NUS

Strategic Innovation and Intelligent Anti-Aging Leadership

• The company continues the early global rollout of its new anti-aging innovation, Prism IO, with over 39,000 devices placed as of Q2 2026, up nearly 30% quarter over quarter. Total customer scans reached 2.5 million, up 25% quarter over quarter.
• Early commercial learnings found sales leaders primarily use Prism IO as an in-person wellness consultation tool, rather than the original in-home placement hypothesis. This insight is driving refinements to the commercial strategy for future global rollout.
• The company expects 50,000 to 60,000 total Prism IO devices placed by the end of 2026. A next-generation AI-enabled Prism IO app, with personalized wellness assessments, product recommendations, and 90-day wellness plans, will launch at the September 2026 global live event in Japan.
• The company is advancing new aging response modulator science incorporating epigenetics, based on collaborative research with leading global academic institutions, to fuel future product innovation, including two new upcoming women's health products for hormonal balance across life stages.

Sales Force Engagement and Enablement

• Recruiting and leadership development remain below the levels needed to return to sustainable growth, so the company is redesigning global compensation, recognition, and incentive frameworks to balance product sales, team building, and leadership development, with local flexibility for markets including mainland China.
• The revised compensation framework has rolled out across the Americas and Pacific in H1 2026, with rollout to remaining markets continuing through 2027. A new clear leadership achievement roadmap with enhanced training, stronger recognition, and improved incentives will launch this fall.

Emerging Market Expansion

• Latin America is facing a mixed macroeconomic environment, but regional leadership has demonstrated resilience, and the company remains positive on long-term regional opportunities.
• The formal full market launch of India has been pushed to H1 2027, to allow additional time to refine the local business model, confirm product quality standards with local partners, resolve unique logistics complexities, and complete regulatory and system integration. The company believes this delay will position India for stronger, more sustainable long-term growth.

Organizational and Profitability Improvements

• The company is shifting from a 7-region operating structure to a distinct East-West operating structure, led by the Chief Operating Officer, to better align support for the different operating models of Eastern and Western markets. The transition will take place over the next two quarters and is expected to improve agility, efficiency, and growth focus.
• The company continues to target a long-term gross margin of ~80% for the core business, with progress driven by strategic price increases to offset rising input costs, supply chain efficiencies, and optimized manufacturing footprint allocation (China facilities for Asian markets, US facilities for Western markets).
• General and administrative expenses declined by $15.9 million year over year, reflecting sustained cost discipline while continuing to invest in strategic priorities.

• Q3 2026 guidance: Revenue is projected to be $310 million to $340 million, including an expected 2% to 3% foreign currency headwind. Adjusted earnings per share is expected to be 10 cents to 20 cents; reported EPS is expected to range from $0 to $0.09.
• Full year 2026 guidance: Revenue is revised to $1.28 billion to $1.35 billion, including an expected 1% foreign currency headwind. Adjusted full year EPS is guided to 70 cents to 90 cents, after excluding non-recurring charges including the Q2 goodwill impairment, deferred tax valuation allowance, first-quarter non-recurring charges, and anticipated H2 2026 organizational transition costs. Reported full year EPS is expected to range from -$4.90 to -$4.73.

The firm reports two core operating segments: Nu Skin Core and RISE. Total Q2 2026 revenue was $320.1 million. For the Nu Skin Core segment, gross margin reached 77.7% (up 20 basis points year-over-year), and selling expense as a percentage of core revenue was 39.8% (down 20 basis points year-over-year). The RISE Manufacturing segment recorded a non-cash goodwill impairment charge of $78.9 million in Q2 2026, which drove the overall reported net loss for the quarter. Revenue contribution percentages for each segment were not explicitly provided in the transcript.

• Foreign currency exchange rate volatility is expected to create a 2% to 3% headwind for Q3 2026 revenue and a 1% headwind for full year 2026 revenue.
• Recruiting and sales leadership development are currently below the levels required to return the business to sustainable growth.
• The Prism IO rollout requires existing sales leaders, particularly in beauty-focused Western markets, to complete a learning curve to effectively sell a new wellness-focused product, which has contributed to softer H1 2026 results.
• Macroeconomic conditions across Latin America remain mixed and create operating headwinds.
• The India market entry has unique complexities around local quality control, logistics, regulatory and system integration that require additional time to resolve before full launch.
• An interim goodwill impairment assessment triggered by year-to-date declines in market capitalization resulted in a $78.9 million non-cash goodwill impairment charge for the RISE Manufacturing segment, plus an additional $167.5 million non-cash deferred tax valuation allowance.

Q: Why has New Skin pushed the full India launch to H1 2027, given India's strong direct selling industry growth? / A: After six to seven months of preparatory work, the company identified areas needing refinement to align with the unique nuances of the Indian market. These include confirming that local manufacturing meets the company's strict 6S quality standards, building appropriate local logistics partnerships, completing full integration of systems with local government and payment infrastructure, and optimizing the business model to match local commercial practices to better support affiliate network growth. The extra time will position the company for stronger long-term growth.

Q: Does Prism IO's wellness focus shift the profile of potential sales leaders, and how is this impacting current sales force performance? / A: In Western markets like the Americas and Europe, Nu Skin's current business is heavily weighted toward beauty, so existing sales leaders face a learning curve to understand and effectively sell a new wellness-focused product like Prism IO. This near-term learning curve has contributed to softer H1 2026 results. Long-term, the company expects strong synergies between beauty and wellness, as consumers interested in one category typically also engage with the other.

Q: What factors will drive performance towards the upper or lower end of the new full-year guidance, which implies a strong Q4 adjusted EPS? / A: The key driver is expected growing adoption of Prism IO following the September 2026 global live event in Japan, which will draw over 10,000 mid-to-high level leaders to align on the new AI-enabled Prism IO app and new epigenetic anti-aging science, boosting leader confidence and customer conversion. In addition, Q4 is traditionally a strong quarter due to seasonal holiday promotions in both Western and Eastern markets that consistently drive higher revenue and earnings.