Cayman Islands law. • Certain provisions in our convertible senior notes and the related indentures, as well as Cayman Islands law and our articles of association, could delay or prevent an otherwise beneficial takeover or takeover attempt of us. • There is uncertainty as to shareholders’ ability to enforce certain foreign civil liabilities in the Cayman Islands. • U.S.
Risks Related to Our Common Shares • Holders of our common shares may face difficulties in protecting their interests because we are incorporated under Cayman Islands law. 19 • Certain provisions in our convertible senior notes and the related indentures, as well as Cayman Islands law and our articles of association, could delay or prevent an otherwise beneficial takeover or takeover attempt of us. • There is uncertainty as to shareholders’ ability to enforce certain foreign civil liabilities in the Cayman Islands. • U.S.
If we are not able to retain our Members and their customers or otherwise compete successfully, our business, financial condition, and operating results would be materially adversely affected. Our contractual obligation to sell our products only through our Member network and to refrain from changing certain aspects of our Marketing Plan may limit our growth.
If we are not able to retain our Members and their customers or otherwise compete successfully, our business, financial condition, and operating results would be materially adversely affected. 21 Our contractual obligation to sell our products only through our Member network and to refrain from changing certain aspects of our Marketing Plan may limit our growth.
Such constructive ownership rules may also attribute share ownership to persons that are entitled to acquire shares pursuant to an option, such as the holders of our 2024 Convertible Notes or 2028 Convertible Notes. As a result of certain changes to the CFC constructive ownership rules introduced by the Tax Cuts and Jobs Act of 2017, or U.S.
Such constructive ownership rules may also attribute share ownership to persons that are entitled to acquire shares pursuant to an option, such as the holders of our 2028 Convertible Notes. As a result of certain changes to the CFC constructive ownership rules introduced by the Tax Cuts and Jobs Act of 2017, or U.S.
Further, significant product quality issues can have an adverse effect on sales or result in increased product returns and buybacks. If we lose the services of members of our senior management team, our business, financial condition, and operating results could be materially harmed.
Further, significant product quality issues can have an adverse effect on sales or result in increased product returns and buybacks. 26 If we lose the services of members of our senior management team, our business, financial condition, and operating results could be materially harmed.
Tax Reform may adversely impact certain U.S. shareholders of the Company. 19 Risks Related to Our Business and Industry Our failure to establish and maintain Member and sales leader relationships could negatively impact sales of our products and materially harm our business, financial condition, and operating results.
Tax Reform may adversely impact certain U.S. shareholders of the Company. Risks Related to Our Business and Industry Our failure to establish and maintain Member and sales leader relationships could negatively impact sales of our products and materially harm our business, financial condition, and operating results.
These laws impose continuing, and at times new, responsibilities on our operations, including, among other things, the collection, deletion, disclosure, and maintenance of personal and financial information of our Members and their customers and could present technological challenges and negatively impact our sales.
These laws impose continuing, and at times new, responsibilities on our operations, including, among other things, the collection, deletion, disclosure, and maintenance of personal, health, and financial information of our Members and their customers and could present technological challenges and negatively impact our sales.
If we are not able to hire, develop, and retain personnel, our business, financial, condition, and operating results may be adversely affected. 26 Our share price may be adversely affected by third parties who raise allegations about our Company.
If we are not able to hire, develop, and retain personnel, our business, financial, condition, and operating results may be adversely affected. Our share price may be adversely affected by third parties who raise allegations about our Company.
Risks Related to Regulatory and Legal Matters • Our products are affected by extensive regulations and our failure or our Members’ failure to comply with any regulations could lead to significant penalties or claims, which could materially harm our financial condition and operating results. • Our network marketing program is subject to extensive regulation and scrutiny and any failure to comply, or alteration to our compensation practices in order to comply, with these regulations could materially harm our business, financial condition, and operating results. • We are subject to the Consent Order with the FTC, the effects of which, or any failure to comply therewith, could materially harm our business, financial condition, and operating results. • Our actual or perceived failure to comply with privacy and data protection laws, rules, and regulations could materially harm our business, financial condition, and operating results. • We are subject to material product liability risks, which could increase our costs and materially harm our business, financial condition, and operating results. • If we fail to protect our intellectual property, our ability to compete could be negatively affected, which could materially harm our financial condition and operating results. • If we infringe the intellectual property rights of others, our business, financial condition, and operating results could be materially harmed. • We may be held responsible for additional compensation, certain taxes, or assessments relating to the activities of our Members, which could materially harm our financial condition and operating results.
Risks Related to Regulatory and Legal Matters • Our products are affected by extensive regulations and our failure or our Members’ failure to comply with any regulations could lead to significant penalties or claims, which could materially harm our financial condition and operating results. • Our network marketing program is subject to extensive regulation and scrutiny and any failure to comply, or alteration to our compensation practices in order to comply, with these regulations could materially harm our business, financial condition, and operating results. • We are subject to the Consent Order with the FTC, the effects of which, or any failure to comply therewith, could materially harm our business, financial condition, and operating results. • Our actual or perceived failure to comply with privacy, artificial intelligence (AI), and data protection laws, rules, and regulations could materially harm our business, financial condition, and operating results. • We are subject to material product liability risks, which could increase our costs and materially harm our business, financial condition, and operating results. • If we fail to protect our intellectual property, our ability to compete could be negatively affected, which could materially harm our financial condition and operating results. • If we infringe the intellectual property rights of others, our business, financial condition, and operating results could be materially harmed. • We may be held responsible for additional compensation, certain taxes, or assessments relating to the activities of our Members, which could materially harm our financial condition and operating results.
Our senior secured credit facility, or the 2024 Credit Facility, and the indentures governing the senior notes due September 1, 2025, or the 2025 Notes, the senior secured notes due April 15, 2029, or the 2029 Secured Notes, and the senior notes due June 1, 2029, or the 2029 Notes, have restrictive covenants that limit our and our subsidiaries’ ability to, among other things: • pay dividends, redeem share capital or capital stock, and make other restricted payments and investments; • sell assets or merge, consolidate, or transfer all or substantially all of our subsidiaries’ assets; • incur or guarantee additional debt; • impose dividend or other distribution restrictions on our subsidiaries; and • create liens on our and our subsidiaries’ assets.
Our senior secured credit facility, or the 2024 Credit Facility, and the indentures governing the senior secured notes due April 15, 2029, or the 2029 Secured Notes, and the senior notes due June 1, 2029, or the 2029 Notes, have restrictive covenants that limit our and our subsidiaries’ ability to, among other things: • pay dividends, redeem share capital or capital stock, and make other restricted payments and investments; • sell assets or merge, consolidate, or transfer all or substantially all of our subsidiaries’ assets; • incur or guarantee additional debt; • impose dividend or other distribution restrictions on our subsidiaries; and • create liens on our and our subsidiaries’ assets.
For example, tariffs and counter tariffs enacted by foreign governments, such as China, Canada or Mexico, that apply to our products or our ingredients may have an adverse impact on the cost and availability of certain ingredients, any of which could adversely affect future sales of our products, particularly if we deem it necessary to increase product prices.
For example, tariffs and counter tariffs enacted by foreign governments, such as China, Canada or Mexico, that apply to our products or our ingredients have had and may continue to have an adverse impact on the cost and availability of certain ingredients, any of which could adversely affect future sales of our products, particularly if we deem it necessary to increase product prices.
See also the risk factor titled “ We depend on the integrity and reliability of our information technology infrastructure, and any related interruptions or inadequacies may have a material adverse effect on our business, financial condition, and operating results. ” 30 In addition, the use and handling of certain types of information, including personal and financial information, is regulated by evolving and increasingly demanding laws, rules, and regulations, such as the Vietnam Personal Data Protection Decree, the India Digital Personal Data Protection Act, the European Union General Data Protection Regulation, the Brazil Law on General Data Protection, the California Consumer Privacy Act, or the CCPA, as amended by the California Privacy Rights Act, the European Union Payment Services Directive 2, which requires stronger customer authentication for online transactions in that region, and the China Personal Information Protection Law.
See also the risk factor titled “ We depend on the integrity and reliability of our information technology infrastructure, and any related interruptions or inadequacies may have a material adverse effect on our business, financial condition, and operating results. ” 30 In addition, the use and handling of certain types of information, including personal, health, and financial information, is regulated by evolving and increasingly demanding laws, rules, and regulations, such as the Vietnam Personal Data Protection Decree, the India Digital Personal Data Protection Act, the European Union General Data Protection Regulation, the Brazil Law on General Data Protection, the California Consumer Privacy Act, or the CCPA, as amended by the California Privacy Rights Act, the European Union Payment Services Directive 2, which requires stronger customer authentication for online transactions in that region, the China Personal Information Protection Law, and state consumer health privacy laws, such as Washington’s My Health My Data Act.
Our operations in some jurisdictions also may be adversely affected by political, economic, legal, regulatory, and social conditions, or instability, including unfavorable foreign currency impacts, as well as by economic and political tensions between governments.
Our operations in some jurisdictions also may be adversely affected by political, economic, legal, regulatory, and social conditions, or instability, including unfavorable foreign currency impacts, as well as by economic and political tensions between governments, such as tariffs.
Finally, even if our insurance covers a claim, given the level of self-insured retentions that we have accepted under our current product liability insurance policies, which is $12.5 million, in certain cases we may be subject to the full amount of liability associated with any claims, which could be substantial.
Finally, even if our insurance covers a claim, given the level of self-insured retentions that we have accepted under our current product liability insurance policies, which is $10 million, in certain cases we may be subject to the full amount of liability associated with any claims, which could be substantial.
Any disruptions to, or failures or inadequacies of, our information technology infrastructure that we may encounter in the future may result in substantial interruptions to our operations, expose us to significant liability, and may damage our reputation and our relationships with, or cause us to lose, our Members, especially if the disruptions, failures, or inadequacies impair our ability to track sales and pay royalty overrides, bonuses, and other incentives, any of which would harm our business, financial condition, and operating results.
Any disruptions to, or failures or inadequacies of, our information technology infrastructure that we may encounter in the future may result in substantial interruptions to our operations, expose us to significant liability, and may damage our reputation and our relationships with, or cause us to lose, our Members, especially if the disruptions, failures, or inadequacies impair our ability to track sales and pay compensation and other incentives to our Members, any of which would harm our business, financial condition, and operating results.
The principal factors, events, and uncertainties that make an investment in our securities risky include the following: Risks Related to Our Business and Industry • Our failure to establish and maintain Member and sales leader relationships could negatively impact sales of our products and materially harm our business, financial condition, and operating results. • Because we cannot exert the same level of influence or control over our Members as we could if they were our employees, our Members could fail to comply with applicable law or our rules and procedures, which could result in claims against us that could materially harm our business, financial condition, and operating results. • Adverse publicity associated with our Company or the direct-selling industry could materially harm our business, financial condition, and operating results. • Our failure to compete successfully could materially harm our business, financial condition, and operating results. • Our contractual obligation to sell our products only through our Member network and to refrain from changing certain aspects of our Marketing Plan may limit our growth. • Our failure to appropriately respond to changing consumer trends, preferences, and demand for new products and product enhancements could materially harm our Member relationships, Members’ customer relationships, and product sales or otherwise materially harm our business, financial condition, and operating results. • If we fail to further penetrate existing markets, the growth in sales of our products, along with our operating results, could be negatively impacted. • Since one of our products constitutes a significant portion of our net sales, significant decreases in consumer demand for this product or our failure to produce a suitable replacement could materially harm our business, financial condition, and operating results. • Our business could be materially and adversely affected by natural disasters, other catastrophic events, acts of war or terrorism, cybersecurity incidents, pandemics, and/or other acts by third parties. • We depend on the integrity and reliability of our information technology infrastructure, and any related interruptions or inadequacies may have a material adverse effect on our business, financial condition, and operating results. • Disruption of supply, shortage, or increases in the cost of ingredients, packaging materials, and other raw materials as well as climate change could materially harm our business, financial condition, and operating results. • If any of our manufacturing facilities or third-party manufacturers fail to reliably supply products to us at required levels of quality or fail to comply with applicable laws, our financial condition and operating results could be materially and adversely impacted. • If we lose the services of members of our senior management team, our business, financial condition, and operating results could be materially harmed. 18 • Our share price may be adversely affected by third parties who raise allegations about our Company. • ESG matters, including those related to climate change and sustainability, may have an adverse effect on our business, financial condition, and operating results and may damage our reputation.
The principal factors, events, and uncertainties that make an investment in our securities risky include the following: Risks Related to Our Business and Industry • Our failure to establish and maintain Member and sales leader relationships could negatively impact sales of our products and materially harm our business, financial condition, and operating results. • Because we cannot exert the same level of influence or control over our Members as we could if they were our employees, our Members could fail to comply with applicable law or our rules and procedures, which could result in claims against us that could materially harm our business, financial condition, and operating results. • Adverse publicity associated with our Company or the direct-selling industry could materially harm our business, financial condition, and operating results. • Our failure to compete successfully could materially harm our business, financial condition, and operating results. • Our contractual obligation to sell our products only through our Member network and to refrain from changing certain aspects of our Marketing Plan may limit our growth. • Our failure to appropriately respond to changing consumer trends, preferences, and demand for new products and product enhancements could materially harm our Member relationships, Members’ customer relationships, and product sales or otherwise materially harm our business, financial condition, and operating results. • We are investing resources in personalized nutrition product offerings, and related technology and support, and our inability to develop, scale, or commercialize these offerings successfully could adversely affect our business, financial condition, and operating results. • If we fail to further penetrate existing markets, the growth in sales of our products, along with our operating results, could be negatively impacted. • Since one of our products constitutes a significant portion of our net sales, significant decreases in consumer demand for this product or our failure to produce a suitable replacement could materially harm our business, financial condition, and operating results. • Acquisitions can expose us to significant risks and additional costs • Our business could be materially and adversely affected by natural disasters, other catastrophic events, acts of war or terrorism, cybersecurity incidents, pandemics, and/or other acts by third parties. • We depend on the integrity and reliability of our information technology infrastructure, and any related interruptions or inadequacies may have a material adverse effect on our business, financial condition, and operating results. • Disruption of supply, shortage, or increases in the cost of ingredients, packaging materials, and other raw materials as well as climate change could materially harm our business, financial condition, and operating results. 18 • If any of our manufacturing facilities or third-party manufacturers fail to reliably supply products to us at required levels of quality or fail to comply with applicable laws, our financial condition and operating results could be materially and adversely impacted. • If we lose the services of members of our senior management team, our business, financial condition, and operating results could be materially harmed. • Our share price may be adversely affected by third parties who raise allegations about our Company. • ESG matters, including those related to climate change and sustainability, may have an adverse effect on our business, financial condition, and operating results and may damage our reputation.
