The following Management’s Discussion and Analysis should be read in conjunction with the unaudited condensed consolidated financial statements and notes thereto included in this report, as well as the consolidated financial statements, the notes thereto and management’s discussion and analysis included in our Annual Report on Form 10-K for the year ended December 31, 2025, and our other reports filed since the date of such Form 10-K. OVERVIEW We are a global leader in manufacturing and marketing high-quality herbal and nutritional supplements. We are a Utah corporation with our principal place of business in Lehi, Utah, and sell our products directly to consumers and to a sales force of independent consultants who resell our products to consumers. Our independent consultants market and sell our products to consumers and sponsor other independent consultants who also market our products to consumers. Because a significant amount of revenue is generated through the sales of our independent consultants, our revenue can be impacted by the number and productivity of our independent consultants. We seek to motivate and provide incentives to our independent consultants by offering high quality products, product support, training seminars and financial incentives, among other considerations. Second Quarter Performance In the second quarter of 2026, we experienced an increase in our consolidated net sales of 1.9 percent (or 3.8 percent in local currencies) compared to the same period in 2025. Asia net sales increased approximately 0.6 percent (or 5.3 percent in local currencies) compared to the same period in 2025. Europe net sales increased approximately 4.4 percent (or 3.7 percent in local currencies) compared to the same period in 2025. North America net sales increased approximately 2.8 percent (or 2.8 percent in local currencies) compared to the same period in 2025. Latin America and Other net sales decreased approximately 0.5 percent (or 3.7 percent in local currencies) compared to the same period in 2025. The weakening of the local currencies versus the U.S. dollar, primarily in our Asian markets, resulted in an approximate 1.9 percent, or $2.1 million, decrease of our net sales during the quarter. Cost of sales decreased $1.6 million during the three months ended June 30, 2026, compared to the same period in 2025, and as a percentage of net sales were 26.3 percent and 28.3 percent for the three months ended June 30, 2026 and 2025, respectively. The decrease in cost of sales percentage is primarily due to cost savings initiatives and market mix. In absolute terms, selling, general and administrative expenses increased $1.2 million during the three months ended June 30, 2026, compared to the same period in 2025, and as a percentage of net sales were 38.4 percent and 38.1 percent for the three months ended June 30, 2026 and 2025, respectively. The increase was primarily related to consultant events and variable selling expenses, partially offset by compensation costs. As an international business, we have significant sales and costs denominated in currencies other than the U.S. Dollar. We expect foreign markets with functional currencies other than the U.S. Dollar will continue to represent a substantial portion of our overall sales and related operating expenses. Accordingly, changes in foreign currency exchange rates could materially affect sales and costs or the comparability of sales and costs from period to period as a result of translating foreign markets' financial statements into our reporting currency. 21 Table of Contents Eastern Europe On February 24, 2022, Russian forces launched significant military action against Ukraine. There continues to be sustained conflict and disruption in the region, which is expected to endure for the foreseeable future. Our consultants in the impacted regions continue to operate their independent businesses, albeit at a reduced level than prior to the start of the conflict. We expect that this will continue to impact our business for the foreseeable future. We will continue monitoring the social, political, regulatory and economic environment in Ukraine and Russia and will consider further actions as appropriate. More broadly, there could be additional negative impacts to our net sales, earnings and cash flows should the situation escalate beyond its current scope, including, among other potential impacts, economic recessions in certain neighboring countries. Despite the war in Ukraine, net sales related to Eastern Europe for the three and six months ended June 30, 2026, were $15.1 million and $32.7 million, respectively, compared to $13.5 million and $29.3 million for the same periods in 2025. Operating income related to Eastern Europe for the three and six months ended June 30, 2026 was $1.6 million and $3.6 million, respectively, compared to $1.0 million