{"url_path":"/sec/nus/10-k/2026/item-7","section_key":"item-7","section_title":"Item 7 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS","topic":"sec","document":{"doc_type":"10-K","doc_date":"2026-02-13","source_url":"https://www.sec.gov/Archives/edgar/data/1021561/0001140361-26-005130-index.html","accession_number":"0001140361-26-005130","cik":"0001021561","ticker":"NUS","issuer_name":"NU SKIN ENTERPRISES, INC.","edgar_url":"https://www.sec.gov/Archives/edgar/data/1021561/0001140361-26-005130-index.html","primary_entity_key":"0001021561","primary_entity_name":"NU SKIN ENTERPRISES, INC."},"word_count":11150,"has_tables":true,"body_markdown":"ITEM 7.\n\nMANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS\n\nThe 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\nAnnual Report on Form 10-K.\n\nBusiness Overview\n\nOur Products\n\nNu 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\nbillion 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\npromote and sell our products, including through the use of social and digital platforms.\n\nIn addition to our core Nu Skin business, we also explore new areas\nof 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\ngenerated $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\nmillion 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.\n\nOur Global Operations\n\nIn 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\nthe 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\nresults also can be impacted by global economic, political, demographic and business trends and conditions.\n\nA Global Network of Customers, Paid Affiliates and Sales Leaders\n\nAs 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\nmade 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\nproducts 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.\n\nOur 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\nChina, 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.\n\nAs 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\nAffiliates” 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\ncustomers and nurturing relationships and community.\n\nWe have been successful in attracting and motivating our sales force by:\n\n●\n\ndeveloping and marketing innovative, technologically and scientifically advanced products;\n\n●\n\nproviding compelling initiatives and strong support; and\n\n●\n\noffering an attractive sales compensation, incentive, and recognition rewards structure.\n\nOur 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\nproducts, 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,\nwe experience relatively high turnover among our sales force.\n\n49\n\n[Table of Contents](#TABLEOFCONTENTS)\n\nTo enhance customer retention, we have developed product subscription and loyalty programs that provide incentives for consumers to commit to\npurchase a specific amount of product on a monthly basis. Several of our products are conducive to subscriptions. For example, Prysm iO\nand 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\nimproved consumer retention, have had a stabilizing impact on revenue and have helped generate recurring sales.\n\nProduct Innovation\n\nOur 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\nleverage 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\nsocial 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\ncompetitive price point.\n\nAny 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\nAffiliates and Sales Leaders.\n\nOur Product Launch Process\n\nPrior 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\nintroduction 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\noften 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.\n\nSales 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,\nPaid 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,\nand 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.\n\nIncome Statement Presentation\n\nWe report revenue in nine segments, and we translate revenue from each market’s local currency into U.S. dollars using weighted-average exchange\nrates. 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\nrecognize 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\ncharges 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\nsubject 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\ngovernmental authorities are accounted for on a net basis and therefore are excluded from net sales.\n\nCost of sales primarily consists of:\n\n●\n\ncost of products purchased from third-party vendors;\n\n●\n\ncost of self-manufactured products;\n\n●\n\ncost of adjustments to inventory carrying value;\n\n●\n\ncost of manufacturing and distribution occupancy cost;\n\n●\n\nlabor cost associated with the manufacturing process;\n\n●\n\nfreight cost of shipping products to our sales force and import duties for the products; and\n\n●\n\nroyalties and related expenses for licensed technologies.\n\n50\n\n[Table of Contents](#TABLEOFCONTENTS)\n\nFor 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\nmanufacturing 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\nin 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.