USANA Swings to Q3 Loss Amid Soaring Costs, Sales Up 6.7%

TL;DR

**USANA's Q3 loss despite sales growth is a red flag; dump shares before costs eat away any remaining value.**

AI Summary

USANA Health Sciences Inc. reported a significant net loss of $6.522 million for the three months ended September 27, 2025, a sharp decline from net earnings of $10.607 million in the prior-year quarter. Despite this, net sales increased to $213.670 million from $200.221 million, representing a 6.7% growth. However, cost of sales rose substantially by 24.3% to $48.815 million, and total operating expenses surged by 12.6% to $163.631 million, primarily driven by a 40.2% increase in selling, general, and administrative expenses to $85.947 million. For the nine months ended September 27, 2025, net earnings attributable to USANA decreased by 66.7% to $12.535 million from $37.576 million in the comparable period of 2024, even as net sales grew 9.1% to $699.057 million. The company's cash and cash equivalents decreased by $36.355 million to $145.349 million as of September 27, 2025, largely due to $54.056 million in net cash used in financing activities, including $27.507 million for common stock repurchases. Inventories also increased by $21.143 million to $90.781 million, indicating potential inventory management challenges or strategic build-up.

Why It Matters

USANA's shift to a net loss in Q3 2025, despite revenue growth, signals significant margin pressure and operational challenges that investors should scrutinize. The substantial increase in selling, general, and administrative expenses, coupled with higher cost of sales, suggests that the company's growth strategy, potentially influenced by the Hiya acquisition, is proving costly. This could impact future profitability and dividend potential, making USNA less attractive compared to competitors with better cost controls. Employees and Brand Partners might face pressure if profitability continues to decline, while customers could see price adjustments or changes in product offerings as the company seeks to restore margins. The broader market for health and wellness direct selling and direct-to-consumer businesses will watch closely to see if these are industry-wide trends or specific to USANA's execution.

Risk Assessment

Risk Level: high — The company reported a net loss of $6.522 million for the three months ended September 27, 2025, a stark reversal from $10.607 million in net earnings in the prior year. This is primarily driven by a 40.2% increase in selling, general and administrative expenses to $85.947 million and a 24.3% rise in cost of sales to $48.815 million, significantly outpacing the 6.7% net sales growth. The substantial decrease in cash and cash equivalents by $36.355 million, largely due to financing activities, further exacerbates the financial risk.

Analyst Insight

Investors should consider reducing their exposure to USNA given the significant decline in profitability and rising operational costs. Await further clarity on the company's strategy to control expenses and improve net income, especially concerning the integration and performance of recent acquisitions like Hiya Health Products, LLC. Monitor upcoming earnings calls for management's plans to address the substantial increase in selling, general, and administrative expenses.

Financial Highlights

revenue

$213.670M

operating Margin

0.6%

total Assets

$726.591M

total Debt

$145.038M

net Income

-$6.522M

eps

-$0.36

gross Margin

77.2%

cash Position

$145.349M

revenue Growth

+6.7%

Revenue Breakdown

Key Numbers

• $213.670M — Net sales for Q3 2025 (Increased from $200.221M in Q3 2024, a 6.7% growth.)
• -$6.522M — Net loss attributable to USANA for Q3 2025 (A significant decline from $10.607M net earnings in Q3 2024.)
• $85.947M — Selling, general and administrative expenses for Q3 2025 (Increased by 40.2% from $61.295M in Q3 2024.)
• $48.815M — Cost of sales for Q3 2025 (Increased by 24.3% from $39.257M in Q3 2024.)
• $12.535M — Net earnings attributable to USANA for YTD Q3 2025 (Decreased by 66.7% from $37.576M in YTD Q3 2024.)
• $145.349M — Cash and cash equivalents as of September 27, 2025 (Decreased from $181.768M as of December 28, 2024.)
• $54.056M — Net cash used in financing activities for YTD Q3 2025 (Primarily due to common stock repurchases of $27.507M.)
• $90.781M — Inventories as of September 27, 2025 (Increased from $69.735M as of December 28, 2024.)
• 18,280,857 — Outstanding shares of common stock as of October 31, 2025 (Reflects share repurchases.)