Our business and operations in China, which generated approximately 6.0% of our net sales for the year ended December 31, 2024, are subject to unique risks and uncertainties related to general economic, political, and legal developments.
Our business and operations in China, which generated approximately 6% of our net sales for the year ended December 31, 2025, are subject to unique risks and uncertainties related to general economic, political, and legal developments.
Our business, including our ability to provide products and services to and manage our Members, depends on the performance and availability of our information technology infrastructure, including our core transactional systems. The most important aspect of our information technology infrastructure is the system through which we record and track Member sales, Volume Points, royalty overrides, bonuses, and other incentives.
Our business, including our ability to provide products and services to and manage our Members, depends on the performance and availability of our information technology infrastructure, including our core transactional systems. The most important aspect of our information technology infrastructure is the system through which we record and track Member sales, Volume Points, Member compensation, and other incentives.
Approximately 79% of our net sales for the year ended December 31, 2024 were generated outside the United States, exposing our business to risks associated with international operations. We have invested significant resources in our international operations and expect to continue to do so in the future.
Approximately 80% of our net sales for the year ended December 31, 2025 were generated outside the United States, exposing our business to risks associated with international operations. We have invested significant resources in our international operations and expect to continue to do so in the future.
Our actual or perceived failure to comply with privacy and data protection laws, rules, and regulations could materially harm our business, financial condition, and operating results.
Our actual or perceived failure to comply with privacy, artificial intelligence (AI), and data protection laws, rules, and regulations could materially harm our business, financial condition, and operating results.
In China, our independent service providers receive compensation for marketing, sales support, and other services instead of the Member allowances and royalty overrides utilized in our network marketing program outside China.
In China, our independent service providers receive compensation for marketing, sales support, and other services instead of the Member allowances and marketing plan payments utilized in our network marketing program outside China.
Any actual security breaches could result in legal and financial exposure, including litigation and other potential liability, and a loss of confidence in our security measures, which could have a material adverse effect on our business, financial condition, and operating results and our reputation as a brand, business partner, and employer.
Any actual security breaches could result in legal and financial exposure, including litigation and other potential liability, reduced Member usage of our systems or digital platforms and a loss of confidence in our security measures, which could have a material adverse effect on our business, financial condition, and operating results and our reputation as a brand, business partner, and employer.
Our Formula 1 Healthy Meal, which is our best-selling product line, approximated 26% of our net sales for the year ended December 31, 2024.
Our Formula 1 Healthy Meal, which is our best-selling product line, approximated 25% of our net sales for the year ended December 31, 2025.
The adoption of new regulations or changes in the interpretations of existing regulations, such as those relating to genetically modified foods, may result in significant compliance costs or discontinuation of impacted product sales and may negatively impact the marketing of our products or require us to change or cease aspects of our business, any of which could result in significant loss of sales and harm our business, financial condition, and operating results. 27 For example, we are subject to the rules of the FDA, including for CGMPs.
The adoption of new regulations or changes in the interpretations of existing regulations, such as those relating to genetically modified foods, may result in significant compliance costs or discontinuation of impacted product sales and may negatively impact the marketing of our products or require us to change or cease aspects of our business, any of which could result in significant loss of sales and harm our business, financial condition, and operating results.
In addition, if we do not introduce new products or make enhancements to meet the changing needs of our Members and their customers in a cost-effective, timely, and commercially appropriate manner, or if our competitors release new products or product enhancements before we do, some of our product offerings could be rendered obsolete, which could cause our market share to decline and negatively impact our business, financial condition, and operating results. 22 If we fail to further penetrate existing markets, the growth in sales of our products, along with our operating results, could be negatively impacted.
In addition, if we do not introduce new products or make enhancements to meet the changing needs of our Members and their customers in a cost-effective, timely, and commercially appropriate manner, or if our competitors release new products or product enhancements before we do, some of our product offerings could be rendered obsolete, which could cause our market share to decline and negatively impact our business, financial condition, and operating results.
While we continue to invest in our information technology infrastructure, including leveraging artificial intelligence (AI) to enhance operational efficiency and improve services for our Members, there can be no assurance that there will not be any significant interruptions to such systems, that the systems will be adequate to meet all of our business needs, or that the systems will keep pace with continuing changes in technology, legal and regulatory standards.
While we continue to invest in our information technology infrastructure, including leveraging artificial intelligence (AI) to enhance operational efficiency and improve services for our Members, and implementing Software-as-a-Service (SaaS) solutions, such as Oracle Fusion Cloud applications, there can be no assurance that there will not be any significant interruptions to such systems, that the systems will be adequate to meet all of our business needs, or that the systems will keep pace with continuing changes in technology, legal and regulatory standards.
For example, our agreement with our Members provides that we may increase, but not decrease, the discount percentages available to our Members for the purchase of products or the applicable royalty override percentages and production and other bonus percentages available to our Members at various qualification levels within our Member hierarchy.
For example, our agreement with our Members provides that we may increase, but not decrease, the discount percentages available to our Members for the purchase of products or the applicable Member compensation percentages available to our Members at various qualification levels within our Member hierarchy.
As a result, our growth may be limited. Our failure to appropriately respond to changing consumer trends, preferences, and demand for new products and product enhancements could materially harm our Member relationships, Members’ customer relationships, and product sales or otherwise materially harm our business, financial condition, and operating results.
Our failure to appropriately respond to changing consumer trends, preferences, and demand for new products and product enhancements could materially harm our Member relationships, Members’ customer relationships, and product sales or otherwise materially harm our business, financial condition, and operating results.
At the same time, stakeholders and regulators in many markets where we operate have increasingly expressed or pursued opposing views, legislation and investment expectations with respect to sustainability initiatives, including the enactment or proposal of “Anti-ESG” legislation or policies, which may lead to risks that are counter to the above sustainability requirements and initiatives.
At the same time, stakeholders and regulators in many markets where we operate have increasingly expressed or pursued opposing views, legislation and investment expectations with respect to sustainability initiatives, including the enactment or proposal of “Anti-ESG” legislation or policies, which may lead to risks that are counter to the above sustainability expectations, requirements, and initiatives, including the repeal of regulations that we may have committed substantial resources to comply that could have been otherwise deployed.
If consumer demand for this product decreases significantly or we cease offering this product without a suitable replacement, or if the replacement product fails to gain market acceptance, our business, financial condition, and operating results could be materially harmed.
If consumer demand for this product decreases significantly or we cease offering this product without a suitable replacement, or if the replacement product fails to gain market acceptance, our business, financial condition, and operating results could be materially harmed. Acquisitions can expose us to significant risks and additional costs.
These cost overruns and delays and disruptions could adversely impact our business, financial condition, and operating results. 24 Disruption of supply, shortage, or increases in the cost of ingredients, packaging materials, and other raw materials as well as climate change could materially harm our business, financial condition, and operating results.
Disruption of supply, shortage, or increases in the cost of ingredients, packaging materials, and other raw materials as well as climate change could materially harm our business, financial condition, and operating results.
In December 2022, the EU member states agreed to implement the OECD framework in their domestic tax laws with a target effective date for the 15% global minimum tax rate in 2024. The OECD has issued additional guidance in 2023 and 2024, and intends to issue more rules in 2025.
In December 2022, the EU member states agreed to implement the OECD framework in their domestic tax laws with a target effective date for the 15% global minimum tax rate in 2024. The OECD issued additional guidance during 2023 through 2025 and may issue additional guidance or interpretive rules in the future.
In both domestic and foreign markets, the formulation, manufacturing, packaging, labeling, distribution, advertising, importation, exportation, licensing, sale, and storage of our products are subject to extensive government regulation.
The majority of our products are classified as foods, dietary supplements, and cosmetics. In both domestic and foreign markets, the formulation, manufacturing, packaging, labeling, distribution, advertising, importation, exportation, licensing, sale, and storage of our products are subject to extensive government regulation.
In addition, catastrophic events may result in significant cancellations or cessations of Member orders; contribute to a general decrease in local, regional, or global economic activity; directly impact our marketing, manufacturing, financial, or logistics functions; impair our ability to meet Member demands; harm our reputation; and expose us to significant liability, losses, and legal proceedings, any of which could materially and adversely affect our business, financial condition, and operating results. 23 We depend on the integrity and reliability of our information technology infrastructure, and any related interruptions or inadequacies may have a material adverse effect on our business, financial condition, and operating results.
In addition, catastrophic events may result in significant cancellations or cessations of Member orders; contribute to a general decrease in local, regional, or global economic activity; directly impact our marketing, manufacturing, financial, or logistics functions; impair our ability to meet Member demands; harm our reputation; and expose us to significant liability, losses, and legal proceedings, any of which could materially and adversely affect our business, financial condition, and operating results.
For example, during the COVID-19 pandemic, our suppliers experienced some delays in receiving and delivering certain ingredients and packaging components. 25 While we have business continuity programs for our manufacturing facilities which plan for such events, any event resulting in the temporary, partial, or complete shutdown of one of these manufacturing facilities, could require us to transfer manufacturing to a surviving facility and/or third-party contract manufacturers if suitable, although no such alternatives may be available.
While we have business continuity programs for our manufacturing facilities which plan for such events, any event resulting in the temporary, partial, or complete shutdown of one of these manufacturing facilities, could require us to transfer manufacturing to a surviving facility and/or third-party contract manufacturers if suitable, although no such alternatives may be available.
Our information technology infrastructure, including our digital technology platforms like Herbalife One discussed in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations , as well as that of our Members and the other third parties with which we interact, may be damaged, disrupted, or breached or otherwise fail for a number of reasons, including power outages, computer and telecommunication failures, internal design, manual or usage errors, workplace violence or wrongdoing, or catastrophic events such as natural disasters, severe weather conditions, or acts of war or terrorism.
If our systems experience significant interruptions, fail to perform as intended, prove inadequate for our business needs, or do not keep pace with evolving technology or regulatory requirements, our business, financial condition, and operating results could be materially adversely affected. 24 Our information technology infrastructure, including our digital technology platforms like Herbalife One discussed in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations , as well as that of our Members and the other third parties with which we interact, may be damaged, disrupted, or breached or otherwise fail for a number of reasons, including power outages, computer and telecommunication failures, internal design, manual or usage errors, workplace violence or wrongdoing, or catastrophic events such as natural disasters, severe weather conditions, or acts of war or terrorism.
We may not modify the eligibility or qualification criteria for these discounts, royalty overrides, and production and other bonuses unless we do so in a manner to make eligibility and/or qualification easier than under the applicable criteria in effect as of the date of the agreement.
We may not modify the eligibility or qualification criteria for certain Member compensation payments and discounts unless we do so in a manner to make eligibility and/or qualification easier than under the applicable criteria in effect as of the date of the agreement.
The success of our response to changing consumer trends and preferences and product introductions, including any new product offerings and enhancements, depends on a number of factors, including our ability to: • accurately anticipate consumer needs; • innovate and develop new products and product enhancements that meet these needs; • successfully commercialize new products and product enhancements; • price our products competitively; • manufacture and deliver our products in sufficient volumes, at our required levels of quality, and in a cost-effective and timely manner; and • differentiate our product offerings from those of our competitors and successfully respond to other competitive pressures, including technological advancements, evolving industry standards, and changing regulatory requirements.
The success of our response to changing consumer trends and preferences and product introductions, including any new product offerings and enhancements, depends on a number of factors, including our ability to: • accurately anticipate consumer needs; • innovate and develop new products and product enhancements that meet these needs; • successfully commercialize new products and product enhancements; • price our products competitively; • manufacture and deliver our products in sufficient volumes, at our required levels of quality, and in a cost-effective and timely manner; and • differentiate our product offerings from those of our competitors and successfully respond to other competitive pressures, including technological advancements, evolving industry standards, and changing regulatory requirements. 22 Our failure to accurately predict changes in consumer demand and technological advancements could negatively impact consumer opinion of our products or our business, which in turn could harm our Member relationships and the Members’ relationships with their customers, and cause a loss of sales.
The imposition of such tariffs may strain international trade relations and increase the risk that foreign governments implement retaliatory tariffs on goods imported from the United States, which could adversely affect our sales to those countries.
Changes in United States administrative policy have led to and may in the future lead to new or increased in tariffs for imported goods. The imposition of such tariffs may strain international trade relations and increase the risk that foreign governments implement retaliatory tariffs on goods imported from the United States, which could adversely affect our sales to those countries.
Further, these initiatives may be subject to cost overruns and delays, may not operate as designed and may cause disruptions in our operations.
Further, these initiatives may be subject to cost overruns and delays, may not operate as designed and may cause disruptions in our operations. These cost overruns and delays and disruptions could adversely impact our business, financial condition, and operating results.
We are also subject to the risk of private party challenges to the legality of our network marketing program, and similar programs of other companies have been successfully challenged in the past.
