A maker of nutritional supplements and personal care products, sold under the Nature's Sunshine Products and Synergy WorldWide brands through a network of independent consultants in regions from Asia to the Americas. It all started in 1972 when Gene Hughes, trying cayenne pepper for a digestive ailment, found it awful to swallow by the spoonful — so he and his wife Kristine hand-filled the powder into gelatin capsules at their kitchen table in Utah, an approach that helped launch the modern supplement industry. The company's name reflects its mission of sharing the healing power of nature.
Gross margin reached 73.7%, the highest in over two years, but foreign exchange losses erased the gain at the net income line.
returned to its pre-2022 peak, but the didn't follow. rose 1.9% to $117.0 million and gross margin expanded 1.9 points to 73.7% on cost savings, yet net income fell 33.7% to $3.5 million as a $3.4 million swing in foreign exchange losses hit . The business is running more efficiently, but currency swings are now the dominant force on earnings.
Key takeaways
expanded 1.9 points to 73.7%, returning to the 73-74% range last seen before the Russia-Ukraine charges began in early 2022, as cost of sales fell to 26.3% of on cost-savings initiatives and market mix.
fell 33.7% to $3.5 million despite the higher , because swung from a $3.0 million gain a year ago to a $0.4 million loss, driven by foreign exchange losses in Asia.
Consolidated rose 1.9% to $117.0 million, with of 3.8% indicating a $2.1 million currency ; Asia, Europe, and North America all grew, partially offset by a decline in Latin America and Other.
Section summaries
Management's Discussion and Analysis
Q2 2026 net sales rose 1.9% to $117.0M; gross margin improved 200 bps on cost savings, but net income fell 35.9% on FX losses.
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Consolidated grew 1.9% (3.8% in local currency) to $117.0M, driven by Asia, Europe, and North America, partially offset by a $2.1M currency .
expanded to 73.7% from 71.7% as cost of sales fell to 26.3% of , primarily due to cost savings initiatives and market mix.
rose 28.2% to $5.5 million, driven by the higher , though SG&A expenses rose to 38.4% of on consultant events and variable selling expenses.
turned negative at $0.8 million for the quarter, down from $4.3 million a year ago, and was -$1.9 million, as lower and the timing of items absorbed cash.
The Bureau of Industry and Security closed its trade-controls matter without action, but the OFAC voluntary self-disclosure remains pending with an uncertain outcome.
What changed
has now held at or above 73% for three consecutive quarters (73.3% in Q3 2025, 73.2% in Q1 2026, 73.7% in Q2 2026), confirming the return to the pre-2022 baseline is durable rather than a one-quarter currency .
The foreign exchange swing that was flagged as a risk in Q1 2026 materialized more forcefully: swung from a $3.0M gain in Q2 2025 to a $0.4M loss this quarter, erasing the operating improvement at the line.
weakened further from the -$1.8M reported in Q1 2026 to $0.8M this quarter, with H1 2026 at -$1.0M compared with +$6.9M a year ago, as the working-capital timing cited by management persisted.
The BIS trade-controls matter was resolved without action in November 2025, removing one regulatory overhang, but the OFAC disclosure remains pending — the only open item from the investigation that began in late 2024.
The material weakness in internal controls, flagged in every prior filing since FY 2022, is not mentioned in this 10-Q, leaving its remediation status unclear ahead of the 2026 year-end audit.
What to watch
Whether the foreign exchange losses in Asia reverse in Q3 2026 or continue to absorb operating gains, given the $3.4M swing this quarter was the primary driver of the decline.
Whether the OFAC voluntary self-disclosure results in fines or penalties, and whether the company's estimate that affected is less than 1% of net revenue proves accurate.
Whether recovers from the -$1.0M first-half level, or whether the working-capital timing cited by management persists through year-end.
Whether the material weakness in internal controls has been remediated — its absence from this filing leaves the status unclear ahead of the 2026 year-end audit.
expenses rose to 38.4% of , driven by consultant events and variable selling expenses, partially offset by lower compensation costs.
dropped 35.9% to $3.5M, largely due to a $3.4M swing in other income/expense to a net loss, driven by foreign exchange losses in Asia.
turned negative at -$1.0M for H1 2026 from +$6.9M a year ago, reflecting lower and timing of items.
The company expects tariffs may adversely affect costs in the remainder of 2026 and continues to monitor the conflict in Eastern Europe, where sales still grew.
Quantitative and Qualitative Disclosures About Market Risk
We conduct business in several countries and intend to grow our international operations. Net sales, operating income and net income are affected by fluctuations in currency exchange rates, interest rates and other uncertainties inherent in doing business and selling products in…
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We conduct business in several countries and intend to grow our international operations. Net sales, operating income and net income are affected by fluctuations in currency exchange rates, interest rates and other uncertainties inherent in doing business and selling products in more than one currency. In addition, our operations are exposed to risks associated with changes in social, political and economic conditions inherent in international operations, including changes in the laws and policies that govern international investment in countries where we have operations, as well as, to a lesser extent, changes in U.S. laws and regulations relating to international trade and investment. Furthermore, we are subject to risks from shifting tariff regimes and trade policies between countries where we operate, which could increase our costs of materials and finished goods, or disrupt our supply chain operations. For further information, see Part II, Item 7A of our Annual Report on Form 10-K for the year ended December 31, 2025.
No material risk changes except a new trade-controls disclosure tied to an ongoing OFAC voluntary self-disclosure.
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The company filed final voluntary self-disclosures with BIS and OFAC in September 2025 after an internal investigation into past trade-controls compliance.
BIS closed its matter without action; the OFAC disclosure remains pending and could result in fines or penalties.
The potential violations represented less than 1% of net in each of the last three fiscal years.
Management believes any fines or penalties would not be material, but the outcome and timeline are uncertain.
Broader exposure to U.S., EU, and other sanctions and export-control laws could increase compliance costs and lead to civil or criminal penalties.