Herbalife, Nu Skin, LifeVantage, and Primerica navigate market pressures and restructuring initiatives
By Dave Rauf
Herbalife
The ongoing costs related to transformation and restructuring efforts at Herbalife negatively affected the company’s profitability for a third consecutive quarter.
The direct selling giant reported that second-quarter profit nose-dived from about $60 million to $4.7 million.
During the second quarter, Herbalife reported $48.8 million in restructuring expenses, $3.5 million associated with its transformation, and $6 million in digital technology expenses.
Herbalife also reported an $18.7 million gain from an income tax adjustment. Overall, adjusted net income was $54.8 million.
Second-quarter sales were down 2.5% to $1.3 billion, including a 6.7% decline in North America to $283.2 million. Meanwhile, Asia Pacific, its largest market that excludes China, was down 2.1% to $416.7 million.
In Latin American, sales were up 2% to about $212 million, the product of a sweeping pilot program throughout most markets in the region, excluding Mexico, that reduced pricing and modified distributor compensation.
Herbalife said it is forecasting third-quarter sales to be down 4.5%, and for total 2024 sales to be in a range of up 1.5% to down 3.5%.
“We believe in our vision of becoming the world’s premier health and wellness company community and platform,” CEO Michael Johnson told analysts during an earnings conference call. “It’s going to take a little time, but we’re well on our way.”
The Numbers
- Profit: $4.7 million, down 92%
- Sales: $1.28 billion, down 3%
- North America: $283 million, down 7%
- Europe and the Middle East: $288 million, flat
- Latin America: $212 million, up 2%
- Asia Pacific: $417 million, down 2%
- China: $82 million, down 7%
Reorganization Program ‘Substantially Completed’
Herbalife announced a restructuring initiative in March 2024, saying it “intends to implement actions throughout 2024 to streamline its employee structure” in an attempt to enhance leadership and productivity. And the company also added as goals to “bring leadership closer to its markets and accelerate productivity.”
During the call with analysts, Johnson said the restructuring program is “substantially complete.” Herbalife estimates it incurred $66 million of implementation costs for the reorganization effort in the first half of the year “with only a small amount remaining.”
As a result of the restructuring program, the company expects to recognize at least $50 million of pre-tax savings in 2024 and at least $80 million annually beginning in 2025.
“This has been a very interesting first part of the year,” Johnson said. “We’ve laid off some folks. We’ve reorganized the company. We’ve gotten incredibly focused on making sure that every move we make in this company delivers results.”
Nu Skin
Nu Skin reported a loss of $118 million in its second quarter amid a sprawling multi-year transformation plan and continued macroeconomic pressures.
The Utah-based seller of skincare and nutritional products reported sales fell by 8% to $439 million.
CEO Ryan Napierski, in a conference call with analysts, said the overall operating environment remains challenging for the company’s core business—in particular, the “challenging macro environment affecting consumer spending and customer acquisition in the majority of our regions.”
Second-quarter sales were down in all of the company’s global markets. One of the bright spots during the quarter was the company’s Rhyz business, which is a subsidiary of Nu Skin that has been described as a “synergistic ecosystem” of consumer, technology and manufacturing companies that are focused on innovation within the beauty, wellness and lifestyle industries.
The Rhyz segment saw revenue increase by 32%, and moving forward Nu Skin is anticipating that the subsidiary will continue growing at a faster pace, accounting for up to 25% of total company revenue by 2025.
“We’ve continued to demonstrate our ability to adapt to challenges and deliver within expectations,” Napierski said.
Announced in 2023, Nu Skin is currently undergoing a transformation that Napierski said will “evolve our core Nu Skin business from a traditional direct selling model towards a more expansive integrated beauty, wellness, and lifestyle company.”
The move is intended to allow the company to accelerate growth as the direct selling business continues to adapt to changes in the business due to technology and social media.
Called “Nu Vision 2025,” the company has launched a series of IoT-connected beauty devices, and has said its smart beauty device segment is expected to be a key part of Nu Skin’s product personalization strategy. It also beefed up its digital efforts as part of the transformation, enhancing its e-commerce platform and launching new apps for customers and affiliates.
Nu Skin incurred a change of $8.4 million during the second quarter related to its transformation efforts.
The company said it expects full-year revenue in the range of $1.73 billion to $1.81 billion.
The Numbers
- Total Profit: $118.3 million loss, down 21%
- Total Sales: $439 million, down 8%
- Americas Sales: $84.9 million, down 21%
- Europe and Africa Sales: $40.7 million, down 13%
- China Sales: $64.7 million, down 27%
- Southeast Asia/Pacific Sales: $60.3 million, down 5%
New Product Division
Nu Skin is readying to launch a new product line called Mind 360, which company officials described as a “support for stress management, cognitive performance, and sleep.”
The company is planning to launch the new product line globally in the next several quarters.
Focus on Developing Markets
During the call with analysts, Napierski also said the company plans to increase its efforts and focus to penetrate developing and emerging markets around the globe.
That project will begin with Nu Skin revising its operating models in Latin America and some Southeast Asia markets in the second half of this year.
Some of that work has already begun, Napierski said. For example, in Argentina, Nu Skin has reduced its product portfolio and evaluated local manufacturing opportunities in an attempt to lower price points.