\nIn 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\nhigher pricing in some markets, changes in product mix and geographic revenue mix can impact our gross margin on a consolidated basis.\n\nSelling expenses are our most significant expense and are classified as operating expenses. Selling expenses include sales commissions paid to our\nsales 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\nChina. 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\nperiod 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\nin-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\nnext 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\ninterim 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\nglobal 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\n“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.\nFluctuations 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\nas 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\nmodifications 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.\n\nOutside 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\nfor, 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\na discount. We pay commissions on preferred customer purchases to the referring member of our sales force.\n\nGeneral and administrative expenses include:\n\n●\n\nwages and benefits;\n\n●\n\nrents and utilities;\n\n●\n\ndepreciation and amortization;\n\n●\n\npromotion and advertising;\n\n●\n\nprofessional fees;\n\n●\n\ntravel;\n\n●\n\nresearch and development; and\n\n●\n\nother operating expenses.\n\nLabor expenses are the most significant portion of our general and administrative expenses.\n\nProvision 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\napproximately 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\nstates within the United States at various tax rates. Our overall effective tax rate was 18.3% for the year ended December 31, 2025.\n\n51\n\n[Table of Contents](#TABLEOFCONTENTS)\n\nCritical Accounting Policies and Estimates\n\nThe following critical accounting policies and estimates should be read in conjunction with our audited consolidated financial statements and related notes thereto. Management considers our\ncritical 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.\n\nIncome Taxes. We account for income taxes in accordance with the Income Taxes Topic of the Financial Accounting Standards Codification. This Topic\nestablishes 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\nreporting 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\nworld. 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\nallowances 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\nanticipated 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\nlosses. 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\nmaterial 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\nincome 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\ndeferred tax assets in the future, an adjustment to the deferred tax assets would be charged to earnings in the period such determination was made.\n\nWe 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\nstate 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\nearnings 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.\n\nWe 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\ndiffering 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”)\n740, 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\nbe 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\nlargest 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\nIRS 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\nprovide book-to-tax reconciliations, credit utilization and other supporting documentation shortly after their audited financial statement is finalized. We have\nbeen 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\naudited 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\ndid 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\ncompany 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\nand 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\nmarkets 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.\n\n52\n\n[Table of Contents](#TABLEOFCONTENTS)\n\nAt 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\ninterest 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,\nrespectively. Interest and penalties related to uncertain tax positions are recognized as a component of income tax expense.\n\nIn 2021, as part of the Organization for Economic Co-operation and Development’s (“OECD”) Inclusive Framework, 140 member countries agreed to the\nimplementation 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\nthey 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\ndid 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\nTwo in 2026.\n\nWe 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\nrelevant 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\nlimitations; (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\nresults.