USANA HEALTH SCIENCES INC (USNA)

CIK: 0000896264. SIC: 2833 Medicinal Chemicals & Botanical Products. Latest 10-K as of: 2026-03-16.

SIC breadcrumb: Manufacturing > Chemicals And Allied Products > SIC 2833 Medicinal Chemicals & Botanical Products

SEC company page: https://www.sec.gov/edgar/browse/?CIK=896264. Latest filing source: 0000896264-26-000021.

Selected Fundamentals

Financials

Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-03-16. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0000896264.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 2026-05-12. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0000896264.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: 0000896264-26-000034.

Extracted structurally from real Item 2 body heading to real Item 3/4 boundary. Confidence: high. Filing date: 2026-05-12. Report date: 2026-04-04.

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

Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is designed to provide an understanding of USANA’s financial condition, results of operations and cash flows by reviewing certain key indicators and measures of performance.

The MD&A is presented in six sections as follows:

•Overview

•Products

•Customers

•Non-GAAP Financial Measures

•Results of Operations

•Liquidity and Capital Resources

This discussion and analysis from management's perspective should be read in conjunction with the Unaudited condensed consolidated financial statements and Notes thereto that are contained in this quarterly report, as well as Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations of our Annual Report on Form 10-K for the year ended January 3, 2026 (“2025 Form 10-K”), filed with the SEC on March 16, 2026, and our other filings, including the Current Reports on Form 8-K, that have been filed with the SEC through the date of this report. Forward-looking statements in Part I, Item 2 may involve risks and uncertainties that could cause results to differ materially from those projected (refer to the section entitled “Cautionary Note Regarding Forward-Looking Statements and Certain Risks” on page 1 and the risk factors provided in Part II, Item 1A for discussion of these risks and uncertainties).

Overview

We develop and manufacture high quality nutritional supplements, functional foods and personal care products that are sold throughout the world. Historically, we have distributed our products through the direct selling channel, because we believe it is conducive to our vision of improving the overall health and nutrition of individuals and families around the world. On December 23, 2024, we acquired a 78.85% controlling ownership interest in Hiya, a leading provider of high-quality children's health and wellness products. We believe that the addition of Hiya to our business promotes our vision and adds a diversified layer of growth in the direct-to-consumer channel. In 2022, we acquired Rise and have expanded Rise's product offering, distribution channel, and customer base over the last three years. Consequently, through our Core Nutritional business, Hiya, and Rise, we now operate and sell products through an omni-channel platform, which includes direct selling, direct-to-consumer, third-party marketplace and retail channels and organize our business into three reportable segments: Core Nutritional, Hiya, and Rise.

Core Nutritional: Core Nutritional is our primary business with approximately 82% of consolidated net sales during the three months ended April 4, 2026. Our Core Nutritional customer base is primarily comprised of two types of customers: “Brand Partners” and “Preferred Customers,” referred to together as “active Customers.” Our Brand Partners also sell our products to retail customers. Brand Partners share in our company vision by acting as independent distributors of our products in addition to purchasing our products for their personal use. In 2023, we launched our Affiliate program in the United States, Canada, and Mexico, which offers another sales and compensation opportunity to individuals who are interested in selling USANA products. Affiliates are discussed and reported in the report as part of our Brand Partners. Preferred Customers purchase our products strictly for personal use and are not permitted to resell or to distribute the products. We only count as active Customers those Brand Partners and Preferred Customers who have purchased from us at any time during the most recent three-month period. As of April 4, 2026, we had approximately 404,000 active Customers worldwide in the Core Nutritional segment.

We have Core Nutritional operations in multiple markets, with sales and expenses being generated and incurred in multiple currencies. Our reported U.S. dollar sales and earnings can be significantly affected by fluctuations in currency exchange rates. In general, our operating results are affected positively by a weakening of the U.S. dollar and negatively by a strengthening of the U.S. dollar. During the three months ended April 4, 2026, net sales outside of the United States represented 91.3% of Core Nutritional net sales. In our net sales discussions that follow, we approximate the impact of currency fluctuations on net sales by translating current year sales at the average exchange rates in effect during the comparable periods of the prior year.

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Hiya: Hiya operates and sells products to customers in the United States, Canada, and the United Kingdom. Hiya's customers purchase Hiya products for personal use primarily through a subscription model, which is intended to provide a steady, predictable income stream for Hiya. The ongoing nature of subscriptions fosters stronger relationships with customers by making it easier for them to receive products regularly, which we believe leads to retention and loyalty. Hiya's subscription model also provides important data on customer preferences and behaviors, which enables personalized offerings, efficient marketing and data-driven innovation insights. We evaluate Hiya's customer counts and behavior through their monthly subscribers and only count as "active Monthly Subscribers" those Hiya customers who have purchased from Hiya at any time during the most recent month. Hiya expanded distribution into retail during the first quarter of 2026.

Rise: Rise manufactures and sells high-quality protein bars, powdered drinks, and clear protein drinks that are formulated to help customers achieve their health goals through clean and simple ingredients. Rise's revenue is generated primarily from sales to large national retailers and club retailers.

The following tables summarize operating results as a percentage of net sales for the current and prior-year periods, as indicated:

Three months ended

April 4, 2026

March 29, 2025

Core Nutritional

Hiya

Rise

Consolidated

Core Nutritional

Hiya

Rise

Consolidated

Net sales

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

Cost of sales

18.0%

31.1%

92.9%

23.8%

17.7%

38.0%

65.1%

21.0%

Gross profit

82.0%

68.9%

7.1%

76.2%

82.3%

62.0%

34.9%

79.0%

Operating expenses:

Brand Partner incentives

43.4%

—%

—%

35.4%

42.7%

—%

—%

36.1%

Selling, general and administrative

29.7%

77.0%

20.0%

35.3%

31.6%

63.4%

79.2%

36.6%

Total operating expenses

73.1%

77.0%

20.0%

70.7%

74.3%

63.4%

79.2%

72.7%

Earnings (loss) from operations

8.9%

(8.1%)

(12.9%)

5.5%

8.0%

(1.4%)

(44.3%)

6.3%

Amortization of acquired intangible assets

—%

13.9%

1.5%

1.9%

—%

12.0%

13.0%

1.9%

For more information relating to our reportable segments, see Note J to our condensed consolidated financial statements.