and $2.4 million for the same periods in 2025. As of June 30, 2026, Eastern Europe had assets of $7.1 million, net of working capital reserves related to inventories. In November 2024, we began an internal investigation regarding our past compliance with relevant U.S. trade controls and made an initial voluntary self-disclosure of apparent trade controls violations to the U.S. Department of Commerce's Bureau of Industry and Security (“BIS”). In addition, in April 2025 we filed an initial voluntary self-disclosure with the Office of Foreign Asset Control (“OFAC”) relating to the same internal investigation. Following our internal investigation, we filed final voluntary self-disclosures with BIS and OFAC on September 5, 2025. We received a response from BIS closing the matter without further action. The voluntary self-disclosure with OFAC remains pending. We estimate that such potential violations represented less than one percent of our net revenue in each of our last three fiscal years. An unfavorable outcome of this investigation may include fines or penalties imposed in response to our voluntary disclosures. While we believe the amount of any fines or penalties would not be material to our financial condition and results of operation, we are unable to predict the outcome or the timing of resolution of these matters. China Joint Ventures On December 17, 2025, we completed the purchase of Fosun Industrial’s interests in Nature’s Sunshine Hong Kong Limited and Shanghai Nature’s Sunshine Health Products Co., Ltd., the Company's two joint ventures. Following the completion of the repurchases, the Company owned 100% of both joint ventures. Tariffs While we did not experience material impacts as a result of tariffs for the six months ended June 30, 2026 and 2025, we continue to monitor the additional pressure that tariff-related price increases may have on our business, including the price, availability and quality of raw materials and other ingredients. We expect that tariffs may adversely affect our costs in the remainder of 2026. 22 Table of Contents RESULTS OF OPERATIONS The following table summarizes our unaudited consolidated operating results from continuing operations in U.S. dollars and as a percentage of net sales for the three months ended June 30, 2026 and 2025 (dollar amounts in thousands): Three Months Ended June 30, 2026 2025 Change Total dollars Percent of net sales Total dollars Percent of net sales Total dollars Percentage Net sales $ 116,985 100.0 % $ 114,750 100.0 % $ 2,235 1.9 % Cost of sales 30,811 26.3 32,451 28.3 (1,640) (5.1) Gross profit 86,174 73.7 82,299 71.7 3,875 4.7 Volume incentives 35,817 30.6 34,360 29.9 1,457 4.2 SG&A expenses 44,876 38.4 43,665 38.1 1,211 2.8 Operating income 5,481 4.7 4,274 3.7 1,207 28.2 Other income (expense), net (115) (0.1) 3,270 2.8 (3,385) (103.5) Income before income taxes 5,366 4.6 7,544 6.6 (2,178) (28.9) Provision for income taxes 1,828 1.6 2,025 1.8 (197) (9.7) Net income $ 3,538 3.0 % $ 5,519 4.8 % $ (1,981) (35.9) % The following table summarizes our unaudited consolidated operating results from continuing operations in U.S. dollars and as a percentage of net sales for the six months ended June 30, 2026 and 2025 (dollar amounts in thousands): Six Months Ended June 30, 2026 2025 Change Total dollars Percent of net sales Total dollars Percent of net sales Total dollars Percentage Net sales $ 239,877 100.0 % $ 227,998 100.0 % $ 11,879 5.2 % Cost of sales 63,726 26.6 64,102 28.1 (376) (0.6) Gross profit 176,151 73.4 163,896 71.9 12,255 7.5 Volume incentives 72,710 30.3 69,204 30.4 3,506 5.1 SG&A expenses 88,415 36.9 84,246 37.0 4,169 4.9 Operating income 15,026 6.3 10,446 4.6 4,580 43.8 Other income (expense), net (1,505) (0.6) 4,207 1.8 (5,712) (135.8) Income before income taxes 13,521 5.6 14,653 6.4 (1,132) (7.7) Provision for income taxes 4,865 2.0 4,250 1.9 615 14.5 Net income $ 8,656 3.6 % $ 10,403 4.6 % $ (1,747) (16.8) % Net Sales International operations have provided, and are expected to continue to provide, a significant portion of our total net sales. As a result, total net sales will continue to be affected by fluctuations in the U.S. dollar against foreign currencies. In order to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency fluctuations, in addition to comparing the percent change in net sales from one period to another in U.S. dollars, we present net sales excluding the impact of foreign exchange fluctuations. We compare the percentage change in net sales from one period to another period by excluding the effects of foreign currency exchange as shown below. Net sales excluding the impact of foreign exchange fluctuations is not a U.S. GAAP financial measure and removes from net sales in U.S. dollars the impact of changes in exchange rates between the U.S. dollar and the functional currencies of our foreign