NU SKIN ENTERPRISES, INC. (NUS)

CIK: 0001021561. SIC: 5122 Wholesale-Drugs, Proprietaries & Druggists' Sundries. Latest 10-K as of: 2026-02-13.

SIC breadcrumb: Wholesale Trade > Wholesale Trade - Nondurable Goods > SIC 5122 Wholesale-Drugs, Proprietaries & Druggists' Sundries

SEC company page: https://www.sec.gov/edgar/browse/?CIK=1021561. Latest filing source: 0001140361-26-005130.

Selected Fundamentals

Financials

Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-02-13. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001021561.json. Derived margins, ratios, and free cash flow are computed from the extracted annual SEC facts.

Flow metrics use full-year FY periods from 10-K/10-K/A filings; balance-sheet metrics use FY-end instants. Free cash flow = operating cash flow - capital expenditures. Missing metrics are omitted rather than fabricated.

Ratios

ROE and ROA use period-end equity/assets. Liabilities / equity uses total liabilities divided by stockholders' equity. Current ratio uses current assets divided by current liabilities when both are reported.

Financial Charts

Quarterly

Quarterly standardized facts from SEC companyfacts as of latest extracted filing date 2026-05-08. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001021561.json.

Flow metrics use discrete quarter-length periods from 10-Q/10-Q/A filings. Q4 revenue and net income are derived only when annual FY and nine-month YTD facts exist for the same fiscal year; derived Q4 values are labeled. EPS Q4 is not derived.

Quarterly Charts

Macro Cross-References

• CPIAUCSL - Consumer Price Index for All Urban Consumers: All Items in U.S. City Average
• UNRATE - Unemployment Rate
• FEDFUNDS - Federal Funds Effective Rate
• CES0500000003 - Average Hourly Earnings of All Employees, Total Private
• DFEDTARU - Federal Funds Target Range - Upper Limit
• DFEDTARL - Federal Funds Target Range - Lower Limit
• DGS3MO - Market Yield on U.S. Treasury Securities at 3-Month Constant Maturity
• DGS2 - Market Yield on U.S. Treasury Securities at 2-Year Constant Maturity
• DGS10 - Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity
• DGS30 - Market Yield on U.S. Treasury Securities at 30-Year Constant Maturity
• T10Y2Y - 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity
• CPILFESL - Consumer Price Index for All Urban Consumers: All Items Less Food and Energy
• CPIUFDSL - Consumer Price Index for All Urban Consumers: Food
• CPIENGSL - Consumer Price Index for All Urban Consumers: Energy
• CUSR0000SAH1 - Consumer Price Index for All Urban Consumers: Shelter
• PCEPI - Personal Consumption Expenditures: Chain-type Price Index
• PCEPILFE - Personal Consumption Expenditures Excluding Food and Energy: Chain-type Price Index
• PPIACO - Producer Price Index by Commodity: All Commodities
• T10YIE - 10-Year Breakeven Inflation Rate
• U6RATE - Total Unemployed, Plus All Marginally Attached Workers Plus Total Employed Part Time for Economic Reasons
• PAYEMS - All Employees, Total Nonfarm
• CIVPART - Labor Force Participation Rate
• EMRATIO - Employment-Population Ratio
• UNEMPLOY - Unemployed
• CE16OV - Employment Level
• ICSA - Initial Claims
• JTSJOL - Job Openings: Total Nonfarm
• JTSQUR - Quits: Total Nonfarm
• GDPC1 - Real Gross Domestic Product
• A191RL1Q225SBEA - Real Gross Domestic Product: Percent Change from Preceding Period
• INDPRO - Industrial Production: Total Index
• TCU - Capacity Utilization: Total Index
• HOUST - New Privately-Owned Housing Units Started: Total Units
• PERMIT - New Privately-Owned Housing Units Authorized in Permit-Issuing Places: Total Units
• RSAFS - Advance Retail Sales: Retail Trade
• PCE - Personal Consumption Expenditures
• DSPIC96 - Real Disposable Personal Income
• PSAVERT - Personal Saving Rate
• M2SL - M2
• BOPGSTB - U.S. International Trade in Goods and Services: Balance
• MSPUS - Median Sales Price of Houses Sold for the United States
• HSN1F - New One Family Houses Sold: United States
• RHORUSQ156N - Homeownership Rate in the United States
• TTLCONS - Total Construction Spending: Total Construction in the United States
• RRVRUSQ156N - Rental Vacancy Rate in the United States
• TOTALSL - Total Consumer Credit Owned and Securitized
• REVOLSL - Revolving Consumer Credit Owned and Securitized
• DRCCLACBS - Delinquency Rate on Credit Card Loans, All Commercial Banks
• GDP - Gross Domestic Product
• GPDI - Gross Private Domestic Investment
• GCE - Government Consumption Expenditures and Gross Investment
• PCEC - Personal Consumption Expenditures
• NETEXP - Net Exports of Goods and Services
• GFDEBTN - Federal Debt: Total Public Debt
• GFDEGDQ188S - Federal Debt: Total Public Debt as Percent of Gross Domestic Product
• FYFSD - Federal Surplus or Deficit
• FGRECPT - Federal Government Current Receipts
• FGEXPND - Federal Government: Current Expenditures
• MANEMP - All Employees, Manufacturing
• USCONS - All Employees, Construction
• USTRADE - All Employees, Retail Trade
• USFIRE - All Employees, Financial Activities
• USGOVT - All Employees, Government
• AWHAETP - Average Weekly Hours of All Employees, Total Private
• DGORDER - Manufacturers' New Orders: Durable Goods
• NEWORDER - Manufacturers' New Orders: Nondefense Capital Goods Excluding Aircraft
• BUSINV - Total Business Inventories
• EXPGS - Exports of Goods and Services
• IMPGS - Imports of Goods and Services
• IR - Import Price Index (End Use): All Commodities
• PPIFIS - Producer Price Index by Commodity: Final Demand

Latest quarter (10-Q)

Latest 10-Q source: 0001140361-26-019630.

Extracted structurally from real Item 2 body heading to real Item 3/4 boundary. Confidence: high. Filing date: 2026-05-08. Report date: 2026-03-31.

ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Quarterly Report on Form 10-Q (this “Quarterly Report”) contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended,
that represent our current expectations and beliefs. All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws and include, but are not limited to, statements of
management’s expectations regarding our performance, growth, initiatives, strategies, products, ingredients, product introductions and offerings, product portfolio optimization, restructuring and exit activities, acquisitions, the integration and
performance of acquired companies, divestitures, opportunities and risks; statements of management’s expectations, plans and beliefs regarding global economic conditions and our markets (including India), sales force, sales compensation plan and
customer base; statements regarding government policies and regulations relating to our industry, including government policies and regulations in or related to the United States and Mainland China; statements regarding tariffs and trade policies;
statements regarding the outcome of litigation, audits, investigations, and other legal or regulatory matters; statements of projections and expectations regarding future sales, expenses, operating results, taxes, duties, capital expenditures,
sources and uses of cash, foreign-currency fluctuations or devaluations, repatriation of undistributed earnings, and other financial items; statements regarding the payment of future dividends and stock repurchases; accounting estimates and
assumptions; statements of belief; and statements of assumptions underlying any of the foregoing. In some cases, you can identify these statements by forward-looking words such as “believe,” “expect,” “enable,” “project,” “anticipate,” “determine,”
“estimate,” “intend,” “plan,” “goal,” “objective,” “targets,” “become,” “likely,” “will,” “would,” “could,” “may,” “might,” the negative of these words and other similar words. We undertake no obligation to publicly update or revise any
forward-looking statement, whether as a result of new information, future events or otherwise, except as required by law. We caution and advise readers that these statements are based on assumptions that may not be realized and involve important
risks and uncertainties that could cause actual results to differ materially from the expectations and beliefs contained herein. For a summary of these risks, see the risk factors included in our Annual Report on Form 10-K for the 2025 fiscal year
and in any of our subsequent Securities and Exchange Commission filings, including this Quarterly Report.

The following Management’s Discussion and Analysis should be read in conjunction with our consolidated financial statements and related notes and Management’s Discussion and Analysis included in our Annual Report on
Form 10-K for the 2025 fiscal year, and our other reports filed with the Securities and Exchange Commission through the date of this Quarterly Report.

Overview

Revenue for the three-month period ended March 31, 2026 decreased 12.0% to $320.6 million, compared to $364.5 million in the prior-year period. Our revenue in the first quarter of 2026 was positively impacted by 1.1%
from foreign-currency fluctuations. Our Customers, Paid Affiliates and Sales Leaders declined 14%, 8% and 13%, respectively, on a year-over-year basis.

The declines for the three-month period ended March 31, 2026 were largely driven by the continued macroeconomic challenges we have been facing in our markets, which have negatively impacted consumer spending and customer acquisition. In
addition, while we continue to make progress on our long-term vision, we have experienced headwinds from the transformation process. Our priorities for 2026 focus on business model optimization, driven by the continued rollout of enhancements to
our sales performance plan, the continued launch of our Prysm iO intelligent wellness platform and business expansion into India. In the first quarter of 2026, we predominately completed the Sales Leader
previews of Prysm iO. We remain focused on the associated Sales Leader activation to enable a successful launch.

Earnings per share for the first quarter of 2026 decreased to $0.04, compared to $2.14 in the prior-year period. Our first quarter of 2026 earnings
per share was negatively impacted by the decline in revenue and $5.9 million of charges associated with our decision to wind down our separate BeautyBio business. Our 2025 earnings per share benefited from the January 2025 sale of our Mavely
business, which generated a pre-tax gain of approximately $176.2 million, partially offset by the associated taxes, an intangible asset group impairment of $25.1 million in our Rhyz Other segment and a non-cash loss on equity investment of
$28.1 million.

