NuSkin Enterprises, Inc. 2026 Q2 Earnings Call

Thanks, Daniel, and good afternoon, everyone. I am joined by Ryan Napierski, President and CEO, and by our Interim CFO, Chelsea Lantz. Today, we will be sharing Nu Skin's Q2 2026 results and providing guidance for the remainder of the year. Before I turn time over to Ryan, let me point out that on today's call, comments will be made that include forward-looking statements. These statements involve important risks and uncertainties, and actual results may differ materially from those discussed or anticipated. Please refer to today's earnings release and our SEC filings for a complete discussion of these risks. Also during the call, certain financial numbers may be discussed that differ from comparable numbers obtained in our financial statements. We believe these non-GAAP numbers assist in comparing period-to-period results in a more consistent manner. Please refer to our investor website, ir.nuskin.com, for any required reconciliation of these non-GAAP numbers.

With that, I would like to turn the call over to Ryan.

Thanks, B.G. Good afternoon, everyone. Thanks for joining the call. Over the past quarter, our team around the world has been focused upon aligning our top leaders around the next era of opportunity for Nu Skin as we extend our anti-aging leadership position with the introduction of our new innovation, Prysm iO. The field is now learning, adapting, and incorporating this new technology into their business models, which contributed to second quarter revenue of approximately $320 million. Our focus on profitability and operational efficiency helped us achieve adjusted earnings per share near the midpoint of our previously communicated range. We have made meaningful progress on our strategic priorities, including expanding our Prysm iO platform and global rollout, working to align and activate our sales leaders via an enhanced Leader Elite achievement and incentive roadmap, and preparing India for formal opening.

We're building capabilities that we believe will strengthen our competitive position and create sustainable growth over time as we advance our vision to becoming the world's number one leadership company, powering our intelligent anti-aging platform. As we have greater clarity and line of sight on the remainder of the year, we are updating our full-year revenue and EPS guidance, which Chelsea will cover in just a few minutes. Let me briefly update you on the three strategic priorities that continue to guide our business forward. Our first priority is extending Nu Skin's leadership position in intelligent anti-aging. For nearly two decades, ageLOC has differentiated Nu Skin through world-class anti-aging science, generating approximately $16 billion in cumulative revenue. Today, advances in epigenetics and biological aging research are creating an entirely new frontier.

Our next major anti-aging innovation, Prysm iO, remains in the early stages of its global rollout, with more than 39,000 devices placed to date, up nearly 30% quarter-over-quarter, and 2.5 million scans, which is up 25% over the same quarterly comparison. We're learning a lot from the nascent technology, including consumer lifestyle behavior and habits, as well as overall nutrition health status and trends around the world. Our next objective is to turn these learnings into increasing engagement opportunities to improve customer health and wellness by improving their nutritional health scores. On the business frontier, one of our biggest learnings to date has been how our sales leaders are using this device to grow their businesses.

Many of our sales leaders are primarily using Prysm iO as a wellness consultation tool to invite consumers into their own personal wellness journey, which is different from our earlier hypothesis of the Prysm iO being an in-home placement device. These early insights are helping us refine our commercial strategy as we enter our next phase of global deployment to better assist our brand affiliates in performing wellness consultations at scale. As we work towards the longer-term vision of placing a Prysm iO in every healthy household. We expect to place 50,000 to 60,000 devices by year's end. At our global live event in Japan this September, we plan to introduce the next generation of AI-enabled Prysm iO app, powered by our proprietary Nu Intelligence platform to deliver even more personalized wellness assessments, product recommendations, and 90-day wellness plans to improve customer engagement, conversion, and lifetime value.

In the future, the Nu Intelligence proprietary trained agent will also assist our affiliates in their personalized wellness and business journeys with Nu Skin. Based upon early findings with Prysm iO, as well as new scientific research from institutions including Shanghai Jiao Tong University, Yonsei University in South Korea, and our collaborators such as Dr. Anne Friedlander at Stanford Medicine, we are expanding our understanding of how nutritional and lifestyle impact biological aging, reinforcing our belief that the future of wellness will increasingly focus on extending health span or the quality of years lived, not only the quantity or longevity of those years. This work is now informing the next stage of anti-aging research and our Aging Response Modulator science, an approach to anti-aging research incorporating epigenetics that we believe will fuel our next generation of innovation.