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Products

The following table summarizes the approximate percentage of total product revenue for the Core Nutritional segment that has been contributed by major product lines and our top-selling products for the current and prior-year periods, as indicated:

Three months ended

April 4, 2026

March 29, 2025

Product line

USANA® Nutritionals

Optimizers

72%

72%

Essentials/CellSentials(1)

14%

16%

USANA Foods(2)

7%

6%

Personal care and Skincare

6%

5%

All other

1%

1%

Key product

USANA® Essentials/CellSentials

8%

9%

Proflavanol®

7%

9%

Probiotic

6%

7%

______________________________

(1)Represents a product line consisting of multiple products, as opposed to the actual USANA® Essentials / CellSentials product.

(2)Includes our Active Nutrition line.

The following table summarizes the approximate percentage of total product revenue for our Hiya segment that has been contributed by major product lines for the current and prior-year periods, as indicated:

Three months ended

Product line

April 4, 2026

March 29, 2025

Kids Daily Multivitamin

55%

52%

Kids Daily Probiotic

14%

14%

Kids Daily Greens and Superfoods

12%

17%

Kids Bedtime Essentials

11%

10%

Kids Daily Iron

4%

4%

Kids Daily Hydration

2%

—%

Kids Daily Immune

1%

3%

Kids Daily Fiber+

1%

—%

The following table summarizes the approximate percentage of total product revenue for our Rise segment that has been contributed by major product lines for the current and prior-year periods, as indicated:

Three months ended

Product line

April 4, 2026

March 29, 2025

Protein Pop (1)

75%

—%

Bars

24%

89%

Powders

1%

11%

______________________________

(1)Protein Pop was launched in the third quarter of 2025.

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Customers

Core Nutritional

Because we primarily sell our products to a customer base of independent Brand Partners and Preferred Customers, we increase our sales by increasing the number of our active Customers, the amount they spend on average, or both. Our primary focus continues to be increasing the number of active Customers. We believe this focus is consistent with our vision of improving the overall health and nutrition of individuals and families around the world. Increases or decreases in product sales are typically the result of variations in the volume of product sold relating to fluctuations in the number of active Customers purchasing our products. The number of active Customers is, therefore, used by management as a key non-financial indicator to evaluate our operational performance.

Sales to Brand Partners accounted for approximately 50% of Core Nutritional segment sales during the three months ended April 4, 2026, with the remainder of our sales generated from Preferred Customers. As of April 4, 2026, Brand Partners and Preferred Customers represented approximately 41% and 59%, respectively, of the total active Customer base for the quarter in the Core Nutritional segment. The table below summarizes the changes in our active Customer base for the Core Nutritional segment by geographic region, rounded to the nearest thousand as of the dates indicated:

Total active customers by region

Change from prior year

Percent change

As of

April 4, 2026

As of

March 29, 2025

Asia Pacific:

Greater China

235,000

58.2

%

254,000

55.3

%

(19,000)

(7.5

%)

Southeast Asia Pacific

59,000

14.6

%

75,000

16.4

%

(16,000)

(21.3

%)

North Asia

32,000

7.9

%

45,000

9.8

%

(13,000)

(28.9

%)

Asia Pacific total

326,000

80.7

%

374,000

81.5

%

(48,000)

(12.8

%)

Americas and Europe

78,000

19.3

%

85,000

18.5

%

(7,000)

(8.2

%)

404,000

100.0

%

459,000

100.0

%

(55,000)

(12.0

%)

Hiya

Hiya's active Monthly Subscribers are comprised of two types: first-time customers and recurring customers. First-time customers are viewed as an investment as the customer is provided a discount, and shipping costs are higher due to the inclusion of a refillable glass bottle. Additionally, as a direct-to-consumer company, customer acquisition is heavily influenced by the level of marketing spend. Recurring customers are not provided the same discount, and shipping costs are lower on refill orders. Both gross margins as well as operating margins improve with recurring customer orders, therefore, profitability margins are affected by sales mix between these two types of customers. As of April 4, 2026 and March 29, 2025, Hiya had approximately 186,000 and 224,000 active Monthly Subscribers, respectively.

Rise

Rise sells its products primarily to large national retailers and club retailers throughout the United States. Rise does not operate under long-term supply agreements with any of its retail customers. Instead, sales are generally made pursuant to purchase orders. As a result, our revenue in any given period is dependent on ordering patterns and inventory management decisions made by our retail customers, which can be difficult to predict and may vary significantly from

[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: 2026-03-16. Report date: 2026-01-03.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of USANA’s financial condition and results of operations is presented in nine sections:

•Overview

•Customers

•Presentation

•Non-GAAP Financial Measures

•Results of Operations

•Liquidity and Capital Resources

•Contractual Obligations and Commercial Contingencies

•Inflation

•Critical Accounting Policies and Estimates

This discussion and analysis from management's perspective should be read in conjunction with the consolidated financial statements and notes thereto appearing elsewhere in this report.