18

Table of Contents

Segment Results

We report our business in nine segments to reflect our current management approach. These segments consist of our seven geographic Nu Skin segments—Americas, Mainland China, Southeast Asia/Pacific, Japan, Europe &
Africa, South Korea and Hong Kong/Taiwan—and our two Rhyz segments—Manufacturing and Rhyz Other. The Nu Skin Other category includes miscellaneous corporate revenue and related adjustments.

The following table sets forth revenue for the three-month periods ended March 31, 2026 and 2025 for each of our reportable segments (U.S. dollars in thousands):

Three Months Ended

Constant-

March 31,

Currency

2026

2025

Change

Change(1)

Nu Skin

Americas

$

57,818

$

69,058

(16.3

)%

(12.6

)%

Southeast Asia/Pacific

45,474

52,172

(12.8

)%

(16.6

)%

Mainland China

45,148

47,775

(5.5

)%

(10.0

)%

Japan

39,739

42,765

(7.1

)%

(4.3

)%

Europe & Africa

31,218

33,021

(5.5

)%

(14.8

)%

Hong Kong/Taiwan

27,457

28,447

(3.5

)%

(5.9

)%

South Korea

25,329

32,515

(22.1

)%

(21.4

)%

Nu Skin Other

(234

)

529

(144.2

)%

(144.4

)%

Total Nu Skin

271,949

306,282

(11.2

)%

(12.5

)%

Rhyz

Manufacturing

44,925

55,290

(18.7

)%

(18.7

)%

Rhyz Other

3,734

2,918

28.0

%

28.0

%

Total Rhyz

48,659

58,208

(16.4

)%

(16.4

)%

Total

$

320,608

$

364,490

(12.0

)%

(13.1

)%

(1)

Constant-currency revenue change is a non-GAAP financial measure. See “Non-GAAP Financial Measures,” below.

The tables below set forth summarized financial information for each of our reportable segments for the three-month periods ended March 31, 2026 and 2025 (U.S. dollars in thousands). Segment contribution excludes
certain intercompany charges, specifically royalties, license fees, transfer pricing and other miscellaneous items. We use segment contribution to measure the portion of profitability that the segment managers have the ability to control for their
respective segments. For additional information regarding our segments and the calculation of segment contribution, see Note 11 to the consolidated financial statements contained in this report.

Three Months Ended March 31, 2026

Nu Skin

Rhyz

Southeast Asia/

Mainland

Europe &

Hong Kong/

South

Rhyz

Total

Americas

Pacific

China

Japan

Africa

Taiwan

Korea

Manufacturing

Other

Segments

Revenue

$

57,818

$

45,474

$

45,148

$

39,739

$

31,218

$

27,457

$

25,329

$

44,925

$

3,734

$

320,842

Cost of sales

14,226

11,184

8,005

8,583

8,007

4,320

5,486

38,889

4,354

103,054

Other segment items

32,591

24,987

27,320

19,792

19,460

14,489

12,560

6,118

7,088

164,405

Segment contribution

$

11,001

$

9,303

$

9,823

$

11,364

$

3,751

$

8,648

$

7,283

$

(82

)

$

(7,708

)

$

53,383

Segment contribution as a percentage of revenue

19.0

%

20.5

%

21.8

%

28.6

%

12.0

%

31.5

%

28.8

%

(0.2

)%

(206.4

)%

16.6

%

Three Months Ended March 31, 2025

Nu Skin

Rhyz

Southeast Asia/

Mainland

Europe &

Hong Kong/

South

Rhyz

Total

Americas

Pacific

China

Japan

Africa

Taiwan

Korea

Manufacturing

Other

Segments

Revenue

$

69,058

$

52,172

$

47,775

$

42,765

$

33,021

$

28,447

$

32,515

$

55,290

$

2,918

$

363,961

Cost of sales

17,766

12,999

8,988

8,755

8,374

5,052

6,441

44,975

1,289

114,639

Other segment items

35,545

27,023

28,235

22,156

19,985

13,705

15,321

8,536

4,009

174,515

Segment contribution

$

15,747

$

12,150

$

10,552

$

11,854

$

4,662

$

9,690

$

10,753

$

1,779

$

(2,380

)

$

74,807

Segment contribution as a percentage of revenue

22.8

%

23.3

%

22.1

%

27.7

%

14.1

%

34.1

%

33.1

%

3.2

%

(81.6

)%

20.6

%

19

Table of Contents

The following table provides information concerning the number of Customers, Paid Affiliates and Sales Leaders in our core Nu Skin business for the three-month periods ended March 31, 2026 and 2025.

●

“Customers” are persons who have purchased directly from the Company during the three months ended as of the date indicated. Our Customer numbers include members of our sales force who made such a purchase, including Paid Affiliates and
those who qualify as Sales Leaders, but they do not include consumers who purchase directly from members of our sales force.

●

“Paid Affiliates” are any Brand Affiliates, as well as members of our sales force in Mainland China, who earned sales compensation during the three-month period. In all of our markets besides Mainland China, we refer to members of our
independent sales force as “Brand Affiliates” because their primary role is to promote our brand and products through their personal social networks.

●

“Sales Leaders” are the three-month average of our monthly Brand Affiliates, as well as sales employees and independent marketers in Mainland China, who achieved certain qualification requirements as of the end of each month of the
quarter.

Three Months Ended

March 31,

2026

2025

Change

Customers

Americas

186,448

227,514

(18

)%

Southeast Asia/Pacific

67,461

74,584

(10

)%

Mainland China

104,721

122,474

(14

)%

Japan

102,392

107,742

(5

)%

Europe & Africa

115,343

130,154

(11

)%

Hong Kong/Taiwan

35,899

42,523

(16

)%

South Korea

57,271

71,721

(20

)%

Total Customers

669,535

776,712

(14

)%

Paid Affiliates

Americas

27,039

26,936

0

%

Southeast Asia/Pacific

18,163

22,296

(19

)%

Mainland China

18,064

19,859

(9

)%

Japan

19,224

21,073

(9

)%

Europe & Africa

13,607

15,184

(10

)%

Hong Kong/Taiwan

9,541

9,622

(1

)%

South Korea

15,212

16,548

(8

)%

Total Paid Affiliates

120,850

131,518

(8

)%

Sales Leaders

Americas

4,930

6,174

(20

)%

Southeast Asia/Pacific

3,769

4,542

(17

)%

Mainland China

5,489

6,214

(12

)%

Japan

5,943

6,210

(4

)%

Europe & Africa

2,314

2,839

(19

)%

Hong Kong/Taiwan

2,123

2,207

(4

)%

South Korea

2,347

2,850

(18

)%

Total Sales Leaders

26,915

31,036

(13

)%

20

Table of Contents

Following is a narrative discussion of our results in each segment, which supplements the tables above.

Americas. The results in our Americas segment reflect a continued decline in our North America markets, while our Latin America markets grew year-over-year. As our Sales Leaders prioritized Prysm iO and

associated wellness products, we experienced switching costs in the first quarter of 2026 as many of our Sales Leaders began adapting to a greater focus on wellness products than previously. In addition, our reported revenue reflects negative
impacts from unfavorable foreign currency fluctuations of 3.7% for the first quarter of 2026.

The year-over-year decrease in segment contribution for the first quarter of 2026 primarily reflects the overall decline in revenue, as well as a 3.5 percentage-point increase in selling expenses from additional incentives aimed a

[Excerpt truncated for page length; source filing is linked above.]

Latest 10-K MD&A

Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary. Confidence: high. Filing date: 2026-02-13. Report date: 2025-12-31.

ITEM 7.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of our financial condition and results of operations should be read in conjunction with the consolidated financial statements and related notes, which are included in this
Annual Report on Form 10-K.

Business Overview

Our Products

Nu Skin Enterprises, Inc. develops and distributes a comprehensive line of premium-quality beauty and wellness solutions in nearly 50 markets worldwide. In 2025, our revenue of $1.5
billion was primarily generated by our two primary product categories: beauty products and wellness products. We operate in the direct selling channel, primarily utilizing person-to-person marketing to
promote and sell our products, including through the use of social and digital platforms.

In addition to our core Nu Skin business, we also explore new areas
of synergistic and adjacent growth through our strategic investment arm known as Rhyz Inc., which we formed in 2018. Our Rhyz businesses primarily consist of consumer, technology and manufacturing companies. In 2025, the Rhyz companies
generated $223.6 million, or 15%, of our 2025 reported revenue (excluding sales to our core Nu Skin business). As discussed further in “Rhyz Companies,” below, in January 2025 we sold one of our Rhyz businesses that accounted for $69.6
million of our 2024 reported revenue. Our Rhyz companies enable us to optimize our cost of goods, improve lead times, diversify our revenue mix, and create synergies for our brands.

Our Global Operations

In 2025, we generated approximately 26% of our revenue from the United States (consisting of our Nu Skin United States and Rhyz businesses) and the remainder from our international markets. Given
the size of our international operations, our results, as reported in U.S. dollars, are often impacted by foreign-currency fluctuations; in 2025, our revenue was negatively impacted 0.8% from foreign-currency fluctuations compared to 2024. Our
results also can be impacted by global economic, political, demographic and business trends and conditions.

