What Happened?
Shares of health and wellness products company USANA Health Sciences (NYSE: USNA) fell 20.7% in the afternoon session after the company announced preliminary third-quarter results that fell below expectations, signaling a sharp decline in profitability.
Although net sales were expected to increase to approximately $214 million from $200 million in the same period of the previous year, earnings from operations dropped significantly to $1.2 million from $15.6 million. The company pointed to two main issues for the poor performance. First, the rollout of a new compensation plan for its Brand Partners led to a more pronounced slowdown in sales and productivity than anticipated. Second, its direct-to-consumer business, Hiya, had weaker sales due to lower-than-expected customer acquisition. Consequently, USANA anticipated a net loss of $6.5 million for the quarter, a stark reversal from the $10.6 million in net earnings reported a year earlier.
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What Is The Market Telling Us
USANA’s shares are somewhat volatile and have had 11 moves greater than 5% over the last year. But moves this big are rare even for USANA and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was 3 months ago when the stock gained 12.4% on the news that reporting strong second-quarter financial results that surpassed analyst expectations and reaffirming its full-year outlook.
The health and wellness products company announced net sales of $236 million, an 11% increase compared to the same period last year and ahead of the $225.2 million analysts had forecasted. Adjusted earnings per share came in at $0.74, significantly beating the consensus estimate of $0.54. While the company's net income saw a slight dip, the robust top-line growth and better-than-expected profitability appeared to fuel investor optimism. USANA also reiterated its fiscal 2025 guidance, projecting consolidated net sales between $920 million and $1.0 billion. Management noted that the business performed in line with expectations, supported by a new commercial strategy for its direct sales business. The company also highlighted strong growth in its Hiya direct-to-consumer business.
USANA is down 44.1% since the beginning of the year, and at $20.35 per share, it is trading 50.7% below its 52-week high of $41.29 from November 2024. Investors who bought $1,000 worth of USANA’s shares 5 years ago would now be looking at an investment worth $260.93.
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