\n\nIntangible Assets. Acquired intangible assets may\nrepresent 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\nand 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\ngoodwill 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\ncompetitive 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\nimpaired.\n\nIf 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\nassumptions 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\nto their net present value and the reasonableness of the implied control premium relative to our market capitalization. Changes in these factors could\nmaterially 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\nimpairment charge in a future period.\n\nOur impairment evaluation for our indefinite-lived intangible assets consists of a qualitative assessment, similar to that for goodwill. If the\nqualitative 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\nqualitative tests, no impairments to our indefinite-lived intangible assets were recorded in 2025, 2024, or 2023.\n\nBelow is a summary of the results of our goodwill impairment assessments and other impairment assessments for 2025 and 2024. There were no\ngoodwill impairments in 2023.\n\n2025\n\nWe 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\nimpairment test on our Manufacturing reporting unit which indicated the fair value exceeded the carrying value. Therefore, no goodwill impairments were recorded.\n\nDuring 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\nforecasted 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\nasset 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\nfair value which resulted in an impairment charge of $25.1 million in our Rhyz Other segment during the three months ended March 31, 2025.\n\n53\n\n[Table of Contents](#TABLEOFCONTENTS)\n\n2024\n\nDuring 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\nquantitative 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\nunits exceeded the carrying value by approximately 1% - 7%.\n\nDuring 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’\nforecasts 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\n& 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.\n\nIn 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\nevent 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\nexpected 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\nin our Rhyz Other segment during the three months ended June 30, 2024.\n\nDuring 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\nrequired 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\ncarrying amounts and no impairment charge was required at that time.\n\n●\n\nDuring 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\nBeautyBio reporting unit was less than its carrying value and as a result recorded a non-cash goodwill impairment charge of $3.6 million.\n\n●\n\nAt 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\nto 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,\nestimated future cash flows, and the discount rates that could result in impairment charges in a future period.\n\n●\n\nDuring 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\nBeautyBio. 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\ncomparing 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\nvalue which resulted in an impairment charge of $25.1 million in our Rhyz Other segment during the three months ended March 31, 2025.\n\n54\n\n[Table of Contents](#TABLEOFCONTENTS)\n\nResults of Operations\n\nThe following table sets forth our operating results as a percentage of revenue for the periods indicated:\n\n \n\n \n\nYear Ended December 31,\n\n \n\n \n\n \n\n2025\n\n \n\n \n\n2024\n\n \n\n \n\n2023\n\n \n\nRevenue\n\n \n\n \n\n100.0\n\n%\n\n \n\n \n\n100.0\n\n%\n\n \n\n \n\n100.0\n\n%\n\nCost of sales\n\n \n\n \n\n30.6\n\n \n\n \n\n \n\n31.8\n\n \n\n \n\n \n\n31.1\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nGross profit\n\n \n\n \n\n69.4\n\n \n\n \n\n \n\n68.2\n\n \n\n \n\n \n\n68.9\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nOperating expenses:\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nSelling expenses\n\n \n\n \n\n34.2\n\n \n\n \n\n \n\n37.6\n\n \n\n \n\n \n\n37.7\n\n \n\nGeneral and administrative expenses\n\n \n\n \n\n29.1\n\n \n\n \n\n \n\n27.7\n\n \n\n \n\n \n\n27.8\n\n \n\nRestructuring and impairment expenses\n\n \n\n \n\n1.7\n\n \n\n \n\n \n\n11.7\n\n \n\n \n\n \n\n1.0\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nTotal operating expenses\n\n \n\n \n\n65.0\n\n \n\n \n\n \n\n77.0\n\n \n\n \n\n \n\n66.5\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nOperating income (loss)\n\n \n\n \n\n4.4\n\n \n\n \n\n \n\n(8.8\n\n)\n\n \n\n \n\n2.4\n\n \n\nInterest expense\n\n \n\n \n\n0.9\n\n \n\n \n\n \n\n1.5\n\n \n\n \n\n \n\n1.3\n\n \n\nGain on sale\n\n \n\n \n\n11.9\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\nOther income (expense), net\n\n \n\n \n\n(2.2\n\n)\n\n \n\n \n\n0.2\n\n \n\n \n\n \n\n0.2\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nIncome (loss) before provision for income taxes\n\n \n\n \n\n13.2\n\n \n\n \n\n \n\n(10.1\n\n)\n\n \n\n \n\n1.3\n\n \n\nProvision (benefit) for income taxes\n\n \n\n \n\n2.4\n\n \n\n \n\n \n\n(1.6\n\n)\n\n \n\n \n\n0.9\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nNet income (loss)\n\n \n\n \n\n10.8\n\n%\n\n \n\n \n\n(8.5\n\n)%\n\n \n\n \n\n0.4\n\n%\n\n2025 Compared to 2024\n\nOverview\n\nRevenue 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\n2025, Customers decreased 10%, Paid Affiliates decreased 11% and Sales Leaders decreased 19% compared to the prior year.