A Global Network of Customers, Paid Affiliates and Sales Leaders

As of December 31, 2025, we had 748,796 persons who purchased directly from the company during the previous three months (“Customers”). Our Customer numbers include members of our sales force who
made such a purchase, including Paid Affiliates and those who qualify as Sales Leaders, but they do not include consumers who purchase directly from members of our sales force. We believe a significant majority of Customers purchase our
products primarily for personal or family consumption but are not actively pursuing the opportunity to generate supplemental income by actively and consistently marketing and reselling products.

Our revenue is highly influenced by the number and productivity of our Sales Leaders. “Sales Leaders” are our Brand Affiliates, as well as sales employees and independent marketers in Mainland
China, who achieve certain qualification requirements. Our reported Sales Leaders number is the three-month average of our monthly Sales Leaders as of the end of each month of the quarter.

As we continue to focus on customer acquisition and social commerce, we believe our number of Paid Affiliates is an important indicator of consumer purchasing activity in our business. “Paid
Affiliates” are any Brand Affiliates, as well as members of our sales force in Mainland China, who earned sales compensation during the previous three months. Paid Affiliates power our social commerce model and are a bridge to attracting new
customers and nurturing relationships and community.

We have been successful in attracting and motivating our sales force by:

●

developing and marketing innovative, technologically and scientifically advanced products;

●

providing compelling initiatives and strong support; and

●

offering an attractive sales compensation, incentive, and recognition rewards structure.

Our global sales force helps us to rapidly introduce products and penetrate our markets with modest up-front promotional expense. We rely on our sales force to create consumer demand for our
products, as opposed to a traditional approach of advertising-generated consumer awareness. Our approach is particularly effective with products that benefit from personal education and demonstration. Similar to other companies in our industry,
we experience relatively high turnover among our sales force.

49

Table of Contents

To enhance customer retention, we have developed product subscription and loyalty programs that provide incentives for consumers to commit to
purchase a specific amount of product on a monthly basis. Several of our products are conducive to subscriptions. For example, Prysm iO
and its accompanying mobile application are designed to generate subscription sales. All purchases under these programs are subject to our standard product payment and return policies. We believe these subscription and loyalty programs have
improved consumer retention, have had a stabilizing impact on revenue and have helped generate recurring sales.

Product Innovation

Our sales force markets and sells our products, and attracts others to the opportunity, based on the distinguishing benefits and innovative characteristics of our products. As a result, we
leverage our scientific expertise and product development resources to introduce innovative beauty, wellness and anti-aging products. Our sales force is increasingly using social media to market and sell our products. To continue to leverage
social media, it is imperative that we develop demonstrable products that are unique and engaging to younger consumers. We strive to strike a balance between the expenses associated with our scientific expertise and sales compensation with a
competitive price point.

Any delays or difficulties in introducing compelling products or attractive initiatives or tools into our markets may have a negative impact on our revenue and our number of Customers, Paid
Affiliates and Sales Leaders.

Our Product Launch Process

Prior to making a product generally available for purchase in a market, we often do one or more introductory offerings of the product, such as a preview of the product to our Sales Leaders or other product
introduction or promotion. We refer to the entire process, beginning with the introductory offering through general availability of the product, as a product launch or our product launch process. The timing of the launch of a particular product
often varies from market to market depending on such factors as customer demand, affiliate brand focus, product registration or other local legal requirements, and product availability in our supply chain.

Sales Leader previews and other product introductions and promotions sometimes generate significant activity and a high level of purchasing, which can result in a higher-than-normal increase in revenue, Customers,
Paid Affiliates and Sales Leaders during the quarter and skew year-over-year and sequential comparisons. We believe our product launch process attracts new Customers, Paid Affiliates and Sales Leaders to our business, increases consumer trial,
and provides us with important marketing and forecasting information about our products. Please refer to Item 1A. Risk Factors for more information on risks related to our product launch process.

Income Statement Presentation

We report revenue in nine segments, and we translate revenue from each market’s local currency into U.S. dollars using weighted-average exchange
rates. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring products. All revenue associated with a contract is recognized when we satisfy our performance obligations under the contract. We
recognize revenue by transferring the promised products to the customer, with revenue primarily recognized at shipping point, the point in time the customer obtains control of the products. We recognize revenue for shipping and handling
charges at the time the products are delivered to or picked up by the customer. In most markets, we offer a return policy that allows our sales force to return unopened and unused product for up to 30 days for a full refund, or 12 months
subject to a 10% restocking fee. Reported revenue is net of returns, which have historically been less than 5% of annual revenue. Sales taxes and value added taxes in foreign jurisdictions that are collected from customers and remitted to
governmental authorities are accounted for on a net basis and therefore are excluded from net sales.

Cost of sales primarily consists of:

●

cost of products purchased from third-party vendors;

●

cost of self-manufactured products;

●

cost of adjustments to inventory carrying value;

●

cost of manufacturing and distribution occupancy cost;

●

labor cost associated with the manufacturing process;

●

freight cost of shipping products to our sales force and import duties for the products; and

●

royalties and related expenses for licensed technologies.

50

Table of Contents

For markets other than Mainland China, in 2025, we sourced most of our beauty products and wellness products from trusted third-party suppliers and manufacturers. In Mainland China, we operate
manufacturing facilities where we produce the majority of our beauty and wellness products sold in Mainland China. We also produce some products at these facilities that are exported to other markets. In addition, our Rhyz Manufacturing entities
in the United States are producing some of our products. Cost of sales and gross profit, on a consolidated basis, may fluctuate as a result of changes in the ratio between self-manufactured products and products sourced from third-party vendors.
In addition, because we purchase a significant amount of our goods in U.S. dollars and recognize revenue in local currencies, our gross margin is subject to exchange rate risks. Because our gross margins vary from product to product and due to
higher pricing in some markets, changes in product mix and geographic revenue mix can impact our gross margin on a consolidated basis.

Selling expenses are our most significant expense and are classified as operating expenses. Selling expenses include sales commissions paid to our
sales force, special incentives, costs for incentive trips, cost of sales force conventions and other rewards, as well as salaries, service fees, benefits, bonuses and other labor and unemployment expenses we pay to our sales force in Mainland
China. The sales force conventions are held in various markets worldwide, which we generally expense in the period in which they are incurred. Because our various sales force conventions are not held during each fiscal year, or in the same
period each year, their impact on our general and administrative expenses may vary from year to year and from quarter to quarter. For example, we currently plan to hold a global convention approximately every other year. We held our last
in-person global convention in the third quarter of 2024, with an east event in South Korea and a west event in the United States, and we currently plan to hold our
next in-person global convention in the third quarter of 2026. These conventions have significant expenses associated with them. Because we have not incurred expenses for these conventions during every fiscal year or in comparable
interim periods, year-over-year comparisons have been impacted accordingly. Selling expenses do not include amounts we pay to our sales force based on their personal purchases; rather, such amounts are reflected as reductions to revenue. Our
global sales compensation plan, which we employ in all our markets except Mainland China, is an important factor in our ability to attract and retain our Sales Leaders. Under our global sales compensation plan, Sales Leaders can earn
“multi-level” compensation, where they earn commissions for product sales to their consumer groups as well as the product sales made through the sales network they have developed and trained. We do not pay commissions on business portfolios.
Fluctuations occur in the amount of commissions paid as our numbers of Customers and Sales Leaders change from month to month, but the fluctuation in the overall payout as a percentage of revenue tends to be relatively small. Selling expenses
as a percentage of revenue typically increase in connection with a significant product offering, due to growth in the number of Sales Leaders qualifying for increased sales compensation and promotional incentives. From time to time, we make
modifications and enhancements to our global sales compensation plan in an effort to help motivate our sales force and develop leadership characteristics, which can have an impact on selling expenses.

Outside of Mainland China, Brand Affiliates also have the opportunity to make profits by purchasing products from us at a discount and selling them to consumers with a mark-up. We do not account
for, nor pay, additional commissions on these mark-ups received by Brand Affiliates. In many markets, we also allow individuals who are not part of our sales force, whom we refer to as “preferred customers,” to buy products directly from us at
a discount. We pay commissions on preferred customer purchases to the referring member of our sales force.

General and administrative expenses include:

●

wages and benefits;

●

rents and utilities;

●

depreciation and amortization;

●

promotion and advertising;

●

professional fees;

●

travel;

●

research and development; and

●

other operating expenses.

Labor expenses are the most significant portion of our general and administrative expenses.

Provision for income taxes depends on the statutory tax rates and the withholding taxes in each of the jurisdictions in which we operate. For example, statutory tax rates in 2025 were
approximately 17% in Hong Kong, 20% in Taiwan, 21% in South Korea, 32% in Japan and 25% in Mainland China. We are subject to taxation in the United States at the statutory corporate federal tax rate of 21% in 2025, and we pay taxes in multiple
states within the United States at various tax rates. Our overall effective tax rate was 18.3% for the year ended December 31, 2025.

51

Table of Contents

Critical Accounting Policies and Estimates

The following critical accounting policies and estimates should be read in conjunction with our audited consolidated financial statements and related notes thereto. Management considers our
critical accounting policies to be accounting for income taxes and accounting for intangible assets. In each of these areas, management makes estimates based on historical results, current trends and future projections.