subsidiaries, by translating the current period net sales into U.S. dollars using the same foreign currency exchange rates that were used to translate the net sales for the previous comparable period. We believe presenting the impact of foreign currency fluctuations is useful to investors because it allows a more meaningful comparison of net sales of our foreign operations from period to period. However, net sales excluding the impact of foreign currency fluctuations should not be considered in isolation or as an alternative to net sales in U.S. dollar measures that reflect current period exchange rates, or to other financial measures calculated and presented in accordance with U.S. GAAP. Throughout the last five years, foreign currency exchange rates have fluctuated significantly. See Item 3. Quantitative and Qualitative Disclosures about Market Risk. 23 Table of Contents The following table summarizes the changes in net sales by operating segment with a reconciliation to net sales excluding the impact of currency fluctuations for the three months ended June 30, 2026 and 2025 (dollar amounts in thousands): Three Months Ended June 30, 2026 2025 Percent Change Impact of Currency Exchange Percent Change Excluding Impact of Currency Asia $ 52,997 $ 52,664 0.6 % $ (2,466) 5.3 % Europe 22,694 21,741 4.4 156 3.7 North America 35,951 34,977 2.8 (6) 2.8 Latin America and Other 5,343 5,368 (0.5) 174 (3.7) $ 116,985 $ 114,750 1.9 % $ (2,142) 3.8 % The following table summarizes the changes in net sales by operating segment with a reconciliation to net sales excluding the impact of currency fluctuations for the six months ended June 30, 2026 and 2025 (dollar amounts in thousands): Six Months Ended June 30, 2026 2025 Percent Change Impact of Currency Exchange Percent Change Excluding Impact of Currency Asia $ 105,180 $ 101,317 3.8 % $ (1,803) 5.6 % Europe 49,089 45,855 7.1 995 4.9 North America 74,274 69,995 6.1 114 6.0 Latin America and Other 11,334 10,831 4.6 398 1.0 $ 239,877 $ 227,998 5.2 % $ (296) 5.3 % Consolidated net sales for the three and six months ended June 30, 2026, were $117.0 million and $239.9 million, respectively, compared to $114.8 million and $228.0 million for the same period in 2025, which represents an increase of 1.9 percent and 5.2 percent, respectively. The increase was primarily related to product sales increases in our Asia, Europe and North America operating segments. Excluding the impact of foreign currency exchange rate fluctuations, consolidated net sales for the three and six months ended June 30, 2026 increased 3.8 percent and 5.3 percent, respectively, from the same periods in 2025. Asia Net sales related to Asia for the three and six months ended June 30, 2026 were $53.0 million and $105.2 million, respectively, compared to $52.7 million and $101.3 million for the same periods in 2025, or increases of 0.6 percent and 3.8 percent, respectively. In local currency, net sales for the three and six months ended June 30, 2026 increased 5.3 percent and 5.6 percent, respectively, compared to the same periods in 2025. Notable activity in the following markets contributed to the results of Asia: In our Japan market, net sales increased $5.0 million and $6.5 million, or 38.3 percent and 26.7 percent, for the three and six months ended June 30, 2026, respectively, compared to the same periods in 2025. In local currencies, net sales for the three and six months ended June 30, 2026 increased 50.7 percent and 34.9 percent, respectively, compared to the same periods in 2025. The increase in net sales was primarily the result of strong momentum and timing of event qualifications that drove greater consultant activity and an increase in total orders and average order value. In our Taiwan market, net sales decreased $3.0 million and $5.9 million, or 17.9 percent and 17.0 percent, for the three and six months ended June 30, 2026, respectively, compared to the same periods in 2025. In local currencies, net sales for the three and six months ended June 30, 2026 decreased 15.6 percent and 17.5 percent, respectively, compared to the same periods in 2025. The decrease was primarily the result of slower consumer acquisition and a reduction in total orders as well as average order values. 