USANA (USNA) Q4 2025 Earnings Call Transcript

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Date

Wednesday, Feb. 18, 2026 at 11 a.m. ET

Call participants

• Chief Executive Officer & Chairman — Kevin Guest
• Chief Financial Officer — G. Douglas Hekking
• Chief Commercial Officer — Brent L. Neidig
• Chief Operating Officer — Walter Noot
• Chief Science Officer — Kathryn Armstrong
• Vice President, Investor Relations — Andrew Masuda

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Takeaways

• Revenue outlook -- Management projects consolidated net sales growth of 4% at the midpoint for fiscal 2026, based on current guidance and strategic execution priorities.
• Brand contribution -- Sales growth in the coming year is expected to be primarily driven by Rise Wellness and HYA, with significant inventory investments supporting retail market expansions, including new launches at retailers such as Costco (NASDAQ:COST), Target (NYSE:TGT), and international markets.
• Inventory position -- Inventories rose $35 million, or 48%, to $107 million at the end of 2025, with approximately 80% of the year-over-year increase attributed to initiatives supporting growth in Rise Wellness and HYA.
• Tax rate guidance -- The expected effective income tax rate for fiscal 2026 is guided to 55%-60%, primarily due to geographic misalignment between revenue sourcing and cost locations, as well as recent recognition of certain one-time costs during the prior year.
• Operating model changes -- A cost realignment in the fourth quarter reduced headcount by approximately 10% and resulted in net annualized savings of about $10 million, largely affecting SG&A expenses.
• Margin dynamics -- Rise Wellness is anticipated to operate at approximately breakeven for 2026, with a forecast of lower gross margin contribution relative to other segments and implications for consolidated margin profile.
• Seasonality -- Management emphasized strong first-quarter sales in core nutritional products driven by the Chinese New Year, with a typical seasonal lull during the third quarter and reacceleration in the fourth quarter.
• Strategic focus -- The company outlined six explicit fiscal 2026 priorities, including transitioning from legacy direct selling to a modern omnichannel platform, advancing technology and AI adoption, in-house manufacturing, product innovation, and direct-to-consumer channel expansion.

Summary

USANA Health Sciences (NYSE:USNA) leadership described their fiscal 2026 direction as a shift toward a science-driven, omnichannel nutrition company, with heavy emphasis on expanding retail partnerships and diversifying revenue streams beyond China. The company highlighted incremental inventory investments in Rise Wellness and HYA to enable new product launches in major retailers, expecting these brands to act as primary growth contributors. Executives directly referenced a continued high effective tax rate driven by unfavorable geographic alignment of revenue and costs, and signaled ongoing margin pressures from scaling lower-margin businesses. Technology modernization and enhanced AI utilization were cited as critical for future competitiveness, with no related capital deployment yet included in guidance.

• CEO Guest explicitly said, "our consolidated net sales outlook for fiscal 2026 is for growth of 4% at the midpoint, reflecting confidence in our strategy and our ability to execute."
• Inventory increases at Rise Wellness were attributed in the call to supporting the Protein Pop launch at Costco (NASDAQ:COST) and growing distribution for HYA at Target (NYSE:TGT), in Canada, and the UK.
• Management stated that approximately 80% of the annual inventory increase backed "significant growth opportunities" in Rise Wellness and HYA.
• Hekking confirmed, "Our effective tax rate guidance for fiscal 2026 is expected to range between 55%-60%," referencing structural challenges in tax alignment as a drag on net earnings.
• COO Noot said, "most of that inventory buildup is already committed revenue, which we have had through these retailers," specifically citing retail rollouts and upcoming new SKU launches.
• The call disclosed, "the total was about 10% of the workforce that was impacted" from the recent cost realignment, with net annualized SG&A savings expected above $10 million.
• Executives pointed to the strategic importance of evolving technology spend, including accelerating adoption of AI and leveraging third-party platforms for enhanced customer engagement and operational efficiency.