\n\nThe year-over-year decrease in our 2025 revenue was primarily driven by the continued macroeconomic pressures we’ve been facing in our markets,\nwhich 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\n2025 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\n2026 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\npre-opening; we remain focused on the formal launch, which is anticipated in the second half of 2026.\n\nEarnings 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\nmillion, 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\nnegatively impacted by $202.4 million of restructuring and impairment charges, and an inventory write-off charge of $38.8 million.\n\nSegment Results\n\nWe report our business in nine segments to reflect our current management approach. These segments consist of our seven geographic Nu Skin\nsegments—Americas, Southeast Asia/Pacific, Mainland China, Japan, Europe & Africa, South Korea, and Hong Kong/Taiwan—and our two Rhyz segments—Manufacturing and Rhyz Other. The Nu Skin Other category includes miscellaneous corporate revenue\nand related adjustments. The Rhyz Other segment includes other investments by our Rhyz strategic investment arm.\n\n55\n\n[Table of Contents](#TABLEOFCONTENTS)\n\nThe following table sets forth revenue for the years ended December 31, 2025 and 2024 for each of our reportable segments (U.S. dollars in thousands):\n\n \n\n \n\n \n\n   \n\n   \n\nChange\n\n   \n\n   \n\nConstant\n\nCurrency\n\nChange(1)\n\n   \n\n \n\n \n\nYear Ended December 31,\n\n \n\n \n\n2025\n\n \n\n \n\n2024\n\nNu Skin\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nAmericas\n\n \n\n$\n\n282,975\n\n \n\n \n\n$\n\n322,516\n\n \n\n \n\n \n\n(12.3\n\n)%\n\n \n\n \n\n(6.2\n\n)%\n\nSoutheast Asia/Pacific\n\n \n\n \n\n209,802\n\n \n\n \n\n \n\n244,846\n\n \n\n \n\n \n\n(14.3\n\n)%\n\n \n\n \n\n(14.6\n\n)%\n\nMainland China\n\n \n\n \n\n195,553\n\n \n\n \n\n \n\n235,235\n\n \n\n \n\n \n\n(16.9\n\n)%\n\n \n\n \n\n(16.9\n\n)%\n\nJapan\n\n \n\n \n\n174,364\n\n \n\n \n\n \n\n181,557\n\n \n\n \n\n \n\n(4.0\n\n)%\n\n \n\n \n\n(5.1\n\n)%\n\nEurope & Africa\n\n \n\n \n\n150,151\n\n \n\n \n\n \n\n164,164\n\n \n\n \n\n \n\n(8.5\n\n)%\n\n \n\n \n\n(12.6\n\n)%\n\nSouth Korea\n\n \n\n \n\n130,216\n\n \n\n \n\n \n\n163,706\n\n \n\n \n\n \n\n(20.5\n\n)%\n\n \n\n \n\n(17.1\n\n)%\n\nHong Kong/ Taiwan\n\n \n\n \n\n117,378\n\n \n\n \n\n \n\n130,610\n\n \n\n \n\n \n\n(10.1\n\n)%\n\n \n\n \n\n(11.9\n\n)%\n\nOther\n\n \n\n \n\n1,138\n\n \n\n \n\n \n\n2,832\n\n \n\n \n\n \n\n(59.8\n\n)%\n\n \n\n \n\n(48.5\n\n)%\n\nTotal Nu Skin\n\n \n\n \n\n1,261,577\n\n \n\n \n\n \n\n1,445,466\n\n \n\n \n\n \n\n(12.7\n\n)%\n\n \n\n \n\n(11.8\n\n)%\n\nRhyz\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nManufacturing\n\n \n\n \n\n205,788\n\n \n\n \n\n \n\n201,430\n\n \n\n \n\n \n\n2.2\n\n%\n\n \n\n \n\n2.2\n\n%\n\nRhyz Other\n\n \n\n \n\n17,794\n\n \n\n \n\n \n\n85,188\n\n \n\n \n\n \n\n(79.1\n\n)%\n\n \n\n \n\n(79.1\n\n)%\n\nTotal Rhyz\n\n \n\n \n\n223,582\n\n \n\n \n\n \n\n286,618\n\n \n\n \n\n \n\n(22.0\n\n)%\n\n \n\n \n\n(22.0\n\n)%\n\nTotal\n\n \n\n$\n\n1,485,159\n\n \n\n \n\n$\n\n1,732,084\n\n \n\n \n\n \n\n(14.3\n\n)%\n\n \n\n \n\n(13.5\n\n)%\n\n(1)\n\nConstant-currency revenue change is a non-GAAP financial measure. See “Non-GAAP Financial Measures,” below.\n\nThe table below sets forth segment contribution for the years ended December 31, 2025 and 2024 for each of our reportable segments (U.S. dollars in thousands). Segment contribution excludes\ncertain intercompany charges, specifically royalties, license fees, transfer pricing and other miscellaneous items. We use segment contribution to measure the portion of profitability that the segment managers have the ability to control for\ntheir respective segments. For additional information regarding our segments and the calculation of segment contribution, see Note 16 to the consolidated financial statements contained in this report.