HLF 10-K & 10-Q changes, risk factors and insider trading

Acquisitions can expose us to significant risks and additional costs Our business could be materially and adversely affected by natural disasters, other catastrophic events, acts of war or terrorism, cybersecurity incidents, pandemics, and/or other acts by third parties.

Our actual or perceived failure to comply with privacyprivacy, artificial intelligence (AI), and data protection laws, rules, and regulations could materially harm our business, financial condition, and operating results.

In addition, this agreement with our Members provides that we will not make any material changes adverse to our Members to certain aspects of our Marketing Plan that may negatively impact our Members without their approval as described in further detail below. For example, our agreement with our Members provides that we may increase, but not decrease, the discount percentages available to our Members for the purchase of products or the applicable royaltyMember override percentages and production and other bonuscompensation percentages available to our Members at various qualification levels within our Member hierarchy. We may not modify the eligibility or qualification criteria for thesecertain discounts,Member royaltycompensation overrides,payments and production and other bonusesdiscounts unless we do so in a manner to make eligibility and/or qualification easier than under the applicable criteria in effect as of the date of the agreement. Our agreement with our Members further provides that we may not vary the criteria for qualification in our Marketing Plan for each Member tier within our Member hierarchy, unless we do so in such a way so as to make qualification easier.

We reserved the right to make changes to our Marketing Plan without the consent of our Members in the event that changes are required by applicable law or are necessary in our reasonable business judgment to account for specific local market or currency conditions to achieve a reasonable profit on operations. In addition, we may initiate other changes that are adverse to our Members based on an assessment of what will be best for the Company and its Members. Under the agreement with our Members, these other adverse changes would then be submitted to our Member leadership for a vote. The vote would require the approval of at least 51% of our Members then at the level of President’s Team earning at the production bonus level of 6% who vote, provided that at least 50% of those Members entitled to vote do in fact vote. While we believe this agreement has strengthened our relationship with our existing Members, improved our ability to recruit new Members, and generally increased the long-term stability of our business, there can be no assurance that our agreement with our Members will not restrict our ability to adapt our Marketing Plan or our business to the evolving requirements of the markets in which we operate. As a result, our growth may be limited. In addition, from time to time, we may take certain actions or may have certain interpretations of this agreement, such as its scope relating to new offerings, acquisitions, or markets that some or all Members may not agree with, which may cause a disruption in performance.

Our business, including our ability to provide products and services to and manage our Members, depends on the performance and availability of our information technology infrastructure, including our core transactional systems. The most important aspect of our information technology infrastructure is the system through which we record and track Member sales, Volume Points, royaltyMember overrides, bonuses,compensation, and other incentives. The failure of our information systems to operate effectively, or a breach in security of these systems, could adversely impact the promptness and accuracy of our product distribution and transaction processing. While we continue to invest in our information technology infrastructure, including leveraging artificial intelligence (AI) to enhance operational efficiency and improve services for our Members, and implementing Software-as-a-Service (SaaS) solutions, such as Oracle Fusion Cloud applications, there can be no assurance that there will not be any significant interruptions to such systems, that the systems will be adequate to meet all of our business needs, or that the systems will keep pace with continuing changes in technology, legal and regulatory standards. If our systems experience significant interruptions, fail to perform as intended, prove inadequate for our business needs, or do not keep pace with evolving technology or regulatory requirements, our business, financial condition, and operating results could be materially adversely affected.

Any disruptions to, or failures or inadequacies of, our information technology infrastructure that we may encounter in the future may result in substantial interruptions to our operations, expose us to significant liability, and may damage our reputation and our relationships with, or cause us to lose, our Members, especially if the disruptions, failures, or inadequacies impair our ability to track sales and pay royalty overrides, bonuses,compensation and other incentives,incentives to our Members, any of which would harm our business, financial condition, and operating results. Any such disruptions, failures, or inadequacies could also create compliance risks under the Consent Order and result in penalties, fines, or sanctions under any applicable laws, regulations or impact our internal control over financial reporting. Furthermore, it may be expensive or difficult to correct or replace any aspect of our information technology infrastructure in a timely manner, if at all, and we may have little or no control over whether any malfunctioning information technology services supplied to us by third parties are appropriately corrected, if at all. We have encountered, and may encounter in the future, errors in our software and our enterprise network, and inadequacies in the software and services supplied by certain of our vendors, although to date none of these errors or inadequacies have had a meaningful adverse impact on our business, financial condition or operating results.