Overview

We develop and manufacture high quality nutritional supplements, functional foods and personal care products that are sold throughout the world. Historically, we have distributed our products through the direct selling channel, because we believe it is conducive to our vision of improving the overall health and nutrition of individuals and families around the world. On December 23, 2024, we acquired a 78.85% controlling ownership interest in Hiya, a leading provider of high-quality children's health and wellness products. We believe that the addition of Hiya to our business promotes our vision and adds a diversified layer of growth in the direct-to-consumer channel. In 2022, we acquired Rise and have expanded Rise's product offering, distribution channel, and customer base over the last three years. Consequently, through our core nutritional business, Hiya and Rise, we now operate and sell products through an omni-channel platform, which includes direct selling, direct-to-consumer, third-party marketplace and retail channels and organize our business into two reportable segments: Core nutritional and Hiya direct-to-consumer.

Core nutritional: Core nutritional is our primary business with approximately 84% of consolidated net sales during 2025. Our core nutritional customer base is primarily comprised of two types of customers: “Brand Partners” and “Preferred Customers,” referred to together as “active Customers.” Our Brand Partners also sell our products to retail customers. Brand Partners share in our company vision by acting as independent distributors of our products in addition to purchasing our products for their personal use. In 2023, we launched our Affiliate program in the United States, Canada, and Mexico, which offers another sales and compensation opportunity to individuals who are interested in selling USANA products. Affiliates are discussed and reported in the report as part of our Brand Partners. Preferred Customers purchase our products strictly for personal use and are not permitted to resell or to distribute the products. We only count as active Customers those Brand Partners and Preferred Customers who have purchased from us at any time during the most recent

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three-month period. As of January 3, 2026, we had approximately 387,000 active Customers worldwide in our core nutritional business.

We have core nutritional operations in multiple markets, with sales and expenses being generated and incurred in multiple currencies. Our reported U.S. dollar sales and earnings can be significantly affected by fluctuations in currency exchange rates. In general, our operating results are affected positively by a weakening of the U.S. dollar and negatively by a strengthening of the U.S. dollar. During 2025, net sales outside of the United States represented 90.3% of core nutritional net sales. In our net sales discussions that follow, we approximate the impact of currency fluctuations on net sales by translating current year sales at the average exchange rates in effect during the comparable periods of the prior year.

Hiya direct-to-consumer: Hiya operates and sells products to customers in the United States. Hiya's customers purchase Hiya products for personal use primarily through a subscription model, which is intended to provide a steady, predictable income stream for Hiya. The ongoing nature of subscriptions fosters stronger relationships with customers by making it easier for them to receive products regularly, which we believe leads to retention and loyalty. Hiya's subscription model also provides important data on customer preferences and behaviors, which enables personalized offerings, efficient marketing and data-driven innovation insights. We evaluate Hiya's customer counts and behavior through its monthly subscribers and only count as "active Monthly Subscribers" those Hiya customers who have purchased from Hiya at any time during the most recent month. As of January 3, 2026, Hiya had approximately 181,700 active Monthly Subscribers.

Other: The other category is comprised of Rise Bar Wellness, Inc. ("Rise") and Oola Global, LLC ("Oola"), which are both businesses we acquired in 2022. Rise manufactures and sells high-quality protein bars, powdered drinks, and clear protein drinks that are formulated to help customers achieve their health goals through clean and simple ingredients. Oola is a direct selling company that offers a personal development framework and nutritional products that helps individuals create a life of balance, growth, and purpose.

We discuss our other category, which is not a reportable segment, together with our "core nutritional" segment.

The following table summarizes operating results as a percentage of net sales for the current and prior-year periods, as indicated:

Year Ended

January 3, 2026

December 28, 2024

Core nutritional & other

Hiya direct-to-consumer

Consolidated

Core nutritional & other

Hiya direct-to-consumer

Consolidated

Net sales

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

Cost of sales

19.5%

35.1%

21.7%

18.8%

30.4%

18.9%

Gross profit

80.5%

64.9%

78.3%

81.2%

69.6%

81.1%

Operating expenses:

Brand Partner incentives

42.4%

—%

36.3%

42.7%

—%

42.6%

Selling, general and administrative

32.2%

62.3%

36.5%

30.7%

62.2%

30.8%

Cost realignment and impairment

1.7%

—%

1.5%

—%

—%

—%

Total operating expenses

76.3%

62.3%

74.3%

73.4%

62.2%

73.4%

Earnings from operations

4.2%

2.6%

4.0%

7.8%

7.4%

7.7%

Amortization of acquired intangible assets

0.2%

13.8%

2.1%

0.1%

14.9%

0.2%

Customers

Core nutritional

Because we primarily sell our products to a customer base of independent Brand Partners and Preferred Customers, we increase our sales by increasing the number of our active Customers, the amount they spend on average, or both. Our primary focus continues to be increasing the number of active Customers. We believe this focus is consistent

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with our vision of improving the overall health and nutrition of individuals and families around the world. Sales to Brand Partners account for approximately 53% of our segment product sales during 2025, with the remainder being to Preferred Customers. Increases or decreases in product sales are typically the result of variations in the volume of product sold relating to fluctuations in the number of active Customers purchasing our products. The number of active Brand Partners and Preferred Customers is therefore used by management as a key non-financial indicator to evaluate our operational performance.

The table below summarizes the change in our active Customer base by geographic region, rounded to the nearest thousand, as of the dates indicated.

Total Active Customers by Region

Change from

Prior Year

Percent

Change

As of

January 3, 2026

As of

December 28, 2024

Asia Pacific:

Greater China

208,000

53.8 

%

246,000

54.2 

%

(38,000)

(15.4

%)

Southeast Asia Pacific

63,000

16.3 

%

77,000

16.9 

%

(14,000)

(18.2

%)

North Asia

35,000

9.0 

%

38,000

8.4 

%

(3,000)

(7.9

%)

Asia Pacific Total

306,000

79.1 

%

361,000

79.5 

%

(55,000)

(15.2

%)

Americas and Europe

81,000

20.9 

%

93,000

20.5 

%

(12,000)

(12.9

%)

387,000

100.0 

%

454,000

100.0 

%

(67,000)

(14.8

%)

Hiya direct-to-consumer

Hiya's active Monthly Subscribers are comprised of two types: first-time customers and recurring customers. First-time customers are viewed as an investment as the customer is provided a discount, and shipping costs are higher due to the inclusion of a refillable glass bottle. Additionally, as a direct-to-consumer company, customer acquisition is heavily influenced by the level of marketing spend. Recurring customers are not provided the same discount, and shipping costs are lower on refill orders. Both gross margins as well as operating margins improve with recurring customer orders, therefore, profitability margins are affected by sales mix between these two types of customers.