Income Taxes. We account for income taxes in accordance with the Income Taxes Topic of the Financial Accounting Standards Codification. This Topic
establishes financial accounting and reporting standards for the effects of income taxes that result from an enterprise’s activities during the current and preceding years. We take an asset and liability approach for financial accounting and
reporting of income taxes. We pay income taxes in many foreign jurisdictions based on the profits realized in those jurisdictions, which can be significantly impacted by terms of intercompany transactions between Nu Skin affiliates around the
world. Deferred tax assets and liabilities are created in this process. As of December 31, 2025, we had net deferred tax assets of $171.4 million. We net these deferred tax assets and deferred tax liabilities by jurisdiction. Valuation
allowances are established when necessary to reduce deferred tax assets to the amounts expected to be ultimately realized. These deferred tax assets assume sufficient future earnings will exist for their realization and are calculated using
anticipated tax rates. In certain jurisdictions, valuation allowances have been recorded against the deferred tax assets specifically related to use of foreign tax credits for branch income, research and development credits, and net operating
losses. The valuation allowance assessment requires estimates as to future operating results. These estimates are made on an ongoing basis based upon the Company’s business plans and growth strategies in each market and consequently, future
material changes in the valuation allowance are possible. The valuation allowance reduces the deferred tax assets to an amount that management determined is more-likely-than-not to be realized. When we determine that there is sufficient taxable
income to utilize the foreign tax credits, research and development credits, or the net operating losses, the valuation allowances will be released. In the event we were to determine that we would not be able to realize all or part of our
deferred tax assets in the future, an adjustment to the deferred tax assets would be charged to earnings in the period such determination was made.

We evaluate our indefinite reinvestment assertions with respect to foreign earnings for each period. Other than earnings we intend to reinvest indefinitely, we accrue for the U.S. federal and
state income taxes applicable to the earnings. For all foreign earnings, we accrue the applicable foreign income taxes. We intend to utilize the offshore earnings to fund foreign investments, specifically capital expenditures. Undistributed
earnings that we have indefinitely reinvested aggregate to $60.0 million as of December 31, 2025. If this amount were repatriated to the United States, the amount of incremental taxes would be approximately $6.0 million.

We operate in and file income tax returns in the U.S. and numerous foreign jurisdictions, which are subject to examination by tax authorities. Years open to examination contain matters that could be subject to
differing interpretations of applicable tax laws and regulations related to the amount and/or timing of income, deductions, and tax credits. We account for uncertain tax positions in accordance with Accounting Standards Codification (“ASC”)
740, Income Taxes. This guidance prescribes a minimum probability threshold that a tax position must meet before a financial statement benefit is recognized. The minimum threshold is defined as a tax position that is more likely than not to
be sustained upon examination by the applicable taxing authority, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The tax benefit to be recognized is measured as the
largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement. In 2009, we entered into a voluntary program with the IRS called Compliance Assurance Process (“CAP”). Under the CAP program, the
IRS audits the tax position of the Company to identify and resolve any tax issues that may arise throughout the tax year. In 2022, the IRS developed a new phase of CAP called “Bridge Plus.” Under Bridge Plus the taxpayer is required to
provide book-to-tax reconciliations, credit utilization and other supporting documentation shortly after their audited financial statement is finalized. We have
been selected for the Bridge Plus phase each year since the 2022 tax year. As of December 31, 2025, all open tax years except 2021 and 2024 have been
audited and are effectively closed to further examination. For the tax year 2021, we were in the Bridge phase of the CAP program, pursuant to which the IRS
did not accept disclosures, did not conduct reviews and did not provide letters of assurance for the Bridge year. There are limited circumstances that tax years in the Bridge phase will be opened for examination. For the tax year 2024, the
company has provided all required documentation to the IRS and is waiting for the IRS to issue their Full Acceptance Letter to indicate the audit is complete and the period is closed. With a few exceptions, we are no longer subject to state
and local income tax examination by tax authorities for the years before 2022. Foreign jurisdictions have varying lengths of statutes of limitations for income tax examinations. Some statutes are as short as three years and in certain
markets may be as long as ten years. We are currently under examination in certain foreign jurisdictions; however, the outcomes of those reviews are not yet determinable.

52

Table of Contents

At December 31, 2025, we had $21.8 million in unrecognized tax benefits, all of which, if recognized, would affect the effective tax rate. In comparison, at December 31, 2024, we had $25.9 million in unrecognized tax benefits, all of which, if recognized, would affect the effective tax rate. We recognized an increase of approximately $1.8 million in interest and penalties expense during the year ended December 31, 2025 and $0.7 million in
interest and penalties during the year ended December 31, 2024. We had approximately $15.5 million, $13.7 million and $13.0 million of accrued interest and penalties related to uncertain tax positions at December 31, 2025, 2024 and 2023,
respectively. Interest and penalties related to uncertain tax positions are recognized as a component of income tax expense.

In 2021, as part of the Organization for Economic Co-operation and Development’s (“OECD”) Inclusive Framework, 140 member countries agreed to the
implementation of the Pillar Two Global Minimum Tax (“Pillar Two”) of 15%. The OECD continues to release additional guidance, including administrative guidance on how Pillar Two rules should be interpreted and applied by jurisdictions as
they adopt Pillar Two. A number of countries have utilized the administrative guidance as a starting point for legislation that went into effect January 1, 2024. We
did not have a tax impact related to Pillar Two in 2025 and based on current enacted legislation, we do not anticipate a material impact related to Pillar
Two in 2026.

We are subject to regular audits by federal, state and foreign tax authorities. These audits may result in additional tax liabilities. We account for such contingent liabilities in accordance with
relevant accounting standards and believe we have appropriately provided for income taxes for all years. Several factors drive the calculation of our tax reserves. Some of these factors include: (i) the expiration of various statutes of
limitations; (ii) changes in tax law and regulations; (iii) issuance of tax rulings; and (iv) settlements with tax authorities. Changes in any of these factors may result in adjustments to our reserves, which would impact our reported financial
results.

Intangible Assets. Acquired intangible assets may
represent indefinite-lived assets, determinable-lived intangibles or goodwill. Of these, only the costs of determinable-lived intangibles are amortized to expense over their estimated life. The value of indefinite-lived intangible assets
and residual goodwill is not amortized, but is tested at least annually for impairment. Our impairment testing for goodwill is performed separately from our impairment testing of indefinite-lived intangibles. Our impairment evaluation of
goodwill consists of a qualitative assessment to determine if it is more likely than not that the fair value of the reporting unit is less than its carrying amount. Our qualitative assessment considers factors including changes in the
competitive market, budget-to-actual performance, trends in market capitalization for us and our peers, turnover in key management personnel and overall changes in the macroeconomic environment. If this qualitative assessment indicates it is more likely than not that the estimated fair value of the reporting unit exceeds its carrying value, no further analysis is required, and goodwill is not
impaired.

If our qualitative assessments indicate that it is more likely than not that the estimated fair value is less than carrying value, we proceed to a quantitative impairment test which compare the estimated fair value of the reporting unit or indefinite-lived intangible asset to its carrying amount with an impairment loss recognized for the amount, if any, by which carrying value exceeds estimated fair value. Considerable management judgment and
assumptions are used in our goodwill impairment assessment, including with respect to the estimated future cash flows, the earnings multiples used in the market approach, the discount rate used to discount such estimated future cash flows
to their net present value and the reasonableness of the implied control premium relative to our market capitalization. Changes in these factors could
materially increase or decrease the fair value of our reporting units and, accordingly, could result in a related impairment charge. Declines in our market capitalization or in our business performance could also result in a material
impairment charge in a future period.

Our impairment evaluation for our indefinite-lived intangible assets consists of a qualitative assessment, similar to that for goodwill. If the
qualitative assessment indicates it is more likely than not that the estimated fair value of an indefinite-lived intangible asset exceeds its carrying value, no further analysis is required, and the asset is not impaired. Based on our
qualitative tests, no impairments to our indefinite-lived intangible assets were recorded in 2025, 2024, or 2023.

Below is a summary of the results of our goodwill impairment assessments and other impairment assessments for 2025 and 2024. There were no
goodwill impairments in 2023.

2025

We performed a qualitative impairment test on our Rhyz Other reporting unit which indicated it was more likely than not that the fair value exceeded the carrying value. We performed a quantitative
impairment test on our Manufacturing reporting unit which indicated the fair value exceeded the carrying value. Therefore, no goodwill impairments were recorded.

During the three months ended March 31, 2025, we decided to make a strategic shift in how we operate the BeautyBio asset group. These strategic changes include exiting certain sales channels, which reduced the
forecasted revenues for BeautyBio. We concluded these actions were an interim impairment triggering event that required us to perform an interim impairment analysis on our BeautyBio asset group. We assessed the recoverability of the related
asset group comparing the carrying value to the undiscounted cash flows expected to be generated. The recoverability test indicated the asset group was impaired. We concluded that the carrying value of the asset group exceeded the estimated
fair value which resulted in an impairment charge of $25.1 million in our Rhyz Other segment during the three months ended March 31, 2025.

53

Table of Contents

2024

During the three months ended March 31, 2024, we determined that the recent decline in our stock price and corresponding decrease in market capitalization were a triggering event that required us to perform a
quantitative impairment analysis. Based on the analysis, we concluded the fair values of all reporting units were in excess of their carrying amounts and no impairment charge was required.  For goodwill, the estimated fair value of the reporting
units exceeded the carrying value by approximately 1% - 7%.

During the three months ended June 30, 2024, we determined that the continued decline in our stock price and corresponding decrease in market capitalization as well as declines in some of our reporting units’
forecasts were triggering events that required us to perform a quantitative impairment analysis. Based on the analysis, we concluded that the estimated fair value of Americas, Mainland China, Southeast Asia/Pacific, Japan, South Korea, Europe
& Africa, Hong Kong/Taiwan and our BeautyBio reporting units were less than their carrying value of equity as June 30, 2024. As a result, we recorded a non-cash goodwill impairment charge of $130.9 million in the second quarter of 2024.