Companies across all industries are facing increasing scrutiny relating to their environmental, social, and governance practices.practices Investorsfrom a number of different, and at times contrasting, perspectives. Consumers and investors may impose additional standards and expectations on companies in these areas. Changing consumer preferences and investor focus may result in increased demands regarding the source of origin of our ingredients, the recyclability of, and amount of recycled content contained in, our packaging containers, and other components of our products and supply chain and their respective environmental impact, including on sustainability. These consumer demands, along with regulatory requirements, remain inconsistent and exposes us to unpredictable reporting obligations or business requirements, could require additional transparency, due diligence, and reporting and could have causedcause us to incur additional costs or to make changes to our operations to comply with such demands. We may also determine that certain changes are required in anticipation of further evolution of consumer preferences and demands. We operate in 95 markets worldwide, and concern over climate change and other environmental sustainability matters, has and may in the future result in new or increased legal and regulatory requirements to reduce or mitigate impacts to the environment, including greenhouse gas emissions regulations, alternative energy policies, and sustainability initiatives, such as single use plastics, which may cause disruptions in the supply and manufacture of our products or an increase in operating and compliance costs. At the same time, stakeholders and regulators in many markets where we operate have increasingly expressed or pursued opposing views, legislation and investment expectations with respect to sustainability initiatives, including the enactment or proposal of “Anti-ESG” legislation or policies, which may lead to risks that are counter to the above sustainability requirementsexpectations, requirements, and initiatives.initiatives, including the repeal of regulations that we may have committed substantial resources to comply that could have been otherwise deployed. If we fail or succeed, or are perceived to fail or succeed, to achieve or maintain any goals, targets, or objectives we may set with respect to ESG matters, if we do not meet or comply with new regulations or evolving consumer, investor, industry, or stakeholder expectations and standards, including those related to reporting, if consumers or investors disagree with our actions or failure to act with respect to ESG matters, including whether we set goals, targets or objectives, or if we are perceived to have not responded appropriately to the growing concern for ESG matters or are unable to satisfy all stakeholders, we may face legal or regulatory actions, the imposition of fines, penalties, or other sanctions, adverse publicity, and decreased demand from consumers who may stop purchasing our products, or the price of our common shares could decline, any of which could materially harm our reputation or have a material adverse effect on our business, financial condition, or operating results.

From time to time, we receive inquiries from regulators and third parties requesting information concerning our products. We fully cooperate with these inquiries including, when requested, by the submission of detailed technical documents addressing product composition, manufacturing, process control, quality assurance, and contaminant testing. We are confident in the safety of our products when used as directed. However, there can be no assurance that regulators, including in countries where we plan to commence or expand operations, will not take actions that may adversely affect our business and our sales, including preventing or delaying entry into markets or the introduction of new products or requiring the reformulation or the temporary or permanent withdrawal of certain of our existing products from their markets. Any such regulatory action, regardless of whether it results in a final determination adverse to us, could create negative publicity, with detrimental effects on the motivation and recruitment of Members and, consequently, on sales. For example, the Chinese government carried out a 100-day review, or the Review, in 2019 to investigate the unlawful promotion and sales of health products, which resulted in negative media attention to the health products industry and materially and adversely impacted our business in China in 2019 as Members significantly reduced activities and sales meetings during and following the Review. Additionally, in response to the COVID-19 pandemic, the FTC has increased its scrutiny of claims being made by companies and issued hundreds of warning letters to, and initiated enforcement actions against, companies making health claims related to the ability of their products to treat, cure, or prevent COVID-19 or business opportunity claims related to COVID-19.

The regulatory requirements concerning network marketing programs do not include “bright line” rules and are inherently fact-based and, thus, we are subject to the risk that these regulations or the enforcement or interpretation of these regulations by regulators or courts can change. Regulatory authorities also periodically review legislative and regulatory policies and initiatives and may promulgate new or revised regulations. For example, in Vietnam, the government is finalizing amendments to its laws regarding all multi-level businesses. Once effective, these amendments could adversely affect our ability to maintain or renew our direct selling license in Vietnam. Similarly, in 2018, the FTC released its nonbinding Business Guidance Concerning Multi-Level Marketing which it further updated in 2024, and in December 2021, India’s Ministry of Consumer Affairs, Food and Public Distribution, Government promulgated the Consumer Protection (Direct Selling) Rules, 2021 under the Consumer Protection Act, 2019.2024. The adoption of new regulations, or changes in the interpretations or enforcement of existing regulations, may result in significant compliance costs or require us to change or cease aspects of our network marketing program. In addition, the ambiguity surrounding these regulations can also affect the public perception of the Company and our business model. For example, in the past, allegations regarding the legality of our network marketing program have been raised, which led to intense public scrutiny and significant share price volatility.

Our actual or perceived failure to comply with privacyprivacy, artificial intelligence (AI), and data protection laws, rules, and regulations could materially harm our business, financial condition, and operating results.

Our business requires the collection, transmission, and retention of large volumes of confidential and proprietary information, including personal information of our Members, customers, leads, vendors, and employees in various information technology systems that we maintain and in those maintained by third parties with which we interact. For example, we introduced the beta version of our Pro2col platform, which will increase the amount of information collected, transmitted and retained. Anyone who is able to circumvent our security measures or those of our third-party service providers could misappropriate such confidential or proprietary information, including that of third parties such as our Members, cause interruption in our operations, damage our information technology infrastructure, damage our reputation, or otherwise damage our business. We may need to expend significant resources to protect against security breaches or to address problems caused by such breaches, and the potential risk of security breaches may increase as we introduce new technology systems and services. Any actual security breaches could result in legal and financial exposure, including litigation and other potential liability, reduced Member usage of our systems or digital platforms and a loss of confidence in our security measures, which could have a material adverse effect on our business, financial condition, and operating results and our reputation as a brand, business partner, and employer. In addition, employee error or malfeasance or other errors in the storage, use, or transmission of any such information could result in disclosure to third parties. If this should occur, we could incur significant expenses addressing such problems. Since we collect and store Member, customer, and vendor information, including credit cardcard, banking, and bankingconsumer health information, and data that may be considered biometric data under certain laws, these risks are heightened. In addition, our role as a credit card merchant may also put us at a greater risk of being targeted by hackers and requires us to comply with certain regulatory requirements. See also the risk factor titled “We depend on the integrity and reliability of our information technology infrastructure, and any related interruptions or inadequacies may have a material adverse effect on our business, financial condition, and operating results.”