From time to time, we are a party to various regulatory proceedings related to compliance with regulations applicable to our network marketing program. We are also subject to the risk of private party challenges to the legality of our network marketing program, and similar programs of other companies have been successfully challenged in the past.
ESG matters, including those related to climate change and sustainability, may have an adverse effect on our business, financial condition, and operating results and may damage our reputation. Companies across all industries are facing increasing scrutiny relating to their environmental, social, and governance practices. Investors may impose additional standards and expectations on companies in these areas.
ESG matters, including those related to climate change and sustainability, may have an adverse effect on our business, financial condition, and operating results and may damage our reputation. Companies across all industries are facing increasing scrutiny relating to their environmental, social, and governance practices from a number of different, and at times contrasting, perspectives.
In addition, employee error or malfeasance or other errors in the storage, use, or transmission of any such information could result in disclosure to third parties. If this should occur, we could incur significant expenses addressing such problems. Since we collect and store Member, customer, and vendor information, including credit card and banking information, these risks are heightened.
In addition, employee error or malfeasance or other errors in the storage, use, or transmission of any such information could result in disclosure to third parties. If this should occur, we could incur significant expenses addressing such problems.
If we experience supply shortages, price increases, or supplier or regulatory impediments with respect to any of the materials we use in our products or packaging, we may need to seek alternative supplies or suppliers and may experience difficulties in finding replacements that are comparable in quality and price.
If we experience supply shortages, price increases, or supplier or regulatory impediments with respect to any of the materials we use in our products or packaging, we may need to seek alternative supplies or suppliers and may experience difficulties in finding replacements that are comparable in quality and price. 25 Further, the risks related to our ability to adequately source the materials required to meet our needs may be exacerbated by the effects of climate change and the legal, regulatory, or market measures that may be implemented to address climate change.
The success of our business is to a large extent contingent on our ability to further penetrate existing markets, which is subject to numerous factors, many of which are out of our control.
If we fail to further penetrate existing markets, the growth in sales of our products, along with our operating results, could be negatively impacted. The success of our business is to a large extent contingent on our ability to further penetrate existing markets, which is subject to numerous factors, many of which are out of our control.
In addition, while we believe the Consent Order has set new standards within the direct-selling industry, our competitors are not required to comply with the Consent Order and may not be subject to similar actions, which could limit our ability to effectively compete for Members, consumers, and ultimately sales. 29 Compliance with the Consent Order requires the cooperation of our Members and, while we have updated our training programs and policies to address the Consent Order and expect our Members to cooperate, we do not have the same level of influence or control over our Members as we would if they were our employees.
In addition, while we believe the Consent Order has set new standards within the direct-selling industry, our competitors are not required to comply with the Consent Order and may not be subject to similar actions, which could limit our ability to effectively compete for Members, consumers, and ultimately sales.
Further, management and our board of directors have been, and may continue to be, required to focus a substantial amount of time on Consent Order compliance activities, which could divert their attention from running and growing our business.
In addition, any failure of these systems to operate as designed could cause us to fail to maintain the records required under, or otherwise violate terms of, the Consent Order. 29 Further, management and our board of directors have been, and may continue to be, required to focus a substantial amount of time on Consent Order compliance activities, which could divert their attention from running and growing our business.
Since this is an open-ended commitment, there can be no assurance that we will be able to take advantage of innovative new distribution channels that are developed in the future or appropriately respond to consumer preferences as they continue to evolve. 21 In addition, this agreement with our Members provides that we will not make any material changes adverse to our Members to certain aspects of our Marketing Plan that may negatively impact our Members without their approval as described in further detail below.
Since this is an open-ended commitment, there can be no assurance that we will be able to take advantage of innovative new distribution channels that are developed in the future or appropriately respond to consumer preferences as they continue to evolve.
The regulatory requirements concerning network marketing programs do not include “bright line” rules and are inherently fact-based and, thus, we are subject to the risk that these regulations or the enforcement or interpretation of these regulations by regulators or courts can change. Regulatory authorities also periodically review legislative and regulatory policies and initiatives and may promulgate new or revised regulations.
For example, in certain foreign countries, compensation to distributors in the direct-selling industry may be limited to a certain percentage of sales. 28 The regulatory requirements concerning network marketing programs do not include “bright line” rules and are inherently fact-based and, thus, we are subject to the risk that these regulations or the enforcement or interpretation of these regulations by regulators or courts can change.
These extensive costs or any amounts in excess of our cost estimates could have a material adverse effect on our financial condition and operating results. In addition, any failure of these systems to operate as designed could cause us to fail to maintain the records required under, or otherwise violate terms of, the Consent Order.
These extensive costs or any amounts in excess of our cost estimates could have a material adverse effect on our financial condition and operating results.
These consumer demands, along with regulatory requirements, could require additional transparency, due diligence, and reporting and could have caused us to incur additional costs or to make changes to our operations to comply with such demands. We may also determine that certain changes are required in anticipation of further evolution of consumer preferences and demands.
These consumer demands, along with regulatory requirements, remain inconsistent and exposes us to unpredictable reporting obligations or business requirements, could require additional transparency, due diligence, and reporting and could cause us to incur additional costs or to make changes to our operations to comply with such demands.
For example, in the past, allegations regarding the legality of our network marketing program have been raised, which led to intense public scrutiny and significant share price volatility. 28 From time to time, we are a party to various regulatory proceedings related to compliance with regulations applicable to our network marketing program.
In addition, the ambiguity surrounding these regulations can also affect the public perception of the Company and our business model. For example, in the past, allegations regarding the legality of our network marketing program have been raised, which led to intense public scrutiny and significant share price volatility.
The adoption of new regulations, or changes in the interpretations or enforcement of existing regulations, may result in significant compliance costs or require us to change or cease aspects of our network marketing program. In addition, the ambiguity surrounding these regulations can also affect the public perception of the Company and our business model.
Similarly, in 2018, the FTC released its nonbinding Business Guidance Concerning Multi-Level Marketing which it further updated in 2024. The adoption of new regulations, or changes in the interpretations or enforcement of existing regulations, may result in significant compliance costs or require us to change or cease aspects of our network marketing program.
Removed
Our failure to accurately predict changes in consumer demand and technological advancements could negatively impact consumer opinion of our products or our business, which in turn could harm our Member relationships and the Members’ relationships with their customers, and cause a loss of sales.
Added
Some of the factors, events, and consequences discussed below may have occurred in the past, and the disclosures below are not representations or warranties as to whether or not any factors, events or consequences have occurred in the past, but reflect our beliefs and opinions as to factors, events, or consequences that could have a material adverse effect on our business, reputation, prospects, financial condition, operating results, cash flows, liquidity, and share price in the future.
Removed
Further, the risks related to our ability to adequately source the materials required to meet our needs may be exacerbated by the effects of climate change and the legal, regulatory, or market measures that may be implemented to address climate change.
Added
In addition, this agreement with our Members provides that we will not make any material changes adverse to our Members to certain aspects of our Marketing Plan that may negatively impact our Members without their approval as described in further detail below.
Removed
Risks Related to Regulatory and Legal Matters Our products are affected by extensive regulations and our failure or our Members’ failure to comply with any regulations could lead to significant penalties or claims, which could materially harm our financial condition and operating results. The majority of our products are classified as foods, dietary supplements, and cosmetics.
Added
As a result, our growth may be limited. In addition, from time to time, we may take certain actions or may have certain interpretations of this agreement, such as its scope relating to new offerings, acquisitions, or markets that some or all Members may not agree with, which may cause a disruption in performance.
Removed
Additionally, in response to the COVID-19 pandemic, the FTC has increased its scrutiny of claims being made by companies and issued hundreds of warning letters to, and initiated enforcement actions against, companies making health claims related to the ability of their products to treat, cure, or prevent COVID-19 or business opportunity claims related to COVID-19.
Added
We are investing resources in personalized nutrition product offerings, and related technology and support, and our inability to develop, scale, or commercialize these offerings successfully could adversely affect our business, financial condition, and operating results.
Removed
For example, in certain foreign countries, compensation to distributors in the direct-selling industry may be limited to a certain percentage of sales.
Added
We have invested, and may continue to invest, resources in developing and commercializing personalized product offerings, along with complementary health and wellness technology tools and systems, as part of our broader growth strategy, including Pro2col, our new personalized health operating system. However, there can be no assurance that these efforts will be successful.
Removed
For example, in 2018, the FTC released its nonbinding Business Guidance Concerning Multi-Level Marketing which it further updated in 2024, and in December 2021, India’s Ministry of Consumer Affairs, Food and Public Distribution, Government promulgated the Consumer Protection (Direct Selling) Rules, 2021 under the Consumer Protection Act, 2019.
Added
For example, we may encounter challenges related to design, functionality, user experience, data accuracy, interoperability with third-party systems (including mobile phone and other device operating systems) and updates thereto, and the ability to scale reliably and securely.
Removed
Changes in United States administrative policy may lead to increases in tariffs for imported goods, and, in some cases, already imposed tariffs against certain countries, among other possible changes.
Added
In addition, there is uncertainty regarding whether Members will adopt these offerings, whether they will integrate effectively with or complement our existing product portfolio, and whether they will drive increased engagement or sales. If Pro2col or other personalized offerings do not perform as intended or achieved expected Member adoption, we may not realize the anticipated benefits of these investments.
Added
We recently completed several acquisitions and may acquire other targets in the future.
Added
Acquisitions involve a number of risks, including: • we may not accurately assess the value, strengths, weaknesses or potential profitability of a target; • we may not receive the anticipated benefits from the transaction because an acquired business or assets may not perform as expected, or we may not manage the new business effectively; • we may become liable for unknown or unforeseen pre-acquisition liabilities of an acquired business, including, tax and environmental liabilities and liabilities for employment practices; • an acquisition can impair other acquired assets such as goodwill or Member or other third-party relationships; 23 • an acquisition can place significant demands on management’s time, which may divert their attention from our day-to-day business operations; and • an acquisition can involve post-transaction disputes regarding a number of matters, including a purchase price or working capital adjustment, earn-out or other contingent payments.
Added
Acquisitions also require that we integrate into our existing operations separate companies and stand-alone assets that historically operated independently or as part of another, larger organization. Acquisitions may require integration of differing control, finance, and administrative systems, processes and cultures, among other things.
Added
We may not be able to manage these risks or successfully integrate a target, or may not be able to do so in a timely, efficient, or cost-effective manner.
Added
Any inability to manage these risks, including the integration process, and to realize the anticipated benefits of an acquisition could have a material adverse effect on our business, financial condition, or operating results.
Added
We depend on the integrity and reliability of our information technology infrastructure, and any related interruptions or inadequacies may have a material adverse effect on our business, financial condition, and operating results.
Added
For example, during the COVID-19 pandemic, our suppliers experienced some delays in receiving and delivering certain ingredients and packaging components.
Added
Consumers and investors may impose additional standards and expectations on companies in these areas.
Added
We may also determine that certain changes are required in anticipation of further evolution of consumer preferences and demands.
Added
For example, we are subject to the rules of the FDA, including for CGMPs.
Added
Regulatory authorities also periodically review legislative and regulatory policies and initiatives and may promulgate new or revised regulations. For example, in Vietnam, the government is finalizing amendments to its laws regarding all multi-level businesses. Once effective, these amendments could adversely affect our ability to maintain or renew our direct selling license in Vietnam.
Added
Compliance with the Consent Order requires the cooperation of our Members and, while we have updated our training programs and policies to address the Consent Order and expect our Members to cooperate, we do not have the same level of influence or control over our Members as we would if they were our employees.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThis statement does not guarantee that future incidents or threats will not have a material impact or that we are not currently the subject of an undetected incident or threat that may have such an impact.
Biggest changeThis statement does not guarantee that future incidents or threats will not have a material impact or that we have not been or are not currently the subject of an undetected incident or threat that may have such an impact.
For example, our Data Protection and Information Security working group, which includes representation by our Chief Information Security Officer, and our Legal, ERM, Information Governance and Finance departments, among others, meets regularly to discuss key risks, strategies and threats related to information security.
For example, our Data Protection and Information Security working group, which includes representation by our Chief Information Officer, and our Legal, ERM, Information Governance and Finance departments, among others, meets regularly to discuss key risks, strategies and threats related to information security.
Any number of third parties may be engaged to assist in response actions, including, among others, intelligence providers, product, software and service providers and advisors. Professional services, or consultants, are engaged as needed to help implement, support or advise on a variety of technical matters. Legal counsel, law enforcement and external auditors are also consulted as needed.
Any number of third parties may be engaged to assist in response actions, including, among others, intelligence, product, software and service providers and advisors. Professional services, or consultants, are engaged as needed to help implement, support or advise on a variety of technical matters. Legal counsel, law enforcement and external auditors are also consulted as needed.
Our Cybersecurity department is staffed with professionals holding a variety of IT, cybersecurity and audit best practice certifications, including, among others, Certified Information Systems Security Professional (CISSP), Certified Information Security Manager (CISM), Certified Information Systems Auditor (CISA), Certified Cloud Security Professional (CCSP), International Organization for Standardization 27001 Lead Auditor Certification (ISO 27001 LA), Certified Information Privacy Professional (IAPP CIPP/CIPM), Alibaba Cloud’s Cloud Security Certification (Ali-ACP), and Certified in Risk and Information Systems Control (CRSC).
Our Cybersecurity department is staffed with professionals holding a variety of IT, cybersecurity and audit best practice certifications, including, among others, Certified Information Systems Security Professional (CISSP), Certified Information Security Manager (CISM), Certified Information Systems Auditor (CISA), Certified Cloud Security Professional (CCSP), International Organization for Standardization 27001 Lead Auditor Certification (ISO 27001 LA), Certified Information Privacy Professional (IAPP CIPP/CIPM), Alibaba Cloud’s Cloud Security Certification (Ali-ACP), and Certified in Risk and Information Systems Control (CRISC).