Industry glossary

• Omnichannel: Integrated strategy combining direct selling, retail, and online channels to deliver products to customers through multiple points of access.
• Rise Wellness: USANA Health Sciences' venture focused on protein-based meal replacement products including Protein Pop and Rise Bars, targeting retail expansion and growth.
• HYA: A USANA Health Sciences brand specializing in wellness-focused products, currently scaling distribution in the US and international retail markets.
• SG&A: Selling, General, and Administrative expenses, a major category of operating costs not directly attributable to product manufacturing.
• Effective tax rate: The average rate at which a company’s pre-tax profits are taxed, influenced by geographic distribution of revenue and deductible costs.
• Protein Pop: A protein-based snack product under the Rise Wellness brand, featuring recent launches in major US retailers such as Costco (NASDAQ:COST) and Target (NYSE:TGT).

Full Conference Call Transcript

Kevin Guest; our Chief Financial Officer, G. Douglas Hekking; Chief Commercial Officer, Brent L. Neidig; our Chief Operating Officer, Walter Noot; as well as other executives. Yesterday, after the market closed, we announced our fourth quarter and fiscal year 2025 results and posted our management commentary document on the company’s website. We will now hear brief remarks from Kevin and Doug before opening the call for questions.

Kevin Guest: Thank you, Andrew, and good morning, everyone. As we sharpen our strategic focus and position the company for renewed and sustainable growth, I am honored to return as Chief Executive Officer while continuing to serve as Chairman of the Board. I appreciate the Board’s confidence in my leadership and its commitment to ensuring continued stability and disciplined execution during this next phase of growth. As I reassume the role of CEO, I do so with a deep understanding of USANA Health Sciences, Inc.’s strengths and a clear view of the opportunities ahead, with the fruition of our strategic plans that we will execute.

Having spent more than three decades at this company, including eight years as CEO, I have seen firsthand the power of our science-based products, the dedication of our employees, and the resilience of our sales force across the world. These elements form the core of USANA Health Sciences, Inc.’s competitive advantage and establish a solid foundation for the long-term value creation that we intend to deliver. During my previous tenure, USANA Health Sciences, Inc. expanded its international footprint, strengthened operational capabilities, and achieved record financial results.

While this external environment continues to evolve, our strategic pillars remain consistent: scientific excellence at the center of product innovation; operational discipline and cost efficiency; a high-performing, aligned global sales force; and a culture rooted in integrity, resilience, and execution. Over the past several weeks, I have engaged in discussions with our leadership team as well as our brand partners. These conversations reinforce that USANA Health Sciences, Inc. remains well positioned, with strong underlying fundamentals and meaningful opportunities for growth across multiple markets and channels. However, the clear message is that we must move with greater speed, focus, relevancy, and precision. As we look ahead, our priorities are straightforward.

First, strengthen USANA Health Sciences, Inc.’s global brand positioning by delivering science-backed nutrition through an omnichannel platform and evolving the company’s identity from a legacy direct selling business to a modern, science-driven nutritional products company. Second, enhance the customer and brand partner experience to drive retention, loyalty, and long-term brand equity. Third, reinvigorate global sales momentum through enhanced field support, market-specific strategies, and strengthened leadership engagement. Fourth, advance our product innovation pipeline by leveraging our world-class research and science teams to deliver differentiated offerings. Fifth, improve operational efficiencies across the organization through disciplined cost management and streamlined processes. And sixth, execute with accountability at every level of the business, ensuring our actions translate into measurable, sustainable results.

We are committed to delivering shareholder value by focusing on these top priorities. Importantly, our consolidated net sales outlook for fiscal 2026 is for growth of 4% at the midpoint, reflecting confidence in our strategy and our ability to execute. We will also remain focused on long-term strategic execution, not short-term optimization, as we strengthen the company for its next chapter of growth. Our fiscal 2026 operating strategy entails the following: First, expand our omnichannel reach by leveraging USANA Health Sciences, Inc.’s strong nutrition foundation and diversifying distribution channels to access a larger global base of health-conscious consumers and strengthen brand relevance.