Presentation

Product sales along with the shipping and handling fees billed to our customers are recorded as revenue net of applicable sales discounts when, or as control of, the promised product is transferred to the customer, which is at the time of delivery to the third-party carrier for shipment. Payments received for unshipped products are recorded as deferred revenue and are included in the "Other current liabilities" line item in the consolidated balance sheets. Also reflected in net sales is a provision for a refund liability for sales returns, which is estimated based on our historical experience. Additionally, other types of revenue include fees, which are paid by the customer at the beginning of the service period, for access to online customer service applications and annual account renewal fees for Brand Partners, for which control is transferred over time as services are delivered and are recognized as revenue on a straight-line basis over the term of the respective contracts.

Cost of sales primarily consists of expenses related to raw materials, labor, quality assurance, overhead costs, and freight out that are all directly associated with the production and distribution of our products and sales materials, as well as duties and taxes that are associated with the import and export of our products. As international sales increase as a percentage of net sales, cost of sales are increasingly affected by additional duties, freight, and other factors, such as changes in currency exchange rates.

Brand Partner incentives expense is incurred only in the core nutritional segment and includes all forms of commissions, and other incentives paid to our Brand Partners. Incentives paid to Brand Partners include bonuses earned, rewards from contests and promotions, and base commissions, which makes up the majority of our Brand Partner incentives expense. We pay bonuses to Brand Partners based on certain business-related criteria, total base commission earnings, and leadership level. Contests and promotions are offered as an incentive and reward to our Brand Partners and are typically paid out only after a Brand Partner achieves specific criteria. Base commissions are paid out on the sale of products. Brand Partners earn their commissions based on sales volume points that are generated in their sales organization. Sales volume points are assigned to each commissionable product and comprise a certain percent of the product price. Items such as our starter kits and sales tools have no sales volume point value, and commissions are not paid on the sale of

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these items. Although insignificant to our financial statements, a Brand Partner may earn commissions on sales volume points that are generated from personal purchases that are not considered part of their “Qualifying Sales.” To be eligible to earn commissions, a Brand Partner must reach a certain level of Qualifying Sales each month, which may include product that they use personally or that they resell to consumers. Brand Partners do not earn commissions on their Qualifying Sales. Commissions paid to Brand Partners on personal purchases are considered a sales discount and are reported as a reduction to our net sales.

Selling, general and administrative expenses include wages and benefits, depreciation and amortization, lease costs and utilities, Brand Partner event costs, advertising, professional fees, marketing, and research and development expenses. Wages and benefits represent the largest component of selling, general and administrative expenses. Significant depreciation and amortization expense is incurred as a result of investments in physical facilities, computer and information technology infrastructure to support our international operations, and intangible assets.

Sales to customers outside the United States are transacted in the respective local currencies and translated to U.S. dollars at weighted-average currency exchange rates for each monthly accounting period to which they relate. With the exception of China, our raw material purchases from suppliers and product purchases from third-party manufacturers are transacted in U.S. dollars. Consequently, our net sales and earnings are affected by changes in currency exchange rates. In general, our operating results are affected positively by a weakening U.S. dollar and negatively by a strengthening U.S. dollar. In our net sales discussions that follow, we approximate the impact of currency fluctuations on net sales by translating current year net sales at the average exchange rates in effect during the comparable prior-year periods.

Non-GAAP Financial Measures

We believe that presentation of certain non-GAAP financial information is meaningful and useful in understanding the activities and business metrics of our operations. Management believes these measures reflect an additional way of viewing aspects of our business that, when viewed with our U.S. GAAP results, provide a more complete understanding of factors and trends affecting our business. This non-GAAP financial information may be determined or calculated differently by other companies, limiting the usefulness of those measures for comparative purposes. We provide such non-GAAP financial information for informational purposes only. Readers should consider the information in addition but not instead of or superior to, our consolidated financial statements prepared in accordance with U.S. GAAP, accompanying this report.

In analyzing business trends and performance, management uses “constant currency” net sales, “local currency” net sales, and other currency-related financial information terms to discuss our financial results in a way we believe is helpful in understanding the impact of fluctuations in foreign-currency exchange rates and facilitating period-to-period comparisons of results of operations and providing investors an additional perspective on trends and underlying business results. Changes in our reported revenue and profits in this report include the impacts of changes in foreign currency exchange rates. As additional information to the reader, we provide constant currency assessments in the tables and the narrative information in this MD&A to remove or quantify the impact of the fluctuation in foreign exchange rates and utilize constant currency results in our analysis of performance. Our constant currency financial results are calculated by translating the current period’s financial results at the same average exchange rates in effect during the applicable prior-year period and then comparing this amount to the prior-year period’s financial results.

Results of Operations

Summary of 2025 Financial Results

Our discussion and analysis is focused on our 2025 and 2024 financial results, including comparisons of our year-over-year performance between these years. Discussion and analysis of our 2023 fiscal year specifically, as well as the year-over-year comparison of our 2024 financial performance to 2023, are located in Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended December 28, 2024, filed with the SEC on March 12, 2025, which is available on our investor relations website at https://ir.usana.com or the SEC’s website at www.sec.gov. That information is incorporated by reference into this report.

