USANA Health Sciences, Inc. (USNA) Earnings

Management highlights

- Core nutritional business: Advancing rollout of enhanced brand partner compensation plan, accelerating new product launches, and accelerating technology initiatives to stabilize and return to sustainable growth. - Hiya: Expanding into international direct to consumer markets (Canada and UK launched in Jan and Mar respectively), expanding into retail with products available at Target, and leveraging USANA's assets for margin efficiencies. - Rise Wellness: Leveraging USANA's assets to accelerate growth, manufacturing Rise bars on USANA's bar line, managing inventory and demand for efficiencies, and reformulating products for better customer experience.

Guidance

Reaffirming full-year 2026 guidance: Projecting consolidated net sales of $925 million to $1 billion U.S. Omnichannel net sales on track to represent more than 20% of total net sales this year, up from 16% in 2025.

Segment performance

Core nutritional business: Net sales of 204 million grew 7% sequentially in Q1, driven by active customer growth, especially in China market. Omnichannel brands Hiya: Generated 32 million in net sales in Q1 with active monthly subscribers of 186,000, modestly improved sequentially from Q4. Full-year 2026 net sales projected at $140 million to $155 million. Rise Wellness: Delivered 14 million in net sales in Q1, more than eight times prior year's Q1, a 143% sequential increase, driven by national launch of Protein Pop Plus into Costco.

Risks & headwinds

Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from projected, including uncertainty related to economic and operating environment around the world, and operations and financial results.

Analyst Q&A

• Q: Good morning, everyone, and thank you for taking the questions. It's certainly nice to see the better-than-expected results. And specifically, I wanted to start with China, actually, so I saw some improvement there in Q1, which is good to see. Just wondering if you've seen any notable changes from a macro perspective in China or maybe elsewhere as it relates to increased fuel prices since the Iran conflict started. Just wondering what you've seen just from a broader consumer perspective as it relates to higher fuel prices.

  A: Yeah, Brent, I'd like you to respond to that. He's our chief commercial officer, Brent. Yeah, Anthony, good morning. It's good to hear from you. As of this point, we haven't. I'd say the macro environment in China is pretty stable relative to the rest of the globe. They've been somewhat insulated from different inflationary pressures that the rest of the markets have been under. I think it's still a little too early to tell in terms of the Iran conflict and what we might see with fuel prices there. But everything that we've seen and that I'm hearing from our brand partners there and from our leadership there is that there's No material impact as of yet.

• Q: And as it relates to the core nutritional business, so you talked about accelerating product development and also as far as the timelines are concerned for that. Can you share any more specifics as far as maybe the number of new products that are in the pipeline or anything else that you can share as to what you – or what we have coming up as far as new product development.

  A: Yeah, Anthony, we have our Chief Science Officer, Dr. Catherine Armstrong here. Catherine, will you go ahead and handle that question? Yeah, hi, Anthony. Good to talk with you. So, you know, for us, a lot of the focus has been on how we better leverage our skill sets internally and externally across all of the different product formats that we now offer against the expanded brand portfolio. So when we talk about the number of products under development, you know, obviously there are products for development in all of our sections, as well as in our team in China. It's certainly over 20. And so I wouldn't go into specifics on launch dates and in which categories they fall under, but we have a plethora of products for developing for all of the brands and for all of the markets. The focus for us is really on how do we help more people ingest the products that we are making. across the brands and how do we leverage things we've learned in our different channels that appeal to different types of consumers or to different types of use occasions and how do you expand each of the channels to allow for more of those consumers to engage across those channels. So, for example, you can expect to see us bring in things to our direct sales channel that are aligned with key insights we've had around how consumers are evolving their experience desires for product usage. and really pulling those learnings together to make sure we have products in each of the channels that are appealing to the right consumers to meet them where they are on their health journey. Hey, Anthony, this is Kevin. Just to jump in, and I'm going to ask Walter to comment on this as well. To your point and what Catherine just alluded to, one of the things that I've been very optimistic about is how we're leveraging the expertise and knowledge base from other sales channels into our core business and the learnings that we're getting from that from a direct-to-consumer approach and how that helps lend itself in other categories. And, Walter, just again to Anthony's point about just our product strategy overall as it relates to the omni-channel and how that's affecting each other, I'd be curious to hear your thoughts on that. Yeah, I mean, cross-platform. I mean, I think what it's done is it's, Traditionally, we've been a direct sales business, and it's an international business. But with the rapid growth we've had with retail, for instance, with Protein Pop launching that new product recently, we've just seen how quickly trends change. Right now, obviously, there's some really big trends around weight loss and using protein to supplement that weight loss. And that's been a really big benefit. And we've been able to leverage that and use product development and the teams we've got to be able to help us to design and develop new products for the direct sales channel. I think you're going to see some of the things that we do in retail and direct-to-consumer, you'll see those bleed over into the direct sales channel.

• Q: Now, just switching gears to Haya, so definitely it was good to see sequential uptick in sales, though. The SG&A was higher than the fourth quarter and higher than last year. Is that just seasonality of the business as far as marketing costs, or is there anything else that's impacting the SG&A?

  A: Yeah, Anthony, this is Doug. As Kevin alluded to and Walter kind of contributed as well, HIA is diversifying within its own channel, and it had the initial foray into retail business, towards the latter part of the quarter, and also entered both Canada and the U.K. And so those things consumed some operational resources as well. The other aspect that you see is kind of this meta-algorithm that we've talked about a few times. The cost of acquiring a customer in that short term was definitely present there on your comparison.

• Q: And can you give us an update as to how Haya is doing so far in Canada, the UK, and selling at Target?

