Executive Summary

Q2 delivered 11% Y/Y net sales growth to $235.8M with strong Hiya contribution; Street revenue and “Primary” EPS both beat, while GAAP EPS was roughly in line with internal expectations. Guidance for FY25 was reiterated (sales $920M–$1.0B; Adj. EPS $2.35–$3.00), with management flagging near‑term Q3 promotional spend and Hiya acquisition costs as temporary margin headwinds .
Direct selling trends were softer ahead of an enhanced compensation plan rollout, with Active Customers down 11% Y/Y; Greater China net sales fell 2% Y/Y and U.S. declined 13% Y/Y. Hiya posted $34M revenue and 200,400 subscribers, with Disney co‑branded SKUs and ongoing product expansion .
Gross margin compressed to 78.7% (consolidated) on business mix (Hiya), while SG&A rate rose on Hiya amortization/seasonality and reclassified costs; Adjusted EBITDA attributable to USANA was $30.5M. Cash was $151M with no debt after repaying the $23M revolver; buybacks totaled $15M in Q2 .
Setup into Q3: catalysts include the global convention, full incentive plan launch (October), and accelerated product cadence. Near‑term, expect higher promotional spend and Hiya customer acquisition costs; management nevertheless maintained full‑year outlook and voiced confidence in sustainable growth initiatives .

What Went Well and What Went Wrong

What Went Well
- Revenue and “Primary” EPS beat consensus; Street tracked adjusted EPS as “Primary,” with USNA printing $0.74 vs $0.54*, and revenue of $235.8M vs $225.2M*; management highlighted execution on growth initiatives and debt repayment to end Q2 debt‑free . Estimates from S&P Global.*
- Hiya growth and profitability remained strong with new Disney‑branded products; Hiya posted $34M revenue and 200,400 subscribers, supporting mix‑driven top‑line expansion .
- Capital returns and balance sheet resilience: $13M operating cash flow, $151M cash, zero debt post repayment; $15M buybacks with $34M remaining authorization .
- Quote: “USANA delivered positive second quarter results, highlighted by 11% year-over-year consolidated net sales growth… we are maintaining our fiscal 2025 outlook.” — Jim Brown, CEO .
What Went Wrong
- Direct selling softness ahead of incentive plan rollout: Active Customers fell 11% Y/Y to 418k; APAC net sales −4% Y/Y; Americas & Europe −8% Y/Y .
- Gross margin compression to 78.7% (−240 bps Y/Y) on mix from Hiya; consolidated SG&A rate rose to 34.7% on Hiya amortization/seasonality and a reclassification of ~$1.8M from COGS to SG&A .
- Regionally, Greater China net sales −2% Y/Y (Active −8%), North Asia −13% Y/Y, Southeast Asia Pacific −7% Y/Y, and U.S. −13% Y/Y, reflecting lower acquisitions and macro challenges; management also flagged expected Q3 promotional cost step‑up .

Financial Results

Headline vs Estimates (Q2 2025)

Metric	Actual	Consensus	Surprise
Revenue ($M)	$235.8	$225.2*	+$10.7
Primary EPS	$0.74	$0.54*	+$0.20
GAAP Diluted EPS	$0.52	n/a	n/a

Values with an asterisk (*) are from S&P Global consensus estimates.

Quarterly Trend

Metric	Q4 2024	Q1 2025	Q2 2025
Net Sales ($M)	$214	$249.5	$235.8
GAAP Diluted EPS	$0.23	$0.49	$0.52
Adjusted Diluted EPS	$0.64	$0.73	$0.74
Adjusted EBITDA ($M)	$25	$30.0	$30.5

Margins and Expense Mix (Consolidated)

Metric	Q2 2024	Q1 2025	Q2 2025
Gross Margin %	81.1%	79.0%	78.7%
Brand Partner/Associate Incentives %	42.5%	36.1%	36.9%
SG&A %	30.2%	36.6%	34.7%
Operating Margin %	8.4%	6.3%	7.1%

Segment/Region Breakdown (Q2 2025)

