NAII Discontinues Brands, Doubles Down on Contract Manufacturing & Beta-Alanine

TL;DR

**NAII is shedding underperforming brands to sharpen its focus on its certified contract manufacturing and patented beta-alanine, a smart move to leverage its core competencies.**

AI Summary

Natural Alternatives International, Inc. (NAII) reported a challenging fiscal year ended June 30, 2025, marked by the discontinuation of its SustainedRx and Perfect Synergy branded products due to lack of commercial success. The company continues to focus on its primary business of private-label contract manufacturing services for nutritional supplements and the commercialization of its beta-alanine patent estate under the CarnoSyn, SR CarnoSyn, and TriBsyn trademarks. NAII expanded its manufacturing capabilities by fully operating a new high-volume powder blending and packaging facility in Carlsbad, California, which commenced full operations in April 2023 and achieved multiple certifications by April 2025. The company maintains significant certifications including TGA, NSF, Health Canada, Organic Processor, Kosher, Halal, and SSCI, with its TGA certification for its Vista, California facility valid through August 12, 2025, though a renewal inspection is delayed. NAII's Swiss subsidiary, NAIE, also maintains pharmaceutical licenses and FSSC 22000 certification as of May 2024, strengthening its international market position.

Why It Matters

NAII's strategic shift away from direct-to-consumer brands like SustainedRx and Perfect Synergy signals a renewed focus on its core strengths: private-label contract manufacturing and its proprietary beta-alanine ingredients. For investors, this could mean a more streamlined business model, but also highlights the difficulty of competing in the crowded branded supplement market. Employees in the Carlsbad and Vista, California, and Manno, Switzerland facilities benefit from continued investment in manufacturing capabilities and certifications, ensuring job stability and growth opportunities. Customers, particularly those in the direct sales marketing channel, rely on NAII's robust certifications and scientific formulations to maintain product quality and trust in a highly competitive and often scrutinized industry.

Risk Assessment

Risk Level: medium — The discontinuation of the SustainedRx and Perfect Synergy brands during fiscal 2025 indicates challenges in direct-to-consumer market penetration, suggesting potential revenue volatility if contract manufacturing demand fluctuates. Additionally, the TGA is experiencing delays in confirming the timing of a renewal inspection for NAII's Vista, California facility, which, while not immediately impacting current certification valid through August 12, 2025, introduces uncertainty for future export capabilities if not renewed promptly.

Analyst Insight

Investors should monitor NAII's ability to grow its private-label contract manufacturing segment and expand beta-alanine commercialization to offset the discontinued brands. Pay close attention to the TGA certification renewal status, as it impacts international market access for manufactured products.

Key Numbers

• $26,717,000 — Aggregate market value of common stock held by non-affiliates (as of December 31, 2024, based on a closing price of $4.31)
• 6,176,778 — Shares of common stock outstanding (as of September 23, 2025, net of treasury shares)
• 3,328,128 — Treasury shares (as of September 23, 2025)
• 1980 — Year NAI was originally founded (demonstrates long operational history)
• 1989 — Year NAI reorganized as a Delaware corporation (marks corporate structure change)
• 1999 — Year NAIE was formed and opened its manufacturing facility (expansion into Europe)
• 2025 — Fiscal year (when SustainedRx and Perfect Synergy brands were discontinued)
• August 12, 2025 — Expiration date of TGA GMP certification (for Vista, California facility)
• April 2023 — Month and year Carlsbad facility commenced full operations (new high-volume powder blending and packaging facility)
• April 2025 — Month and year Carlsbad facility achieved SSCI certification (demonstrates commitment to safety standards)

Key Players & Entities

• NATURAL ALTERNATIVES INTERNATIONAL, INC. (company) — registrant
• NAI (company) — registrant
• SustainedRx (company) — discontinued brand
• Perfect Synergy (company) — discontinued brand
• Natural Alternatives International Europe S.A. (company) — wholly owned subsidiary
• NAIE (company) — wholly owned subsidiary
• CarnoSyn (company) — trademarked ingredient
• SR CarnoSyn (company) — trademarked ingredient
• TriBsyn (company) — trademarked ingredient
• Therapeutic Goods Administration (regulator) — certifying body

