Usana Health Sciences (USNA) risk factors, FY2024 10-K

Other

1. 01Risks Associated with Direct Selling

Risks Related to Our China Business

1. 02Risk Associated with Our International Operations
2. 13Our Greater China region accounts for a significant part of our business and expected growth. A decline in sales or customers in this region would harm our business, financial condition and results of operations
3. 14Although BabyCare utilizes a business model that has been developed specifically for China’s laws and regulations, the Chinese government has not approved BabyCare’s model, compensation plan, and operations
4. 15BabyCare’s operations in China, and direct selling companies in general, are subject to significant government oversight, scrutiny and monitoring
5. 16BabyCare must apply for and receive government approval to expand its business in China and the failure to obtain such approvals could negatively impact its ability to expand and grow its business
6. 17Risks associated with operating in international markets could restrict our ability to expand globally and harm our business and prospects
7. 18Trade policies, disputes, tariffs or other international disputes could harm our business and operating results
8. 19We are subject to various governmental export control and trade sanctions laws and regulations that could impair our ability to compete in international markets or subject us to liability if we violate these controls
9. 20Fluctuation in the value of currency exchange rates with the U.S. dollar affects our operations and our net sales and earnings
10. 21Inflationary pressures and persistently high prices and uncertain availability of commodities, raw materials or other inputs used by us and our suppliers, or instability in logistics and related costs, could negatively impact our profitability

Legal, Regulatory, Compliance and Tax Risks

1. 03Risk Associated with Information Technology, Data Security and Data Privacy
2. 04Human Capital Risks Associated with our Business
3. 05Risks Associated with Business Development Activities and Acquisitions
4. 06General Economic, Publicity, Competitive, and Intellectual Property Risks Associated with our Business
5. 29Legal action by former Associates or third parties against us could harm our business
6. 30We may incur liability under our “Athlete Guarantee” program
7. 31Failure to comply with anti-corruption laws could adversely affect our business
8. 32We could be subject to adverse changes in tax laws, regulations and interpretations or challenges to our tax positions
9. 33If we fail to maintain an effective system of internal controls, we may not be able to accurately report our financial results or prevent fraud
10. 34Environmental, Social and Governance ("ESG") issues may have an adverse effect on our reputation, business, financial condition or results of operations
11. 35In addition to environmental issues these constituencies are also focused on social and other governance issues, including matters such as, but not limited to, human capital and social issues. We also have established inclusion and belonging goals as part of our ESG initiative
12. 36A failure or interruption of our information technology systems would harm our business
13. 37We are subject to data privacy and security laws and regulations, and our actual or perceived failure to comply with them could adversely affect our business and operating results
14. 38These laws and regulations have resulted in greater compliance risk and cost for us
15. 39If we are unable to attract and retain active Associates and Preferred Customers, our business may be harmed
16. 40The loss of key management personnel could adversely affect our business
17. 41Growth through acquisitions is part of our strategy, and we may not successfully integrate, operate or realize the anticipated benefits of our acquisitions
18. 42companies, in a timely and efficient manner; or (viii) the failure to consummate transactions in a timely or efficient manner or at all
19. 43The Hiya Acquisition may not be accretive, and may be dilutive, to our earnings per share, which may negatively affect the market price of our common stock
20. 44Although we expect that the Hiya Acquisition will result in synergies and other benefits to us, we may not realize those benefits because of challenges inherently associated with integration, performance and the achievement of synergies
21. 45The Hiya Acquisition and integration may result in additional costs and expenses
22. 46The Hiya Acquisition may be viewed negatively by our Associates
23. 47Difficult economic conditions may adversely affect our business
24. 48Our business is subject to the effects of adverse publicity and negative public perception
25. 49Our business is subject to the risks associated with intense competition from larger, wealthier, and more established competitors
26. 50Our business is subject to particular intellectual property risks
27. 51Pandemics, epidemics, disease outbreaks and other public health crises, such as the COVID-19 pandemic, have disrupted our business and operations, and future public health crises could materially adversely impact our business, financial condition, liquidity and results of operations

Risks Related to Our Common Stock

1. 07Direct selling is subject to intense government scrutiny, and regulation and changes in the law, or the interpretation and enforcement of the law, might adversely affect our business
2. 08regulator, if it were to review our business, would agree with our assessment and would not require us to change one or more aspects of our operations. Any action against us in the future by the FTC or another regulator could materially and adversely affect our operations
3. 09The violation of marketing or advertising laws by Associates in connection with the sale of our products or the improper promotion of our Compensation Plan could adversely affect our business
4. 10We may have or could incur obligations relating to the activities of our Associates
5. 11Our Associate Compensation Plan, or changes we make to it, may be viewed negatively by some Associates, could fail to achieve our desired objectives, and could have a negative impact on our business
6. 12Changes we are required to make to our Associate Compensation Plan in certain markets, including limits on the amount of Associate compensation we can pay, may hurt our ability to attract and retain Associates, result in regulatory risk and affect our operating results
7. 52The beneficial ownership of a significant percentage of our common stock gives our founder and parties related to or affiliated with him effective control, and limits the influence of other shareholders on important policy and management issues
8. 53Sales by our shareholders of a substantial number of shares of our common stock in the public market could adversely affect the market price of our common stock
9. 54The market price of our common stock may be influenced by many factors, some of which are beyond our control

Risks Related to Our Products, Manufacturing and Operations

1. 22Our products and manufacturing activities are subject to extensive government regulation, which could limit or prevent the sale of our products in some markets
2. 23Our in-house manufacturing activity is subject to certain risks
3. 24Our reliance on third parties to manufacture and supply certain of our products may harm our business, financial condition and operating results
4. 25The inability to obtain adequate supplies of raw materials for products at favorable prices, or at all, could have a material adverse effect on our business, financial condition, or operating results
5. 26Delays and disruptions to transporting and distributing our products may adversely affect our results
6. 27We may incur liability with respect to our products
7. 28Nutritional supplement products may be supported by only limited availability of conclusive clinical studies