Risks from Cybersecurity Threats As of December 31, 2024 and as of the date of this filing, we are not aware of any risks from cybersecurity threats, including any previous cybersecurity incidents, that have materially affected or are reasonably likely to materially affect us, including our business strategy, results of operations, or financial condition.
Risks from Cybersecurity Threats As of December 31, 2025 and as of the date of this filing, we are not aware of any risks from cybersecurity threats, including any previous cybersecurity incidents, that have materially affected or are reasonably likely to materially affect us, including our business strategy, results of operations, or financial condition.
Depending on the nature or severity of the event, the Incident Management Team may escalate the matter to our Executive Leadership Team, which includes the Chief Executive Officer, Chief Operating Officer, Chief Information Security Officer, Chief Financial Officer, General Counsel, and other executives.
Depending on the nature or severity of the event, the Incident Management Team may escalate the matter to our Executive Leadership Team, which includes the Chief Executive Officer, Chief Operating Officer, Chief Information Officer, Chief Financial Officer, Chief Legal Officer, and other executives.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeIn Nanjing, China, we are leasing an additional manufacturing facility of approximately 372,000 square feet under a lease expiring in 2025. In Guadalajara, Mexico, we lease approximately 158,000 square feet and 76,000 square feet of office space under leases expiring in 2031 and 2027, respectively, the majority of which houses a Global Business Service Center that supports worldwide operations.
Biggest changeIn Guadalajara, Mexico, we lease approximately 158,000 square feet and 76,000 square feet of office space under leases expiring in 2031 and 2027, respectively, the majority of which houses a Global Business Service Center that supports worldwide operations. In Bangalore, India, we lease approximately 155,000 square feet of office space for our Global Business Service Center, which expires in 2026.
Item 2. Pr operties As of December 31, 2024, we leased the majority of our physical properties. We currently lease approximately 95,000 square feet in downtown Los Angeles, California, including our corporate executive offices located in the LA Live complex with the lease term expiring in 2033.
Item 2. Pr operties As of December 31, 2025, we leased the majority of our physical properties. We currently lease approximately 95,000 square feet in downtown Los Angeles, California, including our corporate executive offices located in the LA Live complex with the lease term expiring in 2033.
In Lake Forest, California, we lease warehouse, manufacturing plant, and office space of approximately 166,000 square feet expiring in 2029. In Venray, Netherlands, we lease our European centralized warehouse of approximately 257,000 square feet under an arrangement expiring in 2030 and approximately 87,000 square feet expiring in 2025.
In Lake Forest, California, we lease warehouse, manufacturing plant, and office space of approximately 166,000 square feet expiring in 2029. In Venray, Netherlands, we lease our European centralized warehouse of approximately 257,000 square feet under an arrangement expiring in 2030.
See Item 1, Business , for further discussion of the manufacturing facility we own in Winston-Salem, North Carolina. We believe that our existing facilities are adequate to meet our current requirements and that comparable space is readily available at each of these locations.
The manufacturing facility contains approximately 800,000 square feet of manufacturing and office space. See Item 1, Business , for further discussion of the manufacturing facility we own in Winston-Salem, North Carolina. We believe that our existing facilities are adequate to meet our current requirements and that comparable space is readily available at each of these locations.
Additionally, we lease distribution center facilities in Los Angeles, California and Memphis, Tennessee of approximately 255,000 square feet and 259,000 square feet, respectively. The Los Angeles and Memphis lease agreements have terms through 2031 and 2028, respectively. We also lease approximately 178,000 square feet of warehouse space for a distribution center in Hagerstown, Maryland, expiring in 2032.
Additionally, we lease distribution center facilities in Los Angeles, California, Memphis, Tennessee, and Hagerstown, Maryland of approximately 255,000 square feet, 259,000 square feet, and 178,000 square feet, respectively. The Los Angeles, Memphis, and Hagerstown lease agreements have terms through 2031, 2028, and 2032, respectively.
We also lease approximately 140,000 square feet and 189,000 square feet of general office space in Torrance, California, primarily for our North America regional headquarters, including some of our corporate support functions with the lease term expiring in 2033 and 2025, respectively.
We also lease approximately 145,000 square feet, with the lease term expiring in 2036, of general office space in Torrance, California, primarily for our North America regional headquarters, including some of our corporate support functions.
In addition to the properties noted above, we also lease other warehouse and office buildings in a majority of our other geographic areas of operation. We own a manufacturing facility in Winston-Salem, North Carolina. The manufacturing facility contains approximately 800,000 square feet of manufacturing and office space.
We also lease office space for Global Business Service Centers in Querétaro, Mexico; Krakow, Poland; Kuala Lumpur, Malaysia and Dalian, China. In addition to the properties noted above, we also lease other warehouse and office buildings in a majority of our other geographic areas of operation. We own a manufacturing facility in Winston-Salem, North Carolina.
Removed
In Bangalore, India, we lease approximately 155,000 square feet of office space for our Global Business Service Center, which expires in 2026. We also lease office space for Global Business Service Centers in Querétaro, Mexico; Krakow, Poland; Kuala Lumpur, Malaysia; and Dalian, China.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest change(2) The Old Peer Group consists of BellRing Brands, Inc., Conagra Brands, Inc., Medifast, Inc., Nu Skin Enterprises, Inc., Post Holdings, Inc., The Hain Celestial Group, Inc., Tupperware Brands Corporation, and USANA Health Sciences, Inc. Information with Respect to Dividends We have not declared or paid cash dividends since 2014.
Biggest changeThe publicly traded companies in the peer group are BellRing Brands, Inc., Conagra Brands, Inc., Medifast, Inc., Nu Skin Enterprises, Inc., Post Holdings, Inc., The Hain Celestial Group, Inc., and USANA Health Sciences, Inc. 43 December 31, 2020 2021 2022 2023 2024 2025 Herbalife Ltd. $ 100.00 $ 85.18 $ 30.97 $ 31.76 $ 13.92 $ 26.83 S&P 500 Index $ 100.00 $ 128.71 $ 105.40 $ 133.10 $ 166.40 $ 196.16 Peer Group $ 100.00 $ 103.33 $ 101.56 $ 94.31 $ 102.16 $ 62.22 Information with Respect to Dividends We have not declared or paid cash dividends since 2014.
The 2024 Credit Facility permits us to repurchase our common shares as long as no default or event of default exists and other conditions, such as specified consolidated leverage ratios, are met. We did not repurchase any of our common shares during the three months ended December 31, 2024.
The 2024 Credit Facility permits us to repurchase our common shares as long as no default or event of default exists and other conditions, such as specified consolidated leverage ratios, are met. We did not repurchase any of our common shares during the three months ended December 31, 2025.
Performance Graph Set forth below is information comparing the cumulative total shareholder return and share price appreciation plus dividends on our common shares with the cumulative total return of the S&P 500 Index and a market-weighted index of publicly traded peers over the five-year period ended December 31, 2024.
Performance Graph Set forth below is information comparing the cumulative total shareholder return and share price appreciation plus dividends on our common shares with the cumulative total return of the S&P 500 Index and a market-weighted index of publicly traded peers over the five-year period ended December 31, 2025.
For further information on our share repurchases during the year ended December 31, 2024, see Note 8, Shareholders’ Deficit , to the Consolidated Financial Statements included in Part IV, Item 15, Exhibits, Financial Statement Schedules , of this Annual Report on Form 10-K. Item 6. [Reserved] 44
For further information on our share repurchases during the year ended December 31, 2025, see Note 8, Shareholders’ Deficit , to the Consolidated Financial Statements included in Part IV, Item 15, Exhibits, Financial Statement Schedules , of this Annual Report on Form 10-K. Item 6. [Reserved] 44
The graph assumes that $100 is invested in each of our common shares, the S&P 500 Index, and the index of publicly traded peers on December 31, 2019 and that all dividends were reinvested.
The graph assumes that $100 is invested in each of our common shares, the S&P 500 Index, and the index of publicly traded peers on December 31, 2020 and that all dividends were reinvested.
In addition, broad market fluctuations, as well as general economic, business and political conditions may adversely affect the market for our common shares, regardless of our actual or projected performance. The closing price of our common shares on February 12, 2025, was $5.11.
In addition, broad market fluctuations, as well as general economic, business and political conditions may adversely affect the market for our common shares, regardless of our actual or projected performance. The closing price of our common shares on February 11, 2026, was $16.56.
The approximate number of holders of record of our common shares as of February 12, 2025 was 474.
The approximate number of holders of record of our common shares as of February 11, 2026 was 461.
Removed
The Company updated its peer group during the year ended December 31, 2024 due to one company included in the prior peer group filing for bankruptcy. 43 December 31, 2019 2020 2021 2022 2023 2024 Herbalife Ltd. $ 100.00 $ 100.80 $ 85.86 $ 31.21 $ 32.01 $ 14.03 S&P 500 Index $ 100.00 $ 118.40 $ 152.39 $ 124.79 $ 157.59 $ 197.02 New Peer Group(1) $ 100.00 $ 113.30 $ 117.07 $ 115.06 $ 106.85 $ 115.74 Old Peer Group(2) $ 100.00 $ 116.68 $ 117.73 $ 114.08 $ 105.66 $ 114.10 (1) The New Peer Group consists of BellRing Brands, Inc., Conagra Brands, Inc., Medifast, Inc., Nu Skin Enterprises, Inc., Post Holdings, Inc., The Hain Celestial Group, Inc., and USANA Health Sciences, Inc.

Item 7. Management's Discussion & Analysis

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

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Biggest changeNet income for the year ended December 31, 2023 included a $54.2 million pre-tax unfavorable impact ($43.6 million post-tax) of Transformation Program expenses, primarily relating to employee retention and separation costs; a $32.1 million pre-tax unfavorable impact ($29.5 million post-tax) of expenses relating to our new Digital Technology Program focused on enhancing and rebuilding our Member facing technology platform and web-based Member tools; an $8.6 million pre-tax unfavorable impact ($7.5 million post-tax) related to the Korea customs duty settlement (See Note 7, Contingencies , to the Consolidated Financial Statements included in Part IV, Item 15, Exhibits, Financial Statement Schedules , of our 2023 10-K for further discussion); and a $1.0 million favorable impact ($1.0 million post-tax) on the extinguishment of a portion of the 2024 Convertible Notes (See Note 5, Long-Term Debt , to the Consolidated Financial Statements included in Part IV, Item 15, Exhibits, Financial Statement Schedules , of this Annual Report on Form 10-K for further discussion).
Biggest changeNet income attributable to Herbalife for the year ended December 31, 2025 included $36.3 million favorable deferred income tax impacts relating to the changes in the Company’s corporate entity structure in 2024, an $11.3 million pre-tax unfavorable impact ($8.5 million post-tax) of Goods and Services Tax (“GST”) transition charge related to the September 2025 GST amendments in India, a $9.1 million pre-tax unfavorable impact ($7.5 million post-tax) of Technology Realignment Program expenses, primarily relating to employee retention and separation costs, a $7.0 million pre-tax unfavorable impact ($5.9 million post-tax) of Restructuring Program expenses, primarily relating to employee retention and separation costs, and a $6.2 million pre-tax unfavorable impact ($5.5 million post-tax) of expenses relating to our new Digital Technology Program focused on enhancing and rebuilding our Member facing technology platform and web-based Member tools.
Net sales fluctuations, both Company-wide and within a particular geographic region or market, are primarily the result of changes in volume, changes in prices, or changes in foreign currency translation rates.
Net sales fluctuations, both Company-wide and within a particular geographic region or market, are primarily the result of changes in sales volume, changes in prices, or changes in foreign currency translation rates.
The primary purpose of the issuance of the 2029 Secured Notes was to, along with proceeds from the 2024 Credit Facility, repay in full the 2018 Credit Facility and a partial redemption and private repurchase of the 2025 Notes. As of December 31, 2024, the outstanding principal on the 2029 Secured Notes was $800.0 million.
The primary purpose of the issuance of the 2029 Secured Notes was to, along with proceeds from the 2024 Credit Facility, repay in full the 2018 Credit Facility and a partial redemption and private repurchase of the 2025 Notes. As of December 31, 2025, the outstanding principal on the 2029 Secured Notes was $800.0 million.
Interest is due at least quarterly on amounts outstanding under the 2024 Credit Facility. 58 The 2024 Term Loan B Facility was issued to the lenders at a 7.00% discount, or $28.0 million, and we incurred approximately $10.3 million of debt issuance costs in connection with the 2024 Credit Facility.
Interest is due at least quarterly on amounts outstanding under the 2024 Credit Facility. The 2024 Term Loan B Facility was issued to the lenders at a 7.00% discount, or $28.0 million, and we incurred approximately $10.3 million of debt issuance costs in connection with the 2024 Credit Facility.
Revenue and expense accounts are translated at the average rates during the year. Our foreign currency translation adjustments are included in accumulated other comprehensive loss on our accompanying consolidated balance sheets. Foreign currency transaction gains and losses and foreign currency remeasurements are generally included in selling, general, and administrative expenses in the accompanying consolidated statements of income.
Revenue and expense accounts are translated at the average rates during the year. Our foreign currency translation adjustments are included in accumulated other comprehensive loss on our accompanying consolidated balance sheets. Foreign currency transaction gains and losses and foreign currency remeasurements are generally included in general and administrative expenses in the accompanying consolidated statements of income.
Accordingly, management believes that these development and motivation programs increase the productivity of the sales leader network. The expenses for such programs are included in selling, general, and administrative expenses. We also use event and non-event product promotions to motivate Members to increase retailing, retention, and recruiting activities.
Accordingly, management believes that these development and motivation programs increase the productivity of the sales leader network. The expenses for such programs are included in general and administrative expenses. We also use event and non-event product promotions to motivate Members to increase retailing, retention, and recruiting activities.