FAQ

Risk Factors

• Discontinuation of Branded Products [medium — market]: The company discontinued its SustainedRx and Perfect Synergy branded products in fiscal year 2025 due to a lack of commercial success. This indicates a risk in developing and marketing new consumer-facing brands, potentially impacting future revenue diversification efforts.
• Reliance on Contract Manufacturing [medium — operational]: NAII's primary business is private-label contract manufacturing. While this offers flexibility, it also means the company is dependent on the success and demand of its clients' products, making it susceptible to shifts in client strategies or market performance.
• TGA Certification Renewal Delay [high — regulatory]: The TGA GMP certification for the Vista, California facility is valid through August 12, 2025, but the renewal inspection is delayed. Failure to secure timely renewal could disrupt operations and impact the ability to serve certain markets.
• New Facility Integration and Certification [medium — operational]: The new high-volume powder blending and packaging facility in Carlsbad commenced full operations in April 2023 and achieved SSCI certification by April 2025. Successful integration and ongoing compliance with certifications are critical for operational efficiency and market access.
• Competition in Nutritional Supplements [medium — market]: The nutritional supplement market is highly competitive, with numerous players offering a wide range of products. NAII's success depends on its ability to differentiate through proprietary ingredients like beta-alanine and maintain strong customer relationships.

Industry Context

The nutritional supplement industry is characterized by strong consumer demand for health and wellness products, driven by increasing health consciousness and an aging population. However, it is also a highly competitive landscape with numerous manufacturers, brands, and distributors. Key trends include a focus on science-backed ingredients, personalized nutrition, and sustainable sourcing. Regulatory scrutiny from bodies like the FDA remains a constant factor, requiring manufacturers to adhere to strict quality and safety standards.

Regulatory Implications

NAII operates in a heavily regulated industry. The delayed renewal inspection for its TGA GMP certification for the Vista facility presents a significant compliance risk that could impact its ability to serve certain markets. Maintaining various certifications (NSF, Health Canada, Organic, Kosher, Halal, SSCI) is critical for market access and customer trust, requiring ongoing investment in quality control and compliance.

What Investors Should Do

1. Monitor TGA Certification Status
2. Assess Carlsbad Facility Performance
3. Evaluate Beta-Alanine Patent Strategy
4. Analyze Client Concentration and Growth

Key Dates

• 2025-06-30: Fiscal year end — Marks the period during which the company discontinued its SustainedRx and Perfect Synergy branded products.
• 2023-04-01: Carlsbad facility commenced full operations — Indicates the full operational capacity of a new high-volume powder blending and packaging facility, crucial for expanding manufacturing capabilities.
• 2025-04-01: Carlsbad facility achieved SSCI certification — Demonstrates adherence to high safety and quality standards for the new facility, enhancing marketability and customer trust.
• 2025-08-12: Expiration date of TGA GMP certification for Vista facility — A critical regulatory deadline; a delayed renewal inspection poses a risk to operations at this facility.
• 1980-01-01: Natural Alternatives International, Inc. (NAI) originally founded — Highlights the company's long operational history and established presence in the nutritional supplement industry.
• 1999-01-01: NAIE (Swiss subsidiary) formed and opened manufacturing facility — Signifies NAII's strategic expansion into the European market with dedicated manufacturing capabilities.

Glossary

Private-label contract manufacturing

Manufacturing products for other companies who then sell them under their own brand names. (This is NAII's primary business activity, making its operational efficiency and client relationships key to its success.)

Beta-alanine

A naturally occurring amino acid that is a precursor to carnosine, an antioxidant found in muscle and brain tissue. (NAII owns a patent estate for beta-alanine and commercializes it under trademarks like CarnoSyn, representing a significant proprietary product line.)

TGA GMP certification

Therapeutic Goods Administration Good Manufacturing Practice certification, a standard for pharmaceutical and health product manufacturing in Australia and recognized internationally. (This certification is crucial for NAII's Vista, California facility, impacting its ability to operate and serve markets requiring these standards.)

SSCI certification

Likely refers to a food safety or quality certification, such as Safe, Sanitary, Clean, and Inspected, or a similar standard relevant to food and supplement manufacturing. (Achieved by the Carlsbad facility, it signifies compliance with important quality and safety protocols.)

Treasury shares

Shares of a company's own stock that it has repurchased from the open market. (The number of treasury shares affects the total number of outstanding shares available to the public.)

Year-Over-Year Comparison

The company's fiscal year 2025 saw the discontinuation of its branded products, indicating a strategic shift away from direct-to-consumer brands that were not commercially successful. While specific year-over-year financial comparisons are not detailed in this excerpt, the focus on core contract manufacturing and proprietary ingredients suggests a potential stabilization or redirection of efforts. The expansion of manufacturing capabilities with the Carlsbad facility is a significant operational development, aiming to enhance capacity and efficiency, which could positively impact future financial performance if fully leveraged.