In addition to supporting the continued rollout of Prysm iO, we will introduce a new range of products at our live event, including two new products to support women's unique health needs, helping support hormonal balance, and empowering women through every stage of life. These innovations further demonstrate our commitment to advancing our intelligent anti-aging leadership position. Our second strategic priority is engaging, aligning, and empowering our sales force to grow the channel. While our field continues to demonstrate resilience in a difficult operating environment, recruiting and leadership development remain below the levels needed to return the business to sustainable growth. Over the past several months, we've been redesigning how we reward, recognize, and empower leadership globally to empower them to do what they do best, build the network of independent entrepreneurs.

We continue to refine our global compensation framework to place greater emphasis on balancing product selling, team building, and leadership development while maintaining appropriate flexibility for local market needs, including modifications to Mainland China's distinct business model. This revised framework has been rolled out across the Americas and Pacific in the first half of 2026, and will continue into other markets throughout 2027. Our greatest strength is our global leadership, and this fall, we will begin introducing a new leadership achievement roadmap, which will provide clearer developmental pathways, stronger recognition, and incentives that reinforce long-term leadership building. This progressive system will be accompanied by increasing investments in leadership achievements by working more closely with our field leaders to better assist in training and development of new affiliates on the skills and capabilities required for today's evolving environment.

Sustainable growth begins with successful leaders who find, develop, and mentor the next generation of aspiring entrepreneurs, and strengthening our commitment to our talented leadership remains one of our top priorities. Our third strategic priority is expanding our growth opportunities in emerging markets. Across Latin America, we continue to navigate a mixed macroeconomic environment while remaining encouraged by the long-term opportunities in the region. Our leaders throughout the region continue to demonstrate strong commitment and resilience to building the business in spite of persistent disruptions. In India, our focus during the first half of the year has been on building the operational foundation necessary for long-term success, including high-quality local product sourcing, integrated supply chain, technology, and regulatory readiness. As we progress, we've identified additional opportunities to refine elements of our business model before formally launching into the market.

As a result, we've decided to move our full market launch into the first half of 2027 to ensure business model, operational, and field readiness for this significant long-term opportunity. While this extends our formal opening timeline for India, we believe taking the time to optimize the model today will position us for stronger and more sustainable growth once we scale the market. In parallel with our growth initiatives, we'll equally focus on improving profitability along the way. We continue to optimize our gross margin through thoughtful price actions, supply chain efficiencies, and infrastructure improvements as we work towards our long-term objective of approximately 80% gross margin in our core business. This includes strategic price increases to offset rising costs of goods around the globe, as well as realigning manufacturing to further leverage our facilities in China for our Asia-based businesses and our U.S. facilities for our Western businesses.

From an operations perspective, our East and West markets each deploy unique approaches to the business. To better enable our leaders and business to grow in these adjacent models, our Chief Operating Officer, Chayce Clark, is leading an effort to build out a more distinct East-West structure, which marks a shift from our current approach, focusing on seven distinct regions, and will result in our global teams being better positioned to support our customers and sales leaders. This transition will occur over the next two quarters and is intended to create a more agile, efficient, and growth-oriented organization. With that, I'll turn the time over to Chelsea to go through some of the financial details.

Thanks, Ryan, and good afternoon, everyone. Today, I'll review our second quarter results, discuss our outlook for the third quarter, and provide an update to our full year guidance. Second quarter revenue was $320.1 million, including an approximate 1% or $4 million foreign currency headwind. Reported earnings per share were negative $5.14, or a positive $0.20, excluding non-cash accounting charges related to a goodwill impairment and a valuation allowance on our U.S. deferred tax assets. Adjusted earnings per share were in line with our guidance range. Gross margin for the quarter was 68.2% compared to 68.8% in the prior year, reflecting the revenue mix between the Nu Skin core and Rhyz businesses. Within the core Nu Skin business, gross margin improved to 77.7%, up 20 basis points from the prior year, reflecting continued progress on our margin improvement initiatives.