Additionally, in certain markets we are simplifying our pricing by eliminating certain shipping and handling charges and recovering those costs within suggested retail price. Our international operations have provided and will continue to provide a significant portion of our total net sales.
Additionally, in certain markets we are simplifying our pricing by eliminating certain shipping and handling charges and recovering those costs within suggested retail price. 46 Our international operations have provided and will continue to provide a significant portion of our total net sales.
Our products are manufactured by us in our Changsha, Hunan, China extraction facility; Suzhou, China facility; Nanjing, China facility; Lake Forest, California facility; and Winston-Salem, North Carolina facility; and by third-party providers, and then are sold to Members who consume and sell Herbalife products to retail consumers or other Members.
Our products are manufactured by us in our Changsha, Hunan, China extraction facility; Suzhou, China facility; Lake Forest, California facility; and Winston-Salem, North Carolina facility; and by third-party providers, and then are sold to Members who consume and sell Herbalife products to retail consumers or other Members.
Our strategies involve providing quality products, improved DMOs, including daily consumption approaches such as Nutrition Clubs, easier access to product, systemized training and education of Members on our products and methods, leveraging technology to make it easier for our Members to do business, and continued promotion and branding of Herbalife products. 49 Management’s role, in-country and at the region and corporate level, is to provide Members with a competitive, broad, and innovative product line, offer leading-edge business tools and technology services, and encourage strong teamwork and Member leadership to make doing business with Herbalife simple.
Our strategies involve providing quality products, improved DMOs, including daily consumption approaches such as Nutrition Clubs, easier access to product, systemized training and education of Members on our products and methods, leveraging technology to make it easier for our Members to do business, and continued promotion and branding of Herbalife products. 48 Management’s role, in-country and at the region and corporate level, is to provide Members with a competitive, broad, and innovative product line, offer leading-edge business tools and technology services, and encourage strong teamwork and Member leadership to make doing business with Herbalife simple.
In addition, changes in our business, including acquisitions, changes in our international corporate structure, changes in the geographic location of business functions or assets, changes in the geographic mix and amount of income, as well as changes in our agreements with tax authorities, valuation allowances, applicable accounting rules, applicable tax laws and regulations, rulings and interpretations thereof, developments in tax audit and other matters, and variations in the estimated and actual level of annual pre-tax income can affect the overall effective income tax rate. 64 We evaluate the realizability of our deferred income tax assets by assessing the valuation allowance and by adjusting the amount of such allowance, if necessary.
In addition, changes in our business, including acquisitions, changes in our international corporate structure, changes in the geographic location of business functions or assets, changes in the geographic mix and amount of income, as well as changes in our agreements with tax authorities, valuation allowances, applicable accounting rules, applicable tax laws and regulations, rulings and interpretations thereof, developments in tax audit and other matters, and variations in the estimated and actual level of annual pre-tax income can affect the overall effective income tax rate. 63 We evaluate the realizability of our deferred income tax assets by assessing the valuation allowance and by adjusting the amount of such allowance, if necessary.
The primary purpose of the issuance of the 2028 Convertible Notes was to repurchase a portion of the 2024 Convertible Notes. As of December 31, 2024, the outstanding principal on the 2028 Convertible Notes was $277.5 million.
The primary purpose of the issuance of the 2028 Convertible Notes was to repurchase a portion of the 2024 Convertible Notes. As of December 31, 2025, the outstanding principal on the 2028 Convertible Notes was $277.5 million.
Off-Balance Sheet Arrangements As of December 31, 2024 and 2023, we had no material off-balance sheet arrangements except for those described in Note 5, Long-Term Debt , and Note 7, Contingencies , to the Consolidated Financial Statements included in Part IV, Item 15, Exhibits, Financial Statement Schedules, of this Annual Report on Form 10-K.
Off-Balance Sheet Arrangements As of December 31, 2025 and 2024, we had no material off-balance sheet arrangements except for those described in Note 5, Long-Term Debt , and Note 7, Contingencies , to the Consolidated Financial Statements included in Part IV, Item 15, Exhibits, Financial Statement Schedules, of this Annual Report on Form 10-K.
The discussion below of net sales details some of the specific drivers of changes in our business and causes of sales fluctuations during the year ended December 31, 2024 as compared to the same period in 2023, as well as the unique growth or contraction factors specific to certain geographic regions or significant markets within a region during these periods.
The discussion below of net sales details some of the specific drivers of changes in our business and causes of sales fluctuations during the year ended December 31, 2025 as compared to the same period in 2024, as well as the unique growth or contraction factors specific to certain geographic regions or significant markets within a region during these periods.
Discussions of 2022 items and year-over-year comparisons between 2023 and 2022 that are not included in this Annual Report on Form 10-K can be found in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations , of our Annual Report on Form 10-K for the year ended December 31, 2023, or the 2023 10-K.
Discussions of 2023 items and year-over-year comparisons between 2024 and 2023 that are not included in this Annual Report on Form 10-K can be found in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations , of our Annual Report on Form 10-K for the year ended December 31, 2024, or the 2024 10-K.
The factors described above help Members increase their business, which in turn helps drive Volume Point growth in our business, and thus, net sales growth.
The factors described above help Members increase their business, which in turn helps drive sales volume growth in our business, and thus, net sales growth.
Our Russia entity had no sales during the twelve months ended December 31, 2024 due to the suspension of product shipments to our Russia entity where its inventory had been fully depleted as of September 30, 2023; therefore our Russia entity will not have any product sales in future periods while its inventory remains fully depleted.
Our Russia entity had no sales during the twelve months ended December 31, 2025 and 2024 due to the suspension of product shipments to our Russia entity where its inventory had been fully depleted as of September 30, 2023; therefore our Russia entity will not have any product sales in future periods while its inventory remains fully depleted.
As of December 31, 2024, we sold products in 95 markets throughout the world and we are organized and managed by geographic region. We aggregate our operating segments into one reporting segment, except China, as management believes that our operating segments have similar operating characteristics and similar long-term operating performance.
As of December 31, 2025, we sold products in 95 markets throughout the world and we are organized and managed by geographic region. We aggregate our operating segments into one reporting segment, except China, as management believes that our operating segments have similar operating characteristics and similar long-term operating performance.
We continue to examine our cost structure and assess additional potential incremental pricing actions in response to ongoing inflationary pressures and any tariffs and retaliatory tariffs imposed by the U.S. or foreign governments which could have an adverse impact to our business, which includes our Mexico market where our U.S. manufacturing operations provides a significant amount of finished goods inventory to our Mexico operation.
We continue to examine our cost structure and assess additional potential incremental pricing actions in response to ongoing inflationary pressures and any tariffs and retaliatory tariffs imposed by the U.S. or foreign governments which could have a significant adverse impact to our business, which includes our Mexico market where our U.S. manufacturing operations provide a significant amount of finished goods inventory to our Mexico operations.
For example, inflationary pressure impacts both our cost structures and our pricing. During the twelve months ended December 31, 2024, we instituted pricing actions in certain markets to address region or market-specific conditions. We also instituted localized price increases in 2023. These actions are discussed further in the Sales by Geographic Region discussion further below.
For example, inflationary pressure impacts both our cost structures and our pricing. During the twelve months ended December 31, 2025, we instituted pricing actions in certain markets to address region or market-specific conditions. We also instituted localized pricing actions in 2024. These actions are discussed further in the Sales by Geographic Region discussion further below.
The 2024 Credit Facility permits us to repurchase our common shares as long as no default or event of default exists and other conditions, such as specified consolidated leverage ratios, are met. During the year ended December 31, 2024 and 2023, we did not repurchase any of our common shares through open-market purchases.
The 2024 Credit Facility permits us to repurchase our common shares as long as no default or event of default exists and other conditions, such as specified consolidated leverage ratios, are met. During the years ended December 31, 2025 and 2024, we did not repurchase any of our common shares through open-market purchases.
See “Financial Results for the Year Ended December 31, 2024 Compared to the Year Ended December 31, 2023” and “Sales by Geographic Region” for more specific discussion of these and other factors. See Part I, Item 1A, Risk Factors , of this Annual Report on Form 10-K for a further discussion of risks related to these matters.
See “Financial Results for the Year Ended December 31, 2025 Compared to the Year Ended December 31, 2024” and “Sales by Geographic Region” for more specific discussion of these and other factors. See Part I, Item 1A, Risk Factors , of this Annual Report on Form 10-K for a further discussion of risks related to these matters.
Focus areas for Herbalife and our Members in the region include promotions and events, launching new products, enhancing both online and in person training programs and meetings, including new regional Masterclass training formats to help distributors improve their business, supporting Nutrition clubs and other DMOs, and other promotional activities in order to grow our sales in the region.
Focus areas for Herbalife and our Members in the region include promotions and events, launching new products, enhancing both online and in person training programs and meetings to help distributors improve their business, supporting Nutrition clubs and other DMOs, and other promotional activities in order to grow our sales in the region.
We generally recognize revenue upon delivery when control passes to the Member. Product sales are recognized net of product returns, and discounts referred to as “distributor allowances.” We generally receive the net sales price in cash or through credit card payments at the point of sale. Royalty overrides are generally recorded when revenue is recognized.
We generally recognize revenue upon delivery when control passes to the Member. Product sales are recognized net of product returns, and discounts referred to as “distributor allowances.” We generally receive the net sales price in cash or through credit card payments at the point of sale.
This section of this Annual Report on Form 10-K generally discusses 2024 and 2023 items and year-over-year comparisons between 2024 and 2023.
This section of this Annual Report on Form 10-K generally discusses 2025 and 2024 items and year-over-year comparisons between 2025 and 2024.
In addition, pursuant to the terms of the 2024 Credit Facility, beginning in fiscal year 2025, we may be required to make mandatory prepayments towards the 2024 Term Loan B based on an annual excess cash flow calculation and consolidated leverage ratio as defined under the terms of the 2024 Credit Facility.
In addition, pursuant to the terms of the 2024 Credit Facility, we may be required to make mandatory prepayments towards the 2024 Term Loan B based on an annual excess cash flow calculation and consolidated leverage ratio as defined under the terms of the 2024 Credit Facility.
Because of local country regulatory constraints, we may be required to modify our Member incentive plans as described above. We also pay reduced royalty overrides with respect to certain products worldwide. Consequently, the total Royalty override percentage may vary over time.
Because of local country regulatory constraints, we may be required to modify our Member incentive plans as described above. We also pay reduced Member compensation with respect to certain products worldwide. Consequently, the total Member compensation percentage may vary over time.
Effective after April 12, 2024, depending on our total leverage ratio, borrowings under the 2024 Revolving Credit Facility bear interest at either the Adjusted Term SOFR plus a margin of between 5.50% and 6.50%, or the base rate plus a margin of between 4.50% and 5.50%.
Depending on our total leverage ratio, borrowings under the 2024 Revolving Credit Facility bear interest at either the Adjusted Term SOFR plus a margin of between 5.50% and 6.50%, or the base rate plus a margin of between 4.50% and 5.50%.
We expect that cash and funds provided from operations, available borrowings under the 2024 Credit Facility, and longer-term access to capital markets will provide sufficient working capital to operate our business, to make expected capital expenditures, and to meet foreseeable liquidity requirements for the next twelve months and thereafter, including the repayment of the 2025 Notes.
We expect that cash and funds provided from operations, available borrowings under the 2024 Credit Facility, and longer-term access to capital markets will provide sufficient working capital to operate our business, to make expected capital expenditures, and to meet foreseeable liquidity requirements for the next twelve months and thereafter.
In March 2023, our management awarded Members $77.9 million of Mark Hughes bonus payments related to their 2022 performance. In 2021, we initiated a global transformation program to optimize global processes for future growth, or the Transformation Program.
In March 2024, our management awarded Members $74.9 million of Mark Hughes bonus payments related to their 2023 performance. In 2021, we initiated a global transformation program to optimize global processes for future growth, or the Transformation Program.
In addition, as of both December 31, 2024 and December 31, 2023, we had an issued but undrawn letter of credit against the 2024 Revolving Credit Facility and 2018 Revolving Credit Facility, respectively, of approximately $45 million which reduced our remaining available borrowing capacity under the 2024 Revolving Credit Facility and 2018 Revolving Credit Facility.
In addition, as of both December 31, 2025 and December 31, 2024, we had an issued but undrawn letter of credit against the 2024 Revolving Credit Facility, of approximately $45 million which reduced our remaining available borrowing capacity under the 2024 Revolving Credit Facility.
Net sales increased $9.9 million, or 0.6%, for the year ended December 31, 2024 as compared to the same period in 2023. In local currency, net sales increased 3.0% for the year ended December 31, 2024 as compared to the same period in 2023.
Net sales increased $6.0 million, or 0.3%, for the year ended December 31, 2025 as compared to the same period in 2024. In local currency, net sales increased 3.0% for the year ended December 31, 2025 as compared to the same period in 2024.
The war in Ukraine has also impacted our results there as well as in Russia and certain neighboring markets; we do not have any manufacturing operations in Russia and Ukraine and our combined total assets in Russia and Ukraine, which primarily consists of short-term assets, was less than 1% of our consolidated total assets as of December 31, 2024.
The war in Ukraine has also impacted our results there as well as in Russia and certain neighboring markets; we do not have any manufacturing operations in Russia and Ukraine and our combined total assets in Russia and Ukraine, which primarily consists of short-term assets, was approximately 1% of our consolidated total assets as of December 31, 2025.
The 2025 Notes are senior unsecured obligations which rank effectively subordinate to any of our existing and future secured indebtedness, including amounts outstanding under the 2024 Credit Facility, to the extent of the value of the assets securing such indebtedness.
The 2025 Notes were senior unsecured obligations which ranked effectively subordinate to any of our existing and future secured indebtedness, including amounts outstanding under the 2024 Credit Facility, to the extent of the value of the assets securing such indebtedness.