Key Players & Entities

• USANA Health Sciences, Inc. (company) — registrant
• Hiya Health Products, LLC (company) — acquired direct-to-consumer business
• Rise Bar Wellness, Inc. (company) — acquired direct-to-consumer business
• BabyCare Holdings, Ltd. (company) — USANA's wholly owned subsidiary in China
• KPMG LLP (company) — auditor
• New York Stock Exchange (regulator) — exchange where USNA is registered
• SEC (regulator) — Securities and Exchange Commission
• Salt Lake City, Utah (location) — USANA's principal executive offices and auditor location

FAQ

Risk Factors

• Inventory Management Challenges [medium — operational]: Inventories increased by $21.143 million to $90.781 million as of September 27, 2025. This significant rise from $69.735 million at the end of 2024 could indicate potential inventory management issues or a strategic build-up that may tie up working capital.
• Declining Profitability and Cash Position [high — financial]: The company reported a net loss of $6.522 million for Q3 2025, a stark contrast to the $10.607 million net earnings in the prior year. Concurrently, cash and cash equivalents decreased by $36.355 million to $145.349 million, largely due to $54.056 million in net cash used in financing activities, including stock repurchases.
• Surging Operating Expenses [high — operational]: Total operating expenses surged by 12.6% to $163.631 million in Q3 2025. A significant driver was the 40.2% increase in selling, general, and administrative expenses to $85.947 million, which outpaced net sales growth and contributed to the net loss.
• Regulatory Scrutiny of Direct Selling Models [medium — regulatory]: As a direct selling company, USANA is subject to regulations concerning product claims, marketing practices, and compensation plans. Changes in regulatory interpretations or enforcement, particularly in international markets, could impact operations and sales.
• Intense Competition in Health and Wellness Sector [medium — market]: The health and wellness industry is highly competitive, with numerous players offering similar products. USANA faces competition from other direct selling companies, as well as traditional retail channels and online platforms, which can pressure pricing and market share.

Industry Context

The health and wellness sector, particularly the direct selling segment, is characterized by strong consumer demand for nutritional supplements and personal care products. However, it is also a highly competitive landscape with evolving consumer preferences and increasing regulatory oversight globally. Companies like USANA must navigate these dynamics while managing complex supply chains and distributor networks.

Regulatory Implications

USANA operates under strict regulations regarding product claims, marketing practices, and pyramid scheme prohibitions in various jurisdictions. Any misstep in compliance, particularly concerning international operations, could lead to significant fines, reputational damage, and operational disruptions.

What Investors Should Do

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Key Dates

• 2025-09-27: End of Third Quarter 2025 — Reporting period for the 10-Q, showing a net loss and increased sales, with significant changes in operating expenses and cash flow.
• 2025-09-27: Balance Sheet Date — Reflects a decrease in cash and cash equivalents and an increase in inventories compared to the prior year-end.
• 2024-09-28: End of Third Quarter 2024 — Prior year comparable period, showing net earnings and lower operating expenses, providing a benchmark for the current year's performance decline.

Glossary

Brand Partner incentives

Payments or commissions made to individuals who sell USANA's products and recruit other sellers. (This is a significant operating expense for USANA, and its decrease in Q3 2025 compared to Q3 2024 ($77.684M vs $84.068M) is notable, though overall operating expenses increased due to SG&A.)

Selling, general and administrative expenses (SG&A)

Costs associated with marketing, sales, and the general administration of the business, excluding direct cost of goods sold and production. (SG&A expenses saw a substantial increase of 40.2% in Q3 2025, significantly impacting the company's profitability and contributing to the net loss.)

Redeemable noncontrolling interest

Represents the equity interest of minority shareholders in a subsidiary that has redemption features, meaning it can be redeemed or repurchased by the company. (This item affects the total equity and net income attributable to USANA's shareholders. It decreased slightly from $54.223M to $53.479M.)

Common stock repurchases

The company buying back its own shares from the open market. (USANA used $27.507 million for common stock repurchases in the first nine months of 2025, contributing to the significant net cash used in financing activities.)

Year-Over-Year Comparison

Compared to the prior year's third quarter, USANA Health Sciences Inc. experienced a significant shift from net earnings of $10.607 million to a net loss of $6.522 million, despite a 6.7% increase in net sales. This deterioration in profitability is primarily attributed to a substantial 40.2% surge in selling, general, and administrative expenses and a 24.3% rise in the cost of sales. Total assets also decreased from $748.193 million to $726.591 million, while cash reserves declined by $36.355 million, indicating a tightening financial position.