In addition, the use and handling of certain types of information, including personalpersonal, health, and financial information, is regulated by evolving and increasingly demanding laws, rules, and regulations, such as the Vietnam Personal Data Protection Decree, the India Digital Personal Data Protection Act, the European Union General Data Protection Regulation, the Brazil Law on General Data Protection, the California Consumer Privacy Act, or the CCPA, as amended by the California Privacy Rights Act, the European Union Payment Services Directive 2, which requires stronger customer authentication for online transactions in that region, and the China Personal Information Protection Law.Law, and state consumer health privacy laws, such as Washington’s My Health My Data Act. These laws impose continuing, and at times new, responsibilities on our operations, including, among other things, the collection, deletion, disclosure, and maintenance of personalpersonal, health, and financial information of our Members and their customers and could present technological challenges and negatively impact our sales. Compliance with these laws, rules, and regulations and potential and actual conflicts amongst them in the various jurisdictions in which we operate have resulted in greater compliance burden and risk and increased costs for us. Furthermore, as we expand our use of AI, we face additional regulatory risks due to the evolving legal landscape relating to AI, with various jurisdictions, including Europe and certain U.S. states, proposing or enacting AI-related laws. For example, certain of our software applications have the ability to utilize AI and we expect our usage of AI to increase with the rollout of our Pro2col platform and the adoption of certain cloud-based software applications, which could increase this risk. As such, it remains uncertain how AI laws and regulations will impact our business, or the associated cost or risks related to compliance therewith or with respect to embedding compliance mechanisms appropriately and effectively into our operations. If we fail to comply with these privacy, data security, and AI laws, rules, and regulations, we could be subject to significant litigation, monetary damages, and regulatory enforcement actions or fines in one or more jurisdictions, which could have a material adverse effect on our operating results.

Our operations in some jurisdictions also may be adversely affected by political, economic, legal, regulatory, and social conditions, or instability, including unfavorable foreign currency impacts, as well as by economic and political tensions between governments.governments, such as tariffs. Changes in United States administrative policy have led to and may in the future lead to increasesnew or increased in tariffs for imported goods, and, in some cases, already imposed tariffs against certain countries, among other possible changes.goods. The imposition of such tariffs may strain international trade relations and increase the risk that foreign governments implement retaliatory tariffs on goods imported from the United States, which could adversely affect our sales to those countries. For example, tariffs and counter tariffs enacted by foreign governments, such as China, Canada or Mexico, that apply to our products or our ingredients have had and may continue to have an adverse impact on the cost and availability of certain ingredients, any of which could adversely affect future sales of our products, particularly if we deem it necessary to increase product prices. These measures may also cause us to discontinue a previously profitable item in one or more markets, including because it is no longer practicable or feasible to produce or sell the product. These actions could also have a disproportionately adverse effect on particular markets in which we operate, such as our Mexico market, which receives a significant amount of its products from our U.S. manufacturing operations. New or continued geopolitical conflicts may also adversely affect our business, including the Russia/Ukraine conflict as discussed in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations and Certain Factors Impacting Results, of this Annual Report on Form 10-K, and the recent conflict in the Middle East. In addition, our compliance with our code of conduct and anti-bribery laws, rules, and regulations may conflict with local customs and practices in certain of the jurisdictions in which we operate. See the risk factor titled “We are subject to the anti-bribery, laws, rules, and regulations of the United States and the other foreign jurisdictions in which we operate.”

In addition, any change in applicable tax laws, rules, treaties, or regulations, or their interpretation, could result in a higher effective tax rate on our worldwide earnings. For example, the Organisation for Economic Co-operation and Development, or OECD, has released guidance covering various international tax standards as part of its “base erosion and profit shifting,” or BEPS, initiative. The anticipated implementation of BEPS by non-U.S. jurisdictions in which we operate could result in changes to tax laws, rules, and regulations, including with respect to transfer pricing, that could materially increase our effective tax rate. On October 8, 2021, the OECD issued a statement announcing that 137 of its 140 members had agreed upon two groups of proposals for global tax reform, labeled “Pillar One” and “Pillar Two.” Pillar One is focused on providing a mechanism for taxing rights more closely aligned with market engagement (generally where people or consumers are located). Pillar Two is focused on establishing a global minimum tax rate and would apply when a country’s income tax rate is below a minimum tax rate of at least 15%. On December 20, 2021, the OECD published model rules consistent with the two Pillars announced in its October 2021 statement, and the model rules included the 15% global minimum tax rate previewed as part of Pillar Two in the OECD’s October 2021 statement. In December 2022, the EU member states agreed to implement the OECD framework in their domestic tax laws with a target effective date for the 15% global minimum tax rate in 2024. The OECD has issued additional guidance induring 2023 andthrough 2024,2025 and intends tomay issue moreadditional guidance or interpretive rules in 2025.the future. We continue to evaluate and assess the potential impact of the OECD framework on the Company. No assurances can be given that future legislative, regulatory, or judicial developments will not result in an increase in the amount of taxes payable by us. If any such developments occur, our business, financial condition, and operating results could be materially and adversely affected.