\n\n \n\n \n\nYear Ended December 31, 2025\n\n \n\n \n\n \n\nNu Skin\n\n \n\n \n\nRhyz\n\n \n\n \n\n \n\n \n\n \n\n \n\nAmericas\n\n \n\n \n\nSoutheast\n\nAsia/Pacific\n\n \n\n \n\nMainland\n\nChina\n\n \n\n \n\nJapan\n\n \n\n \n\nEurope &\n\nAfrica\n\n \n\n \n\nSouth\n\nKorea\n\n \n\n \n\nHong Kong/\n\nTaiwan\n\n \n\n \n\nManufacturing\n\n \n\n \n\nRhyz\n\nOther\n\n \n\n \n\nTotal\n\nSegments\n\n \n\nRevenue\n\n \n\n$\n\n282,975\n\n \n\n \n\n$\n\n209,802\n\n \n\n \n\n$\n\n195,553\n\n \n\n \n\n$\n\n174,364\n\n \n\n \n\n$\n\n150,151\n\n \n\n \n\n$\n\n130,216\n\n \n\n \n\n$\n\n117,378\n\n \n\n \n\n$\n\n205,788\n\n \n\n \n\n$\n\n17,794\n\n \n\n \n\n$\n\n1,484,021\n\n \n\nCost of sales\n\n \n\n \n\n73,198\n\n \n\n \n\n \n\n51,044\n\n \n\n \n\n \n\n34,631\n\n \n\n \n\n \n\n36,067\n\n \n\n \n\n \n\n38,947\n\n \n\n \n\n \n\n26,402\n\n \n\n \n\n \n\n19,892\n\n \n\n \n\n \n\n163,707\n\n \n\n \n\n \n\n4,697\n\n \n\n \n\n \n\n448,585\n\n \n\nOther segment items\n\n \n\n \n\n149,289\n\n \n\n \n\n \n\n111,983\n\n \n\n \n\n \n\n115,367\n\n \n\n \n\n \n\n89,325\n\n \n\n \n\n \n\n88,571\n\n \n\n \n\n \n\n66,355\n\n \n\n \n\n \n\n60,314\n\n \n\n \n\n \n\n34,268\n\n \n\n \n\n \n\n43,690\n\n \n\n \n\n \n\n759,162\n\n \n\nSegment contribution\n\n \n\n$\n\n60,488\n\n \n\n \n\n$\n\n46,775\n\n \n\n \n\n$\n\n45,555\n\n \n\n \n\n$\n\n48,972\n\n \n\n \n\n$\n\n22,633\n\n \n\n \n\n$\n\n37,459\n\n \n\n \n\n$\n\n37,172\n\n \n\n \n\n$\n\n7,813\n\n \n\n \n\n$\n\n(30,593\n\n)\n\n \n\n$\n\n276,274\n\n \n\nSegment contribution as a percentage of revenue\n\n \n\n \n\n21.4\n\n%\n\n \n\n \n\n22.3\n\n%\n\n \n\n \n\n23.3\n\n%\n\n \n\n \n\n28.1\n\n%\n\n \n\n \n\n15.1\n\n%\n\n \n\n \n\n28.8\n\n%\n\n \n\n \n\n31.7\n\n%\n\n \n\n \n\n3.8\n\n%\n\n \n\n \n\n(171.9\n\n)%\n\n \n\n \n\n18.6\n\n%\n\n \n\n \n\nYear Ended December 31, 2024\n\n \n\n \n\n \n\nNu Skin\n\n \n\n \n\nRhyz\n\n \n\n \n\n \n\n \n\n \n\n \n\nAmericas\n\n \n\n \n\nSoutheast\n\nAsia/Pacific\n\n \n\n \n\nMainland\n\nChina\n\n \n\n \n\nJapan\n\n \n\n \n\nEurope &\n\nAfrica\n\n \n\n \n\nSouth\n\nKorea\n\n \n\n \n\nHong Kong/\n\nTaiwan\n\n \n\n \n\nManufacturing\n\n \n\n \n\nRhyz\n\nOther\n\n \n\n \n\nTotal\n\nSegments\n\n \n\nRevenue\n\n \n\n$\n\n322,516\n\n \n\n \n\n$\n\n244,846\n\n \n\n \n\n$\n\n235,235\n\n \n\n \n\n$\n\n181,557\n\n \n\n \n\n$\n\n164,164\n\n \n\n \n\n$\n\n163,706\n\n \n\n \n\n$\n\n130,610\n\n \n\n \n\n$\n\n201,430\n\n \n\n \n\n$\n\n85,188\n\n \n\n \n\n$\n\n1,729,252\n\n \n\nCost of sales\n\n \n\n \n\n83,461\n\n \n\n \n\n \n\n64,950\n\n \n\n \n\n \n\n44,059\n\n \n\n \n\n \n\n36,852\n\n \n\n \n\n \n\n42,766\n\n \n\n \n\n \n\n33,600\n\n \n\n \n\n \n\n24,932\n\n \n\n \n\n \n\n164,145\n\n \n\n \n\n \n\n14,532\n\n \n\n \n\n \n\n509,297\n\n \n\nOther segment items\n\n \n\n \n\n171,338\n\n \n\n \n\n \n\n134,666\n\n \n\n \n\n \n\n145,086\n\n \n\n \n\n \n\n93,907\n\n \n\n \n\n \n\n100,389\n\n \n\n \n\n \n\n79,360\n\n \n\n \n\n \n\n70,989\n\n \n\n \n\n \n\n35,825\n\n \n\n \n\n \n\n116,465\n\n \n\n \n\n \n\n948,025\n\n \n\nSegment contribution\n\n \n\n$\n\n67,717\n\n \n\n \n\n$\n\n45,230\n\n \n\n \n\n$\n\n46,090\n\n \n\n \n\n$\n\n50,798\n\n \n\n \n\n$\n\n21,009\n\n \n\n \n\n$\n\n50,746\n\n \n\n \n\n$\n\n34,689\n\n \n\n \n\n$\n\n1,460\n\n \n\n \n\n$\n\n(45,809\n\n)\n\n \n\n$\n\n271,930\n\n \n\nSegment contribution as a percentage of revenue\n\n \n\n \n\n21.0\n\n%\n\n \n\n \n\n18.5\n\n%\n\n \n\n \n\n19.6\n\n%\n\n \n\n \n\n28.0\n\n%\n\n \n\n \n\n12.8\n\n%\n\n \n\n \n\n31.0\n\n%\n\n \n\n \n\n26.6\n\n%\n\n \n\n \n\n0.7\n\n%\n\n \n\n \n\n(53.8\n\n)%\n\n \n\n \n\n15.7\n\n%\n\n56\n\n[Table of Contents](#TABLEOFCONTENTS)\n\n \n\n \n\nYear Ended December 31,\n\n \n\n \n\n \n\n2025\n\n \n\n \n\n2024\n\n \n\n \n\n2023\n\n \n\nTotal Segment Revenue\n\n \n\n$\n\n1,484,021\n\n \n\n \n\n$\n\n1,729,252\n\n \n\n \n\n$\n\n1,969,989\n\n \n\nCore Nu Skin Adjustment\n\n \n\n \n\n1,138\n\n \n\n \n\n \n\n2,832\n\n \n\n \n\n \n\n(858\n\n)\n\nTotal Revenue\n\n \n\n$\n\n1,485,159\n\n \n\n \n\n$\n\n1,732,084\n\n \n\n \n\n$\n\n1,969,131\n\n \n\nThe 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.\n\n●\n\n“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\nand those who qualify as Sales Leaders, but they do not include consumers who purchase directly from members of our sales force.\n\n●\n\n“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\nindependent sales force as “Brand Affiliates” because their primary role is to promote our brand and products through their personal social networks.\n\n●\n\n“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\nquarter.\n\n \n\n \n\nThree Months Ended\n\nDecember 31,\n\n \n\n \n\n \n\n \n\n \n\n \n\n2025\n\n \n\n \n\n2024\n\n \n\n \n\nChange\n\n \n\nCustomers\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nAmericas\n\n \n\n \n\n225,527\n\n \n\n \n\n \n\n227,556\n\n \n\n \n\n \n\n(1\n\n)%\n\nSoutheast Asia/Pacific\n\n \n\n \n\n74,300\n\n \n\n \n\n \n\n82,956\n\n \n\n \n\n \n\n(10\n\n)%\n\nMainland China\n\n \n\n \n\n118,523\n\n \n\n \n\n \n\n150,731\n\n \n\n \n\n \n\n(21\n\n)%\n\nJapan\n\n \n\n \n\n104,439\n\n \n\n \n\n \n\n110,069\n\n \n\n \n\n \n\n(5\n\n)%\n\nEurope & Africa\n\n \n\n \n\n127,910\n\n \n\n \n\n \n\n133,306\n\n \n\n \n\n \n\n(4\n\n)%\n\nSouth Korea\n\n \n\n \n\n58,880\n\n \n\n \n\n \n\n81,301\n\n \n\n \n\n \n\n(28\n\n)%\n\nHong Kong/Taiwan\n\n \n\n \n\n39,217\n\n \n\n \n\n \n\n46,053\n\n \n\n \n\n \n\n(15\n\n)%\n\nTotal\n\n \n\n \n\n748,796\n\n \n\n \n\n \n\n831,972\n\n \n\n \n\n \n\n(10\n\n)%\n\nPaid Affiliates\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nAmericas\n\n \n\n \n\n28,900\n\n \n\n \n\n \n\n28,361\n\n \n\n \n\n \n\n2\n\n%\n\nSoutheast Asia/Pacific\n\n \n\n \n\n20,260\n\n \n\n \n\n \n\n26,310\n\n \n\n \n\n \n\n(23\n\n)%\n\nMainland China\n\n \n\n \n\n18,922\n\n \n\n \n\n \n\n22,125\n\n \n\n \n\n \n\n(14\n\n)%\n\nJapan\n\n \n\n \n\n20,126\n\n \n\n \n\n \n\n22,318\n\n \n\n \n\n \n\n(10\n\n)%\n\nEurope & Africa\n\n \n\n \n\n14,918\n\n \n\n \n\n \n\n16,860\n\n \n\n \n\n \n\n(12\n\n)%\n\nSouth Korea\n\n \n\n \n\n16,341\n\n \n\n \n\n \n\n17,939\n\n \n\n \n\n \n\n(9\n\n)%\n\nHong Kong/Taiwan\n\n \n\n \n\n9,844\n\n \n\n \n\n \n\n10,961\n\n \n\n \n\n \n\n(10\n\n)%\n\nTotal\n\n \n\n \n\n129,311\n\n \n\n \n\n \n\n144,874\n\n \n\n \n\n \n\n(11\n\n)%\n\nSales Leaders\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nAmericas\n\n \n\n \n\n6,016\n\n \n\n \n\n \n\n6,778\n\n \n\n \n\n \n\n(11\n\n)%\n\nSoutheast Asia/Pacific\n\n \n\n \n\n4,272\n\n \n\n \n\n \n\n5,288\n\n \n\n \n\n \n\n(19\n\n)%\n\nMainland China\n\n \n\n \n\n6,065\n\n \n\n \n\n \n\n8,969\n\n \n\n \n\n \n\n(32\n\n)%\n\nJapan\n\n \n\n \n\n6,259\n\n \n\n \n\n \n\n6,780\n\n \n\n \n\n \n\n(8\n\n)%\n\nEurope & Africa\n\n \n\n \n\n2,722\n\n \n\n \n\n \n\n3,343\n\n \n\n \n\n \n\n(19\n\n)%\n\nSouth Korea\n\n \n\n \n\n2,547\n\n \n\n \n\n \n\n3,343\n\n \n\n \n\n \n\n(24\n\n)%\n\nHong Kong/Taiwan\n\n \n\n \n\n2,164\n\n \n\n \n\n \n\n2,411\n\n \n\n \n\n \n\n(10\n\n)%\n\nTotal\n\n \n\n \n\n30,045\n\n \n\n \n\n \n\n36,912\n\n \n\n \n\n \n\n(19\n\n)%\n\n57\n\n[Table of Contents](#TABLEOFCONTENTS)\n\nFollowing is a narrative discussion of our results in each segment, which supplements the tables above.\n\nAmericas. 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\nmarkets 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\nchanges. In addition, our reported revenue reflects negative impacts from unfavorable foreign currency fluctuations of 6.1% for fiscal year 2025.\n\nIn 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\nus 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\nincrease; in addition, Latin America Customers increased 46%, Paid Affiliates increased 47%, and Sales Leaders increased 25%.\n\nThe 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.\n\nSoutheast 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\nthe 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.\n\nDuring 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.\nOur 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.\n\nThe 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\nselling 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.\n\nMainland China. Our Mainland China market continued to be challenged during 2025, with ongoing macroeconomic factors, the associated\ndecrease in consumer spending and a continued shift of market consumer awareness and demand to online product marketplaces.\n\nThe 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\nincrease 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\nrevenue, particularly when there is a sequential change in revenue.\n\nJapan. The reduction in revenue, Customers, Paid Affiliates and Sales Leaders is partially attributable to consumer inflationary pressures which depressed spending.\n\nThe year-over-year decrease in segment contribution is primarily attributable to the decreased revenue.\n\nEurope & Africa. The reduction in revenue, Customers, Paid Affiliates and Sales Leaders reflects continued softness in these markets, as well as the macroeconomic\nfactors 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\nrevenue reflects benefits from favorable foreign currency fluctuations of 4.1%.\n\nThe year-over-year increase in segment contribution was primarily driven by a 2.3 percentage point decline in selling expenses as a percent of\nrevenue for 2025, primarily from elevated sales force events costs in the prior year, partially offset by the decline in revenue.\n\n58\n\n[Table of Contents](#TABLEOFCONTENTS)\n\nSouth Korea. Our South Korea market was challenged by\ndifficult 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\nreported revenue reflects negative impacts from unfavorable foreign currency fluctuations of 3.4% for 2025.\n\nThe 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\nenhancements 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\nrestructuring plan.\n\nHong 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\nreported revenue reflects benefits from favorable foreign currency fluctuations of 1.8% for 2025.\n\nThe 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\npoint decrease in general and administrative expenses, from our recent cost saving efforts, partially offset by the decline in revenue.\n\nManufacturing. Our Manufacturing segment revenue increased 2.2% for 2025.\n\nThe 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.\n\nRhyz 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\naddition, 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.\n\nOur 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\nprofitability 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\npotentially divesting it, to maximize our return on investment.\n\nThe increase in segment contribution is primarily from our cost saving efforts at BeautyBio, which had smaller losses for 2025.\n\nConsolidated Results\n\nRevenue\n\nRevenue 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\n“Overview” and “Segment Results,” above.