Second, advance product innovation through refreshed branding, alignment with modern consumer usage behaviors, and a robust pipeline for upgraded and new products launching globally in 2026. Third, accelerate technology modernization by adopting best-in-practice third-party platforms to improve customer experience, enable scalable growth, and drive long-term IT and operational benefits. Fourth, drive highest growth through continued direct-to-consumer expansion, new channel and product launches, and entry into additional markets. We are also leveraging USANA Health Sciences, Inc.’s capabilities to improve margins, including transitioning to in-house manufacturing to increase speed, efficiency, and reduce costs.

Fifth, scale Rise Wellness performance by building on a strong recent momentum, expanding the Rise Bar footprint, and accelerating Protein Pops distribution, particularly within major retailers and within club retail channels. USANA Health Sciences, Inc.’s mission, culture, and people have always been at the heart of our success. As we embark on this transition, I am confident in our direction and energized by the opportunities ahead. Together, with clarity, discipline, and a shared vision, we will position USANA Health Sciences, Inc. to deliver stronger performance and create enduring value for all stakeholders. With that, I will now ask Doug to provide additional color on our fiscal 2026 outlook.

G. Douglas Hekking: Thanks, Kevin, good morning, everyone. I would like to provide some additional color on our fiscal 2026 outlook and the key financial considerations shaping our guidance for the upcoming year. As Kevin mentioned, we are expecting net sales growth at the midpoint of about 4%. The sales growth is being driven by our venture companies Rise Wellness and HYA. Note that our outlook reflects a 52-week fiscal year in 2026, which includes one less week of operations when compared to fiscal 2025. As Kevin indicated in his remarks, we intend to accelerate our technology roadmap to fundamentally improve how customers experience our brand, as well as allow for future benefits in both speed and cost efficiency.

This incremental investment has not been factored into our fiscal 2026 outlook at this time. We will provide updated information once the scope, timing, and capital requirements of this project are finalized. Turning to inventory, inventories increased $35 million, or 48%, to $107 million at the end of fiscal 2025. Approximately 80% of the year-over-year increase was driven by initiatives to support significant growth opportunities at Rise Wellness and HYA. Let me break this down further. For Rise Wellness, the increase reflects the inventory necessary to support the launch and growth of Protein Pop, particularly with retailers like Costco.

For HYA, the inventory increase largely reflects channel expansion, including distribution into Target, international expansion into Canada and the United Kingdom, and building raw materials inventory in connection with USANA Health Sciences, Inc. to begin manufacturing HYA products in-house. Given the growth trajectories of both Rise Wellness and HYA, we anticipate elevated inventory levels throughout fiscal 2026. Although we will continue to focus on working capital efficiency, our intention is to continue supporting product demand as well as the expansion of distribution channels and geographies for these important brands. Expect Rise Wellness to operate at approximately breakeven in fiscal 2026, while we position the company for future growth, thoughtfully scale the business, and strengthen the long-term revenue and profitability profile.

Let me now touch on our expected effective income tax rate. Our effective tax rate guidance for fiscal 2026 is expected to range between 55%–60%. The primary challenge we continue to face is a geographic misalignment between revenue generated and costs incurred. This dynamic has been particularly evident in our effective tax rate during 2025 and particularly felt with the recognition of certain one-time costs during the period. Execution of our growth strategy, as well as targeted cost efficiencies, are expected to contribute to a lower effective tax rate in future years. With that, I will now turn the call back to Kevin before we open the line for questions.

Kevin Guest: Thanks, Doug. Let me close by saying this. We believe USANA Health Sciences, Inc. is in a strong position, and the path ahead is both clear and compelling. Our core business has faced year-over-year sales declines, but we are seeing encouraging signs of stabilization as we take the right steps to return the business to growth. HYA and Rise Wellness broaden our market and bring new energy to the portfolio, while our strategic investments are strengthening the foundation that will support our next phase of expansion. And with a solid financial position, including a strong cash balance and an efficient model that generates healthy cash flow, we have the flexibility to invest thoughtfully, execute with confidence, and build long-term value.