24 Table of Contents In our South Korea market, net sales decreased $0.5 million and increased $0.9 million, or decreased 4.1 percent and increased 4.0 percent, for the three and six months ended June 30, 2026, respectively, compared to the same periods in 2025. In local currency, net sales for the three and six months ended June 30, 2026 increased 2.9 percent and 8.1 percent, respectively, compared to the same periods in 2025. The increase in net sales in local currency was primarily the result of an increase in total orders and average order value. In our China market, net sales decreased $1.4 million and increased $2.1 million, or decreased 15.3 percent and increased 12.7 percent, for the three and six months ended June 30, 2026, compared to the same periods in 2025. In local currencies, net sales for the three and six months ended June 30, 2026 decreased 20.1 percent and increased 7.3 percent, respectively, compared to the same periods in 2025. The decrease in net sales for the three months ended June 30, 2026 was primarily the result of a decrease in average order value and total orders, partially offset by an increase in subscription orders. The increase in net sales for the six months ended June 30, 2026 was primarily the result of an increase in total orders and average order value. Europe Net sales related to Europe for the three and six months ended June 30, 2026 were $22.7 million and $49.1 million, respectively, compared to $21.7 million and $45.9 million for the same periods in 2025, or increases of 4.4 percent and 7.1 percent, respectively. In local currency, net sales for the three and six months ended June 30, 2026 increased 3.7 percent and 4.9 percent, respectively, compared to the same periods in 2025. The functional currency for many of these markets is the U.S. Dollar which reduces the effect from foreign currency fluctuations. Fluctuations in foreign currency exchange rates had favorable impacts on net sales of $0.2 million and $1.0 million for the three and six months ended June 30, 2026, respectively. Net sales in local currency increased for the three and six months ended June 30, 2026, primarily as a result of growth in average order size and an expanding distributor base. North America Net sales related to North America for the three and six months ended June 30, 2026 were $36.0 million and $74.3 million, respectively, compared to $35.0 million and $70.0 million for the same periods in 2025, or increased 2.8 percent and 6.1 percent, respectively. In local currency, net sales for the three and six months ended June 30, 2026 increased 2.8 percent and 6.0 percent, respectively, compared to the same periods in 2025. In the United States, net sales for the three and six months ended June 30, 2026 increased $1.1 million and $4.2 million, or 3.3 percent and 6.5 percent, respectively, compared to the same periods in 2025. The increase was primarily due to improved consumer acquisition through our digital channels. Latin America and Other Net sales related to Latin America and Other markets for the three and six months ended June 30, 2026 were $5.3 million and $11.3 million, respectively, compared to $5.4 million and $10.8 million for the same periods in 2025, or decreased 0.5 percent and increased 4.6 percent. In local currency, net sales for the three and six months ended June 30, 2026 decreased 3.7 percent and increased 1.0 percent, respectively, compared to the same periods in 2025. Fluctuations in foreign currency had favorable impacts on net sales of $0.2 million and $0.4 million for the three and six months ended June 30, 2026, respectively. Further information related to our Asia, Europe, North America and Latin America and Other business segments is set forth in Note 7 to the unaudited Condensed Consolidated Financial Statements in Part I, Item 1 of this report. Cost of Sales Cost of sales as a percent of net sales was 26.3 percent and 26.6 percent for the three and six months ended June 30, 2026, compared to 28.3 percent and 28.1 percent for the same periods in 2025. The decrease in cost of sales percentage is primarily due to cost savings initiatives and market mix. 25 Table of Contents Volume Incentives Volume incentives expense as a percent of net sales was 30.6 percent and 30.3 percent for the three and six months ended June 30, 2026, respectively, compared to 29.9 percent and 30.4 percent for the same periods in 2025. The increase for the three months ended June 30, 2026, was primarily due to timing of promotional incentives and market mix. These payments are designed to provide incentives for reaching certain sales levels. Volume incentives vary slightly, on a percentage basis, by product due to pricing policies and commission plans in place in our various geographies. We do not pay volume incentives in China, instead we pay independent service fees which are included in selling, general and administrative expenses. Selling, General and Administrative Selling, general and administrative expenses represent operating expenses, components of which include labor and benefits, sales events, professional fees, travel and entertainment, marketing, occupancy costs, communications costs, bank fees, depreciation and amortization, independent services fees paid in China and other miscellaneous operating expenses. Selling, general and administrative expenses increased $1.2 million and $4.2 million, respectively, to $44.9 million and $88.4 million for the three and six months ended