What is causing the 20% revenue decline in North Asia, and what steps are being taken to improve the trend?

Korea, the largest market in North Asia, has seen slowing over the past couple of years. A recent leadership transition caused disruption, but a new general manager is in place, and momentum is building with leadership unification. New personalized products are launching in Q3, leading to optimism for a rebound. “We also have a couple of new products that are going to be launched in that market, personalized packs that are going to be unique to that market as well that's going to be launching here in the third quarter.”

How is HIA's core direct U.S. subscription business performing organically, excluding growth initiatives?

The core subscription business has faced challenges with Meta's algorithms increasing customer acquisition costs (CAC). However, recent improvements in CAC and the upcoming back-to-school season are encouraging. The business is expected to add more customers, complementing retail expansion. “We've had issues with Meta's algorithm and it's created issues for us as far as customer acquisition. And we've seen improvement in that over the last, let's say last few months, last month, let's say, we've seen improvement in those numbers and that's been encouraging.”

Given issues with Meta, what are the plans to diversify HIA's advertising efforts, e.g., TikTok or influencers?

The HIA team is actively diversifying, with TikTok being a significant mechanism for growth in the rest of this year and next. They are also adding more retailers and expanding internationally, leveraging HIA's strong brand presence built over years of advertising investment. “TikTok is going to be a big, uh, a big mechanism for them to be able to build growth and of course retail. We're adding more retailers. So that's why we're very excited about the future of HIA, where it's going.”

USNA

USANA Health Sciences (USNA) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Consumer Staples· Aug 5, 2026

Source: earnings call transcript

Executive summary

USANA Health Sciences, Inc. Q2 FY26 — Core Nutritional Strength Amidst Venture Challenges

USANA is navigating a strategic evolution towards a diversified, omni-channel health and wellness company. While the core nutritional business demonstrates stability and momentum, particularly in Mainland China, venture brands HIA and Rise Wellness faced near-term operational and market challenges, leading to a lowered full-year outlook. Management remains confident in the long-term potential of these ventures and the overall strategy, supported by a strong balance sheet and continued investment in technology and innovation.

Highlights

Mainland China showed renewed strength, with sales growth noted as a 'really bright spot'.
Core nutritional business performed in line with expectations and is gaining traction.
Ended the quarter with $169 million in cash and zero debt.
Generated $20 million in free cash flow, driven by improved working capital management.
Launch of GLOW, a new skin health supplement, generated incremental business and new consumers.

Concerns

Recorded an estimated preliminary non-cash goodwill impairment charge of $29 million related to the HIA reporting unit.
Recorded $9 million in income tax expense on a pre-tax loss of $19 million.
Lowered full-year outlook due to a more difficult and expensive direct-to-consumer digital marketing environment affecting HIA's second-half net sales.
Lower near-term net sales from Rise Wellness due to a packaging issue, impacting top line by $30M-$40M and margins by $4M-$5M.
North Asia (primarily Korea) direct business was down 20% in revenue.

Guidance & targets

Category	Target	Timeline	Confidence
Full-year 2026 Outlook	Lowered high materiality	FY26	Medium
HIA Net Sales	Lower than previously anticipated medium materiality	FY26	Medium
Rise Wellness Top Line Impact	$30M-$40M pressure medium materiality	FY26	High
Rise Wellness Margin Impact	$4M-$5M pressure medium materiality	FY26	High
Effective Tax Rate	Elevated medium materiality	H2 FY26	Medium

Segment performance

Segment	Revenue	YoY	QoQ	Margin
Mainland China Showed signs of renewed strength and momentum, driven by robust incentives and new product launches in Q1, with a tail continuing into Q2. Resiliency of brand partners and customers noted despite a soft economy. Strong leadership is executing well.	—	—	slight uptick	—
North Asia (primarily Korea) Experienced a 20% decline in direct business revenue. Leadership transition in Korea at the beginning of the year caused disruption, but new general manager is in place, and momentum is starting to build with leadership unification. New personalized products are launching in Q3.	—	-20%	—	—

Product announcements

Product	Type	Timeline
GLOW	launch	recent
Protein Pop	launch	Q3 FY26
Personalized Packs	launch	Q3 FY26

Risks & headwinds

Digital Marketing Environment for DTC Second half of FY26

More difficult and expensive

Mitigation:Diversifying advertising efforts to platforms like TikTok, expanding into new retail channels and geographies for HIA.