In China, we sell our products to and through independent service providers and sales representatives, to preferred customers and other customers, as well as through Company-operated retail platforms when necessary. We also have a social e-commerce business in China, which enables our sales representatives who are also individual e-commerce promoters and independent service providers to promote our products and provide services to customers in China through virtual online stores. Our independent service providers must meet requirements to operate their own business under Chinese law, which prohibits fraudulent or misleading claims and engaging in any pyramid sales schemes, as well as our policies. In China, our independent service providers receive compensation for marketing, sales support, and other services instead of the Member allowances and royaltymarketing overridesplan payments utilized in our network marketing program outside China. The service hours and related fees eligible to be earned by the independent service providers are based on a number of factors, including the sales generated through them and through others to whom they may provide marketing, sales support and other services, the quality of their service, and other factors. Total compensation available to our independent service providers in China can generally be comparable to the total compensation available to other sales leaders globally. The Company does this by performing an analysis in our worldwide system to estimate the potential compensation available to the service providers, which can generally be comparable to that of sales leaders in other countries. After adjusting such amounts for other factors and dividing by each service provider’s hourly rate, we then notify each independent service provider the maximum hours of work for which they are eligible to be compensated in the given month. In order for a service provider to be paid, the Company requires each service provider to invoice the Company for their services and submit a timesheet of such services and, upon the Company’s request, service providers may be required to submit additional supporting documents for the Company’s further verification. These and other business model features in China are not common to the business model we employ elsewhere in the world, and we expect our business model in China will continue to incorporate some or all of these features, and any failure of this model or our business or our service providers to comply with Chinese law could materially and negatively impact our business, financial condition, and operating results.

Our senior secured credit facility, or the 2024 Credit Facility, and the indentures governing the senior notes due September 1, 2025, or the 2025 Notes, the senior secured notes due April 15, 2029, or the 2029 Secured Notes, and the senior notes due June 1, 2029, or the 2029 Notes, have restrictive covenants that limit our and our subsidiaries’ ability to, among other things:

If a U.S. shareholder owns 10% or more of our common shares, it may be subject to increased U.S. federal income taxation under the “controlled foreign corporation,” or CFC, rules. A non-U.S. corporation will be classified as a CFC for any particular taxable year, if U.S. persons (including individuals and entities) who own (directly, indirectly, or constructively) 10% or more of the voting power or value of shares, or 10% U.S. Shareholders, own, in the aggregate, more than 50% of the total combined voting power or value of the shares. In determining whether a shareholder is treated as a 10% U.S. Shareholder, the voting power of the shares and any special voting rights, such as to appoint directors, may also be taken into account. In addition, certain constructive ownership rules apply, which attribute share ownership among certain family members and certain entities and their owners. Such constructive ownership rules may also attribute share ownership to persons that are entitled to acquire shares pursuant to an option, such as the holders of our 2024 Convertible Notes or 2028 Convertible Notes.

While we continue to monitor the current global financial environment including the impacts of the inflation, foreign exchange rate fluctuations, and the wars in Ukraine and the Middle East, rising trade tensions, including U.S. tariffs and retaliatory tariffs from foreign countries and other factors, we remain focused on the opportunities and challenges in retailing our products and enhancing the customer experience, sponsoring and retaining Members, improving Member productivity, further penetrating existing markets, globalizing successful Daily Methods of Operation, or DMOs, such as Nutrition Clubs, Fit Clubs, and Weight Loss Challenges, introducing new products and globalizing existing products, developing niche market segments and further investing in our infrastructure.

Global inflationary pressures and other macroeconomic factors, such as foreign exchange rate fluctuations and geopolitical conflicts, can impact our financial condition, results of operations and liquidity. For example, inflationary pressure impacts both our cost structures and our pricing. During the twelve months ended December 31, 2024,2025, we instituted pricing actions in certain markets to address region or market-specific conditions. We also instituted localized pricepricing increasesactions in 2023.2024. These actions are discussed further in the Sales by Geographic Region discussion further below. We continue to examine our cost structure and assess additional potential incremental pricing actions in response to ongoing inflationary pressures and any tariffs and retaliatory tariffs imposed by the U.S. or foreign governments which could have ana significant adverse impact to our business, which includes our Mexico market where our U.S. manufacturing operations providesprovide a significant amount of finished goods inventory to our Mexico operation.operations.

The war in Ukraine has also impacted our results there as well as in Russia and certain neighboring markets; we do not have any manufacturing operations in Russia and Ukraine and our combined total assets in Russia and Ukraine, which primarily consists of short-term assets, was less thanapproximately 1% of our consolidated total assets as of December 31, 2024.2025.

As describedpreviously above,disclosed in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, of the 2024 10-K, considering the recent changes to Volume Point values in certain regions,regions Managementand isManagement’s currentlyrecent evaluatingassessment theof its value and continued usefulnessusefulness, ofManagement has decided to no longer disclose the Volume PointPoints metric.by Geographic Region going forward.

Because of local country regulatory constraints, we may be required to modify our Member incentive plans as described above. We also pay reduced royaltyMember overridescompensation with respect to certain products worldwide. Consequently, the total RoyaltyMember overridecompensation percentage may vary over time.