The primary purpose of the issuance of the 2029 Notes was to repurchase the 2026 Notes as well as for general corporate purposes, which may include shares repurchases and other capital investment projects. As of December 31, 2024, the outstanding principal on the 2029 Notes was $600.0 million.
The primary purpose of the issuance of the 2029 Notes was to repurchase the senior notes due in 2026 as well as for general corporate purposes, which may include shares repurchases and other capital investment projects. As of December 31, 2025, the outstanding principal on the 2029 Notes was $600.0 million.
Under the quantitative method for impairment testing of our marketing-related intangible assets, we use a discounted cash flow model, or the income approach, under the relief-from-royalty method to determine the fair value of our marketing-related intangible assets in order to confirm there is no impairment required.
If we are required to determine the fair value of our marketing-related intangible assets using the quantitative method, we use a discounted cash flow model, or the income approach, under the relief-from-royalty method to determine the fair value of our marketing-related intangible assets in order to confirm there is no impairment required.
The majority of the markets in the region instituted price increases to address market-specific conditions during the twelve months ended December 31, 2024. Asia Pacific The Asia Pacific region, which excludes China, reported net sales of $1,723.8 million for the year ended December 31, 2024.
The majority of the markets in the region instituted price increases to address market-specific conditions during the twelve months ended December 31, 2025 and 2024. 52 Asia Pacific The Asia Pacific region, which excludes China, reported net sales of $1,729.8 million for the year ended December 31, 2025.
The 2024 Term Loan B Facility matures upon the earlier of (i) April 12, 2029, or (ii) March 16, 2028 if the outstanding principal on the 2028 Convertible Notes, as defined below, exceeds $100.0 million and we exceed certain leverage ratios as of that date, or (iii) June 2, 2025 if the outstanding principal on the 2025 Notes, as defined below, exceeds $200.0 million on such date.
The 2024 Term Loan B Facility matures upon the earlier of (i) April 12, 2029, or (ii) March 16, 2028 if the outstanding principal on the 2028 Convertible Notes, as defined below, exceeds $100.0 million and we exceed certain leverage ratios as of that date.
The 2024 Revolving Credit Facility matures upon the earlier of (i) April 12, 2028, (ii) December 16, 2027 if the outstanding principal on the 2028 Convertible Notes, as defined below, exceeds $100.0 million and we exceed certain leverage ratios as of that date, or (iii) March 3, 2025 if the outstanding principal on the 2025 Notes, as defined below, exceeds $200.0 million on such date.
The 2024 Revolving Credit Facility matures upon the earlier of (i) April 12, 2028, or (ii) December 16, 2027 if the outstanding principal on the 2028 Convertible Notes, as defined below, exceeds $100.0 million and we exceed certain leverage ratios as of that date.
The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate resolution. Our policy is to account for global intangible low-taxed income as a period cost if and when incurred.
The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate resolution. Our policy is to account for net foreign tested income as a period cost if and when incurred.
Other Expense (Income), Net The $10.5 million of other expense (income), net for the year ended December 31, 2024 consisted of a loss on the extinguishment of the 2018 Credit Facility and the partial redemption of the 2025 Notes (See Note 5, Long-Term Debt , to the Consolidated Financial Statements included in Part IV, Item 15, Exhibits, Financial Statement Schedules , of this Annual Report on Form 10-K). 56 The $1.0 million of other expense (income), net for the year ended December 31, 2023 consisted of a gain on the extinguishment of a portion of the 2024 Convertible Notes.
Other Expense, Net The $10.5 million of other expense, net for the year ended December 31, 2024 consisted of a loss on the extinguishment of the 2018 Credit Facility and the partial redemption of the 2025 Notes (See Note 5, Long-Term Debt , to the Consolidated Financial Statements included in Part IV, Item 15, Exhibits, Financial Statement Schedules , of this Annual Report on Form 10-K).
While we continue to monitor the current global financial environment including the impacts of the inflation, foreign exchange rate fluctuations, and the wars in Ukraine and the Middle East, we remain focused on the opportunities and challenges in retailing our products and enhancing the customer experience, sponsoring and retaining Members, improving Member productivity, further penetrating existing markets, globalizing successful Daily Methods of Operation, or DMOs, such as Nutrition Clubs, Fit Clubs, and Weight Loss Challenges, introducing new products and globalizing existing products, developing niche market segments and further investing in our infrastructure.
While we continue to monitor the current global financial environment including the impacts of inflation, foreign exchange rate fluctuations, the wars in Ukraine and the Middle East, rising trade tensions, including U.S. tariffs and retaliatory tariffs from foreign countries and other factors, we remain focused on the opportunities and challenges in retailing our products and enhancing the customer experience, sponsoring and retaining Members, improving Member productivity, further penetrating existing markets, globalizing successful Daily Methods of Operation, or DMOs, such as Nutrition Clubs, Fit Clubs, and Weight Loss Challenges, introducing new products and globalizing existing products, developing niche market segments and further investing in our infrastructure.
Our $415.3 million cash and cash equivalents as of December 31, 2024 and our senior secured credit facility, in addition to cash flow from operations, can be used to support general corporate purposes, including any future strategic investment opportunities, share repurchases, and dividends.
Our $353.1 million cash and cash equivalents as of December 31, 2025 and our senior secured credit facility, in addition to cash flow from operations, can be used to support general corporate purposes, including any future strategic investment opportunities, share repurchases, and dividends.
We have obsolete and slow moving inventories which have been adjusted downward $14.4 million and $24.2 million to present them at their lower of cost and net realizable value in our consolidated balance sheets as of December 31, 2024 and 2023, respectively.
We have obsolete and slow moving inventories which have been adjusted downward $19.9 million and $14.4 million to present them at their lower of cost and net realizable value in our consolidated balance sheets as of December 31, 2025 and 2024, respectively.
Our “ gross profit ” consists of net sales less “ cost of sales ,” which represents our manufacturing costs, the price we pay to our raw material suppliers and manufacturers of our products as well as shipping and handling costs including duties, tariffs, and similar expenses.
Our “ gross profit ” consists of net sales less “ cost of sales ,” which represents our manufacturing costs, the price we pay to our raw material suppliers and manufacturers of our products as well as shipping and handling costs including duties, tariffs, and similar expenses. Our “ selling expenses” primarily consists of certain compensation to our Members.
GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the year.
Critical Accounting Policies and Estimates U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the year.
We may prepay the 2024 Term Loan B at a 102% premium at any time on or before the first anniversary, 101% premium following the first anniversary and on or prior to the second anniversary, and, solely in connection with a repricing event, at a 101% premium after the second anniversary but on or prior to the third anniversary, and generally at no premium thereafter.
We may prepay the 2024 Term Loan B at a 101% premium on or prior to the second anniversary, and, solely in connection with a repricing event, at a 101% premium after the second anniversary but on or prior to the third anniversary, and generally at no premium thereafter.
In local currency, net sales increased 1.2% for the year ended December 31, 2024 as compared to the same period in 2023.
In local currency, net sales increased 2.5% for the year ended December 31, 2025 as compared to the same period in 2024.
As of December 31, 2024, the total amount of cash and cash equivalents held by Herbalife Ltd. and its U.S. entities, inclusive of U.S. territories, was $85.1 million. For earnings not considered to be indefinitely reinvested, deferred taxes have been provided. For earnings considered to be indefinitely reinvested, deferred taxes have not been provided.
As of December 31, 2025, the total amount of cash and cash equivalents held by Herbalife Ltd. and its U.S. entities, inclusive of U.S. territories, was $47.8 million. 60 For earnings not considered to be indefinitely reinvested, deferred income taxes have been provided. For earnings considered to be indefinitely reinvested, deferred income taxes have not been provided.
The 1.5% increase in net sales for the year ended December 31, 2024 was primarily due to a 9.4% favorable impact of price increases and a 2.2% favorable impact of country sales mix, partially offset by a decrease in sales volume, as indicated by a 7.1% decrease in Volume Points and a 2.9% unfavorable impact of fluctuations in foreign currency exchange rates.
The 0.3% increase in net sales for the year ended December 31, 2025 was primarily due to a 2.5% favorable impact of price increases and a 1.9% increase in sales volume, partially offset by a 2.7% unfavorable impact of fluctuations in foreign currency exchange rates and a 1.4% unfavorable impact of sales mix.
Pursuant to the terms of the 2018 Credit Facility excess cash flow clause and based on the 2023 excess cash flow calculation and consolidated leverage ratio as of December 31, 2023, as described and defined under the terms of the 2018 Credit Facility, we made a $66.3 million mandatory prepayment towards the 2018 Term Loan B during the first quarter of 2024. 59 During the year ended December 31, 2024, we borrowed an aggregate amount of $1,421.2 million, including $1,221.2 million under the 2024 Credit Facility, which included $821.2 million of borrowings under the 2024 Revolving Credit Facility, and $200.0 million under the 2018 Credit Facility, all of which was under the 2018 Revolving Credit Facility, and repaid a total amount of $1,917.9 million, including $831.2 million on amounts outstanding under the 2024 Credit Facility, which included $821.2 million of repayments on amounts outstanding under the 2024 Revolving Credit Facility, and $1,086.7 million on amounts outstanding under the 2018 Credit Facility, which included $200.0 million of repayments on amounts outstanding under the 2018 Revolving Credit Facility and a $66.3 million mandatory prepayment on amounts outstanding under the 2018 Term Loan B pursuant to the terms of the 2018 Credit Facility excess cash flow clause.
During the year ended December 31, 2024, we borrowed an aggregate amount of $1,421.2 million, including $1,221.2 million under the 2024 Credit Facility, which included $821.2 million of borrowings under the 2024 Revolving Credit Facility, and $200.0 million under the 2018 Credit Facility, all of which was under the 2018 Revolving Credit Facility, and repaid a total amount of $1,917.9 million, including $831.2 million on amounts outstanding under the 2024 Credit Facility, which included $821.2 million of repayments on amounts outstanding under the 2024 Revolving Credit Facility, and $1,086.7 million on amounts outstanding under the 2018 Credit Facility, which included $200.0 million of repayments on amounts outstanding under the 2018 Revolving Credit Facility and a $66.3 million mandatory prepayment on amounts outstanding under the 2018 Term Loan B pursuant to the terms of the 2018 Credit Facility excess cash flow clause.
The 0.6% increase in net sales for the year ended December 31, 2024 was primarily due to a 3.5% favorable impact of price increases, partially offset by a 2.4% unfavorable impact of fluctuations in foreign currency exchange rates and a decrease in sales volume, as indicated by a 0.3% decrease in Volume Points.
The 2.7% increase in net sales for the year ended December 31, 2025 was primarily due to a 4.2% favorable impact of price increases, a 1.6% favorable impact of sales mix, and a 0.4% favorable impact of fluctuations in foreign currency exchange rates, partially offset by a 3.5% decrease in sales volume.
The increase in labor and benefit costs includes higher employee retention and separation costs related to the Restructuring Program, and higher employee bonus accruals, partially offset by lower expenses related to the Transformation Program, and savings on labor cost resulting from the restructuring initiatives.
The decrease in labor and benefit costs includes lower employee bonus accruals, lower employee retention and separation costs related to the Restructuring Program and the Transformation Program, and savings on labor cost resulting from the restructuring initiatives, partially offset by employee retention and separation costs related to the Technology Realignment Program in 2025.
As of December 31, 2024 and 2023, the U.S. dollar amount outstanding under the 2024 Credit Facility was $390.0 million and 2018 Credit Facility was $886.7 million, respectively. Of the $390.0 million outstanding under the 2024 Credit Facility as of December 31, 2024, $390.0 million was outstanding under the 2024 Term Loan B.
As of December 31, 2025 and 2024, the U.S. dollar amount outstanding under the 2024 Credit Facility was $370.0 million and $390.0 million, respectively. Of the $370.0 million outstanding under the 2024 Credit Facility as of December 31, 2025, $370.0 million was outstanding under the 2024 Term Loan B.
Net income for the year ended December 31, 2024 included a $147.3 million favorable deferred income tax impacts from corporate reorganization in 2024, a $69.1 million pre-tax unfavorable impact ($51.6 million post-tax) of Restructuring Program expenses, primarily relating to employee retention and separation costs, a $26.7 million pre-tax unfavorable impact ($24.9 million post-tax) of expenses relating to our new Digital Technology Program focused on enhancing and rebuilding our Member facing technology platform and web-based Member tools, a $13.4 million pre-tax unfavorable impact ($10.3 million post-tax) of Transformation Program expenses, primarily relating to employee retention and separation costs, a $10.5 million pre-tax unfavorable impact ($8.2 million post-tax) of loss on extinguishment of debt related to the April 2024 debt refinancing transactions, and a $4.0 million pre-tax favorable impact ($3.1 million post-tax) of gain on sale of the Company’s land, building, and related building improvements of its office building in Torrance, California (See Note 2, Basis of Presentation, to the Consolidated Financial Statements included in Part IV, Item 15, Exhibits, Financial Statement Schedules , of this Annual Report on Form 10-K for further discussion).
Net income attributable to Herbalife for the year ended December 31, 2024 included a $147.3 million favorable deferred income tax impacts from corporate reorganization in 2024, a $69.1 million pre-tax unfavorable impact ($51.6 million post-tax) of Restructuring Program expenses, primarily relating to employee retention and separation costs, a $26.7 million pre-tax unfavorable impact ($24.9 million post-tax) of expenses relating to our new Digital Technology Program focused on enhancing and rebuilding our Member facing technology platform and web-based Member tools, a $13.4 million pre-tax unfavorable impact ($10.3 million post-tax) of Transformation Program expenses, primarily relating to employee retention and separation costs, a $10.5 million pre-tax unfavorable impact ($8.2 million post-tax) of loss on extinguishment of debt related to the April 2024 debt refinancing transactions, and a $4.0 million pre-tax favorable impact ($3.1 million post-tax) of gain on sale of the Company’s land, building, and related building improvements of its office building in Torrance, California.