Put simply, we have the people, the products, and the financial strength to win. And we are committed to doing exactly that. This, we believe, will deliver sustainable value creation for our shareholders. I will now turn the call back to the operator for Q&A.

Operator: Thank you. We will now be conducting a question and answer session. You may press 2 if you would like to withdraw your question from the queue. It may be necessary to pick up your handset before pressing the star keys. Thank you. The first question is from the line of Anthony Chester Lebiedzinski with Sidoti & Company. Please proceed with your questions.

Anthony Chester Lebiedzinski: Thank you, and good morning, everyone, and thanks for taking the questions. Certainly nice to see the better-than-expected results for the fourth quarter as well as the higher-than-expected EPS guidance for 2026 as well. So as we look at the guidance for both revenue and EPS, obviously, you provided revenue guidance in January, but nevertheless, they are pretty wide ranges. Can you just walk us through the different puts and takes as to what you would need to do to get to the top end of the guidance? Are you perhaps assuming a notable improvement in the macro environment? Maybe just kind of walk us through the different puts and takes for revenue and EPS guidance?

G. Douglas Hekking: Yeah. So I think it is easier if we break it down by some of the brands we talked about, Anthony. And so with Rise Wellness, they are really on an emerging path. Some of these orders we have in our back pocket, and some are banking on having orders in the back half of the year. And so as we look at Rise, that is kind of the range that we provided specifically on the sales there. HYA is just very, very newly into Canada and will soon be in the UK, and then launching Target here in April. So there is a lot of activity on the horizon there to go back and bridge that.

I think in short, when we look at the revenue equation and kind of the margin profile, I think achieving the top line is going to be the main thing that will help us go back and deliver the top end of the EPS.

Kevin Guest: Yeah. And, hey, Walt. We have Walter here. Walter, will you just give some color to what Doug said? Walter is on the management team that is in the trenches day to day on some of these things, and I thought I might bring you some added color to hear from Walter on this subject.

Walter Noot: Yeah. It is what Doug was saying. We have booked a lot of business on the retail side, but when you look at the inventory buildup, most of that inventory buildup is already committed revenue, which we have had through these retailers. We have got Target. We are in all the Target stores in the US. We are in all the Costco stores now as of last week. And then we have got other major US retailers that we are talking to right now.

And so that is really, as we move forward, you are adding more flavors to the Protein Pop line that is going to go into Target, and then, of course, all the new retailers that are coming in. So we just see a huge upside, a huge potential for us, but again, that is why we put such a big range on the guidance. And with HYA, we are super excited. What we have seen so far in Canada has been really good. We just barely launched that. Probably in the next couple of weeks, next three weeks, you are going to see the UK go live.

In April, you see Target go live on the retail side, and that is a stand-up that goes into every store.

G. Douglas Hekking: So we are pretty bullish on both these businesses and the growth of these businesses. And a lot of it is just because there is such a range. I mean, the reason the range is there is because you do not know exactly what you are going to do, but HYA has been such a great brand. The company has spent so much money on marketing and creating so much awareness in the US. We think the retail channel is going to be really good for us. Hey.

Kevin Guest: And one of the things that I am sure of, which you all are aware, is that the omnichannel strategy is also a diversification of revenue strategy, meaning the more of these succeed and we are generating money so it is not disproportionate to China. And more locally based, that will help our effective tax rate where we are generating income, which is part of our also long-term strategy, just to diversify where revenue is being generated because, as you could see from what hit us this last quarter, it is pretty significant. And so that is a very real opportunity for us.

G. Douglas Hekking: Yeah. And maybe, Anthony, to kind of go full circle on this, we are still very bullish on our core nutritional business. Yes. And there are so many opportunities. I think Kevin’s initiative to go back and look at technology and advance some of those roadmaps and really support that team. But I think we are at a time where people want health and wellness products. And we make as good products as you can find out there. And so we really see these things as enablers moving forward.