In addition, during the three months ended June 30, 2024, we determined that the current operating losses and decline in forecasted losses associated with our BeautyBio retail asset group were an interim triggering
event that required us to perform an interim impairment analysis on our BeautyBio retail asset group. We assessed the recoverability of the related asset group comparing the carrying value of the asset group to the undiscounted cash flows
expected to be generated. The recoverability test indicated the retail asset group was impaired. We concluded the carrying value of the retail asset group exceeded the estimated fair value which resulted in an impairment charge of $10.1 million
in our Rhyz Other segment during the three months ended June 30, 2024.

During the three months ended September 30, 2024, we determined that the continued decline in our stock price and corresponding decrease in market capitalization were a triggering event that
required us to perform a quantitative impairment analysis for the Manufacturing and Rhyz Other reporting units. Based on the analysis, we concluded the fair value of the Manufacturing and Rhyz Other reporting units were in excess of their
carrying amounts and no impairment charge was required at that time.

●

During the fourth quarter of 2024, the continued decline in our BeautyBio reporting unit forecast was a triggering event that required us to perform a quantitative analysis. As a result, we concluded the estimated fair value of our
BeautyBio reporting unit was less than its carrying value and as a result recorded a non-cash goodwill impairment charge of $3.6 million.

●

At the time of the September 30, 2024 analysis, the estimated fair value of the Manufacturing reporting unit exceeded the carrying value by approximately 8%; therefore, the reporting unit is considered
to be at risk of future impairment. The Manufacturing reporting units’ fair values remain sensitive to unfavorable changes in assumptions utilized in the income approach, including revenue growth rates, profitability margins,
estimated future cash flows, and the discount rates that could result in impairment charges in a future period.

●

During the three months ended March 31, 2025, we decided to make a strategic shift in how we operate the BeautyBio asset group. These strategic changes include exiting certain sales channels, which reduced the forecasted revenues for
BeautyBio. We concluded these actions were an interim impairment triggering event that required us to perform an interim impairment analysis on our BeautyBio asset group. We assessed the recoverability of the related asset group
comparing the carrying value to the undiscounted cash flows expected to be generated. The recoverability test indicated the asset group was impaired. We concluded that the carrying value of the asset group exceeded the estimated fair
value which resulted in an impairment charge of $25.1 million in our Rhyz Other segment during the three months ended March 31, 2025.

54

Table of Contents

Results of Operations

The following table sets forth our operating results as a percentage of revenue for the periods indicated:

Year Ended December 31,

2025

2024

2023

Revenue

100.0

%

100.0

%

100.0

%

Cost of sales

30.6

31.8

31.1

Gross profit

69.4

68.2

68.9

Operating expenses:

Selling expenses

34.2

37.6

37.7

General and administrative expenses

29.1

27.7

27.8

Restructuring and impairment expenses

1.7

11.7

1.0

Total operating expenses

65.0

77.0

66.5

Operating income (loss)

4.4

(8.8

)

2.4

Interest expense

0.9

1.5

1.3

Gain on sale

11.9

—

—

Other income (expense), net

(2.2

)

0.2

0.2

Income (loss) before provision for income taxes

13.2

(10.1

)

1.3

Provision (benefit) for income taxes

2.4

(1.6

)

0.9

Net income (loss)

10.8

%

(8.5

)%

0.4

%

2025 Compared to 2024

Overview

Revenue in 2025 decreased 14% to $1.49 billion from $1.73 billion in 2024. Our 2025 revenue was negatively impacted 0.8% from foreign-currency fluctuations. As of the end of the fourth quarter of
2025, Customers decreased 10%, Paid Affiliates decreased 11% and Sales Leaders decreased 19% compared to the prior year.

The year-over-year decrease in our 2025 revenue was primarily driven by the continued macroeconomic pressures we’ve been facing in our markets,
which have negatively impacted consumer spending and customer acquisition. In addition, while we believe we continue to make progress on our long-term vision, we have experienced headwinds from the transformation process. Our priorities for
2025 were to focus on business model optimization, driven by the continued rollout of enhancements to our sales performance plan, the initial limited previews of our Prysm iO intelligent wellness platform and the continued business expansion into India. We are continuing the launch process into
2026 with the consumer launch slated for the back half of the year. We currently anticipate approximately $30 million of revenue from sales of the Prysm iO device during 2026, with additional revenue anticipated from subscription sales derived from consumers’ use of the device. During the fourth quarter of 2025, we recognized nominal revenue from our India market
pre-opening; we remain focused on the formal launch, which is anticipated in the second half of 2026.

Earnings per share in 2025 increased to $3.18 from $(2.95) in 2024. Our 2025 earnings per share benefited from the January 2025 sale of our Mavely business, which generated a pre-tax gain of approximately $176.2
million, partially offset by the associated taxes, an intangible asset group impairment of $25.1 million in our Rhyz Other segment, a non-cash loss on equity investment of $28.1 million and the decline in revenue. Our 2024 earnings per share was
negatively impacted by $202.4 million of restructuring and impairment charges, and an inventory write-off charge of $38.8 million.

Segment Results

We report our business in nine segments to reflect our current management approach. These segments consist of our seven geographic Nu Skin
segments—Americas, Southeast Asia/Pacific, Mainland China, Japan, Europe & Africa, South Korea, and Hong Kong/Taiwan—and our two Rhyz segments—Manufacturing and Rhyz Other. The Nu Skin Other category includes miscellaneous corporate revenue
and related adjustments. The Rhyz Other segment includes other investments by our Rhyz strategic investment arm.

55

Table of Contents

The following table sets forth revenue for the years ended December 31, 2025 and 2024 for each of our reportable segments (U.S. dollars in thousands):

Change

Constant

Currency

Change(1)

Year Ended December 31,

2025

2024

Nu Skin

Americas

$

282,975

$

322,516

(12.3

)%

(6.2

)%

Southeast Asia/Pacific

209,802

244,846

(14.3

)%

(14.6

)%

Mainland China

195,553

235,235

(16.9

)%

(16.9

)%

Japan

174,364

181,557

(4.0

)%

(5.1

)%

Europe & Africa

150,151

164,164

(8.5

)%

(12.6

)%

South Korea

130,216

163,706

(20.5

)%

(17.1

)%

Hong Kong/ Taiwan

117,378

130,610

(10.1

)%

(11.9

)%

Other

1,138

2,832

(59.8

)%

(48.5

)%

Total Nu Skin

1,261,577

1,445,466

(12.7

)%

(11.8

)%

Rhyz

Manufacturing

205,788

201,430

2.2

%

2.2

%

Rhyz Other

17,794

85,188

(79.1

)%

(79.1

)%

Total Rhyz

223,582

286,618

(22.0

)%

(22.0

)%

Total

$

1,485,159

$

1,732,084

(14.3

)%

(13.5

)%

(1)

Constant-currency revenue change is a non-GAAP financial measure. See “Non-GAAP Financial Measures,” below.

The table below sets forth segment contribution for the years ended December 31, 2025 and 2024 for each of our reportable segments (U.S. dollars in thousands). Segment contribution excludes
certain intercompany charges, specifically royalties, license fees, transfer pricing and other miscellaneous items. We use segment contribution to measure the portion of profitability that the segment managers have the ability to control for
their respective segments. For additional information regarding our segments and the calculation of segment contribution, see Note 16 to the consolidated financial statements contained in this report.

Year Ended December 31, 2025

Nu Skin

Rhyz

Americas

Southeast

Asia/Pacific

Mainland

China

Japan

Europe &

Africa

South

Korea

Hong Kong/

Taiwan

Manufacturing

Rhyz

Other

Total

Segments

Revenue

$

282,975

$

209,802

$

195,553

$

174,364

$

150,151

$

130,216

$

117,378

$

205,788

$

17,794

$

1,484,021

Cost of sales

73,198

51,044

34,631

36,067

38,947

26,402

19,892

163,707

4,697

448,585

Other segment items

149,289

111,983

115,367

89,325

88,571

66,355

60,314

34,268

43,690

759,162

Segment contribution

$

60,488

$

46,775

$

45,555

$

48,972

$

22,633

$

37,459

$

37,172

$

7,813

$

(30,593

)

$

276,274

Segment contribution as a percentage of revenue

21.4

%

22.3

%

23.3

%

28.1

%

15.1

%

28.8

%

31.7

%

3.8

%

(171.9

)%

18.6

%

Year Ended December 31, 2024

Nu Skin

Rhyz

Americas

Southeast

Asia/Pacific

Mainland

China

Japan

Europe &

Africa

South

Korea

Hong Kong/

Taiwan

Manufacturing

Rhyz

Other

Total

Segments

Revenue

$

322,516

$

244,846

$

235,235

$

181,557

$

164,164

$

163,706

$

130,610

$

201,430

$

85,188

$

1,729,252

Cost of sales

83,461

64,950

44,059

36,852

42,766

33,600

24,932

164,145

14,532

509,297

Other segment items

171,338

134,666

145,086

93,907

100,389

79,360

70,989

35,825

116,465

948,025

Segment contribution

$

67,717

$

45,230

$

46,090

$

50,798

$

21,009

$

50,746

$

34,689

$

1,460

$

(45,809

)

$

271,930

Segment contribution as a percentage of revenue

21.0

%

18.5

%

19.6

%

28.0

%

12.8

%

31.0

%

26.6

%

0.7

%

(53.8

)%

15.7

%

56

Table of Contents

Year Ended December 31,

2025

2024

2023

Total Segment Revenue

$

1,484,021

$

1,729,252

$

1,969,989

Core Nu Skin Adjustment

1,138

2,832

(858

)

Total Revenue

$

1,485,159

$

1,732,084

$

1,969,131

The following table provides information concerning the number of Customers, Paid Affiliates and Sales Leaders in our core Nu Skin business as of December 31, 2025 and 2024.