Other Operating Income The $5.5 million of other operating income for the year ended December 31, 2024 consisted of $5.5 million of government grant income for China (See Note 2, Basis of Presentation , to the Consolidated Financial Statements included in Part IV, Item 15, Exhibits, Financial Statement Schedules , of this Annual Report on Form 10-K).
See Note 14, Restructuring Activities , to the Consolidated Financial Statements included in Part IV, Item 15, Exhibits, Financial Statement Schedules , of this Annual Report on Form 10-K for further discussion. 54 Other Operating Income The $4.8 million of other operating income for the year ended December 31, 2025 consisted of $4.8 million of government grant income for China (See Note 2, Basis of Presentation , to the Consolidated Financial Statements included in Part IV, Item 15, Exhibits, Financial Statement Schedules , of this Annual Report on Form 10-K).
Other focus areas for China include enhancing our digital capabilities and offerings, such as improving the integration of our technological and enhanced tools to make it easier for our Members to do business, encouraging a customer-based approach through customer loyalty programs to engage customers, and supporting Nutrition Clubs.
In China we continue to enhance our digital capabilities and offerings, such as improving the integration of our technological and enhanced tools to make it easier for our Members to do business, encouraging a customer-based approach through customer loyalty programs which we continue to enhance to engage customers, and supporting Nutrition Clubs.
Even with these restrictions and the current inflationary environment, which is improving but has remained elevated in certain markets during the twelve months ended December 31, 2024, we believe we will have sufficient resources, including cash flow from operating activities and longer-term access to capital markets, to meet debt service obligations in a timely manner and be able to continue to meet our objectives.
Even with these restrictions and the current inflationary environment, which is improving but has remained elevated in certain markets during the twelve months ended December 31, 2025, we believe we will have sufficient resources, including cash flow from operating activities and longer-term access to capital markets, to meet debt service obligations in a timely manner and be able to continue to meet our objectives. 55 Historically, our debt has not resulted from the need to fund our normal operations, but instead has resulted primarily from our share repurchase programs.
Generally, gross profit as a percentage of net sales may vary from period to period due to the impact of foreign currency fluctuations, changes in sales mix, price increases, cost changes related to inflation, self-manufacturing and sourcing, and inventory write-downs. Royalty Overrides Royalty overrides were $1,633.0 million and $1,659.2 million for the years ended December 31, 2024 and 2023, respectively.
Generally, gross profit as a percentage of net sales may vary from period to period due to the impact of foreign currency fluctuations, changes in sales mix, price increases, cost changes related to inflation, self-manufacturing and sourcing, and inventory write-downs. Selling Expenses Selling expenses were $1,782.4 million and $1,782.8 million for the years ended December 31, 2025 and 2024, respectively.
In preparing our financial statements, we translate revenues into U.S. dollars using average exchange rates. Additionally, the majority of our purchases from our suppliers generally are made in U.S. dollars. Consequently, a strengthening of the U.S. dollar versus a foreign currency can have a negative impact on gross profit and can generate foreign currency losses on intercompany transactions.
Additionally, the majority of our purchases from our suppliers generally are made in U.S. dollars. Consequently, a strengthening of the U.S. dollar versus a foreign currency can have a negative impact on gross profit and can generate foreign currency losses on intercompany transactions. Foreign currency exchange rates can fluctuate significantly.
For a discussion of China’s net sales for the year ended December 31, 2024 as compared to the same period in 2023, see the China section of Sales by Geographic Region below. 51 Contribution Margin by Reporting Segment As discussed above under “Presentation,” contribution margin consists of net sales less cost of sales, Royalty overrides, and service fees to our independent service providers in China.
For a discussion of China’s net sales for the year ended December 31, 2025 as compared to the same period in 2024, see the China section of Sales by Geographic Region below. Contribution Margin by Reporting Segment As discussed above under “Presentation,” contribution margin consists of net sales less cost of sales and selling expenses.
The fluctuation of foreign currency exchange rates had an unfavorable impact of $11.0 million on net sales for the year ended December 31, 2024. The sales volume in India increased 2.4% for the twelve months ended December 31, 2024, as compared to the same period in 2023.
The fluctuation of foreign currency exchange rates had an unfavorable impact of $37.5 million on net sales for the year ended December 31, 2025. The sales volume in India increased 6.8% for the twelve months ended December 31, 2025, as compared to the same period in 2024.
Interest Expense, Net Interest expense, net is as follows: Year Ended December 31, 2024 2023 (in millions) Interest expense $ 218.3 $ 165.9 Interest income (12.3 ) (11.5 ) Interest expense, net $ 206.0 $ 154.4 The increase in interest expense, net for the year ended December 31, 2024 as compared to the same period in 2023 was primarily due to an increase in our weighted-average interest rate as a result of the April 2024 debt refinancing transactions, partially offset by a decrease in our overall weighted-average borrowings.
Interest Expense, Net Interest expense, net is as follows: Year Ended December 31, 2025 2024 (in millions) Interest expense $ 214.4 $ 218.3 Interest income (8.5 ) (12.3 ) Interest expense, net $ 205.9 $ 206.0 The decrease in interest expense, net for the year ended December 31, 2025 as compared to the same period in 2024 was primarily due to a decrease in our overall weighted-average borrowings, partially offset by an increase in our weighted-average interest rate as a result of the April 2024 debt refinancing transactions and lower interest income earned as a result of a lower average balance on interest-bearing cash and cash equivalents.
Reporting Segment Results We aggregate our operating segments, excluding China, into a reporting segment, or the Primary Reporting Segment. The Primary Reporting Segment includes the North America, Latin America, EMEA, and Asia Pacific regions. China has been identified as a separate reporting segment as it does not meet the criteria for aggregation.
The Primary Reporting Segment includes the North America, Latin America, EMEA, and Asia Pacific regions. China has been identified as a separate reporting segment as it does not meet the criteria for aggregation.
In local currency, net sales increased 7.8% for the year ended December 31, 2024 as compared to the same period in 2023.
In local currency, net sales increased 2.3% for the year ended December 31, 2025 as compared to the same period in 2024.
The $10.2 million of other operating income for the year ended December 31, 2023 consisted of $10.2 million of government grant income for China.
The $5.5 million of other operating income for the year ended December 31, 2024 consisted of $5.5 million of government grant income for China.
Net sales decreased $29.8 million, or 9.1%, for the year ended December 31, 2024 as compared to the same period in 2023. In local currency, net sales decreased 7.5% for the year ended December 31, 2024 as compared to the same period in 2023.
Net sales increased $19.1 million, or 3.5% for the year ended December 31, 2025 as compared to the same period in 2024. In local currency, net sales increased 8.9% for the year ended December 31, 2025 as compared to the same period in 2024.
These prepayments, if any, will be applied against remaining quarterly installments owed under the 2024 Term Loan B in order of maturity with the remaining principal due upon maturity, unless directed otherwise by us.
We are permitted to make voluntary prepayments, subject to the premiums as discussed above. These prepayments, if any, will be applied against remaining quarterly installments owed under the 2024 Term Loan B in order of maturity with the remaining principal due upon maturity, unless directed otherwise by us.
Cash and Cash Equivalents The majority of our foreign subsidiaries designate their local currencies as their functional currencies. As of December 31, 2024, the total amount of our foreign subsidiary cash and cash equivalents was $330.2 million, of which $20.8 million was held in U.S. dollars.
Cash and Cash Equivalents The majority of our foreign subsidiaries designate their local currencies as their functional currencies. As of December 31, 2025, the total amount of our foreign subsidiary cash and cash equivalents was $305.3 million, of which $26.0 million was held in U.S. dollars.
Net sales increased $4.7 million, or 1.7%, for the year ended December 31, 2024 as compared to the same period in 2023. In local currency, net sales increased 6.8% for the year ended December 31, 2024 as compared to the same period in 2023.
Net sales increased $48.7 million, or 5.8%, for the year ended December 31, 2025 as compared to the same period in 2024. In local currency, net sales increased 10.5% for the year ended December 31, 2025 as compared to the same period in 2024.
Further, changes to direct-selling regulations in the market were approved by the Vietnam government in April 2023; we continue to work closely with the Vietnam government to monitor their interpretations of these regulations, and address them accordingly.
The market implemented a 2.5% price increase in March 2025. During March 2024, the market implemented a 3.5% price increase. Further, changes to direct-selling regulations in the market were approved by the Vietnam government in April 2023; we continue to work closely with the Vietnam government to monitor their interpretations of these regulations and address them accordingly.
Our leases generally consist of long-term operating leases, which are payable monthly and relate to our office space, warehouses, distribution centers, manufacturing centers, and equipment. 61 For a further discussion on our debt and operating lease commitments as of December 31, 2024, see the sections above as well as Note 4, Leases and Note 5, Long-Term Debt , to the Consolidated Financial Statements included in Part IV, Item 15, Exhibits, Financial Statement Schedules , of this Annual Report on Form 10-K.
For a further discussion on our debt and operating lease commitments as of December 31, 2025, see the sections above as well as Note 4, Leases and Note 5, Long-Term Debt , to the Consolidated Financial Statements included in Part IV, Item 15, Exhibits, Financial Statement Schedules , of this Annual Report on Form 10-K.
See Note 14, Restructuring Activities , to the Consolidated Financial Statements included in Part IV, Item 15, Exhibits, Financial Statement Schedules , of this Annual Report on Form 10-K for a further discussion on our Transformation Program and Restructuring Program.
See Note 8, Shareholders’ Deficit , to the Consolidated Financial Statements included in Part IV, Item 15, Exhibits, Financial Statement Schedules , of this Annual Report on Form 10-K for a further discussion on our share repurchases.
Net sales decreased $77.0 million, or 6.8%, for the year ended December 31, 2024 as compared to the same period in 2023. In local currency, net sales decreased 6.8% for the year ended December 31, 2024 as compared to the same period in 2023.
Net sales decreased $21.4 million, or 2.0%, for the year ended December 31, 2025 as compared to the same period in 2024. In local currency, net sales decreased 2.0% for the year ended December 31, 2025 as compared to the same period in 2024.
See Note 5, Long-Term Debt , to the Consolidated Financial Statements included in Part IV, Item 15, Exhibits, Financial Statement Schedules , of this Annual Report on Form 10-K for a further discussion on our 2024 Convertible Notes.
See Note 5, Long-Term Debt , to the Consolidated Financial Statements included in Part IV, Item 15, Exhibits, Financial Statement Schedules , of this Annual Report on Form 10-K for a further discussion on our 2024 Convertible Notes. 59 Convertible Senior Notes due 2028 In December 2022, we issued $277.5 million aggregate principal amount of convertible senior notes due 2028, or the 2028 Convertible Notes.
Sales by Geographic Region Net sales by geographic region were as follows: Year Ended December 31, 2024 2023 % Change (Dollars in millions) North America $ 1,054.4 $ 1,131.4 (6.8 )% Latin America 832.5 820.9 1.4 % EMEA 1,084.8 1,068.8 1.5 % Asia Pacific 1,723.8 1,713.9 0.6 % China 297.6 327.4 (9.1 )% Worldwide $ 4,993.1 $ 5,062.4 (1.4 )% North America The North America region reported net sales of $1,054.4 million for the year ended December 31, 2024.
Sales by Geographic Region Net sales by geographic region were as follows: Year Ended December 31, 2025 2024 % Change (Dollars in millions) North America $ 1,033.0 $ 1,054.4 (2.0 )% Latin America 881.2 832.5 5.8 % EMEA 1,114.4 1,084.8 2.7 % Asia Pacific 1,729.8 1,723.8 0.3 % China 279.1 297.6 (6.2 )% Worldwide $ 5,037.5 $ 4,993.1 0.9 % North America The North America region reported net sales of $1,033.0 million for the year ended December 31, 2025.
Proceeds from the 2024 Term Loan B together with the proceeds from the 2029 Secured Notes were used to repay indebtedness, including all borrowings outstanding under the 2018 Credit Facility, effectively terminating its $228.9 million outstanding principal balance on the 2018 Term Loan A, and repaying $584.3 million on the 2018 Term Loan B, $170.0 million on the 2018 Revolving Credit Facility, and a portion of the 2025 Notes described further below.
Based on the 2025 excess cash flow calculation, pursuant to the terms of the 2024 Credit Facility, we will not be required to make a mandatory prepayment in 2026 toward the 2024 Term Loan B. 57 Proceeds from the 2024 Term Loan B together with the proceeds from the 2029 Secured Notes were used to repay indebtedness, including all borrowings outstanding under the 2018 Credit Facility, effectively terminating its $228.9 million outstanding principal balance on the 2018 Term Loan A, and repaying $584.3 million on the 2018 Term Loan B, $170.0 million on the 2018 Revolving Credit Facility, and a portion of the 2025 Notes described further below.
While a significant net sales decline could potentially affect the availability of funds, many of our largest expenses are variable in nature, which we believe protects our funding in all but a dramatic net sales downturn.
Since inception in 2007, total share repurchases amounted to approximately $6.5 billion. While a significant net sales decline could potentially affect the availability of funds, many of our largest expenses are variable in nature, which we believe protects our funding in all but a dramatic net sales downturn.
As of December 31, 2024, the weighted-average interest rate for borrowings under the 2024 Credit Facility was 10.35% and as of December 31, 2023, the weighted-average interest rate for borrowings under the 2018 Credit Facility was 7.62%.
As of December 31, 2025 and December 31, 2024, the weighted-average interest rate for borrowings under the 2024 Credit Facility was 11.64% and 10.35%, respectively.
The 2024 Convertible Notes paid interest at a rate of 2.625% per annum payable semiannually in arrears on March 15 and September 15 of each year, beginning on September 15, 2018. The 2024 Convertible Notes matured on March 15, 2024.