Our “contribution margins” consist of net sales less cost of sales, Royalty overrides,sales and serviceselling fees to our independent service providers in China, for the purposes of segment reporting specifically,expenses, as discussed further below and described in our Note 10, Segment Information, to the Consolidated Financial Statements included in Part IV, Item 15, Exhibits, Financial Statement Schedules, of this Annual Report on Form 10-K.

“Selling, general,General and administrative expenses” represent our operating expenses, which include labor and benefits, service fees to China independent service providers, sales events, professional fees, travel and entertainment, Member promotions, occupancy costs, communication costs, bank fees, depreciation and amortization, foreign exchange gains and losses, and other miscellaneous operating expenses.

Management’s role, in-country and at the region and corporate level, is to provide Members with a competitive, broad, and innovative product line, offer leading-edge business tools and technology services, and encourage strong teamwork and Member leadership to make doing business with Herbalife simple. We continue to provide our Members with enhanced technology tools, which includes updated brand sites, for ordering, business performance, and customer retailing to make it easier for them to do business with us and to optimize their customers’ experiences. Management uses the Marketing Plan, which reflects the rules for our global network marketing organization that specify the qualification requirements and general compensation structure for Members, coupled with educational, training, and motivational programs and promotions to encourage Members to increase retailing, retention, and recruiting, which in turn affect net sales. Such programs include sales events such as Extravaganzas, Leadership Development Weekends and World Team Schools where large groups of Members network with other Members, learn retailing, retention, and recruiting techniques from our leading Members, and become more familiar with how to market and sell our products and business opportunities. Accordingly, management believes that these development and motivation programs increase the productivity of the sales leader network. The expenses for such programs are included in selling, general,general and administrative expenses. We also use event and non-event product promotions to motivate Members to increase retailing, retention, and recruiting activities. These promotions have prizes ranging from qualifying for events to product prizes and vacations. In a number of markets, we have segmented our Member base into “preferred members” and “distributors” for more targeted and efficient communication and promotions for these two differently motivated types of Members. In certain other markets that have not been segmented, we use Member data to similarly categorize Members for communication and promotion efforts.

The factors described above help Members increase their business, which in turn helps drive Volumesales Pointvolume growth in our business, and thus, net sales growth. The discussion below of net sales details some of the specific drivers of changes in our business and causes of sales fluctuations during the year ended December 31, 20242025 as compared to the same period in 2023,2024, as well as the unique growth or contraction factors specific to certain geographic regions or significant markets within a region during these periods. Net sales fluctuations, both Company-wide and within a particular geographic region or market, are primarily the result of changes in sales volume, changes in prices, or changes in foreign currency translation rates. The discussion of changes in net sales quantifies the impact of those drivers that are quantifiable such as changes in foreign currency translation rates, and cites the estimated impact of any significant price changes. The remaining drivers, which management believes are the primary drivers of changes in volume, are typically qualitative factors whose impact cannot be quantified. We use Volume Points as an indication for changes in sales volume.

Global inflationary pressures, supply chain challenges and other macroeconomic factors such as foreign exchange rate fluctuations, geopolitical conflictconflict, and rising trade tensionstensions, including U.S. tariffs and retaliatory tariffs from foreign countries, may impact both our cost structures and our pricing, with potential adverse sales volume impact. However, given the unpredictable, unprecedented, and fluid nature of these factors, we are unable to predict the extent to which they will adversely impact our business, financial condition, and results of operations, including the impact it may have on our regions and individual markets. We continue to examine our cost structure and assess potential incremental pricing actions in response to ongoing inflationary pressures which could impact our net sales and sales volumes. See the Sales by Geographic Region below for a more detailed discussion of each geographic region and individual market.

Net sales were $4,993.1$5,037.5 million for the year ended December 31, 2024.2025. Net sales decreasedincreased $69.3$44.4 million, or 1.4%,0.9%, for the year ended December 31, 20242025 as compared to the same period in 2023.2024. In local currency, net sales increased 1.2%2.5% for the year ended December 31, 20242025 as compared to the same period in 2023.2024. The 1.4%0.9% decreaseincrease in net sales for the year ended December 31, 20242025 was primarily driven by a decrease3.2% infavorable salesimpact volume,of asprice indicatedincreases, partially offset by a 4.0% decrease in Volume Points (4.3% decrease excluding the impact of the Volume Point adjustments noted above in the Volume Points by Geographic Region section), and a 2.6%1.6% unfavorable impact of fluctuations in foreign currency exchange rates,rates partially offset byand a 5.3%0.5% favorabledecrease impactin ofsales price increases.volume.

Net income attributable to Herbalife was $254.3$228.3 million, or $2.50$2.20 per diluted share, for the year ended December 31, 2024.2025. Net income increasedattributable $112.1to Herbalife decreased $26.0 million, or 78.8%,10.2%, for the year ended December 31, 20242025 as compared to the same period in 2023.2024. The increasedecrease in net income attributable to Herbalife for the year ended December 31, 20242025 was mainly due to $145.7$132.2 million higher income taxes; partially offset by $61.3 million lower income taxes primarily due to the deferred income tax impacts from corporate reorganization in 2024general and $26.2administrative million lower royalty overridesexpenses driven by lower netlabor sales,and partiallybenefits offsetcosts by(see $51.6General and Administrative Expenses below for further discussion), $34.1 million higher gross profit driven by higher net interestsales, expense.and $10.5 million loss on extinguishment of debt in 2024 related to the April 2024 debt refinancing transactions (see Liquidity and Capital Resources below for further discussion).

