Why Usana Health Sciences Stock Plummeted This Week
Key Points
Usana's Q2 earnings came in way below expectations, and sales were also lower than expected.
Usana now expects to record a loss for the full-year period.
The company also lowered its full-year sales forecast.
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Usana Health Sciences (NYSE: USNA) stock saw a huge valuation contraction this week in response to disappointing second-quarter results. The company's share price declined 30% across the stretch. Meanwhile, the S&P 500 rose 3.6%, and the Nasdaq Composite gained 5.2%.
Usana published its second quarter results on Aug. 4, and both sales and earnings for the period came in significantly worse than the average analyst estimates. In addition to the weak Q2 print, the company also issued new forward guidance that disappointed the market.
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Usana's Q2 results suggest the business is struggling
In the second quarter, Usana recorded non-GAAP (adjusted) earnings of $0.07 per share on sales of roughly $223 million. The company's adjusted profit per share came in $0.50 below the level called for by the average analyst estimate, and revenue for the period was roughly $12 million lower than the average forecast. In addition to Q2 earnings that came in far below Wall Street's forecast and a meaningful sales miss, the company's Q2 report also arrived with disappointing forward guidance.
What's next for Usana?
With its Q2 report, Usana announced that it would be taking a $29 million goodwill impairment charge on the value of its Hiya business. As a result, the company now expects to record a loss of roughly $11 million this year -- down from previous guidance for a profit between $20 million and $27 million. The company also lowered its full-year sales target.
While the company's core nutrition segment has shown some signs of stabilization, that was offset by weaker results for its Hiya and Rise segments. As a result, the company lowered its full-year sales guidance from between $925 million and $1 billion to $910 million. With earnings coming in far weaker than expected in the second quarter and forward guidance suggesting that headwinds will persist in the near term, Usana stock could remain under pressure until the company can demonstrate meaningful signs that performance is rebounding.
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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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