“We’re already in a test model down in Latin America on a revision to the business model,” he said. “We will continue to expand those tests throughout the end of this year, evaluating a couple of markets in Southeast Asia, like The Philippines, Thailand, Vietnam. These parts of the world where the socioeconomic status is just different and much different than the more developed markets we operate in.”
LifeVantage
LifeVantage reported net income of $1.3 million in its fourth quarter and is projecting modest growth for the upcoming fiscal year as the company readies to enter the lucrative—but crowded—weight-loss supplement space for GLP-1 products (Glucagon-like peptide-1 receptor agonists).
Revenue during the quarter fell 10% to $48.9 million. Sales in the company’s largest global regions—the Americas—were down 4%, including a roughly 5% drop in the United States. In LifeVantage’s other global region, Asia Pacific and Europe, revenue was down 25%, negatively impacted by foreign currency fluctuations.
CEO Steve Fife said the company faced negative circumstances due to “challenging macro conditions” during the quarter.
“Our fourth quarter results again demonstrated strong profitability despite challenging macro conditions that have continued to create top line headwinds,” Fife told analysts during an earnings call.
LifeVantage is expecting “moderate improvement” in each quarter in its current fiscal year—2025—with the expectation that momentum will build toward the second half of the year. Part of that optimism lies in the company’s expected launch in mid-October of a new product that will expand its offerings into the burgeoning weight loss product segment of GLP-1 supplements.
GLP-1 supplements are emerging as a natural Ozempic alternative.
Fife said the company’s new product is “designed to suppress food cravings and balance hunger hormones by activating GLP-1 production.”
“We are incredibly excited about this launch and believe it will be a game-changer,” he said.
During fiscal 2024, LifeVantage reported profit of $2.9 million on total revenue of $200.2 million. The company expects full-year earnings in the range of 70 cents to 80 cents for fiscal 2025 with revenue in the range of $200 million to $210 million.
The Numbers
- Total Profit: $1.3 million
- Total Sales: $48.9 million, down 10%
- Americas Sales: $38.1 million, down 4%
- Asia/Pacific & Europe Sales: $10.8 million, down 25%
Erin Brokovich Resigns from Board of Directors
Erin Brokovich, the consumer advocate and environment activist who was portrayed by Julia Roberts in the 2000 Hollywood movie of the same name, has resigned from LifeVantage’s board of directors.
Brokovich became the company’s first female board member in 2019. The company said her “diverse legal and business background along with her renowned advocacy experience provided valuable insights to the Board.”
LifeVantage has now appointed Rajendran Anbalagan, the chief information and product transformation officer at Caesars Entertainment, to the board. Brokovich resigned “to make room for a new board member that the Board and Erin feel will bring exceptional value to the company,” Fife said. “The appointment comes after the Board conducted a comprehensive search to identify a candidate with transformational digital skills.”
During the call with analysts, Fife thanked Brokovich for her time at the company.
“Erin has been an amazing partner and advocate for our brand, and we are thankful for her many years of dedicated service,” he said.
Primerica
The Georgia-based life insurance and financial services company reported profit of $1.2 million during its second quarter, a huge decline compared to a year ago, after the company recognized losses related to exiting one of its business segments.
Primerica is a direct selling company that offers term insurance policies and annuities, along with other financial services—and up until recently, the company also operated a senior healthcare business called e-teleQuote that sold insurance products.
Revenue increased during the most recent three-month period by 17% to $803 million.
CEO Glenn Williams told analysts during an earnings call that the company’s core business results from the quarter were strong, driven by strong sales of investment products and rising client asset values.
Primerica still issued more than 100,000 new term life insurance policies during the quarter, a 4% increase compared to a year ago. Revenue in the company’s life insurance segment also increased by 4% to about $427 million.
Meanwhile, Primerica’s investment and savings product segment saw sales increase by 29% to $3.1 billion.
Despite the revenue increases, the company’s profit was substantially lower compared to a year ago during the same period when it reported $144 million in net income.
That was largely due to $254 million in losses related to writing off “remaining goodwill intangibles” from its senior healthcare insurance business. Primerica announced in July it was exiting its senior health business because there was no path to profitability within what company officials have described as an “acceptable time frame.”
The company’s decision to exit the senior health business led to several non-cash adjustments in the second quarter of 2024. These included write-offs of the remaining goodwill and intangibles and the recognition of a tax benefit from the removal of the deferred tax liabilities associated with the intangible assets and a valuation allowance for state net operating losses.
Primerica had acquired e-TeleQuote, a provider of senior health insurance distributor of Medicare-related insurance policies, in July of 2021, but the segment continually underperformed, failing to deliver the type of results the company had hoped for upon its acquisition.
“Over the last several months, we’ve determined that the increasingly challenging senior health distribution market, including, for example, increasing policy churn and the regulatory uncertainty facing this industry would make it difficult for us to achieve the near-term stockholder value that had been anticipated,” Williams said.
Primerica determined that relinquishing its ownership of e-TeleQuote would be the “most expeditious way to exit its senior health business while maximizing Primerica’s residual stockholder value.”
The Numbers
- Profit: $1.2 million
- Total Revenue: $803 million, up 17%