  A: For Canada, I think we've put some targets in place, and we've exceeded those targets in Canada. And I think that's only because I think a lot of people in Canada have probably seen Haya. They understand the brand. It kind of bleeds over. With the UK, it's a new market for us. It's brand new territory. We're using Meta also in advertising there. And I would say it's very new for us. I mean, we've been out about a month, probably about a little bit, maybe a month, maybe five weeks. So I would say, again, it's a very slow start for us because it's a new market. But we have very high hopes for the UK. I mean, we went across the world and looked at what the best markets are for the higher products. And we believe that with the DTC appetite in the UK and with the competitive landscape there, we think high is going to do really well. And as far as Target goes, Target's really been, I think it's been two weeks, maybe a little more than two weeks that it's been on shelf. About a week ago, Many of the targets, I would say most of the targets, have put end caps in place with Hyatt products. So we went live with Target, then we put end caps in place. So we're going to see. We really don't know. I think in the next few weeks we'll have a much better idea. But the placement in the store, the amount of attention that Target has given us gives us high hopes, and that's why we've kept our guidance in place. Yeah, and I would say, Anthony, that things are going according to plan, and as we kind of step into this area, it's even maybe expanded into Amazon a little bit more than we have in the past, is things are going according to plan, but we expect it to be kind of a build as we go on here, and we're very early stage. The other thing that Walter and the biz dev team has worked with the Haya team on and what they've communicated is the diversification with their own advertising team. And consumers spend different ways to reach the consumer and being a little bit more insulated relative to being too committed to just one channel for advertising. They've always been diversified, but they continue to work on that aspect as well.

• Q: And then just switching gears to Rise, so you spoke highly of your – relationship with Costco. So just curious, after the initial sell-in to Costco, have you seen reorder activity from them? And as far as any other retailers, have you seen new order placements?

  A: Yeah, we are seeing reorder placements on a weekly basis with Costco. So we are selling through. Obviously, if you look at our balance sheet, we've used up a lot of cash, and a lot of that was building up Costco inventory, and we're selling through that to Costco. So that's going on. I would say it's still, you know, with any retailer, you know, Target has been in place for a while. We've had Target in place, I think, since September of last year, or August, September, something like that. So Target has been very consistent for us, and we know the cadence, and we know what that business looks like. I think Costco is still – we've gone through multiple iterations. We had a discount for a couple weeks that we agreed to up front with Costco, and that gave us a lot of sell-through. And you kind of see a little bit of up and down as you go through that process. So I wouldn't say we know exactly how that's going to go in the long term, but we have a lot of conversations with them about new products that we're going to put out, different types of protein products that – they're interested in. And I think that, I mean, at least the relationship is really good. And I think the opportunity continues.

• Q: And just quickly to follow up, are you look as far as other retailers, will you be selling to others in the, in this quarter or in the second half of the year?

  A: Yes, we have already agreed. We have nine more retailers, major retailers that we've set up for this year. Some will be in second quarter and some in third quarter. Major retailers in the U.S., and so Protein Pop will continue to expand. We are in 500 Walmart stores already, and that's been good. The Walmart buyers like us, and they feel like that's a good product for them. So we hope to expand that, but we are going to be adding more retailers throughout the U.S., yes.

• Q: Congratulations on the great results and the success with Haya and Rise. Can you give me some insight into your R&D initiatives and where you see some new growth opportunities going forward?

  A: Yeah. Hi, Ivan. It's good to talk with you again. This is Catherine. You know, our focus continues to really deepen into women's health and children's health and looking across our brands and the integration of ULA into our direct sales brand. I think that's a very logical place for us to be. across all of the channels we're in. You can expect to see us continuing to push further into the real science behind women's health and children's health. We've done a lot of investment in terms of true research and working on clinical research to really understand how we can more meaningfully impact the health for both of those sort of segments of the population. We also have a strong focus. Obviously our direct sales business is essential to us and we have a strong focus on how we can ensure that that product pipeline is both continually updated as well as streamlined to help people navigate it more efficiently and really get the health benefits that they're seeking in order to sort of achieve what they're looking for. So I would say those are our big focus areas right now, Ivan, so women, kids, and then ensuring that our core product line is updated and streamlined to enable consumer efficiency.

• Q: And how about additional focus on gut health, which seems to be the major focus, the driving of overall health, and also any updates or insight to products in your active nutrition category?

  A: So when we think about gut health, it impacts all segments of humanity. Women have some unique gut health topics that need to be addressed. People tend to think about gut health still in our less developed microbiome focused markets in terms of just digestion and obviously the expansion into all possible health benefits beyond digestion and immunity. For women you'll see us putting a focus there on what does that look like for women in all of the various aspects of what addressing gut health can do for them holistically, physiologically. Obviously for children we have probiotic lines and fiber lines and those will continue to expand and continue to be leveraged as appropriate across our channels. Active nutrition, you know, we are hearing, as there was a reference earlier, a lot of focus on protein and how to help consumers consume protein in ways that are more aligned with their needs and their desired consumption profiles. You can expect to see more products in those categories as well coming to market to really ensure that people are being supported both on their weight loss journeys as well as on their health and sort of muscle building journeys. And Ivan, this is Brent here. Just to add a little bit more color in terms of the active nutrition. In the first quarter of this year, we relaunched new active nutrition shakes. So weight management, weight loss shakes in China. We made an investment into manufacturing equipment, filling equipment in that facility so that we could do it in-house and do it ourselves. And we upgraded our formulas. So that was launched in Q1 with a lot of excitement from our brand partners, and we have a really strong weight management campaign that's currently running there. So it's still a big focus for us, and we'll continue to invest in that area.