Net sales in 2025 increased 8.3%, or $70.8 million, to $925.3 million, compared with 2024. The net sales increase was primarily the result of adding the year-to-date incremental sales for Hiya of $130.0 million, partially offset by a decline in net sales for the core nutritional segment. Additionally, unfavorable changes in currency exchange rates decreased net sales for the year by an estimated $3.1 million.

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Net earnings attributable to USANA decreased 74.4% to $10.8 million in 2025, when compared with 2024. The decrease in net earnings attributable to USANA was primarily the result of a lower operating margin and a substantial increase in the effective tax rate for 2025.

Fiscal Year 2025 compared to Fiscal Year 2024

Net Sales

The following table summarizes the changes in our net sales by segment for the fiscal years ended January 3, 2026, and December 28, 2024:

Net Sales by Region

(in thousands)

Change from prior

year

Percent change

Currency impact on

sales

Percent change

excluding currency

impact

Year Ended

January 3, 2026

December 28, 2024

Core nutritional:

Asia Pacific

Greater China

$

424,541 

45.9 

%

$

457,976 

53.6 

%

$

(33,435)

(7.3)

%

$

(180)

(7.3)

%

Southeast Asia Pacific

131,996 

14.3 

%

146,795 

17.2 

%

(14,799)

(10.1)

%

1,950 

(11.4)

%

North Asia

70,627 

7.6 

%

78,214 

9.1 

%

(7,587)

(9.7)

%

(3,068)

(5.8)

%

Asia Pacific total

627,164 

67.8 

%

682,985 

79.9 

%

(55,821)

(8.2)

%

(1,298)

(8.0)

%

Americas and Europe

148,288 

16.0 

%

162,804 

19.1 

%

(14,516)

(8.9)

%

(1,757)

(7.8)

%

Core nutritional total

775,452 

83.8 

%

845,789 

99.0 

%

(70,337)

(8.3)

%

(3,055)

(8.0)

%

Hiya(1)

131,971 

14.3 

%

1,970 

0.2 

%

130,001 

N/A

— 

N/A

Other

17,834 

1.9 

%

6,744 

0.8 

%

11,090 

164.4 

%

— 

164.4 

%

Consolidated total

$

925,257 

100.0 

%

$

854,503 

100.0 

%

$

70,754 

8.3 

%

$

(3,055)

8.6 

%

______________________________

(1)Percentage change for Hiya is not applicable due to timing of the acquisition.

Core Nutritional Net Sales

Net sales in our core nutritional business (discussed with our other category) in 2025 were $793.3 million, down 6.9% when compared to the corresponding period of 2024. On a constant currency basis, net sales in the core nutritional segment declined 6.6%. The decrease in net sales was mainly due to a 14.8% decrease in active Customers, partially offset by a 4.4% increase in average spend per customer and one additional week of operations compared to fiscal year 2024 which was a 52-week year.

Asia Pacific: Net sales declined 8.2%, or 8.0% on a constant currency basis, in this region during the current year period. Active Customers in this region declined 10.8% year-over-year, partially offset by 3.2% higher average spend per customer throughout the region. The net sales decline reflects a challenging economic and operating environment.

The following table summarizes changes in local currency net sales, active Customer counts, and average spend per active Customer for the markets primarily contributing to the decline in net sales within the Asia Pacific region:

Market

Local currency net sales

Active Customers

Average spend per active Customer

China

(7.4%)

(10.9%)

3.8%

South Korea

(5.8%)

(6.8%)

1.7%

Malaysia

(16.7%)

(17.3%)

1.2%

Australia

(12.4%)

(9.1%)

(3.8%)

Americas and Europe: Net sales declined 8.9%, or 7.8% on a constant currency basis, in this region during the current year period. Active Customers in this region declined 14.4% year-over-year, while average spend per customer

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increased 8.6% year-over-year. Year-over-year results in this region reflect a continued challenging environment to attract new customers.

The following table summarizes changes in local currency net sales, active Customer counts, and average spend per active Customer for the markets primarily contributing to the decline in net sales within the Americas and Europe region:

Market

Local currency net sales

Active Customers

Average spend per active Customer

United States

(7.8%)

(14.9%)

8.3%

Canada

(4.3%)

(11.1%)

7.6%

Mexico

(8.3%)

(16.9%)

10.1%

Hiya Net Sales

Our Hiya direct-to-consumer net sales for 2025 and 2024 were $131,971 and $1,970, respectively. 2025 represented an entire year of net sales, whereas 2024 consisted of net sales for the final week of the year, from the Hiya acquisition date of December 23, 2024 through the end of the year.

Gross Profit

Gross profit decreased 280 basis points to 78.3% of net sales, down from 81.1% in 2024. The decrease in gross profit is largely attributable to the inclusion of Hiya, which carries lower gross margins relative to the core nutritional segment. Gross profit in the core nutritional segment, excluding the impact of the other category, improved 30 basis points from the prior year mainly due to the change in cost attribution from cost of sales to selling, general and administrative expenses resulting from the reorganization of our commercial team, a favorable change in market and product mix, and price increases, partially offset by unfavorable changes in currency exchange rates.