\n\nGross profit\n\nGross 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\npercentage 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\nmanufacturing 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\nour 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\ncore Nu Skin business, as we continued to accelerate and expand our product portfolio optimization.\n\n59\n\n[Table of Contents](#TABLEOFCONTENTS)\n\nSelling expenses\n\nSelling 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\n1.6 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\nvarious 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\nSkin 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\npercentage 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.\n\nGeneral and administrative expenses\n\nGeneral and administrative expenses decreased to $432.1 million in\n2025, 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\nMavely, 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\npercentage of revenue, general and administrative increased 1.4 percentage points to 29.1% for 2025, compared to 27.7% for 2024.\n\nRestructuring and impairment expenses\n\n2022 restructuring plan. In the third quarter of 2022, we\nadopted 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\napproximately $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\nintangibles 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\ncharges of $1.7 million in accelerated depreciation.\n\n2023 restructuring plan. In the fourth quarter of 2023, we\nadopted 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\ntechnology 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\n$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\ncharges 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.\n\nGoodwill and intangibles impairment. During the three\nmonths 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\nperform 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 &\nAfrica, 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\nthe 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\nunit was less than its carrying value and as a result recorded a non-cash goodwill impairment charge of $3.6 million.\n\nIn 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\nevent 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\nexpected 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\nin our Rhyz Other segment during the three months ended June 30, 2024.\n\n60\n\n[Table of Contents](#TABLEOFCONTENTS)\n\nDuring 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\nforecasted 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\ngroup 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\nwhich resulted in an impairment charge of $25.1 million in our Rhyz Other segment during the three months ended March 31, 2025.\n\nInterest expense\n\nInterest 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\nusing 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.\n\nGain on sale of business\n\nIn 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\nadjustments 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\nof 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\n$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.\n\nOther income (expense), net\n\nOther income (expense), net for 2025 was $(31.8) million, compared to\n$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\ninformation 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\ninflationary.\n\nProvision for income taxes\n\nProvision (benefit) for income taxes increased to $36.0 million in\n2025 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\ndetermined 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.\n\nFor 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\nrates 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\namount 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\njurisdictions, 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.\n\nOn 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\ncommonly 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\nAct has not materially impacted the Company’s effective tax rate.\n\nNet income (loss)\n\nAs a result of the foregoing factors, net income (loss) in 2025\nincreased to $160.2 million, compared to $(146.6) million in 2024.\n\n61\n\n[Table of Contents](#TABLEOFCONTENTS)\n\n2024 Compared to 2023\n\nFor 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\nended December 31, 2024, as filed with the SEC on February 14, 2025.\n\nLiquidity and Capital Resources\n\nHistorically, our principal uses of cash have included operating\nexpenses (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\ntimes 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\nto 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\ndecrease 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\ntaxes primarily associated with estimated payments related to the Mavely sale.\n\nAs of December 31, 2025, cash and cash equivalents, including current\ninvestments, 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\nmillion 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\nof 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.