Net income attributable to Herbalife for the year ended December 31, 2024 included a $147.3 million favorable deferred income tax impacts from corporate reorganization in 2024, a $69.1 million pre-tax unfavorable impact ($51.6 million post-tax) of Restructuring Program expenses, primarily relating to employee retention and separation costs, a $26.7 million pre-tax unfavorable impact ($24.9 million post-tax) of expenses relating to our new Digital Technology Program focused on enhancing and rebuilding our Member facing technology platform and web-based Member tools, a $13.4 million pre-tax unfavorable impact ($10.3 million post-tax) of Transformation Program expenses, primarily relating to employee retention and separation costs, a $10.5 million pre-tax unfavorable impact ($8.2 million post-tax) of loss on extinguishment of debt related to the April 2024 debt refinancing transactions, and a $4.0 million pre-tax favorable impact ($3.1 million post-tax) of gain on sale of the Company’s land, building, and related building improvements of its office building in Torrance, CaliforniaCalifornia. (See Note 2, Basis of Presentation, to the Consolidated Financial Statements included in Part IV, Item 15, Exhibits, Financial Statement Schedules, of this Annual Report on Form 10-K for further discussion).

The Primary Reporting Segment reported net sales of $4,695.5$4,758.4 million for the year ended December 31, 2024,2025, representing aan decreaseincrease of $39.5$62.9 million, or 0.8%,1.3%, as compared to the same period in 2023.2024. In local currency, net sales increased 1.8%3.0% for the year ended December 31, 20242025 as compared to the same period in 2023.2024. The 0.8%1.3% decreaseincrease in net sales for the year ended December 31, 20242025 was primarily due to a decrease3.5% infavorable salesimpact volume,of asprice indicatedincreases, partially offset by a 3.9% decrease in Volume Points (4.2% decrease excluding the impact of the Volume Point adjustments noted above in the Volume Points by Geographic Region section) and a 2.7%1.7% unfavorable impact of fluctuations in foreign currency exchange rates,rates partially offset byand a 5.6%0.1% favorabledecrease impactin ofsales price increases.volume.

ChinaThe Primary Reporting Segment reported contribution margin of $101.7$2,037.2 millionmillion, or 42.8% of net sales, for the year ended December 31, 2024,2025, representing aan decreaseincrease of $7.7$32.9 million, or 7.0%,1.6%, as compared to the same period in 2023.2024. The 7.0%1.6% decreaseincrease in contribution margin for the year ended December 31, 20242025 was primarily the result of ana 5.6% favorable impact of price increases and a 0.3% favorable impact of other cost changes, partially offset by a 3.4% unfavorable impact of volumeforeign decreases,currency as indicated byfluctuations, a 6.5% decrease in Volume Points, a 2.5%0.8% unfavorable impact of sales mix, and a 2.1%0.3% unfavorable impact of foreignhigher currencyinventory fluctuations,write partially offset by a 1.4% favorable impact of cost changes related to self-manufacturing and sourcing.downs.

The ChinaNorth America region reported net sales of $297.6$1,033.0 million for the year ended December 31, 2024.2025. Net sales decreased $29.8$21.4 million, or 9.1%,2.0%, for the year ended December 31, 20242025 as compared to the same period in 2023.2024. In local currency, net sales decreased 7.5%2.0% for the year ended December 31, 20242025 as compared to the same period in 2023.2024. The 9.1%2.0% decrease in net sales for the year ended December 31, 20242025 was primarily due to a 3.9% decrease in sales volume,volume as indicated byand a 6.5% decrease in Volume Points, a 2.5%0.7% unfavorable impact of sales mix, andpartially offset by a 1.6%2.7% unfavorablefavorable impact of fluctuations in foreign currency exchange rates. The China region had no price increaseincreases. duringNorth America’s sales volume decreased for the twelve monthsyear ended December 31, 20242025 as compared to the same period in 2024, and duringthe decrease was less than the twelveprior monthsyear endedperiod December 31, 2023.decrease.

While we continue to monitor the current global financial environment, including the impacts of inflation, foreign exchange rate fluctuations, the wars in Ukraine and the Middle East, rising trade tensions, including U.S. tariffs and retaliatory tariffs from foreign countries and other factors, we remain focused on the opportunities and challenges in retailing our products and enhancing the customer experience, sponsoring and retaining Members, improving Member productivity, further penetrating existing markets, globalizing successful Daily Methods of Operation, or DMOs, such as Nutrition Clubs, Fit Clubs, and Weight Loss Challenges, introducing new products and globalizing existing products, developing niche market segments and further investing in our infrastructure.