June 30, 2026, respectively, compared to the same periods in 2025. Selling, general and administrative expenses were 38.4 percent and 36.9 percent of net sales for the three and six months ended June 30, 2026, compared to 38.1 percent and 37.0 percent for the same periods in 2025. The increase was primarily related to consultant events and variable selling expenses, partially offset by compensation costs. Other Income (Expense), Net Other income (expense), net, for the three and six months ended June 30, 2026, was expense of $0.1 million and $1.5 million, respectively, compared to income of $3.3 million and $4.2 million during the same periods in 2025, respectively. Other income (expense), net for the three and six months ended June 30, 2026 primarily consisted of foreign exchange losses in Asia, partially offset by foreign exchange gains in Europe and Latin America, that resulted from net changes in foreign currencies. Income Taxes For the three months ended June 30, 2026 and 2025, our provision for income taxes, as a percentage of income before income taxes was 34.1 percent and 26.8 percent, respectively, compared with a U.S. federal statutory rate of 21.0 percent. For the six months ended June 30, 2026 and 2025, our provision for income taxes, as a percentage of income before income taxes was 36.0 percent and 29.0 percent, respectively, compared with a U.S. federal statutory rate of 21.0 percent. The difference between the effective tax rate and the U.S. federal statutory tax rate for the three and six months ended June 30, 2026, was primarily attributed to recording a valuation allowance on foreign tax credits which are not expected to be utilized before expiration, non-deductible executive compensation, and foreign losses that presently do not provide a future tax benefit, partially offset by the deduction allowed for foreign-derived eligible income and favorable deductions for share-based compensation. The difference between the effective tax rate and the U.S. federal statutory tax rate for the three and six months ended June 30, 2025, was primarily attributed to operations in foreign countries which are treated as a branch for U.S. tax purposes, partially offset by favorable adjustments to deferred tax assets, foreign derived intangible income deduction and foreign tax credits. The difference between the effective tax rate for the three and six months ended June 30, 2026, compared to June 30, 2025, was primarily caused by an increase in foreign losses year over year that presently do not provide future tax benefit and favorable adjustments to deferred tax assets in the prior period which do not repeat in the current period. Our U.S. federal income tax returns for 2022 through 2024 are open to examination for federal tax purposes. We have several foreign tax jurisdictions that have open tax years from 2020 through 2025. As of June 30, 2026 and December 31, 2025, we had accrued $0.1 million and $0.4 million, respectively, related to unrecognized tax positions. 26 Table of Contents Product Categories Our line of over 800 products includes several different product classifications, such as immune, cardiovascular, digestive, personal care, weight management and other general health products. We purchase herbs and other raw materials in bulk, and after quality control testing, we formulate, encapsulate, tablet or concentrate them, label and package them for shipment. Most of our products are manufactured at our facility in Spanish Fork, Utah. Contract manufacturers produce some of our products in accordance with our specifications and standards. We have implemented quality control procedures to verify that our contract manufacturers have complied with our specifications and standards. See Note 7, Segment Information, for a summary of the U.S. dollar amounts from the sale of general health, immune, cardiovascular, digestive, personal care and weight management products for the three and six months ended June 30, 2026 and 2025, by business segment. Distribution and Marketing We market our products primarily through our network of independent consultants, who market our products to consumers through direct selling techniques. We seek to motivate and provide incentives to our independent consultants by offering high quality products and providing independent consultants with product support, training seminars, sales conventions, travel programs and financial incentives. Our products sold in the United States are shipped directly from our manufacturing and warehouse facilities located in Spanish Fork, Utah, as well as from our regional warehouses located in Georgia, Ohio and Texas. Many of our international operations maintain warehouse facilities and inventory to supply their independent consultants. However, in foreign markets where we do not maintain warehouse facilities, we have contracted with