Key Financial Figures

• $0.001 — hares of the registrant's common stock, $0.001 par value. Auditor Name: KPMG LLP Au

Filing Documents

• usna-20250927.htm (10-Q) — 1102KB
• usna-20250927xex311.htm (EX-31.1) — 10KB
• usna-20250927xex312.htm (EX-31.2) — 9KB
• usna-20250927xex321.htm (EX-32.1) — 3KB
• usna-20250927xex322.htm (EX-32.2) — 4KB
• 0000896264-25-000224.txt ( ) — 5681KB
• usna-20250927.xsd (EX-101.SCH) — 31KB
• usna-20250927_cal.xml (EX-101.CAL) — 65KB
• usna-20250927_def.xml (EX-101.DEF) — 127KB
• usna-20250927_lab.xml (EX-101.LAB) — 483KB
• usna-20250927_pre.xml (EX-101.PRE) — 327KB
• usna-20250927_htm.xml (XML) — 818KB

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION Item 1

Financial Statements (unaudited)

Financial Statements (unaudited) 3 Condensed Consolidated Balance Sheets 3 Condensed Consolidated Statements of Comprehensive Income 4 Condensed Consolidated Statements of Stockholders' Equity 5 Condensed Consolidated Statements of Cash Flows 7 Notes to Condensed Consolidated Financial Statements 8 - 20 Item 2

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 21 - 31 Item 3

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 31 Item 4

Controls and Procedures

Controls and Procedures 31

OTHER INFORMATION

PART II. OTHER INFORMATION Item 1

Legal Proceedings

Legal Proceedings 33 Item 1A

Risk Factors

Risk Factors 33 Item 2 Unregistered Sales of Equity Securities and Use of Proceeds 33 Item 5 Other Information 33 Item 6 Exhibits 34

Signatures

Signatures 35 Table of Contents Cautionary Note Regarding Forward-Looking Statements and Certain Risks This report contains "forward-looking statements" within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). All statements other than statements of historical fact are "forward-looking statements" for purposes of federal and state securities laws, including any projections of earnings, revenue or other financial items; any statements of the plans, strategies and objectives of management for future operations; any statements concerning proposed new products; any statements regarding future economic conditions or performance; any statements of belief; and any statements of assumptions underlying any of the foregoing. Forward-looking statements may include, but are not limited to, statements regarding future financial results, long-term value creation goals, focus and strategy, integration of acquisitions and performance expectations regarding such acquisitions, productivity, raw material prices and related costs, supply chain, asset impairment, litigation, sustainability and governance efforts, compliance with current or proposed international laws and regulations, the impact of COVID-19 or other pandemics, or geo-political relationships, trade policies, tariffs, tensions, conflicts or wars on our operations. Forward-looking statements can be identified by words such as: "anticipate," "intend," "plan," "seek," "believe," "project," "estimate," "target," "expect," "strategy," "potential," "future," "likely," "may," "should," "could," "will" and similar references to future periods, or the negative of these terms, or other similar expressions. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on ou

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

FINANCIAL STATEMENTS

Item 1. FINANCIAL STATEMENTS USANA HEALTH SCIENCES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except par value) (unaudited) As of September 27, 2025 As of December 28, 2024 ASSETS Current assets Cash and cash equivalents $ 145,349 $ 181,768 Inventories 90,781 69,735 Prepaid expenses and other current assets 27,935 27,684 Total current assets 264,065 279,187 Property and equipment, net 96,212 94,565 Goodwill 144,288 144,168 Intangible assets, net 138,159 151,823 Deferred tax assets 24,157 19,644 Other assets 59,710 58,806 Total assets $ 726,591 $ 748,193 LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST, AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable $ 16,219 $ 11,984 Line of credit — 23,000 Other current liabilities 102,445 104,641 Total current liabilities 118,664 139,625 Deferred tax liabilities 4,467 4,073 Other long-term liabilities 21,907 18,163 Total liabilities 145,038 161,861 Redeemable noncontrolling interest 53,479 54,223 Stockholders' equity Common stock, $ 0.001 par value; Authorized -- 50,000 shares, issued and outstanding 18,272 as of September 27, 2025 and 19,064 as of December 28, 2024 18 19 Additional paid-in capital 79,850 75,816 Retained earnings 467,495 478,944 Accumulated other comprehensive income (loss) ( 19,289 ) ( 22,670 ) Total stockholders' equity attributable to USANA 528,074 532,109 Total liabilities, redeemable noncontrolling interest, and stockholders' equity $ 726,591 $ 748,193 The accompanying notes are an integral part of these statements. 3 Table of Contents USANA HEALTH SCIENCES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (in thousands, except per share data) (unaudited) Three Months Ended Nine Months Ended September 27, 2025 September 28, 2024 September 27, 2025 September 28, 2024 Net sales $ 213,670 $ 200,221 $ 699,057 $ 640,890 Cost of sales 48,815 39,257 151,444 122,659 Gross profit