Global inflationary pressures and other macroeconomic factors such as foreign exchange rate fluctuations and geopolitical conflicts can impact our financial condition, results of operations and liquidity. For example, inflationary pressure impacts both our cost structures and our pricing. During the threesix months ended MarchJune 31,30, 2026, we instituted pricing increases in certain markets to address region or market-specific conditions. We also instituted localized pricing actions in 2025. These actions are discussed further in the Sales by Geographic Region discussion further below. We continue to examine our cost structure and assess additional potential incremental pricing actions in response to ongoing inflationary pressures, including due to rising energy prices, and any tariffs and retaliatory tariffs imposed by the U.S. or foreign governments which could have a significant adverse impact to our business, which includes our Mexico market where our U.S. manufacturing operations provide a significant amount of finished goods inventory to our Mexico operations.

The war in the Middle East has not had a direct material impact on our results. However, we are exposed to volatility in energy and oil markets, which could materially impact manufacturing, transportation, and packaging costs. Maritime restrictions in the Strait of Hormuz will continue to influence this risk. Significant increases in fuel, utilities, and petroleum-based inputs may materially increase our cost of goods sold and logistics expenses, and these increases may not be fully offset through pricing actions, which could adversely impact our margins and operating results.

The war in Ukraine has also impacted our results there as well as in Russia and certain neighboring markets; we do not have any manufacturing operations in Russia and Ukraine and our combined total assets in Russia and Ukraine, which primarily consists of short-term assets, was approximately 1% of our consolidated total assets as of MarchJune 31,30, 2026.

Given the unpredictable and fluid nature of these factors, we are unable to predict the extent to which they will adversely impact our business, financial condition, and results of operations, including the impact they may have on our geographic regions and individual markets. See “Summary Financial Results” and “Sales by Geographic Region” for more specific discussion of these and other factors. See Part I, Item 1A, Risk Factors, of the 2025 10-K for a further discussion of risks related to these matters.

Net sales were $1,317.2$1,326.8 million and $2,644.0 million for the three and six months ended MarchJune 31,30, 2026.2026, respectively. Net sales increased $95.5$67.7 million, or 7.8%,5.4%, and $163.2 million, or 6.6%, for the three and six months ended MarchJune 31,30, 2026, respectively, as compared to the same periodperiods in 2025. In local currency, net sales increased 5.4%5.8% and 5.6% for the three and six months ended MarchJune 31,30, 2026, respectively, as compared to the same periodperiods in 2025. The 7.8%5.4% increase in net sales for the three months ended MarchJune 31,30, 2026 was primarily driven by a 4.1%5.8% increase in sales volume, and a 3.0% favorable impact of price increases, partially offset by a 3.0% unfavorable impact of sales mix and a 0.4% unfavorable impact of fluctuations in foreign currency exchange rates. The 6.6% increase in net sales for the six months ended June 30, 2026 was primarily driven by a 5.0% increase in sales volume, a 3.2%3.1% favorable impact of price increases, and a 2.4%1.0% favorable impact of fluctuations in foreign currency exchange rates, partially offset by a 2.1%2.5% unfavorable impact of sales mix.

Net incomeloss attributable to Herbalife for the three months ended MarchJune 31,30, 2026 included $5.4a $94.6 million pre-tax unfavorable impact ($74.6 million post-tax) of loss on debt extinguishment from our April 2026 debt refinancing, $3.3 million favorable deferred income tax impacts relating to the changes in the Company’s corporate entity structure in 2024, and a $2.4$1.3 million pre-tax unfavorable impact ($1.7$0.9 million post-tax) of Optimization Program expenses, and a $1.1 million pre-tax unfavorable impact ($0.7 million post-tax) of Technology Realignment Program expenses, primarily relating to employee retention and separation costs.

Net income attributable to Herbalife for the three months ended MarchJune 31,30, 2025 included $5.1$7.8 million favorable deferred income tax impacts relating to the changes in the Company’s corporate entity structure in 2024, a $3.3$3.6 million pre-tax unfavorable impact ($2.4$2.6 million post-tax) of Technology Realignment Program expenses, primarily relating to employee retention and separation costs, a $0.7 million pre-tax unfavorable impact ($0.5 million post-tax) of Restructuring Program expenses, primarily relating to employee retention and separation costs, and a $2.4$0.4 million pre-tax unfavorable impact ($2.0$0.3 million post-tax) of expenses relating to our new Digital Technology Program focused on enhancing and rebuilding our Member facing technology platform and web-based Member tools.

The Primary Reporting Segment reported net sales of $1,260.2$1,266.4 million and $2,526.6 million for the three and six months ended MarchJune 31,30, 2026, respectively, representing an increase of $103.3$87.3 million, or 8.9%,7.4%, and $190.6 million, or 8.2%, respectively, as compared to the same periodperiods in 2025. In local currency, net sales increased 6.7%8.2% and 7.4% for the three and six months ended MarchJune 31,30, 2026, respectively, as compared to the same periodperiods in 2025. The 8.9%7.4% increase in net sales for the three months ended MarchJune 31,30, 2026 was primarily due to a 4.9%7.3% increase in sales volume and a 3.2% favorable impact of price increases, partially offset by a 2.3% unfavorable impact of sales mix and a 0.8% unfavorable impact of fluctuations in foreign currency exchange rates. The 8.2% increase in net sales for the six months ended June 30, 2026 was primarily due to a 6.1% increase in sales volume, a 3.4%3.3% favorable impact of price increases, and a 2.2%0.8% favorable impact of fluctuations in foreign currency exchange rates, partially offset by a 1.8%2.0% unfavorable impact of sales mix.