Brand Partner Incentives

Brand Partner incentives expense is incurred only in the core nutritional segment. Brand Partner incentives decreased 30 basis points to 42.4% of segment net sales in 2025, compared with 42.7% in the prior year, primarily due to the other category, which does not incur Brand Partner incentives expense. Excluding the impact of the other category, Brand Partner incentives expense increased 5 basis points to 43.3% of core nutritional net sales. The rollout of our enhanced Brand Partner Compensation Plan in the third quarter of 2025 accounted for a 50 basis point increase, almost entirely offset by lower accruals for distributor trips and events in the current year and the effects of price increases. On a consolidated basis, Brand Partner incentives expense decreased 630 basis points to 36.3% of consolidated net sales, down from 42.6% in the prior year. This decrease can be primarily attributed to the inclusion of Hiya net sales where no Brand Partner incentives expense is incurred.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased $74.1 million in absolute terms during the current year, or 580 basis points relative to net sales. The increase reflects an approximately 400 basis point unfavorable impact on consolidated results from the Hiya direct-to-consumer segment, which has a higher mix of selling, general and administrative expenses compared to the core nutritional segment, mainly concentrated in advertising spend, payroll and other professional services, and amortization of acquired intangible assets. Selling, general and administrative expenses for our core nutritional segment increased 150 basis points relative to net segment sales, but decreased $6.9 million from an absolute dollar perspective compared to the prior year. The relative increase is primarily due to a loss of leverage on lower sales. The absolute dollar decrease in selling, general and administrative expense can be primarily attributed to the absence of costs related to the acquisition of Hiya in 2024 and a gain on the sale of property and equipment, partially offset by the change in cost attribution from cost of sales to selling, general and administrative expenses resulting from the reorganization of the commercial team.

Cost realignment and impairment

During the fourth quarter of 2025, the Company initiated and began executing a comprehensive process to align all costs throughout the business globally. This process supports business strategy while ensuring organizational costs are

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aligned with sales performance. As a result of this realignment and rightsizing process, we incurred a one-time charge of $6,463 in the fourth quarter of 2025.

In the fourth quarter of 2025, we recorded a non-cash goodwill impairment charge of $6,527 and a non-cash amortized intangible asset impairment charge of $440.

Income Taxes

Income taxes increased to 72.4% of pre-tax earnings in 2025, up from 44.9% of pre-tax earnings in 2024. The higher effective tax rate was driven by lower U.S. earnings before taxes including cost realignment and impairment while still paying a relatively similar amount of foreign taxes.

Diluted Earnings Per Share Attributable to USANA

Diluted earnings per share attributable to USANA decreased to $0.58 in 2025 from $2.19 in 2024. This decrease can be attributed to lower earnings from operations and a substantial increase in the effective tax rate for 2025.

Liquidity and Capital Resources

We have historically met our working capital and capital expenditure requirements by using net cash flow from operations and by drawing on our line of credit. Our principal source of liquidity is our operating cash flow. Although we are required to maintain cash deposits with banks in certain of our markets, there are currently no material restrictions on our ability to transfer and remit funds among our international markets. In China, however, our compliance with Chinese accounting and tax regulations promulgated by the State Administration of Foreign Exchange (“SAFE”) results in transfer and remittance of our profits and dividends from China to the United States on a delayed basis. If SAFE or other Chinese regulators introduce new regulations or change existing regulations which allow foreign investors to remit profits and dividends earned in China to other countries, our ability to remit profits or pay dividends from China to the United States may be limited in the future.

We believe our current liquidity, through cash flow from operations along with our line of credit, is adequate to meet our cash requirements and sustain our operations. Maintaining a capital structure that emphasizes sufficient liquidity and adaptability in the prevailing economic climate is our top priority. We actively assess potential acquisition opportunities and investments in complementary ventures. While we continuously aim to preserve ample liquidity and ensure business continuity amid uncertainties, we also explore initiatives such as stock repurchases. These strategic decisions have the potential to impact our liquidity, enabling us to navigate these challenging times effectively.

Cash and Cash Equivalents

Cash and cash equivalents decreased to $158.4 million at January 3, 2026, from $181.8 million at December 28, 2024. Cash flow provided by operating activities was $22.3 million, offset by cash used in investing activities and financing activities of $10.1 million and $40.6 million, respectively. Additionally, favorable changes in currency exchange rates have impacted cash and cash equivalents, and restricted cash by $5.1 million.

The following table below presents concentrations of cash and cash equivalents by market for the periods indicated:

Cash and cash equivalents

(in millions)

As of

January 3, 2026

As of

December 28, 2024

China

$

89.3 

$

101.2 

United States

28.5 

43.0 

All other markets

40.6 

37.6 

Total cash and cash equivalents

$

158.4 

$

181.8 

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Cash Flows Provided by Operations and Significant Uses of Cash

As discussed above, our principal source of liquidity comes from cash flows from operations. Net cash flow provided by operating activities totaled $22.3 million in 2025. Net earnings combined with adjustments of non-cash items, an increase in accounts payable, and an increase in accrued employee compensation due to severance accruals contributed positively to our net cash flow provided by operating activities, partially offset by purchases of inventories and accrued Brand Partner incentives.

Other significant uses of cash included an investment of $13.8 million to purchase property and equipment, and cash used to repurchase and retire shares totaled $27.5 million in 2025.

Net cash flow provided by operating activities totaled $61.0 million in 2024. Net earnings combined with adjustments of non-cash items contributed positively to our net cash flow provided by operating activities, partially offset by changes in working capital.

Line of Credit

Information with respect to our line of credit may be found in Note J to the consolidated financial statements included in Part II, Item 8 of this Annual Report, which is incorporated by reference.

Share Repurchase

Information with respect to our share repurchases may be found in Note N to the consolidated financial statements included in Part II, Item 8 of this Annual Report, which is incorporated by reference.

Off-Balance Sheet Arrangements

None.

Summary

We believe our current cash balances, future cash provided by operations, and amounts available under our line of credit will be sufficient to cover our operating and capital needs in the ordinary course of business for the foreseeable future. If we experience an adverse operating environment or unanticipated and unusual capital expenditure requirements, additional financing may be required. No assurance can be given, however, that additional financing, if required, would be available to us at all or on favorable terms. We might also require or seek additional financing for the purpose of expanding into new markets, growing our existing markets, mergers and acquisitions, or for other reasons. Such financing may include the use of debt or the sale of additional equity securities. Any financing which involves the sale of equity securities or instruments that are convertible into equity securities could result in immediate and possibly significant dilution to our existing shareholders.