Rise Wellness Packaging Issue Q2 FY26, with ongoing impact on full-year outlook

Impacted full-year top line by $30M-$40M and margins by $4M-$5M.

Mitigation:Issue resolved, voluntarily pulled product, maintaining good relationships with retailers, positive outlook for future momentum and new product innovation.

Elevated Tax Rate Through FY26

Elevated, much higher than desired

Mitigation:Working on strategies to address misalignment between revenue generation and cost incurrence, expecting improvement as venture brands execute.

Soft Economy in China Ongoing

Economy is soft

Mitigation:Resiliency of brand partners and customers, strong local leadership, robust incentives, and new product launches.

What to watch in Q3 FY26

Mainland China Sales Growth

Next quarter / H2 FY26

Current Slight uptick

Target Continued momentum

Why it matters

Mainland China is the largest market, and its sustained growth is crucial for overall company performance and confidence in the core nutritional business.

We have several things that are scheduled for the back half of the year, just like we do in many of our other markets in terms of new product rollouts, incentive offerings, and other events. So pleased to see the progress that we've made so far, and we expect that to continue.

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Q&A highlights

What factors are driving the uptick in China sales, and is this growth sustainable?

The uptick is due to robust incentives, new product launches, and the resiliency of brand partners and customers. Management expects the momentum to continue, citing strong local leadership and planned initiatives for the second half of the year.

“We have several things that are scheduled for the back half of the year, just like we do in many of our other markets in terms of new product rollouts, incentive offerings, and other events. So pleased to see the progress that we've made so far, and we expect that to continue.”

asked by Anthony Levizinski · answered by Brent Neidig

2 min read 6 chapters

Detailed narrative

Strategic Transformation to Omni-Channel Health & Wellness

USANA is actively transforming from a direct seller to a diversified, omni-channel health and wellness company. This involves evolving the brand partner compensation plan, accelerating product innovation, and modernizing technology to enhance consumer interaction. The strategy aims to grow the consumer base by making products more accessible across various retail and digital channels, leveraging science-backed formulations and deep consumer loyalty.

Core Nutritional Business Stability and China's Rebound

The core nutritional business continues to demonstrate stability and momentum, performing in line with expectations. Mainland China, the largest and most established market, is showing renewed strength, driven by robust incentives, new product launches, and strong local leadership. Management expects this positive trend to continue into the second half of the year, supported by planned product rollouts and events.

HIA Venture Challenges and Strategic Diversification

HIA, the children's health and wellness brand, experienced a tougher and more expensive digital marketing environment, impacting subscriber growth. This led to a non-cash goodwill impairment charge of $29 million. However, HIA is diversifying its advertising efforts beyond Meta to platforms like TikTok and expanding into new retail channels, geographies, and product categories, with strong brand equity built over years of investment.

Rise Wellness Operational Disruption and Future Potential

Rise Wellness faced a short-term disruption due to a packaging issue that halted sales, resulting in a $30-$40 million impact on full-year top line and $4-$5 million on margins. This issue has been resolved, and the company is positive about its long-term potential, with new product innovation and expansion into over 4,000 retail doors by year-end, already exceeding last year's performance.

Product Innovation and Market Expansion

USANA continues to drive innovation, exemplified by the recent launch of GLOW, a skin health supplement that extends science leadership into cellular-level formulations. This product generated incremental business and attracted new consumers. The company is also launching personalized packs in Korea and an additional Protein Pop product in Q3, demonstrating a commitment to speed and innovation across its portfolio.

Financial Strength and Investment Capacity

The company maintains a strong balance sheet, ending the quarter with $169 million in cash and zero debt. It generated $20 million in free cash flow, attributed to improved working capital management. This financial flexibility allows USANA to continue investing in its strategic evolution, technology upgrades, and brand development, despite near-term challenges in its venture businesses.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.