USANA Health Sciences (USNA) Q3 2026 earnings review
Hiya subscribers rebound, but USANA cuts its profit plan again
USANA Health Sciences, a direct seller of nutritional supplements and owner of children's vitamin brand Hiya, reversed Hiya's subscriber slide by spending heavily on marketing while its main business and protein-bar unit weakened. Third-quarter sales fell 4% from a year ago to $206 million, and higher ad spending plus an overseas tax drag pushed the group into a $6 million net loss. Chief executive Kevin Guest raised Hiya's full-year sales plan after adding 29,500 subscribers, but finance chief Doug Hekking cut the consolidated sales and profit outlook again.
| Consolidated net sales | $205.9M -3.6% from a year ago (-5.6% constant currency) |
|---|---|
| Hiya active monthly subscribers | 195,500 +18% from last quarter (+29,500 net additions) |
| Core Nutritional active customers | 356,000 -8% from a year ago (-28,000 from last quarter) |
| Full-year profit outlook (excl. one-offs) | Cut to $0.55/sh down from $0.76 prior outlook |
⚖️ Verdict: 🔴 Bearish
The story got worse because the company had to cut its full-year profit plan for a second straight quarter and correct a $6 million accounting error in last quarter's cash-profit metric. Additionally, Greater China customer counts dropped sharply once second-quarter promotions ended, and Rise Wellness cut its sales plan again on weak retail orders. On the bright side, Hiya's subscriber rebound eases the immediate risk of another goodwill write-down, and cost cuts lifted margins in the main supplement business.
The question now is whether Hiya can hold its larger subscriber base and hit its fourth-quarter profit target without the heavy ad spending that drove third-quarter losses. One view is that lower acquisition costs and Target store sales have put Hiya back on a growth path; the other is that USANA simply bought temporary volume at negative margins while its main customer base keeps shrinking. Fourth-quarter Hiya margins and subscriber retention will settle it.
🐂 Bull Case
Hiya Subscribers Rebounded, but Buying Growth Cut Margins
Hiya, USANA's children's vitamin business, had lost subscribers for five of the prior six quarters, raising the risk of another write-down on its remaining goodwill. In the third quarter, the subscriber base rebounded as chief executive Kevin Guest said "customer acquisition costs declined noticeably from the first half of the year and net sales through Target and Amazon more than doubled from the second quarter".
- Active monthly subscribers: 195,500, up 29,500 from last quarter and up 1.1% from a year ago
- Hiya net sales: $31.5 million, up 2.3% from a year ago, with the full-year outlook raised by $5 million to $130 million
- Hiya operating margin: negative 20.1%, down 18.0 percentage points from a year ago as selling and administrative costs jumped to 86.2% of segment sales
The subscriber jump eases the immediate top-line concern, because a growing customer base supports recurring revenue. However, management "increased marketing spend to build on that traction, which pressured margins" and pushed Hiya into a $6.3 million operating loss by our math. What to watch: Hiya's fourth-quarter operating margin and subscriber count. Holding above 195,000 subscribers while losses narrow would show the new customers stay without constant ad spending.
Cost Cuts Lifted Core Nutritional Margins Despite Lower Sales
Core Nutritional, USANA's main direct-selling supplement business, continues to shrink on the top line, so the nutrition company relies on cost control to protect cash flow. Despite a 3.1% drop in segment sales to $170.7 million, segment operating margin expanded by 2.9 percentage points from a year ago to 4.1%.
Two expense lines drove the gain. Brand Partner incentives — commissions paid to independent distributors — fell 2.0 percentage points to 42.1% of segment sales because prior-year compensation plan costs did not repeat. Selling and administrative overhead fell another 2.0 percentage points to 33.9% of segment sales on "lower event expenses and lower employee compensation expenses", offsetting a 1.1 percentage point drop in gross margin from lower factory volume.
What to watch: Core Nutritional operating margin in the fourth quarter, when the full-year outlook implies segment sales drop nearly 10% from a year ago by our math. Holding margins above 4% on that lower volume would prove the leaner cost structure is durable.
🐻 Bear Case
Rise Wellness Missed Orders and Cut Its Full-Year Plan Again
Guest said Rise Wellness, the maker of Rise Bar and Protein Pop shakes, is "building on a strengthening retail foundation" after launching Protein Pop Balance at Target in September. Yet third-quarter segment sales fell 44.8% from a year ago to $3.6 million, because the company stated that "Club channel sales are inherently lumpy, and orders in the quarter came in below our expectations".