\n\nCash requirements. For 2026, we currently expect that our material cash requirements will include the following:\n\n●\n\nCash requirements for operating activities. Our operating expenses typically total approximately 85%-90% of our revenue, with compensation to\nour 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.\nInventory 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\npayments, 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.\n\n●\n\nCash requirements for investing activities. As discussed in more detail below, our capital expenditures are expected to be $40-60 million for 2026.\n\n●\n\nCash 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\nquarterly 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.\n\nFor 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\ncash requirements related to our debt principal repayment and our maturities of lease liabilities.\n\nWe 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.\n\nCapital 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:\n\n●\n\nRhyz plant expansion to increase capacity and capabilities;\n\n●\n\npurchases and expenditures for computer systems and equipment, software, and application development; and\n\n●\n\nthe expansion and upgrade of facilities in our various markets.\n\nWe estimate that capital expenditures for the uses listed above will total approximately $40-60 million for 2026.\n\n62\n\n[Table of Contents](#TABLEOFCONTENTS)\n\nCredit Agreement. On June 14, 2022, we entered into an\nAmended 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\n$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\nOvernight 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\nthe 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,\nand $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\nAgreement. 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\ndebt 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.\n\nDerivative 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\nduring the third quarter of 2020 to hedge the variable cash flows associated with our variable-rate debt under the Credit Agreement.\n\nStock 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\nthe 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\nstock repurchases are used primarily to offset dilution from our equity incentive plans and for strategic initiatives.\n\nDividends. 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\nwere 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\nper 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\nsufficient 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,\ncash requirements, future prospects and other relevant factors.\n\nCash 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\namounts 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.\ndollars or other currencies, subject to procedural or other requirements in certain markets, as well as an indefinite-reinvestment designation, as described below.\n\nWe typically fund the cash requirements of our operations in the United States through intercompany dividends, intercompany loans and intercompany charges for products, use of\nintangible 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\nthe 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\nalso 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\n\nalso 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\nof 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\nsecond 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\nrepurchases, 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\nrelated to the non-U.S. earnings.\n\n63\n\n[Table of Contents](#TABLEOFCONTENTS)\n\nWe 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\nmajority 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\ncurrent 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\nrealigning our strategic plans, including a reduction in capital spending, stock repurchases or dividend payments.\n\nNon-GAAP Financial Measures\n\nConstant-currency revenue change is a non-GAAP financial measure that removes the impact of fluctuations in foreign-currency exchange rates, thereby\nfacilitating 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\namount 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\nfrom period to period.\n\nContingent Liabilities\n\nPlease refer to Note 17 to the consolidated financial statements contained in this report for information regarding our contingent liabilities.\n\nSeasonality and Cyclicality\n\nIn 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\nrespective 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\nforce, traditionally take vacations.\n\nPrior 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\nother 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\nduring the quarter and skew year-over-year and sequential comparisons.\n\nRecent Accounting Pronouncements\n\nA description of new accounting pronouncements is contained in Note 2 to consolidated financial statements contained in this report."}