The 2024 Convertible Notes paid interest at a rate of 2.625% per annum payable semiannually in arrears on March 15 and September 15 of each year, beginning on September 15, 2018. The 2024 Convertible Notes matured on March 15, 2024. We repurchased $287.5 million and $65.5 million of our 2024 Convertible Notes in December 2022 and August 2023, respectively.
During March 2024, we repaid a total amount of $197.0 million to repay in full amounts outstanding on the 2024 Convertible Notes upon maturity, as well as $2.6 million of accrued interest.
For accounting purposes, pursuant to ASC 470, Debt , these transactions were accounted for as an extinguishment of 2024 Convertible Notes. During March 2024, we repaid a total amount of $197.0 million to repay in full amounts outstanding on the 2024 Convertible Notes upon maturity, as well as $2.6 million of accrued interest.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

23 edited+0 added−4 removed12 unchanged
Biggest changeAs of December 31, 2023, the fair value of the 2025 Notes was approximately $596.8 million and the carrying value was $597.1 million. The 2025 Notes pay interest at a fixed rate of 7.875% per annum payable semiannually in arrears on March 1 and September 1 of each year, beginning on March 1, 2021.
Biggest changeThe 2025 Notes paid interest at a fixed rate of 7.875% per annum payable semiannually in arrears on March 1 and September 1 of each year, beginning on March 1, 2021. As of December 31, 2025, the fair value of the 2029 Notes was approximately $565.6 million and the carrying value was $596.3 million.
Interest Rate Risk As of December 31, 2024, the aggregate annual maturities of the 2024 Credit Facility were expected to be $20.0 million for 2025, $20.0 million for 2026, $20.0 million for 2027, $20.0 million for 2028, and $310.0 million for 2029.
Interest Rate Risk As of December 31, 2025, the aggregate annual maturities of the 2024 Credit Facility were expected to be $20.0 million for 2026, $20.0 million for 2027, $20.0 million for 2028, and $310.0 million for 2029.
Changes in the fair value of these forward contracts designated as cash flow hedges, excluding forward points, are recorded as a component of accumulated other comprehensive loss within shareholders’ deficit, and are recognized in selling, general, and administrative expenses within our consolidated statement of income during the period when the hedged item and underlying transaction affect earnings.
Changes in the fair value of these forward contracts designated as cash flow hedges, excluding forward points, are recorded as a component of accumulated other comprehensive loss within shareholders’ deficit, and are recognized in general and administrative expenses within our consolidated statement of income during the period when the hedged item and underlying transaction affect earnings.
The changes in the fair value of the derivatives not qualifying as cash flow hedges are included in selling, general, and administrative expenses within our consolidated statements of income. The foreign currency forward contracts and option contracts designated as freestanding derivatives are primarily used to hedge foreign currency-denominated intercompany transactions and to partially mitigate the impact of foreign currency fluctuations.
The changes in the fair value of the derivatives not qualifying as cash flow hedges are included in general and administrative expenses within our consolidated statements of income. The foreign currency forward contracts and option contracts designated as freestanding derivatives are primarily used to hedge foreign currency-denominated intercompany transactions and to partially mitigate the impact of foreign currency fluctuations.
See Note 11, Derivative Instruments and Hedging Activities , to the Consolidated Financial Statements included in Part IV, Item 15, Exhibits, Financial Statement Schedules , of this Annual Report on Form 10-K for a description of foreign currency forward contracts that were outstanding as of December 31, 2024 and 2023, which discussion is incorporated herein by reference.
See Note 11, Derivative Instruments and Hedging Activities , to the Consolidated Financial Statements included in Part IV, Item 15, Exhibits, Financial Statement Schedules , of this Annual Report on Form 10-K for a description of foreign currency forward contracts that were outstanding as of December 31, 2025 and 2024, which discussion is incorporated herein by reference.
As of December 31, 2024, the outstanding contracts were expected to mature over the next fifteen months. Our derivative financial instruments are recorded on the consolidated balance sheets at fair value based on quoted market rates. For the forecasted inventory transactions, the forward contracts are used to hedge forecasted inventory transactions over specific months.
As of December 31, 2025, the outstanding contracts were expected to mature over the next fifteen months. Our derivative financial instruments are recorded on the consolidated balance sheets at fair value based on quoted market rates. For the forecasted inventory transactions, the forward contracts are used to hedge forecasted inventory transactions over specific months.
A discussion of our primary market risk exposures and derivatives is presented below. 65 Foreign Exchange Risk We transact business globally and are subject to risks associated with changes in foreign exchange rates. Our objective is to minimize the impact to earnings and cash flow associated with foreign exchange rate fluctuations.
A discussion of our primary market risk exposures and derivatives is presented below. 64 Foreign Exchange Risk We transact business globally and are subject to risks associated with changes in foreign exchange rates. Our objective is to minimize the impact to earnings and cash flow associated with foreign exchange rate fluctuations.
As of both December 31, 2024 and 2023, the majority of our outstanding foreign currency forward contracts related to freestanding derivatives had maturity dates of less than twelve months with the majority of freestanding derivatives expiring within one month.
As of both December 31, 2025 and 2024, the majority of our outstanding foreign currency forward contracts related to freestanding derivatives had maturity dates of less than twelve months with the majority of freestanding derivatives expiring within one month.
The 2029 Secured Notes are recorded at their carrying value and their fair value is used only for disclosure purposes, so an increase or decrease in interest rates would not have any impact to our consolidated financial statements; however, if interest rates were to increase or decrease by 1%, their fair value could decrease by approximately $26.6 million or increase by approximately $27.8 million, respectively.
The 2029 Secured Notes are recorded at their carrying value and their fair value is used only for disclosure purposes, so an increase or decrease in interest rates would not have any impact to our consolidated financial statements; however, if interest rates were to increase or decrease by 1%, their fair value could decrease by approximately $2.5 million or increase by approximately $2.5 million, respectively.
The 2025 Notes are recorded at their carrying value and their fair value is used only for disclosure purposes, so an increase or decrease in interest rates would not have any impact to our consolidated financial statements; however, if interest rates were to increase or decrease by 1%, their fair value could decrease by approximately $1.6 million or increase by approximately $1.7 million, respectively.
The 2029 Notes are recorded at their carrying value and their fair value is used only for disclosure purposes, so an increase or decrease in interest rates would not have any impact to our consolidated financial statements; however, if interest rates were to increase or decrease by 1%, their fair value could decrease by approximately $16.7 million or increase by approximately $17.4 million, respectively.
As of December 31, 2024, we recorded assets at fair value of $4.1 million and liabilities at fair value of zero relating to all outstanding foreign currency contracts designated as cash flow hedges.
As of December 31, 2024, we recorded assets at fair value of $4.1 million and liabilities at fair value of zero relating to all outstanding foreign currency contracts designated as cash flow hedges. These hedges remained effective as of December 31, 2025 and December 31, 2024.
We applied the hedge accounting rules as required by ASC 815 for these hedges. These contracts allow us to buy and sell certain currencies at specified contract rates. As of December 31, 2024 and 2023, the aggregate notional amounts of these contracts outstanding were approximately $69.9 million and $76.3 million, respectively.
We applied the hedge accounting rules as required by ASC 815 for these hedges. These contracts allow us to buy and sell certain currencies at specified contract rates. As of December 31, 2025 and 2024, the aggregate notional amounts of these contracts outstanding were approximately $75.4 million and $69.9 million, respectively.
As of December 31, 2024, the fair value of the 2024 Term Loan B was approximately $387.3 million, and the carrying value was $359.9 million.
As of December 31, 2025, the fair value of the 2024 Term Loan B was approximately $376.5 million, and the carrying value was $346.3 million. As of December 31, 2024, the fair value of the 2024 Term Loan B was approximately $387.3 million, and the carrying value was $359.9 million.
The 2024 Credit Facility bears variable interest rates, and as of December 31, 2024 the weighted-average interest rate for borrowings under the 2024 Credit Facility was 10.35% and the 2018 Credit Facility bore variable interest rates, and as of December 31, 2023 the weighted-average interest rate for borrowings under the 2018 Credit Facility was 7.62%. 66 Since our 2024 Credit Facility is based on variable interest rates, if interest rates were to increase or decrease by 1% for the year and our borrowing amounts on our 2024 Credit Facility remained constant, our annual interest expense could increase or decrease by approximately $3.9 million, respectively.
The 2024 Credit Facility bears variable interest rates, and as of December 31, 2025 and December 31, 2024 the weighted-average interest rate for borrowings under the 2024 Credit Facility was 11.64% and 10.35%, respectively. 65 Since our 2024 Credit Facility is based on variable interest rates, if interest rates were to increase or decrease by 1% for the year and our borrowing amounts on our 2024 Credit Facility remained constant, our annual interest expense could increase or decrease by approximately $3.7 million, respectively.
The 2025 Notes mature on September 1, 2025, unless redeemed or repurchased in accordance with their terms prior to such date.
The 2029 Notes mature on June 1, 2029, unless redeemed or repurchased in accordance with their terms prior to such date.
The 2029 Notes pay interest at a fixed rate of 4.875% per annum payable semiannually in arrears on June 1 and December 1 of each year, beginning on December 1, 2021. The 2029 Notes mature on June 1, 2029, unless redeemed or repurchased in accordance with their terms prior to such date.
The 2028 Convertible Notes pay interest at a fixed rate of 4.25% per annum payable semiannually in arrears on June 15 and December 15 of each year, beginning on June 15, 2023. Unless redeemed, repurchased or converted in accordance with their terms prior to such date, the 2028 Convertible Notes mature on June 15, 2028.
There were no outstanding borrowings on the 2024 Revolving Credit Facility and 2018 Revolving Credit Facility as of December 31, 2024 and December 31, 2023, respectively.
There were no outstanding borrowings on the 2024 Revolving Credit Facility as of both December 31, 2025 and December 31, 2024.
As of December 31, 2023, we recorded assets at fair value of zero and liabilities at fair value of $3.3 million relating to all outstanding foreign currency contracts designated as cash flow hedges. These hedges remained effective as of December 31, 2024 and December 31, 2023.
As of December 31, 2025, we recorded assets at fair value of zero and liabilities at fair value of $4.5 million relating to all outstanding foreign currency contracts designated as cash flow hedges.
As of December 31, 2023, the fair value of the 2028 Convertible Notes was approximately $320.9 million, and the carrying value was $270.5 million. The 2028 Convertible Notes pay interest at a fixed rate of 4.25% per annum payable semiannually in arrears on June 15 and December 15 of each year, beginning on June 15, 2023.
As of December 31, 2024, the fair value of the 2029 Notes was approximately $421.5 million and the carrying value was $595.4 million. The 2029 Notes pay interest at a fixed rate of 4.875% per annum payable semiannually in arrears on June 1 and December 1 of each year, beginning on December 1, 2021.
As of December 31, 2024, the fair value of the 2029 Secured Notes was approximately $851.3 million and the carrying value was $768.2 million. The 2029 Secured Notes pay interest at a fixed rate of 12.250% per annum payable semiannually in arrears on April 15 and October 15 of each year, beginning on October 15, 2024.
The 2029 Secured Notes pay interest at a fixed rate of 12.250% per annum payable semiannually in arrears on April 15 and October 15 of each year, beginning on October 15, 2024. The 2029 Secured Notes mature on April 15, 2029, unless redeemed or repurchased in accordance with their terms prior to such date.
On March 15, 2024, the 2024 Convertible Notes matured and were repaid in full. As of December 31, 2023, the fair value of the 2024 Convertible Notes was approximately $196.2 million and the carrying value was $196.8 million.
In September 2025, the 2025 Notes matured and the remaining aggregate principal amount outstanding was paid in full. As of December 31, 2024, the fair value of the 2025 Notes was approximately $263.0 million and the carrying value was $261.8 million.
As of December 31, 2024, the fair value of the 2029 Notes was approximately $421.5 million and the carrying value was $595.4 million. As of December 31, 2023, the fair value of the 2029 Notes was approximately $471.6 million and the carrying value was $594.5 million.
As of December 31, 2025, the fair value of the 2029 Secured Notes was approximately $888.1 million and the carrying value was $774.1 million. As of December 31, 2024, the fair value of the 2029 Secured Notes was approximately $851.3 million and the carrying value was $768.2 million.
The 2024 Convertible Notes paid interest at a fixed rate of 2.625% per annum payable semiannually in arrears on March 15 and September 15 of each year, beginning on September 15, 2018. As of December 31, 2024, the fair value of the 2028 Convertible Notes was approximately $215.3 million, and the carrying value was $271.9 million.
As of December 31, 2025, the fair value of the 2028 Convertible Notes was approximately $301.7 million, and the carrying value was $273.4 million. As of December 31, 2024, the fair value of the 2028 Convertible Notes was approximately $215.3 million, and the carrying value was $271.9 million.
Removed
As of December 31, 2023, the fair values of the 2018 Term Loan A and 2018 Term Loan B were approximately $236.1 million and $650.6 million, respectively, and the carrying values were $235.5 million and $648.2 million, respectively.
Removed
The 2029 Secured Notes mature on April 15, 2029, unless redeemed or repurchased in accordance with their terms prior to such date.
Removed
Unless redeemed, repurchased or converted in accordance with their terms prior to such date, the 2028 Convertible Notes mature on June 15, 2028. As of December 31, 2024, the fair value of the 2025 Notes was approximately $263.0 million and the carrying value was $261.8 million.
Removed
The 2029 Notes are recorded at their carrying value and their fair value is used only for disclosure purposes, so an increase or decrease in interest rates would not have any impact to our consolidated financial statements; however, if interest rates were to increase or decrease by 1%, their fair value could decrease by approximately $14.3 million or increase by approximately $15.0 million, respectively.

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