- Full-year Rise sales outlook: cut for a second straight quarter to $30 million, down from $35 million in August and $65–80 million in May
- Fourth-quarter sales implied by the outlook: $9.3 million by our math, more than double the third-quarter level
- Rise gross margin: negative 10.4%, down 40.2 percentage points from a year ago on poor production yields and inventory write-downs, pushing segment operating margin to negative 56.4%
The numbers cut against the retail expansion story because new store shelves are not producing steady orders or positive gross profit. Furthermore, the company warned that its "fiscal 2026 outlook assumes certain Rise Wellness retail orders ship in the fourth quarter", meaning any shipping delay will cause another miss. What to watch: fourth-quarter Rise sales against the $9.3 million implied target. A shortfall would confirm that retail reorders cannot replace lumpy warehouse club shipments.
Core Nutritional Customer Losses Accelerated After Promotions Ended
Rebuilding the active customer base in Core Nutritional is Guest's stated top priority, and last quarter's slower year-over-year decline raised hopes that the direct-selling network was stabilizing. Third-quarter results showed the earlier stability in China was temporary, driven by second-quarter promotions rather than lasting demand.
- Total Core active customers: 356,000, down 28,000 from last quarter and down 8.2% from a year ago
- Greater China sales: $93.9 million, down 18% from last quarter on "lower incentive and promotional activity in mainland China compared with the second quarter", with regional active customers down 23,000 sequentially to 192,000
- North Asia and Americas/Europe sales: down 19.6% and 11.1% from a year ago, while Southeast Asia Pacific grew 2.4%
Because customer counts fell across almost every region, USANA cut its full-year Core Nutritional sales outlook by $10 million to $740 million. By our math, that plan implies fourth-quarter segment sales fall 9.5% from a year ago. What to watch: Greater China active customer counts in the fourth quarter. Another sequential drop would show the revised distributor commission plan is not halting customer churn.
Accounting Error and Tax Drag Cut Full-Year Profit Plan
USANA relies on Adjusted EBITDA — earnings before interest, taxes, depreciation, and one-off items, attributable to its own shareholders — to measure cash profit. While preparing this report, management found an error in last quarter's calculation: "The $29.1 million Hiya goodwill impairment was added back in full, rather than net of the $6.2 million share attributable to the noncontrolling interest".
Fixing the math lowered second-quarter Adjusted EBITDA from $27.8 million to $21.7 million and cut the August full-year outlook from $87.0 million to $80.5 million. Finance chief Doug Hekking then cut the full-year target by another $3.5 million to $77.0 million on Hiya ad spending and weaker Rise sales. Meanwhile, income tax expense reached $6.1 million on a $0.8 million pretax loss because "Concentrated U.S. operating and administrative expenses create U.S. losses, while taxes are paid abroad", prompting a $3 million raise to the full-year tax forecast.
What to watch: the full-year effective tax rate and any tax-structure changes in 2027. Until USANA aligns its US overhead with its foreign profits, tax payments will keep turning small pretax losses into much larger net losses.
Risks this quarter didn't answer
Five standing concerns around channel mix, factory integration, debt covenants, and cash deployment could not be resolved from the earnings release and management commentary.
- Hiya subscription vs retail split: management said Target and Amazon sales more than doubled sequentially, but again gave no dollar split between online subscriptions and retail stores.
- In-house Hiya manufacturing: the commentary repeated that USANA anticipates "shifting more production of Hiya and Rise Wellness products in-house", without giving the second-half margin uplift previously promised.
- Credit line covenant and Hiya buyout liability: trailing four-quarter Adjusted EBITDA is $89.4 million by our math against a $100 million credit-line threshold, while the 21.2% minority stake in Hiya stands at $43.3 million; the quarterly filing will detail covenant compliance.
- China cash balances: the release does not break out how much of the $178.9 million cash pile sits in China under currency remittance rules; the quarterly filing will show it.
- Dormant share buyback: USANA bought back zero shares for a fifth straight quarter, leaving $34 million unused.
👓 Other Themes
Favorable Currency Rates Cushioned Underlying Sales Declines
A weaker US dollar helped USANA's international results, because the company generates more than four-fifths of its sales outside the Americas and Europe. Favorable exchange rates added $4.2 million, or 2.0 percentage points, to third-quarter consolidated sales, softening a 5.6% constant-currency drop into a 3.6% reported decline. For the full year, the outlook still includes about $20 million of currency benefit in Core Nutritional.