third parties to distribute our products and provide support services to our force of independent consultants. In the United States, we generally sell our products on a cash or credit card basis. From time to time, our U.S. operations extend short-term credit associated with product promotions. For certain of our international operations, we use independent distribution centers and offer credit terms that are generally consistent with industry standards within each respective country. We pay sales commissions, or “volume incentives,” to our independent consultants based upon their own product sales and the product sales of their sales organization. As an exception, in China, we do not pay volume incentives; rather, we pay independent service fees, which are included in selling, general and administrative expenses. These volume incentives and independent service fees are recorded as an expense in the year earned. The amounts of volume incentives that we expensed during the quarters ended June 30, 2026 and 2025, are set forth in the unaudited Condensed Consolidated Financial Statements in Item 1 of this report. In addition to the opportunity to receive volume incentives, independent consultants who attain certain levels of monthly product sales are eligible for additional incentive programs including automobile allowances, sales convention privileges and travel awards. LIQUIDITY AND CAPITAL RESOURCES Our principal use of cash is to pay for operating expenses, including volume incentives, inventory and raw material purchases, capital assets, digital investments and funding of international expansion. As of June 30, 2026, working capital was $109.7 million, compared to $100.3 million as of December 31, 2025. At June 30, 2026, we had $82.5 million in cash, of which $15.7 million was held in the U.S. and $66.8 million was held in foreign markets and may be subject to various withholding taxes and other restrictions related to repatriation before becoming available to be used along with the normal cash flows from operations to fund any unanticipated shortfalls in future cash flows. Our net consolidated cash inflows (outflows) are as follows (in thousands): Six Months Ended June 30, 2026 2025 Operating activities $ (1,011) $ 6,949 Investing activities (5,256) (2,460) Financing activities (5,035) (12,853) 27 Table of Contents Operating Activities For the six months ended June 30, 2026, operating activities used cash of $1.0 million, compared to provided cash of $6.9 million in the same period in 2025. Operating cash flows decreased primarily due to reduced net income and the timing of payments and receipts for accrued liabilities, deferred revenue, income taxes payable, accounts receivable, prepaid expense and other current assets, partially offset by a decrease in inventories and lease liabilities. Investing Activities For the six months ended June 30, 2026, investing activities used $5.3 million, compared to $2.5 million for the same period in 2025, which consisted of capital expenditures related to the purchase of equipment, computer systems and software. Financing Activities For the six months ended June 30, 2026, financing activities used $5.0 million, compared to $12.9 million for the same period in 2025. During the six months ended June 30, 2026, we used cash to repurchase 113,000 shares of our common stock under the share repurchase program for $2.6 million. At June 30, 2026, the remaining balance available for repurchases under the program was $14.8 million. We maintain a revolving credit agreement with Bank of America, N.A. (the “Credit Agreement”), as well as a credit agreement with Banc of America Leasing and Capital, LLC (the "Capital Credit Agreement"). At June 30, 2026, there were no outstanding balances under the Credit Agreement or the Capital Credit Agreement. Our debt obligations are discussed in greater detail in Note 4, “Revolving Credit Facility and Other Obligations,” to our unaudited Condensed Consolidated Financial Statements in Part I, Item 1 of this report. We believe that cash generated from operations, along with available cash and cash equivalents, will be sufficient to fund our normal operating needs, including capital expenditures, on both a short- and long-term basis. In addition, other things such as a prolonged economic downturn, a decrease in demand for our products, an unfavorable settlement of our unrecognized tax positions or non-income tax contingencies could adversely affect our long-term liquidity. CRITICAL ACCOUNTING POLICIES AND ESTIMATES There were no significant changes in our critical accounting policies or estimates for the six months ended June 30, 2026. A summary of our significant accounting policies is provided in Note 1 of the Notes to Consolidated Financial Statements in Item 8 of the Annual Report on Form 10-K for the year ended December 31, 2025.