Segment/Region	Revenue ($M)	Mix	Y/Y %	Seq %
Direct Selling – Asia Pacific	$163.2	69.2%	−4.3%	−6%
• Greater China	$113.2	48.0%	−2.0%	−5%
• North Asia	$17.2	7.3%	−12.9%	−9%
• SE Asia Pacific	$32.9	13.9%	−7.1%	−8%
Direct Selling – Americas & Europe	$35.9	15.2%	−11.5%	−1%
Hiya (DTC)	$33.9	14.4%	N/A	Seasonally lower (text)
Other	$2.8	1.2%	+67.9%	n/a

KPIs

KPI	Q4 2024	Q1 2025	Q2 2025
Direct Selling Active Customers	454,000	459,000	418,000
Hiya Active Monthly Subscribers	N/A	224,000	200,400

Balance Sheet and Capital Return (Q2 2025)

Cash and cash equivalents: $151M; Debt: $0 (repaid $23M credit facility) .
Operating cash flow: $13M; Share repurchases: 528k shares for $15M; $34M authorization remaining .
Inventory lift to manage tariff exposure and support venture growth; total inventories $86.2M (incl. noncurrent) .

Guidance Changes

Metric	Period	Previous Guidance (Q1 2025)	Current Guidance (Q2 2025)	Change
Consolidated Net Sales	FY 2025	$920M–$1.0B	$920M–$1.0B	Maintained
Net Earnings	FY 2025	$29M–$41M	$29M–$41M	Maintained
Diluted EPS (GAAP)	FY 2025	$1.50–$2.20	$1.50–$2.20	Maintained
Adjusted Diluted EPS	FY 2025	$2.35–$3.00	$2.35–$3.00	Maintained
Adjusted EBITDA	FY 2025	$107M–$123M	$107M–$123M	Maintained
Direct selling net sales	FY 2025	$775M–$840M	$775M–$840M	Maintained
Hiya net sales	FY 2025	$145M–$160M	$145M–$160M	Maintained
Effective tax rate	FY 2025	41.5%–45.0%	44.0%–45.0%	Narrowed upper/lower end

Management also guided to a short‑term increase in Q3 promotional costs tied to the global incentive plan launch and higher Hiya acquisition spend (seasonal), while reiterating the full‑year outlook .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q-2: Q4’24; Q-1: Q1’25)	Current Period (Q2’25)	Trend
Compensation plan/incentives	Reorganizing to “commercial team”; incentive enhancements planned for back half 2025 . Q1 reiterated enhancements and product cadence .	Rollout underway with full launch by October; elevated Q3 promo spend; “Brand Partner” terminology adopted .	Accelerating execution
China/Greater China	Q4: −3% Y/Y; macro caution . Q1: −7% Y/Y; sequential uptick on incentives .	Q2: −2% Y/Y; Active −8%; some “buy up” amid tariff uncertainty; sequential −5% sales, −10% Active .	Stabilizing Y/Y; softer sequential
Tariffs/trade and inventory	Q4: outlook excluded tariff impacts . Q1: inventory build to mitigate tariff risk .	Q2: impact minimal so far; sourcing/inventory actions ongoing; inventory up to manage exposure .	Managed; monitoring
Hiya integration/growth	Q4: initial acquisition and synergy plans . Q1: strong growth; seasonality guide .	Q2: $34M revenue; Disney partnership; ERP phase 1 done; synergies/logistics next phase .	Strong execution
Tools/AI enablement	Q1: increased cadence and engagement .	Q2: data‑driven tools, social media pilots; AI exploration to guide Brand Partners .	Building capability

Management Commentary

Strategic focus: Modernize and simplify direct sales model, elevate brand messaging, and accelerate product innovation; deliver a “more compelling opportunity” to drive sustainable sales and Active Customer growth .
Hiya growth vector: New products (e.g., Kids Daily Hydration), Disney co‑branding, DTC momentum, ERP integration and forthcoming synergies across logistics/manufacturing .
Inventory/tariffs: Intentional inventory build to mitigate tariff exposure; alternative sourcing under evaluation .