Contractual Obligations and Commercial Contingencies

The following table summarizes our contractual obligations and commitments as of January 3, 2026, and the effect such obligations and commitments are expected to have on our liquidity and cash flow in future periods:

Payments Due By Period

(in thousands)

Contractual Obligations

Total

Less than 1 year

1 - 3 years

3 - 5 years

More than 5 years

Operating leases

$

19,639 

$

6,404 

$

9,168 

$

3,945 

$

122 

Other commitments

28,500 

18,370 

8,781 

1,227 

122 

Total contractual obligations

$

48,139 

$

24,774 

$

17,949 

$

5,172 

$

244 

“Operating leases” generally provide that property taxes, insurance, and maintenance expenses are our responsibility. Such expenses are not included in the operating lease amounts in the table above. Information with respect to our Operating leases may be found in Note G to the consolidated financial statements included in Part II, Item 8 of this Annual Report, which is incorporated by reference.

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“Other commitments” generally include consulting- and IT-related services, investments in brand awareness through corporate and athlete sponsorships, facility maintenance, services related to the events that we hold for our Brand Partners both locally and internationally, and local lines of credit. Additionally, throughout the year we will enter into various short-term contracts, mostly for services related to events that we hold for our Brand Partners. Information with respect to our unconditional purchase obligations may be found in Note K to the consolidated financial statements included in Part II, Item 8 of this Annual Report, which is incorporated by reference.

Inflation

Like many other global companies, we are facing significant inflationary pressures in the world economy. Inflationary pressures are growing as we renew pricing arrangements, notably for certain direct materials, wages, energy, and transportation costs. These inflationary pressures, including margin pressure from inflation as well as the cost of capital could continue to grow in 2026.

Critical Accounting Policies and Estimates

Our consolidated financial statements included in this report have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Our significant accounting policies are described in the consolidated financial statements included herein. The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Those estimates and assumptions are derived and are continually evaluated based on our historical experiences, current facts and circumstances, and on changes in the business environment. Actual results, however, may sometimes differ materially from estimates under different conditions. Critical accounting estimates are defined as both those that are material to the portrayal of our financial condition and results of operations and those that require management’s most subjective judgments. We believe that our most critical accounting policies and estimates are described in this section.

Impairment of Long-Lived Assets, Goodwill, and Indefinite-Lived Intangible Assets. Long-lived assets, including property and equipment and definite-lived intangible assets, are reviewed for impairment whenever events or changes in circumstances exist that indicate the carrying amount of the assets may not be recoverable. Events or changes in circumstances that would indicate the need for impairment testing include, among other factors: operating losses; unused capacity; market value declines; technological developments resulting in obsolescence; changes in demand for products manufactured; changes in competition and competitive practices; uncertainties associated with the world economies; and changes in governmental regulations or actions. When indicators of impairment exist, an estimate of undiscounted net cash flows is used in measuring whether the carrying amount of the asset or related asset group is recoverable. Measurement of the amount of impairment, if any, is based upon the difference between the asset group's carrying value and estimated fair value. Fair value is determined through various valuation techniques, including market and income approaches as considered necessary.

Goodwill represents the excess of purchase price paid over the fair market value of identifiable net assets and noncontrolling interest of acquired companies. Goodwill is not amortized, but rather it is tested at the reporting unit level at least annually for impairment or more frequently if triggering events or changes in circumstances indicate that the fair value of a reporting unit is less than its carrying amount. Initially, qualitative factors are considered to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. Some of these qualitative factors may include macroeconomic conditions, industry and market considerations, a change in financial performance, entity-specific events, a sustained decrease in share price, and consideration of the difference between the fair value and carrying amount of a reporting unit as determined in the most recent quantitative assessment. If, through this qualitative assessment, the conclusion is made that it is more likely than not that a reporting unit's fair value is less than its carrying amount, a quantitative impairment analysis is performed. This analysis involves estimating the fair values of a reporting unit using widely-accepted valuation methodologies including the income and market approaches, which requires the use of estimates and assumptions. These estimates and assumptions include projected revenue growth rates, discount rates, and determination of appropriate comparable entities. If the fair value of the reporting unit is less than its carrying amount, an impairment loss is recognized in an amount equal to the excess of the carrying amount over the fair value of the reporting unit, not to exceed the carrying amount of the goodwill.

Indefinite-lived intangible assets are not amortized; however, they are tested at least annually for impairment or more frequently if events or changes in circumstances exist that may indicate impairment. Initially, qualitative factors are considered to determine whether it is more likely than not that the fair value of an indefinite-lived intangible asset is less than its carrying amount. If, through this qualitative assessment, the conclusion is made that it is more likely than not that

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an indefinite-lived intangible asset's fair value is less than its carrying amount, a quantitative impairment analysis is performed by comparing the indefinite-lived intangible asset's carrying amount to its fair value. The fair value for indefinite-lived intangible assets is determined through various valuation techniques, including market and income approaches as considered necessary. The amount of any impairment is measured as the difference between the carrying amount and the fair value of the impaired asset.

Determining the fair value of our long-lived assets, reporting units, and indefinite-lived intangible assets as part of these impairment analyses requires significant judgment in estimates and assumptions used under the income and market approaches. The principal assumptions used in these analyses include management’s best estimates of future financial results including revenue growth rates, an appropriate discount rate to apply to projected cash flows, guideline public companies, selection of market multiples and weightings, and control premium. A change in any of the estimates or assumptions used could result in impairment. During 2025, we recorded a $6,390 impairment charge of all goodwill related to the Buy-Sell reporting unit within the core nutritional segment, which resulted primarily from lower projected revenues and operating margins within the reporting unit. In addition, we recorded a $577 impairment of goodwill and amortizable intangible assets in the other category. No impairment of long-lived assets, goodwill, or indefinite-lived intangible assets was recorded in 2024 and 2023.