●

“Customers” are persons who have purchased directly from the Company during the three months ended as of the date indicated. Our Customer numbers include members of our sales force who made such a purchase, including Paid Affiliates
and those who qualify as Sales Leaders, but they do not include consumers who purchase directly from members of our sales force.

●

“Paid Affiliates” are any Brand Affiliates, as well as members of our sales force in Mainland China, who earned sales compensation during the three-month period. In all of our markets besides Mainland China, we refer to members of our
independent sales force as “Brand Affiliates” because their primary role is to promote our brand and products through their personal social networks.

●

“Sales Leaders” are the three-month average of our monthly Brand Affiliates, as well as sales employees and independent marketers in Mainland China, who achieved certain qualification requirements as of the end of each month of the
quarter.

Three Months Ended

December 31,

2025

2024

Change

Customers

Americas

225,527

227,556

(1

)%

Southeast Asia/Pacific

74,300

82,956

(10

)%

Mainland China

118,523

150,731

(21

)%

Japan

104,439

110,069

(5

)%

Europe & Africa

127,910

133,306

(4

)%

South Korea

58,880

81,301

(28

)%

Hong Kong/Taiwan

39,217

46,053

(15

)%

Total

748,796

831,972

(10

)%

Paid Affiliates

Americas

28,900

28,361

2

%

Southeast Asia/Pacific

20,260

26,310

(23

)%

Mainland China

18,922

22,125

(14

)%

Japan

20,126

22,318

(10

)%

Europe & Africa

14,918

16,860

(12

)%

South Korea

16,341

17,939

(9

)%

Hong Kong/Taiwan

9,844

10,961

(10

)%

Total

129,311

144,874

(11

)%

Sales Leaders

Americas

6,016

6,778

(11

)%

Southeast Asia/Pacific

4,272

5,288

(19

)%

Mainland China

6,065

8,969

(32

)%

Japan

6,259

6,780

(8

)%

Europe & Africa

2,722

3,343

(19

)%

South Korea

2,547

3,343

(24

)%

Hong Kong/Taiwan

2,164

2,411

(10

)%

Total

30,045

36,912

(19

)%

57

Table of Contents

Following is a narrative discussion of our results in each segment, which supplements the tables above.

Americas. The results in our Americas segment reflect a continued decline in our North America markets, while our Latin America markets grew year-over-year. Our North America
markets continued to be challenged, where in November 2024 we introduced enhancements to the sales performance plan to address the macro environmental landscape. These enhancements have caused disruption as our sales force adapts to the
changes. In addition, our reported revenue reflects negative impacts from unfavorable foreign currency fluctuations of 6.1% for fiscal year 2025.

In the second quarter of 2024, we launched our developing market strategy in Argentina, with a revised operating model with a focused product portfolio and modified business model that has enabled
us to reach a broader demographic. During early 2025, we continued to roll out this strategy in additional Latin America markets. For 2025, our Latin America markets revenue increased from $57.8 million to $99.6 million, a 72.3% year-over-year
increase; in addition, Latin America Customers increased 46%, Paid Affiliates increased 47%, and Sales Leaders increased 25%.

The year-over-year decrease in segment contribution for 2025 primarily reflects the decline in revenue, partially offset by an 0.8 percentage point decrease in selling expenses as a percentage of revenue.

Southeast Asia/Pacific. The decline in revenue, Customers, Paid Affiliates and Sales Leaders for 2025 is partially attributable to slowing momentum from the general macroeconomic factors in
the markets. In response to these challenges, in 2025 we began leveraging our learnings from the developing market strategy, including by launching products specifically aimed at expanding our customer base.

During the fourth quarter of 2025, we began pre-market activities in India, setting the operational foundation and infrastructure ahead of a full market opening anticipated in the back half of 2026.
Our financial results and key performance indicators for this market, which are included in our Southeast Asia/Pacific segment in this report, were insignificant for 2025.

The year-over-year increase in segment contribution for 2025 is primarily attributable to a 2.2 percentage point increase to gross margin due to a shift in product mix, and a 1.3 percentage point decrease in
selling expenses as a percentage of revenue primarily from a lower amount of local sales force incentives during the period as well as less qualifiers for the success trips.

Mainland China. Our Mainland China market continued to be challenged during 2025, with ongoing macroeconomic factors, the associated
decrease in consumer spending and a continued shift of market consumer awareness and demand to online product marketplaces.

The decrease in segment contribution for 2025 primarily reflects the decline in revenue, partially offset by a 4.1 percentage point decrease in selling expenses as a percent of revenue and a 1.0 percentage point
increase in gross margin. The salaries and service fees of our Sales Leaders in Mainland China are fixed until they are adjusted in a quarterly evaluation process. As a result, we have variations in our selling expenses as a percentage of
revenue, particularly when there is a sequential change in revenue.

Japan. The reduction in revenue, Customers, Paid Affiliates and Sales Leaders is partially attributable to consumer inflationary pressures which depressed spending.

The year-over-year decrease in segment contribution is primarily attributable to the decreased revenue.

Europe & Africa. The reduction in revenue, Customers, Paid Affiliates and Sales Leaders reflects continued softness in these markets, as well as the macroeconomic
factors that have led to a decline in the purchasing power of our customers. We introduced enhancements to the sales performance plan in Europe & Africa starting in March 2025. In addition, our 2025 reported
revenue reflects benefits from favorable foreign currency fluctuations of 4.1%.

The year-over-year increase in segment contribution was primarily driven by a 2.3 percentage point decline in selling expenses as a percent of
revenue for 2025, primarily from elevated sales force events costs in the prior year, partially offset by the decline in revenue.

58

Table of Contents

South Korea. Our South Korea market was challenged by
difficult macroeconomic trends, including inflationary pressures, political instability, and our associated price increases which negatively impacted our revenue, Customers, Paid Affiliates and Sales Leaders for the 2025. In addition, our
reported revenue reflects negative impacts from unfavorable foreign currency fluctuations of 3.4% for 2025.

The year-over-year decline in segment contribution primarily reflects the decline in revenue, as well as a 3.7 percentage point increase in selling expenses associated with incremental cost pressure from the
enhancements to the sales performance plan, which we introduced in this segment during the fourth quarter of 2024, partially offset by a $5.9 million decline in general and administrative expenses from cost savings realized from our 2023
restructuring plan.

Hong Kong/Taiwan. The decline in our Hong Kong/Taiwan segment for 2025 is attributable to macroeconomic issues, which are resulting in less purchasing power for our consumers. Our
reported revenue reflects benefits from favorable foreign currency fluctuations of 1.8% for 2025.

The increase in segment contribution for 2025 was primarily driven by a 2.1 percentage point improvement in gross margin due to sales mix, a 1.9 percentage point decrease in selling expenses and a 1.1 percentage
point decrease in general and administrative expenses, from our recent cost saving efforts, partially offset by the decline in revenue.

Manufacturing. Our Manufacturing segment revenue increased 2.2% for 2025.

The increase in segment contribution for 2025 is primarily from the revenue mix amongst our manufacturing entities as well as product mix, which resulted in more profitability for the year.

Rhyz Other.  The decrease in revenue of our Rhyz Other segment is primarily driven by the January 2, 2025 sale of Mavely. Mavely recognized $69.6 million of revenue in 2024. In
addition, our BeautyBio entity continues to be challenged, with a 52.4% decline in revenue for 2025, as we continue to implement our strategy to minimize future losses and better position the brand.

Our Rhyz Other segment also includes LifeDNA, Inc. (“LifeDNA”), a DNA assessment and recommendation technology company. During 2025, LifeDNA revenue grew 188%, to $12.4 million. In addition, the
profitability of LifeDNA has increased as part of the revenue growth, resulting in a 2025 operating margin of 7.7% compared to (30.8)% for the prior year period. We are currently evaluating strategic opportunities with LifeDNA, including
potentially divesting it, to maximize our return on investment.

The increase in segment contribution is primarily from our cost saving efforts at BeautyBio, which had smaller losses for 2025.

Consolidated Results

Revenue

Revenue for the year ended December 31, 2025 decreased 14% to $1.49 billion, compared to $1.73 billion in the prior-year period. For a discussion and analysis of this decline in revenue, see
“Overview” and “Segment Results,” above.

Gross profit

Gross profit as a percentage of revenue increased to 69.4% in 2025, compared to 68.2% in 2024. Gross profit as a percentage of revenue for our core Nu Skin business increased 3.1
percentage points to 77.4%. Our Nu Skin gross margin continues to benefit from our strategic portfolio optimization as well as a favorable product mix shift. Our gross margin was also impacted by the gross margin of our owned
manufacturing entities, which as previously disclosed, is significantly lower than the gross margin of our core Nu Skin business. With the year-over-year growth within our Manufacturing segment, their revenue represented a higher proportion of
our overall consolidated revenue for the year ended December 31, 2025 than in the prior-year. In the fourth quarter of 2024, we recorded an incremental inventory write-off charge of $38.8 million, $32.7 million of which was recorded within our
core Nu Skin business, as we continued to accelerate and expand our product portfolio optimization.

