Usana Health Sciences (USNA) risk factors, FY2025 10-K

Other

1. 01Risks Associated with Direct Selling38% rewritten

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 Business35% rewritten
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 Brand Partners or third parties against us could harm our business20% rewritten
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. 33Our effective tax rate has meaningfully increased over the last few years and will likely remain elevated due to profitability erosion in the U.S. resulting from geographic misalignment between net sales and operating expensesNew
10. 34income and expenses across our markets. Any such developments may increase the disparity between the location of our net sales and expenses and could cause our effective tax rate to remain elevated or increase furtherNew
11. 35If we fail to maintain an effective system of internal controls, we may not be able to accurately report our financial results or prevent fraud24% rewritten
12. 36Environmental, Social and Governance ("ESG") issues may have an adverse effect on our reputation, business, financial condition or results of operations
13. 37In 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 initiative30% rewritten
14. 38A failure or interruption of our information technology systems would harm our business
15. 39We 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
16. 40These laws and regulations have resulted in greater compliance risk and cost for us
17. 41If we are unable to attract and retain active Brand Partners and Preferred Customers, our business may be harmed39% rewritten
18. 42The loss of key management personnel could adversely affect our business
19. 43Growth through acquisitions is part of our strategy, and we may not successfully integrate, operate or realize the anticipated benefits of our acquisitions46% rewritten
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 Brand Partners49% rewritten
23. 47Hiya's ability to acquire customers in a cost effective manner depends on its capacity to adapt to changes in the digital marketing environmentNew
24. 48Rise's business depends on a limited number of key retail customers, and the loss of, or a significant reduction in orders from, any of these customers could materially adversely affect Rise's business, financial condition and results of operationsNew
25. 49Difficult economic conditions may adversely affect our business
26. 50Our business is subject to the effects of adverse publicity and negative public perception25% rewritten
27. 51Our business is subject to the risks associated with intense competition from larger, wealthier, and more established competitors
28. 52Our business is subject to particular intellectual property risks
29. 53Pandemics, 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. 08that a regulator, 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 Brand Partners in connection with the sale of our products or the improper promotion of our Compensation Plan could adversely affect our business28% rewritten
4. 10We may have or could incur obligations relating to the activities of our Brand Partners
5. 11Our Brand Partner Compensation Plan, or changes we make to it, may be viewed negatively by some Brand Partners, could fail to achieve our desired objectives, and could have a negative impact on our business40% rewritten
6. 12Changes we are required to make to our Brand Partner Compensation Plan in certain markets, including limits on the amount of Brand Partner compensation we can pay, may hurt our ability to attract and retain Brand Partners, result in regulatory risk and affect our operating results
7. 54The 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. 55Sales 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. 56The 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