💲 Other KPIs
Cash rose by $10.4 million from last quarter to $178.9 million, while total debt stayed at zero. Total inventories — raw materials and finished goods on hand — fell 13.1% from year-end 2025 to $93.3 million as the nutrition group worked down stock built up for earlier retail launches, generating $8.4 million in third-quarter free cash flow.
Diluted shares increased 1.1% from a year ago and rose slightly from 18.49 million in the second quarter. Because the supplement maker has not repurchased any stock since the second quarter of 2025, ongoing employee stock compensation continues to push the share count higher, matching the full-year forecast of 18.4 million shares.
🔮 Guidance
Cut. The full-year target dropped by about $10 million, pointing to a 2.7% decline from last year. By our math, that leaves $220.6 million for the fourth quarter — down 2.5% from a year ago as reported, or up about 2.6% after stripping out an extra $11.2 million calendar week in late 2025. This is the second cut in two quarters: $962.5M, $910M, $900M.
Cut. Management lowered the direct-selling target by $10 million, or 4.8% below fiscal 2025. By our math, the plan leaves $173.3 million for the fourth quarter, a 9.5% drop from a year ago that partly reflects one fewer operating week than in the fourth quarter of 2025. Favorable currency rates still provide about $20 million of support.
Raised. Following third-quarter subscriber additions and retail expansion, the children's wellness forecast moved up by $5 million, nearly matching last year's $132 million total. By our math, that implies $38.0 million of sales in the fourth quarter, a 26.4% jump from a year ago and a 20.6% step-up from the third quarter.
Cut. After cutting the target from $65–80 million down to $35 million in August, USANA lowered it by another $5 million on weak warehouse club orders. By our math, reaching $30 million still requires $9.3 million in fourth-quarter sales — more than double the third-quarter level — and depends on retail orders that could slip into 2027.
Cut. After correcting the August forecast down by $6.2 million to fix a minority-interest accounting error, Hekking reduced the target by another $3.5 million, a 24.0% drop from fiscal 2025. By our math, the outlook implies $14.9 million in the fourth quarter, or a 6.7% margin, up slightly from 5.9% in the third quarter.
Cut. The expected full-year net loss attributable to USANA widened by $5 million. By our math, with $19.4 million of net losses already recorded through the first nine months, the full-year figure implies a $3.4 million net profit in the fourth quarter.
Cut. The GAAP loss per share forecast widened by $0.29, down from a $1.28 profit midpoint at the start of the year. By our math, after $(1.05) in losses per share through three quarters, the plan points to about $0.15 of positive earnings per share in the final quarter.
Cut. Profit per share excluding one-offs was lowered by $0.21, a 71.5% drop from the $1.93 earned in fiscal 2025. By our math, having earned $0.43 per share across the first three quarters, USANA needs $0.12 per share in the fourth quarter to meet the lowered target. Moves this year: $2.12, $0.76, $0.55.
Cut (higher tax expense). Management raised expected full-year tax payments by $3 million despite projecting a larger pretax loss, because losses at Hiya and Rise in the US cannot offset taxable profits in Asia. With $23.7 million of tax booked in the first nine months by our math, the outlook leaves $9.3 million for the fourth quarter.
Unchanged. The full-year share count estimate remains at 18.4 million, down slightly from the 18.50 million diluted shares recorded in the third quarter and reflecting zero planned share buybacks.
❓ Key Questions
How much of Hiya's sales come from retail stores?
Management saidHiya's sales through Target and Amazon more than doubled from the second quarter, while subscribers rose 18% to 195,500. Yet revenue per subscriber stayed near $161 by our math. Disclosing the exact dollar split between online subscriptions and retail stores would show what is driving the $38 million fourth-quarter target.
What will it cost to keep Hiya's new subscribers?
Hiya added 29,500 net subscribers in the third quarter, but segment selling and administrative costs jumped nearly 20 percentage points to 86.2% of sales, pushing operating margin to negative 20.1%. Investors need to know the customer acquisition cost and how fast fourth-quarter marketing spend can come down without restarting subscriber churn.
Does the $77 million EBITDA plan trip credit covenants?
After the $6.2 million accounting correction and the latest outlook cut, full-year Adjusted EBITDA is set for $77 million, and trailing four-quarter Adjusted EBITDA sits at $89.4 million by our math. How does that compare against the credit agreement's $100 million rolling EBITDA requirement, and is the credit line still accessible?
When will in-house manufacturing lift Hiya and Rise margins?
Management previously said in-house production for Hiya would lift margins in the second half of 2026, yet this quarter's commentary only noted that it anticipates shifting more production in-house. With Rise posting a negative 10.4% gross margin on poor yields, when will factory integration deliver measurable cost savings?