59

Table of Contents

Selling expenses

Selling expenses as a percentage of revenue decreased to 34.2% in 2025, compared to 37.6% for 2024. Our core Nu Skin business’s selling expense as a percentage of revenue decreased
1.6 percentage points to 40.3% for 2025, compared to 41.9% for 2024. Selling expenses for our core Nu Skin business are driven by the specific performance of our individual Sales Leaders. Given the size of our sales force and the
various components of our compensation and incentive programs, selling expenses as a percentage of revenue typically fluctuate plus or minus approximately 100 basis points from period to period. Our 2025 core Nu
Skin selling expenses decrease is partially attributable to our third quarter of 2024 global Nu Skin L!VE events, which drove approximately $10.2 million of incremental expenditures, that did not repeat in 2025. In addition, approximately 2.7
percentage points of the decline in selling expenses as a percentage of revenue in our consolidated results are attributable to the January 2, 2025 sale of Mavely.

General and administrative expenses

General and administrative expenses decreased to $432.1 million in
2025, compared to $479.0 million in 2024. The $46.9 million decrease primarily was from $15.3 million decrease in depreciation and amortization following our 2024 and first quarter of 2025 impairments, $13.8 million of 2024 expenses from
Mavely, which was sold in the first quarter of 2025, $8.5 million contraction in labor expenses from our 2024 cost savings initiatives, and a decrease in promotional expenses in connection with our prior-year product launches. As a
percentage of revenue, general and administrative increased 1.4 percentage points to 29.1% for 2025, compared to 27.7% for 2024.

Restructuring and impairment expenses

2022 restructuring plan. In the third quarter of 2022, we
adopted a strategic plan to focus resources on our strategic priorities and optimize future growth and profitability. The global program included workforce reductions and footprint optimization. Total charges incurred under the program were
approximately $53.3 million, with $40.8 million in cash charges of severance and lease termination cost and approximately $12.5 million of non-cash charges of impairment of fixed assets, acceleration of depreciation and impairment of other
intangibles related to our footprint optimization. During 2023, we incurred charges to be settled in cash of $4.0 million in severance charges, $1.9 million in lease termination cost, and $2.2 million in other associated cost, and non-cash
charges of $1.7 million in accelerated depreciation.

2023 restructuring plan. In the fourth quarter of 2023, we
adopted another strategic plan to focus resources on our global priorities and optimize future growth and profitability. The global program includes workforce reductions and fixed asset impairments associated with our consolidation of
technology assets. Total charges under the program included approximately $27.9 million in cash charges of severance, approximately $1.0 million in other cash charges and approximately $38.8 million in non-cash charges, including approximately
$36.6 million in fixed asset impairments. We have incurred all expected charges under the 2023 plan. During the fourth quarter of 2023, we incurred charges to be settled in cash of $10.0 million in severance charges. During 2024, we incurred
charges to be settled in cash of $17.9 million in severance charges and $1.1 million of other associated cost, and non-cash charges of $36.6 million of fixed asset impairments and $2.2 million of other non-cash charges.

Goodwill and intangibles impairment. During the three
months ended June 30, 2024, we determined that the continued decline in our stock price and corresponding decrease in market capitalization as well as declines in some of our reporting units’ forecasts were triggering events that required us to
perform a quantitative impairment analysis. When we performed an impairment test during the second quarter of 2024, we concluded that the estimated fair value of Americas, Mainland China, Southeast Asia/Pacific, Japan, South Korea, Europe &
Africa, Hong Kong/Taiwan and our BeautyBio reporting units were less than their carrying value of equity as June 30, 2024. As a result, we recorded a non-cash goodwill impairment charge of $130.9 million in the second quarter of 2024. During
the fourth quarter of 2024, the continued decline in our BeautyBio reporting unit forecast was a triggering event that required us to perform a quantitative analysis. As a result, we concluded the estimated fair value of our BeautyBio reporting
unit was less than its carrying value and as a result recorded a non-cash goodwill impairment charge of $3.6 million.

In addition, during the three months ended June 30, 2024, we determined that the current operating losses and decline in forecasted losses associated with our BeautyBio retail asset group were an interim triggering
event that required us to perform an interim impairment analysis on our BeautyBio retail asset group. We assessed the recoverability of the related asset group comparing the carrying value of the asset group to the undiscounted cash flows
expected to be generated. The recoverability test indicated the retail asset group was impaired. We concluded the carrying value of the retail asset group exceeded the estimated fair value which resulted in an impairment charge of $10.1 million
in our Rhyz Other segment during the three months ended June 30, 2024.

60

Table of Contents

During the three months ended March 31, 2025, we decided to make a strategic shift in how we operate the BeautyBio asset group. These strategic changes include exiting certain sales channels, which reduced the
forecasted revenues for BeautyBio. We concluded these actions were an interim impairment triggering event that required us to perform an interim impairment analysis on our BeautyBio asset group. We assessed the recoverability of the related asset
group comparing the carrying value to the undiscounted cash flows expected to be generated. The recoverability test indicated the asset group was impaired. We concluded that the carrying value of the asset group exceeded the estimated fair value
which resulted in an impairment charge of $25.1 million in our Rhyz Other segment during the three months ended March 31, 2025.

Interest expense

Interest expense decreased to $13.9 million for 2025, compared to $26.4 million in the prior-year period. The decrease in interest expense was primarily due to the debt payments made in the first quarter of 2025
using a portion of the proceeds from the Mavely sale. Our interest rate swap arrangements that we entered into in 2020 matured on July 31, 2025, at which time our effective interest rate increased.

Gain on sale of business

In January 2025, we completed the sale of our Mavely entity for $230 million in cash and shares of the purchaser’s common stock, subject to certain
adjustments as set forth in the purchase agreement, including post-closing determination of net working capital and other elements of purchase price. Following the completion of certain payments to other equity holders in Mavely and the payment
of certain transaction expenses, we received $193.7 million of cash and equity interest with an estimated fair value of $6.1 million.  Following the finalization of net working capital, we received additional cash payments of $2.7 million and
$1.7 million in the second and third quarter of 2025, respectively. In 2025, we recorded a pre-tax gain on disposition of $176.2 million.

Other income (expense), net

Other income (expense), net for 2025 was $(31.8) million, compared to
$2.9 million in 2024. The decrease in other income for the year ended December 31, 2025 is primarily from a $28.1 million unrealized loss on investment. See Note 11 to the consolidated financial statements contained in this report for more
information on the unrealized equity investment and the associated loss. In addition, for 2025 we had an incremental $4.4 million of foreign currency losses, primarily from our growth in Argentina, which currency is classified as highly
inflationary.

Provision for income taxes

Provision (benefit) for income taxes increased to $36.0 million in
2025 from $(28.5) million in 2024. Our effective tax rate increased to 18.3% of pre-tax income in 2025 from 16.3% in 2024. Our effective tax rate for 2025 was impacted by $8.1 million of additional research and development credits
determined creditable during the year, the sale of Mavely, the impairment of the BeautyBio asset group and the impairment of an equity investment. Our effective tax rate for 2024 was impacted by the 2024 goodwill impairment.

For 2026, we currently anticipate that our effective tax rate will be approximately 28-36%. Our actual 2026 effective tax rate could differ materially from this estimate. Our future effective tax
rates could fluctuate significantly, being affected by numerous factors, such as intercompany transactions, changes in our business operations, foreign audits, increases in uncertain tax positions, acquisitions, entry into new markets, the
amount of our foreign earnings, including earnings being lower than anticipated in jurisdictions where we have a lower statutory rate and higher than anticipated in jurisdictions where we have a higher statutory rate, losses incurred in
jurisdictions, the inability to realize tax benefits, withholding taxes, changes in foreign currency exchange rates, changes in our stock price, changes in our deferred tax assets and liabilities and their valuation.

On July 4, 2025, U.S. legislation formally titled “An Act to Provide for Reconciliation Pursuant to Title II of H. Con. Res. 14” (“the Act”) and
commonly referred to as the One Big Beautiful Bill Act was signed into law. The Act, among other things, extended key provisions of the 2017 Tax Cuts and Jobs Act and introduced targeted changes to the U.S. federal income tax regime. The
Act has not materially impacted the Company’s effective tax rate.

Net income (loss)

As a result of the foregoing factors, net income (loss) in 2025
increased to $160.2 million, compared to $(146.6) million in 2024.

61

Table of Contents

2024 Compared to 2023

For a comparison of our operating results for 2024 compared to 2023, see Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations beginning on page 49 of our Annual Report on Form 10-K for the fiscal year
ended December 31, 2024, as filed with the SEC on February 14, 2025.

Liquidity and Capital Resources

Historically, our principal uses of cash have included operating
expenses (particularly selling expenses) and working capital (principally inventory purchases), as well as capital expenditures, stock repurchases, dividends, debt repayment and the development of operations in new markets. We have at
times incurred long-term debt, or drawn on our revolving line of credit, to fund strategic transactions, stock repurchases, capital investments and short-term operating needs. We typically generate positive cash flow from operations due
to favorable margins and have generally relied on cash from operations to fund operating activities. We generated $80.3 million in cash from operations during 2025, compared to $111.7 million in cash from operations during 2024. The
decrease in cash flow from operations primarily reflects cash payments made in the first quarter of 2025 related to expenses accrued as of year-end, which included restructuring and other accrued expenses as well as an increase in prepaid
taxes primarily associated with estimated payments related to the Mavely sale.