Selected quotes:

“We will make other important announcements… including the simplification of our direct sales model, additional enhanced sales incentives… and several new and enhanced health products.” — Jim Brown, CEO .
“During the quarter, we also repaid the $23 million draw on our credit facility… and are again debt-free.” — Doug Hekking, CFO .
“Hiya… launched a new partnership with Disney… special edition Disney Lion King and Disney Princesses branded Multivitamin packs.” .

Q&A Highlights

China and tariffs: Management noted modest “buy up” in China due to tariff uncertainty, otherwise optimistic; tariff impact minimal to date given sourcing strategy and inventory positioning .
Active Customer decline: Attributed largely to anticipation of incentive plan changes; acquisition slowed late in the quarter, expected to improve as incentives roll out .
Hiya dynamics: Seasonal cadence with stronger acquisition in Q1/Q3; significant Y/Y growth expected, with Disney partnership as catalyst; synergies to be detailed as realized .
Tools/AI: Rolling out data‑driven recommendations and social media tools; exploring AI to improve Brand Partner decisioning .
Capital allocation/M&A: Opportunistic on buybacks; active M&A pipeline but near‑term focus on cash rebuild and integration .

Estimates Context

Consensus (S&P Global): Q2 2025 revenue $225.2M* vs actual $235.8M; Q2 2025 “Primary EPS” $0.54* vs actual $0.74 — both beat. FY25 Primary EPS $1.73* and revenue $920.4M* imply Street in line with reiterated guide; single‑analyst coverage limits robustness (1 estimate) [GetEstimates]. Values retrieved from S&P Global.*
Note on comparability: Street “Primary EPS” reflects adjusted EPS convention; GAAP EPS was $0.52 (non‑comparable to Primary EPS) .

Estimates Snapshot (S&P Global)*

Metric	Q1 2025	Q2 2025	Q3 2025	FY 2025	FY 2026
Revenue Consensus Mean ($M)	243.0	225.2	213.9	920.4	902.9
Primary EPS Consensus Mean	0.70	0.54	−0.15	1.73	2.10

Values retrieved from S&P Global.*

Key Takeaways for Investors

Top‑line momentum with Hiya diversification drove a clear beat on revenue and Primary EPS; the Street appears to track adjusted EPS as “Primary,” which USANA exceeded by $0.20 in Q2 . S&P Global estimates.*
Near‑term setup includes Q3 promotional spend and higher Hiya acquisition costs, but full‑year guidance is intact and management is signaling confidence in execution of incentives, brand/story upgrade, and product cadence .
Direct selling metrics remain the swing factor: watch Active Customer re‑acceleration as incentives roll out (October full launch) and event cadence returns (global convention in August) .
China stabilization is a key monitor: modest Y/Y decline with sequential softness tied to incentive transition; tariff impacts currently limited due to pre‑buy/sourcing actions .
Hiya remains a structural growth driver with brand partnerships (Disney), new products, and integration synergies; international expansion could provide an out‑year lever (2026+) .
Balance sheet firepower supports buybacks and selective M&A over time; ended Q2 with $151M cash and no debt after repaying the revolver .
Trading lens: stock likely responds to execution on Q3/Q4 catalysts (incentives/product launches, subscriber adds) versus near‑term margin pressure; sustained Active Customer growth and Hiya scale are core to multiple re‑rating.

Appendix: Additional Relevant Press Release (Q2 2025)

“USANA Announces the Elevation of Its Opportunity” (July 1): outlines enhanced compensation (e.g., new 10% sales bonus on first six months’ purchases, milestone bonuses, targeted leadership incentives) with October full launch — consistent with call commentary on improving early‑journey earnings for new Brand Partners .

Non‑GAAP notes: Q2 reconciliations show add‑backs for Hiya intangible amortization ($4.46M), transaction/integration costs, inventory step‑up, and non‑controlling interest, bridging GAAP diluted EPS $0.52 to adjusted $0.74 and adjusted EBITDA attributable to USANA $30.5M .

USANA HEALTH SCIENCES INC (USNA)·Q2 2025 Earnings Summary