Anthony Chester Lebiedzinski: Gotcha. Yeah. Thanks for all that color. So as we look to update our here, is there anything that you guys can say as far—I mean, obviously, you will have one less week of sales in the fourth quarter, so I realize that. But other than that, I mean, as we look at the business, quarter one to two, three, and four, I mean, is there anything to keep in mind as far as, you know, will revenue ramp up as the year progresses? Or do we think that it should be more kind of even throughout the year? Anything to point out as far as the seasonality of the business?

G. Douglas Hekking: Yeah. So seasonality, particularly in our core nutrition business, has really, as we evolved and grew in China, has revolved around that Lunar New Year. And it is fairly impactful. And so that market, as well as many of our markets in the Asia Pacific region, really set up a pretty heavy promotional cadence surrounding that to support the business as we go through there.

G. Douglas Hekking: And so I would say the activity that we see quarter to quarter is not perfectly equal. And so you will see some ebbs and flows, which we can just give color as the year progresses.

Kevin Guest: Yes. And we have Brent Neidig here at the table who is our Chief Commercial Officer. He also could add some color to what we are seeing from the revenue base as it relates specifically to our core business.

Brent L. Neidig: Doug just highlighted there is a certain element of seasonality in our core nutritional business, especially with our predominance within the Chinese community. We are currently in Chinese New Year right now, and typically leading up to that New Year in many of our Chinese markets, specifically in Mainland China, there is a heavier emphasis on promotional activity as many of our brand partners want to stock up on product to provide for gifts and other selling opportunities throughout the Chinese New Year.

That is why we typically see a stronger Q1, and then that momentum starts to escalate into Q2 as well as we have different conventions and events that kick off both in our first quarter and our second quarter. As we hit Q3, summer season, and a lot of our brand partners typically take time off where they go on vacation, they spend time with family as their kids are out of school. So we typically see a lull there. That is what we are expecting, and that is what I am continuing to expect. And then, Q4, people start to get back into action and prepare for the following year. So that is typically the model that I see.

Anthony Chester Lebiedzinski: Got you. And then as it relates to HYA and then Rise, any added color there that you can share?

Walter Noot: Well, this is Walter. I do not know how much color I can share. When I look at that business, of course, there is a growing trend of protein, especially Protein Pop, is a there is a really strong trend there. And we basically introduced, and late last year, we really introduced Protein Pop retail. So it is a very new brand.

Walter Noot: And it is building, and as that brand continues to build, I think we will continue to see it grow in the retail channel. I do not know exactly what the numbers are going to look like, but we have put some guidance in place and we are feeling really good about where we are going.

Anthony Chester Lebiedzinski: Gotcha. Alright. And it sounds like you also feel good about HYA as well. So, you know, as far as the cost realignment that you guys did in the fourth quarter, can you just help us out as far as how much that lowered your headcount? And then I know you are using some of those cost savings for other things as well. But maybe you could also touch on how to think about gross margins here for 2026 as well as your SG&A? Any sort of added color there would be certainly appreciated.

Kevin Guest: Yeah. Anthony, so the total was about 10% of the workforce that was impacted.

G. Douglas Hekking: In that cost realignment, overall, on a net basis, after some of the money has been repurposed, we are probably about $10 million or so in savings, maybe $10 million plus in that range. I think a lot of the things these are being repurposed to are very important to the business and executing strategy and stabilizing. But those primarily reside in SG&A. I would not expect a whole lot in gross margin or cost of sales. The primary issue you are going to see on a few of our key line items is the mix between the different businesses. Right? And so as you see Rise grow, and right now, we talked about them being breakeven this year.

They are going to be at a much thinner gross margin, and so that will kind of give the impression. But we will break that out accordingly so you have some optics there as we move forward into the year as well.

Anthony Chester Lebiedzinski: Gotcha. Okay. And then you touched on some of the—you mentioned technology initiatives that you are working on. I know you are not ready to share specifics, so it sounds like it is still something that you are working on. But can you give us a sneak peek as to what you are thinking as far as how impactful that could be as far as some of the changes that you are looking to do on the technology side?