Revenue Recognition. Revenue is recognized when, or as, control of a promised product or service transfers to a customer, in an amount that reflects the consideration to which the Company expects to be entitled in exchange for transferring those products or services. Revenue excludes taxes that have been assessed by governmental authorities and that are directly imposed on revenue-producing transactions between the Company and its customers, including sales, use, value-added, and some excise taxes. Revenue recognition is evaluated through the following five-step process:

1)identification of the contract with a customer;

2)identification of the performance obligations in the contract;

3)determination of the transaction price;

4)allocation of the transaction price to the performance obligations in the contract; and

5)recognition of revenue when or as a performance obligation is satisfied.

Core Nutritional Business Product Revenue

A majority of the Company’s core nutritional sales are for products sold at a point in time and shipped to customers, for which control is transferred to the customer as goods are delivered to the third-party carrier for shipment. The Company receives payment, primarily via credit card, for the sale of products at the time customers place orders and payment is required prior to shipment. The Company does not recognize assets associated with costs to obtain or fulfill a contract with a customer.

The Company’s core nutritional product sales contracts include terms that could cause variability in the transaction price for items such as discounts, product promotions, credits, or sales returns, which are a reduction of revenue. Accordingly, the transaction price for product sales includes estimates of variable consideration to the extent it is probable that a significant reversal of revenue recognized will not occur. At the time of sale, the Company estimates a refund liability for the variable consideration based on historical experience, which is recorded within the “Other current liabilities” line item in the consolidated balance sheets.

Initial product orders with a new core nutritional customer may include multiple performance obligations related to sales discounts earned under the Company’s initial order reward program. Under this program, the customer receives an option to apply the discounts earned on the initial order to two subsequent Auto Orders, which conveys a material right to the customer. As such, the initial order transaction price is allocated to each separate performance obligation based on its relative standalone selling price and is recognized as revenue as each performance obligation is satisfied.

Brand Partner incentives represent consideration paid to a Brand Partner for distinct services provided in the sale of the Company's core nutritional products and include all forms of commissions, and other incentives paid to our Brand Partners. The Company may provide Brand Partner incentive promotions which are earned by Brand Partners for distinct services rendered. Brand Partner incentive promotions are recorded as the incentives are earned by the Brand Partners. With the exception of commissions paid to Brand Partners on personal purchases, which are considered a sales discount and are reported as a reduction to net sales, Brand Partner incentives are recorded as an operating expense. The amounts paid to Brand Partners are commensurate with the fair value received for the distinct services rendered by Brand Partners and are recorded as an operating expense when revenue for the goods is recognized.

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With respect to will-call orders, the Company periodically assesses the likelihood that customers will exercise their contractual right to pick up orders and revenue is recognized when the likelihood that customers will pick up orders becomes remote.

Hiya Product Revenue

Hiya's revenue is generated from e-commerce/direct to consumer sales. Revenue from online product sales is recognized at the point in time when control of the promised good is transferred to the third-party shipping carrier. The Company receives payments, primarily via credit card and PayPal, for the sale of products at the time customers place orders and subsequent subscription orders, and payment is required prior to shipment. There are no extended payment terms offered to consumers. To encourage customers to purchase its products, the Company provides incentive offers on initial orders. These offers, when accepted by customers, are treated as a reduction to the transaction price. The Company does not recognize assets associated with costs to obtain or fulfill a contract with a customer.

Shipping and Handling

Shipping and handling activities are performed upon delivery to the third-party carrier for shipment. The Company accounts for these activities as fulfillment costs. Therefore, the Company recognizes the costs of these activities when revenue for the goods is recognized. Shipping and handling costs are included in cost of sales for all periods presented.

Other Revenue

Other types of core nutritional revenue include fees, which are paid by the customer at the beginning of the service period, for access to online customer service applications and annual account renewal fees for Brand Partners, for which control is transferred over time as services are delivered and are recognized as revenue on a straight-line basis over the term of the respective contracts.

Contract liabilities relate to deferred revenue for product sales for customer payments received in advance of shipment, for outstanding material rights under the initial order program, and for services where the performance obligations are satisfied over time as services are delivered.

Deferred revenue is recognized when or as the related performance obligation is satisfied. On the occasion that will-call orders are not picked up by customers, we periodically assess the likelihood that customers will exercise their contractual right to pick up orders and recognize revenue when the likelihood that customers will pick up orders becomes remote.

Business Combinations. To record the value of assets acquired, liabilities assumed, and noncontrolling interest as a result of our acquisition of Hiya on December 23, 2024, we have performed a purchase price allocation utilizing the best information available to management. Assets acquired, liabilities assumed, and noncontrolling interests as part of a business acquisition are generally recorded at their fair value at the date of acquisition. The excess of purchase price over the fair value of assets acquired, liabilities assumed, and noncontrolling interest is recorded as goodwill. The acquisition method requires management to make assumptions and apply judgment, particularly for those assets acquired, liabilities assumed, and noncontrolling interest for which inputs are unobservable, such as trade name and customer relationship intangible assets. The fair value for the acquired trade name intangible asset was estimated utilizing an income approach, specifically the multi-period excess earnings method. The fair value for the acquired customer relationship intangible asset was estimated utilizing an income approach, specifically the with-and-without method. Both methods involve the use of significant estimates and assumptions including related to projected revenue growth rates, projected earnings before interest, taxes, depreciation and amortization (“EBITDA”) margins, and discount rates. Intangible assets estimated and recognized as a result of the Hiya Acquisition are based upon assumptions and inputs which have inherent estimation uncertainty. These estimates were adjusted and finalized during the quarter ended June 28, 2025, as more current information was made available.