Nature's Sunshine Products Q2 Earnings Call Highlights

Key Points

• Record Q2 sales: Nature’s Sunshine reported $117 million in second-quarter net sales, up 2% year over year, while adjusted EBITDA rose nearly 1% to $11.3 million. Gross margin expanded nearly 200 basis points to 73.7%, its highest level in more than four years.
• Digital growth offset regional weakness: North American digital sales increased 26% and social-commerce sales surged 177%, while Japan and Europe also performed well. However, China sales fell 20% due to operational issues, weighing on Asia-Pacific results.
• 2026 outlook reduced: The company lowered its full-year sales forecast to $490 million-$500 million and adjusted EBITDA guidance to $48 million-$52 million, citing the China slowdown and currency changes. Management continues to target long-term expansion through digital channels, new markets, product innovation and acquisitions.

Nature's Sunshine Products NASDAQ: NATR reported second-quarter net sales of $117 million, its strongest second quarter in company history, as digital growth in North America and continued momentum across much of Asia-Pacific and Europe supported results.

Sales increased 2% from the prior-year quarter and rose 4% on a constant-currency basis. Chief Executive Officer Ken Romanzi said growth was driven by customer acquisition, expanded digital capabilities, autoship subscription adoption and consultant growth. He also said cost controls and productivity efforts contributed to further gross-margin expansion.

Regional performance

Asia-Pacific sales increased 1% year over year to $53 million, or 5% on a constant-currency basis. Chief Accounting Officer Jon Lanoy said Japan delivered 50% growth, while China sales declined 20% following operational issues. China had previously grown more than 30% over the past year, he said.

Lanoy characterized the China issues as short term and said management expects to address them during the second half of 2026. Excluding China, sales through the company's SynerG Eagle system in Asia-Pacific rose 11% from a year earlier.

North American sales grew 3% to $36 million in the second quarter, bringing first-half growth in the region to 6%. The company's digital business expanded 26%, with new customers also up 26%. Autoship represented 36% of orders placed through the company's website.

Social commerce sales increased 177% year over year, according to Lanoy, while subscription autoship accounted for 60% of social-commerce revenue. He said the company views autoship participation as an indicator of future growth and profitability because the lifetime value of subscription customers is more than three times that of other customers.

Romanzi said the company's core North American direct-selling business has been soft for several years, even as digital channels continue to expand. Nature's Sunshine plans to reinvigorate its U.S. direct-selling program in early 2027 through new products, a new compensation plan and incentives.

European sales increased 4% to $26.7 million, helped by 12% growth in Eastern Europe. Lanoy said improved availability of key products supported the region despite continuing unrest there.

Margins, expenses and capital position

Gross margin rose nearly 200 basis points to 73.7%, the highest level in more than four years. Lanoy attributed the improvement to renegotiated logistics contracts, manufacturing efficiencies, sourcing improvements and more disciplined pricing. The company expects gross margin to average in the low- to mid-73% range for the remainder of 2026.

Volume incentives represented 30.6% of net sales, compared with 29.9% a year earlier, primarily because of market mix changes. Selling, general and administrative expenses increased to $44.9 million from $43.7 million and represented 38.4% of sales, versus 38.1% in the prior-year quarter. Management said the increase reflected investments behind its “Vision for Growth” strategy.

Adjusted EBITDA was $11.3 million, up nearly 1% from a year earlier. Nature's Sunshine ended the quarter with $82.5 million in cash and cash equivalents and no debt. Net cash used in operating activities was $1.1 million, compared with $6.9 million of cash provided in the prior-year period.

During the first six months of 2026, the company repurchased 113,000 shares for about $2.5 million, or $22.55 per share. It had $14.8 million remaining under its share repurchase program as of June 30.

Outlook reduced amid China slowdown and currency changes

Nature's Sunshine lowered its 2026 outlook, citing recent exchange-rate changes and the slowdown in China. The company now expects full-year net sales of $490 million to $500 million, compared with prior guidance of $500 million to $515 million. The revised range implies year-over-year growth of 2% to 4%.

The company also reduced its adjusted EBITDA outlook to $48 million to $52 million from its previous forecast of $50 million to $54 million. SG&A expense is expected to range from $45 million to $47 million per quarter for the rest of the year as strategic investments ramp up.

Growth strategy and leadership additions

Romanzi said the company's long-term “Vision for Growth” calls for doubling sales to $1 billion and increasing EBITDA margin to 15% from just over 10% currently. The strategy centers on four areas:

• Continued digital-channel expansion;
• Deeper geographic penetration and entry into new markets;
• Marketing and product innovation; and
• Mergers and acquisitions.

The digital business is on track to generate $50 million in sales in 2026, five years after its launch, Romanzi said. The company is assessing opportunities to extend digital channels outside the U.S.

Nature's Sunshine began its Germany launch earlier in 2026 and expects about $1 million in sales there this year. Romanzi said the company is targeting a potential $10 million business in Germany over time, noting that it is recruiting approximately 150 consultants per month and recently held a Berlin event attended by 400 people who paid their own way to learn about becoming independent consultants.

Management also plans to enter a new Asian market through its SynerG system in 2027, subject to government approvals. The company intends to launch its “Live on the Bright Side” consumer campaign this fall and has several product introductions planned for the fall and early 2027.

On acquisitions, Romanzi said the company is seeking potentially accretive opportunities in supplements that can be incorporated into its supply chain and manufacturing operations. He said management would favor opportunities that diversify its business mix through direct-to-consumer channels, retail or geography, while adding that the company is not actively seeking to acquire another direct-selling business.

The company also announced that Ruth Perkins will become chief financial officer effective Sept. 1, following the June departure of former CFO Shane Jones. Perkins previously held financial leadership roles at Ford, The Estée Lauder Companies and PepsiCo. Janine Weber will join as president of North America effective Aug. 10, bringing 25 years of direct-selling industry experience, Romanzi said.

About Nature's Sunshine Products (NASDAQ:NATR)

Nature’s Sunshine Products, Inc is a global manufacturer and direct seller of nutritional supplements, herbal remedies, and personal care products. The company’s core business centers on research, development and distribution of vitamins, minerals, botanicals and essential oil-based formulations designed to support overall health and wellness. Operating under a network-marketing model, Nature’s Sunshine works through a network of independent distributors who promote and sell its product line directly to consumers.

The company’s product portfolio spans dietary supplements such as single-ingredient vitamins, proprietary herbal blends, sports nutrition formulas and weight-management solutions, along with skin and hair care items based on botanical extracts and essential oils.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.

Continue following MarketBeat

Add MarketBeat as your preferred source on Google to see our latest stories in your feed.

Add As Preferred Source