Kevin Guest: Well, this is Kevin. From my perspective, the notion of staying relevant in today’s world is so important for us, and how people interact with our brand and/or brands is very critical and will determine the future growth of our company, I believe. And so I want to focus on the ability to be quick and be nimble, and our traditional approach has been where we build things in-house, and that has served us very well. Strategically, we are going to look at how can we leverage outside resources a more robust way, both in the U.S. as well as internationally.

But I think speed to market and speed to change and the relevance of how people interact will be a big part of the focus of the strategy behind our technology spend, which will allow people to interact in a much more robust way with our brand and our brands across the board. The other thing we are going to do, which we have not really spoken much about, is we are going to leverage the knowledge and expertise. For instance, HYA, they have a great knowledge and expertise in brand awareness.

And so how can we utilize some of their expertise and resources to help us leverage the USANA Health Sciences, Inc. brand and the USANA Health Sciences, Inc. brand awareness? And so, as we move forward, that is very kind of high-level fluff and not real detail, but I just am convinced that if we could leverage especially AI in a way that we see many, many really high-end brands interact and utilize AI, which we are not to its fullest capacity right now and it is changing literally every day. And we have to play in that space and be as good at technology and utilizing AI as we are in nutrition. That is the goal.

I think that is the future of a growth company in our space. Of the things I am most excited about is if you look at the—I have seen numbers, a global CAGR of about anywhere from 5% to 8% growth in the health and wellness space. Well, that is where we play. We should be on those curves as a company, and technology plays a key role in that growth. So that is where my head is at.

Anthony Chester Lebiedzinski: That is very helpful color. Well, thank you very much and best of luck.

G. Douglas Hekking: Thanks, Anthony. Thank you.

Operator: The next question comes from the line of Ivan Philip Feinseth with Tigress Financial. Please proceed with your questions.

Ivan Philip Feinseth: Hi. Thanks for taking my question, and congratulations on the ongoing success of HYA and the new Rise Bars, which I sampled at the ICR conference and were really delicious and I have purchased them. I think that is really great. Going to the technology question for Kevin, what are your focus and thoughts on integrating technology into the consumer health management journey?

Ivan Philip Feinseth: Recently, another company launched a product that can give you a nutritional absorption reading through your finger. And when I was at the ICR conference with Doug and Andrew and Patrick, we were talking about the monitor from Kohler, and you know, what gets measured gets managed, and the more technology that a consumer can use to give insight to their health and nutrition journey, the more they can see, you know, where they need products or creating product opportunities for your company.

Kevin Guest: So, Ivan, thanks for the question. That is a great question. I am highly interested in the utilization of technology and the ability to personalize how a person receives their nutrition and not have it based on a one-size-fits-all approach, and moving further into the technology space. I have our Chief Science Officer here with us, Kathryn Armstrong. Kathryn, do you want to jump in on this real quick with this conversation with Ivan?

Kathryn Armstrong: Hi, Ivan. It is good to talk to you again.

Kathryn Armstrong: So I think for us, you know, we have obviously a focus on integrity and ensuring that everything we provide to our customers, through all of our brands, meets scientific rigor. And I know all of us have watched with eager anticipation over the past decade and more as these types of devices have been launched and then really struggled to link to clinical efficacy. And it is a lot about behavioral science versus physiological science, as you know. So are we actively looking at how to help individuals personalize and monitor their health status? Of course.

We will continue to do so, and we are partnering to better understand how to advance that in a way that has scientific integrity and ensures our customers are able to apply their spend to true physiological benefits.

Ivan Philip Feinseth: Alright. Thank you. Thanks, Ivan.

Operator: Thank you. Thank you. At this time, this will conclude our question and answer session. I will turn the floor back to Andrew Masuda for closing comments.

Andrew Masuda: Thanks for your questions and participation on today’s conference call. If you have any remaining questions, please feel free to contact Investor Relations at (801) 954-7210.

Operator: Ladies and gentlemen, this does conclude today’s conference. You may disconnect your lines at this time, and have a wonderful day.

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