Key Financial Figures

• $0.01 — nge on which registered Common Stock, $0.01 par value per share Nasdaq Global Mark
• $4.31 — 000 (based on the closing sale price of $4.31 reported by Nasdaq on December 31, 2024

Filing Documents

• naii20250630_10k.htm (10-K) — 1737KB
• ex_819848.htm (EX-21) — 3KB
• ex_819849.htm (EX-23.1) — 2KB
• ex_819850.htm (EX-31.1) — 8KB
• ex_819851.htm (EX-31.2) — 8KB
• ex_819852.htm (EX-32) — 5KB
• 0001437749-25-029731.txt ( ) — 10048KB
• naii-20250630.xsd (EX-101.SCH) — 82KB
• naii-20250630_cal.xml (EX-101.CAL) — 69KB
• naii-20250630_def.xml (EX-101.DEF) — 617KB
• naii-20250630_lab.xml (EX-101.LAB) — 505KB
• naii-20250630_pre.xml (EX-101.PRE) — 661KB
• naii20250630_10k_htm.xml (XML) — 1781KB

Business

Business 2 Item 1A.

Risk Factors

Risk Factors 8 Item 1C. Cybersecurity 14 Item 2.

Properties

Properties 15 Item 3.

Legal Proceedings

Legal Proceedings 15 Item 4. Mine Safety Disclosures 15 PART II Item 5. Market for Our Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 16 Item 6.

Selected Financial Data

Selected Financial Data 16 Item 7. Management ' s Discussion and Analysis of Financial Condition and Results of Operations 17 Item 7A.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 19 Item 8.

Financial Statements and Supplementary Data

Financial Statements and Supplementary Data 20 Report of Independent Registered Public Accounting Firm (PCAOB ID 200) 20 Consolidated Financial Statements 21 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 42 Item 9A.

Controls and Procedures

Controls and Procedures 42 Item 9B. Other Information 42 PART III Item 10. Directors, Executive Officers and Corporate Governance 42 Item 11.

Executive Compensation

Executive Compensation 42 Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 42 Item 13. Certain Relationships and Related Transactions, and Director Independence 42 Item 14. Principal Accountant Fees and Services 42 PART IV Item 15. Exhibits and Financial Statement Schedules 43

SIGNATURES

SIGNATURES 46 (i) Table of Contents SPECIAL NOTE ABOUT FORWARD-LOOKING STATEMENTS Certain statements in this report, including information incorporated by reference, are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934, and the Private Securities Litigation Reform Act of 1995. Forward-looking statements reflect current views about future events and financial performance based on certain assumptions. They include opinions, forecasts, intentions, plans, goals, projections, guidance, expectations, beliefs, or other statements that are not statements of historical fact. Words such as "may," "will," "should," "could," "would," "expect," "plan," "believe," "anticipate," "intend," "estimate," "approximate," "predict," "forecast," "project,", "future", or "likely", or the negative or other variation of such words, and similar expressions may identify a statement as a forward-looking statement. Any statements that refer to projections of our future financial performance, our anticipated growth and trends in our business, our goals, strategies, focus and plans, and other characterizations of future events or circumstances, including statements expressing general optimism or pessimism about future operating results, are forward-looking statements. Forward-looking statements in this report may include statements about: our ability to develop market acceptance for and increase sales of new products, develop relationships with new customers and maintain or improve existing customer relationships future financial and operating results, including projections of net sales, revenue, income or loss, net income or loss per share, profit margins, expenditures, liquidity, and other financial items the sufficiency of our available cash and cash equivalents, including continued access to borrowings under our credit facilities, and potential cash flows from our operations to fund our

BUSINESS

ITEM 1. BUSINESS General Our vision is to enrich the world through the best of nutrition. We are a leading formulator, manufacturer and marketer of nutritional supplements. Our comprehensive strategic partnerships with our customers allow us to offer a wide range of innovative nutritional products and services to such customers including: scientific research, clinical studies, proprietary ingredients, customer-specific nutritional product formulation, product testing and evaluation, marketing management and support, packaging and delivery system design, regulatory review, and international product registration assistance. As our primary business activity, we provide private-label contract manufacturing services to companies that market and distribute vitamins, minerals, herbal and other nutritional supplements, as well as other health care products, to consumers both within and outside the U.S. We also own a patent estate related to the raw material ingredient known as beta-alanine, which is primarily commercialized through the direct sale of this raw material and supply agreements with third parties for the distribution and use of this raw material under our CarnoSyn, SR CarnoSyn and TriBsyn trademarks. We previously sold a branded version of our SR CarnoSyn Wellness tablet product under a brand we created called SustainedRx and a product named Perfect Synergy. This product was sold directly to consumers through Amazon and our own direct to consumer website. This brand was discontinued during fiscal 2025 as it was not commercially successful. We also sell SR CarnoSyn tablet products and TriBsyn capsule products that are offered as business-to-business private label products. History Originally founded in 1980, Natural Alternatives International, Inc. (NAI) reorganized as a Delaware corporation in 1989. Our principal executive offices are located at 1535 Faraday Ave, Carlsbad, CA 92008. Our primary U.S. manufacturing facility is located approximately three

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