As of December 31, 2025, cash and cash equivalents, including current
investments, were $239.8 million compared to $198.0 million as of December 31, 2024. The increase was primarily driven by the proceeds from the sale of Mavely and cash generated from operations as described above, partially offset by $170.0
million in net debt payments, which was comprised of $135.0 million toward our term loan and $35.0 million toward our revolving credit facility, $34.3 million capital expenditures, and $20.0 million in share repurchases.  Working capital as
of December 31, 2025 was $284.0 million compared to $242.0 million as of December 31, 2024. Our increase in working capital is primarily attributable to the increase in cash as discussed above.

Cash requirements. For 2026, we currently expect that our material cash requirements will include the following:

●

Cash requirements for operating activities. Our operating expenses typically total approximately 85%-90% of our revenue, with compensation to
our sales force constituting 40%-43% of our core Nu Skin revenue. These compensation expenses consist primarily of commission payments, which we generally pay to our sales force within approximately one to two months of the sale.
Inventory purchases have historically constituted approximately 15%-20% of our revenue. On average, we purchase our inventory approximately three to six months prior to sale. While our actual cash usage may vary based on the timing of
payments, we currently expect these approximate percentages and payment practices to continue in 2026. In addition, we expect our 2026 lease payments will be approximately $23.5 million.

●

Cash requirements for investing activities. As discussed in more detail below, our capital expenditures are expected to be $40-60 million for 2026.

●

Cash requirements for financing activities. In 2025 we are obligated to make a total of $20.0 million in quarterly principal payments plus the associated interest on our term loan. We also anticipate paying
quarterly cash dividends throughout 2026, approximating $3 million per quarter depending on the number of shares outstanding as of record date. Additional details about our dividends and term loan are provided below.

For 2026 and onward, we currently expect the above material cash requirements will remain. See Note 7 and Note 8 to the consolidated financial statements contained in this report for our future
cash requirements related to our debt principal repayment and our maturities of lease liabilities.

We intend to fund the aforementioned cash requirements with our cash from operations and draw on our revolving credit facility, as needed, to address any short-term funding requirements.

Capital expenditures. Capital expenditures in 2025 totaled $34.3 million. As with 2025, we expect that the capital expenditures in 2026 will be primarily related to:

●

Rhyz plant expansion to increase capacity and capabilities;

●

purchases and expenditures for computer systems and equipment, software, and application development; and

●

the expansion and upgrade of facilities in our various markets.

We estimate that capital expenditures for the uses listed above will total approximately $40-60 million for 2026.

62

Table of Contents

Credit Agreement. On June 14, 2022, we entered into an
Amended and Restated Credit Agreement (the “Credit Agreement”) with various financial institutions as lenders and Bank of America, N.A., as administrative agent. The Credit Agreement provides for a $400.0 million term loan facility and a
$500.0 million revolving credit facility, each with a term of five years. We used the proceeds of the term loan and the draw on the revolving facility to pay off the previous credit agreement. Both facilities bear interest at the Secured
Overnight Financing Rate (“SOFR”), plus a margin based on our consolidated leverage ratio. The term loan facility amortizes in quarterly installments in amounts resulting in an annual amortization of 2.5% during the first year and 5.0% during
the subsequent years after the closing date of the Credit Agreement, with the remainder payable at final maturity. As of December 31, 2025 and 2024, we had $0 and $35.0 million of outstanding borrowings under our revolving credit facility,
and $225.0 million and $360.0 million on our term loan facility. The carrying value of the debt also reflects debt issuance costs of $0.8 million and $1.4 million as of December 31, 2025 and 2024, respectively, related to the Credit
Agreement. The Credit Agreement requires us to maintain a consolidated leverage ratio not exceeding 2.75 to 1.00 and a consolidated interest coverage ratio of no less than 3.00 to 1.00. As of December 31, 2025, we were in compliance with all
debt covenants under the Credit Agreement. We are planning to refinance our Credit Agreement during the first half of 2026; however, no assurance can be given that we will be able to complete such refinancing on favorable terms, or at all.

Derivative instruments. During the third quarter of 2025, we had four interest rate swaps mature, with a total notional principal amount of $200 million. We entered into these interest rate swap arrangements
during the third quarter of 2020 to hedge the variable cash flows associated with our variable-rate debt under the Credit Agreement.

Stock repurchase plan. In 2018, our board of directors approved a stock repurchase plan authorizing us to repurchase up to $500.0 million of our outstanding shares of Class A common stock on
the open market or in private transactions. During 2025, we repurchased 2.0 million shares of our Class A common stock under the plan for $20.0 million. As of December 31, 2025, $142.3 million was available for repurchases under the plan. Our
stock repurchases are used primarily to offset dilution from our equity incentive plans and for strategic initiatives.

Dividends. In February, May, August and November 2025, our board of directors declared quarterly cash dividends of $0.06 per share. The quarterly cash dividends of $3.0 million, $3.0 million, $3.0 million, and $2.9 million
were paid on March 5, 2025, June 11, 2025, September 10, 2025 and December 10, 2025 to stockholders of record on February 24, 2025, May 30, 2025, August 29, 2025 and November 28, 2025, respectively. In February 2026, our board of directors declared a quarterly cash dividend of $0.06
per share to be paid on March 11, 2026 to stockholders of record on February 27, 2026. Currently, we anticipate that our board of directors will continue to declare quarterly cash dividends and that the cash flows from operations will be
sufficient to fund our future dividend payments. However, the continued declaration of dividends is subject to the discretion of our board of directors and will depend upon various factors, including our net earnings, financial condition,
cash requirements, future prospects and other relevant factors.

Cash from foreign subsidiaries. As of December 31, 2025 and 2024, we held $239.8 million and $198.0 million, respectively, in cash and cash equivalents, including current investments. These
amounts include $170.7 million and $154.1 million as of December 31, 2025 and 2024, respectively, held in our operations outside of the United States. Substantially all of our non-U.S. cash and cash equivalents are readily convertible into U.S.
dollars or other currencies, subject to procedural or other requirements in certain markets, as well as an indefinite-reinvestment designation, as described below.

We typically fund the cash requirements of our operations in the United States through intercompany dividends, intercompany loans and intercompany charges for products, use of
intangible property, and corporate services. However, some markets impose government-approval or other requirements for the repatriation of dividends. For example, in Mainland China, we are unable to repatriate cash from current operations in
the form of dividends until we file the necessary statutory financial statements for the relevant period. As of December 31, 2025 and 2024, we had $35.7 million and $27.4 million, respectively, in cash denominated in Chinese RMB. We
also have experienced delays in repatriating cash from Argentina. As of December 31, 2025 and 2024, we had $23.9 million and $22.4 million, respectively, in intercompany receivable with our Argentina subsidiary. We

also have intercompany loan arrangements with some of our markets, including Mainland China, that allow us to access available cash, subject to certain limits in Mainland China and other jurisdictions. We also have drawn on our revolving line
of credit to address cash needs until we can repatriate cash from Mainland China or other markets, and we may continue to do so. Except for $60 million of earnings in Mainland China that we designated as indefinitely reinvested during the
second quarter of 2018, we currently plan to repatriate undistributed earnings from our non-U.S. operations as necessary, considering the cash needs of our non-U.S. operations and the cash needs of our U.S. operations for dividends, stock
repurchases, capital investments, debt repayment and strategic transactions. Repatriation of non-U.S. earnings is subject to withholding taxes in certain foreign jurisdictions. Accordingly, we have accrued the necessary withholding taxes
related to the non-U.S. earnings.

63

Table of Contents

We currently believe that existing cash balances, future cash flows from operations and existing lines of credit will be adequate to fund our cash needs on both a short- and long-term basis. The
majority of our historical expenses have been variable in nature and as such, a potential reduction in the level of revenue would reduce our cash flow needs. In the event that our current cash balances, future cash flow from operations and
current lines of credit are not sufficient to meet our obligations or strategic needs, we would consider raising additional funds in the debt or equity markets or restructuring our current debt obligations. Additionally, we would consider
realigning our strategic plans, including a reduction in capital spending, stock repurchases or dividend payments.

Non-GAAP Financial Measures

Constant-currency revenue change is a non-GAAP financial measure that removes the impact of fluctuations in foreign-currency exchange rates, thereby
facilitating period-to-period comparisons of the Company’s performance. It is calculated by translating the current period’s revenue at the same average exchange rates in effect during the applicable prior-year period and then comparing that
amount to the prior-year period’s revenue. We believe that constant-currency revenue change is useful to investors, lenders, and analysts because such information enables them to gauge the impact of foreign-currency fluctuations on our revenue
from period to period.

Contingent Liabilities

Please refer to Note 17 to the consolidated financial statements contained in this report for information regarding our contingent liabilities.

Seasonality and Cyclicality

In addition to general economic factors, we are impacted by seasonal factors and trends such as major cultural events and vacation patterns. For example, most Asian markets celebrate their
respective local New Year in the first quarter, which generally has a negative impact on that quarter. We believe that direct selling is also generally negatively impacted during the third quarter, when many individuals, including our sales
force, traditionally take vacations.

Prior to making a product generally available for purchase in a market, we often do one or more introductory offerings of the product, such as a preview of the product to our Sales Leaders or
other product introduction or promotion. These offerings sometimes generate significant activity and a high level of purchasing, which can result in a higher-than-normal increase in revenue, Sales Leaders, Paid Affiliates and/or Customers
during the quarter and skew year-over-year and sequential comparisons.

Recent Accounting Pronouncements

A description of new accounting pronouncements is contained in Note 2 to consolidated financial statements contained in this report.