For a discussion of China’s net sales for the three and six months ended MarchJune 31,30, 2026 as compared to the same periodperiods in 2025, see the China section of Sales by Geographic Region below.

The Primary Reporting Segment reported contribution margin of $543.9$543.3 million, or 43.2%42.9% of net sales, and $1,087.2 million, or 43.0% of net sales for the three and six months ended MarchJune 31,30, 2026, respectively, representing an increase of $44.1$35.6 million, or 8.8%,7.0%, and $79.7 million, or 7.9%, respectively, as compared to the same periodperiods in 2025. The 8.8%7.0% increase in contribution margin for the three months ended MarchJune 31,30, 2026 was primarily the result of a 5.5% favorable impact of price increases, a 4.9%7.3% favorable impact of sales volume increases and a 1.3%5.2% favorable impact of lowerprice inventory write downs,increases, partially offset by a 3.7%3.5% unfavorable impact of sales mix and a 1.0%1.1% unfavorable impact of costforeign changescurrency relatedfluctuations. toThe self-manufacturing7.9% increase in contribution margin for the six months ended June 30, 2026 was primarily the result of a 6.1% favorable impact of sales volume increases and sourcing.a 5.3% favorable impact of price increases, partially offset by a 3.0% unfavorable impact of sales mix.

China reported contribution margin of $20.4$21.2 million and $41.6 million for the three and six months ended MarchJune 31,30, 2026, respectively, representing a decrease of $2.9$7.4 million, or 12.4%,25.9%, and of $10.3 million, or 19.8%, for the three and six months ended MarchJune 31,30, 2026, respectively, as compared to the same periodperiods in 2025. The 12.4%25.9% decrease in contribution margin for the three months ended MarchJune 31,30, 2026 was primarily the result of a 17.6%28.7% unfavorable impact of sales volume decreases, and a 5.9%2.3% unfavorable impact of cost changes related to self-manufacturing and sourcing and a 4.1% unfavorable impact of higher inventory write downs,sourcing, partially offset by a 10.1%7.7% favorable impact of foreign currency fluctuationsfluctuations. The 19.8% decrease in contribution margin for the six months ended June 30, 2026 was primarily the result of a 23.7% unfavorable impact of sales volume decreases, and a 5.0%1.7% unfavorable impact of cost changes related to self-manufacturing and sourcing, partially offset by an 8.0% favorable impact of salesforeign mixcurrency driven by the customer loyalty program in China.fluctuations.

The factors described above help Members increase their business, which in turn helps drive sales volume growth in our business, and thus, net sales growth. The discussion below of net sales details some of the specific drivers of changes in our business and causes of sales fluctuations during the three and six months ended MarchJune 31,30, 2026, as compared to the same periodperiods in 2025, as well as the unique growth or contraction factors specific to certain geographic regions or significant markets within a region during these periods. Net sales fluctuations, both Company-wide and within a particular geographic region or market, are primarily the result of changes in sales volume, changes in prices, or changes in foreign currency translation rates. The discussion of changes in net sales quantifies the impact of those drivers that are quantifiable such as changes in foreign currency translation rates, and cites the estimated impact of any significant price changes. The remaining drivers, which management believes are the primary drivers of changes in volume, are typically qualitative factors whose impact cannot be quantified.

The North America region reported net sales of $247.6$273.0 million and $520.6 million for the three and six months ended MarchJune 31,30, 2026.2026, respectively. Net sales decreasedincreased $6.8$0.6 million, or 2.7%,0.2%, and decreased $6.2 million, or 1.2%, for the three and six months ended MarchJune 31,30, 2026, respectively, as compared to the same periodperiods in 2025. In local currency, net sales increased 0.2% and decreased 2.8%1.2% for the three and six months ended MarchJune 31,30, 2026, respectively, as compared to the same periodperiods in 2025. The 2.7%0.2% decreaseincrease in net sales for the three months ended MarchJune 31,30, 2026 was primarily due to a 5.0%2.9% favorable impact of price increases, partially offset by a 1.9% decrease in sales volume and a 0.8% unfavorable impact of sales mix. The 1.2% decrease in net sales for the six months ended June 30, 2026 was primarily due to a 3.4% decrease in sales volume, partially offset by a 2.5%2.7% favorable impact of price increases. North America’s sales volume decreased for the three and six months ended MarchJune 31,30, 2026 as compared to the same periodperiods in 2025, and the decreasedecreases waswere less than the prior year period decrease. Net sales were negatively impacted by a combination of unusually severe weather conditions during January and February and higher levels of shipments in transit at quarter‑end, with the related revenue deferred to the subsequent quarter pursuant to the Company's revenue recognition policies. These combined factors adversely affected our net sales trend for the three months ended March 31, 2026.decreases.

Net sales in the U.S. were $241.3$266.3 million and $507.6 million for the three and six months ended MarchJune 31,30, 2026.2026, respectively. Net sales decreasedincreased $6.4$1.0 million, or 2.6%,0.4%, and decreased $5.4 million, or 1.1%, for the three and six months ended MarchJune 31,30, 20262026, respectively, as compared to the same periodperiods in 2025.

We are supporting Members and Members’ Nutrition Clubs, which are an important DMO in the market, with new product launches, a training and recognition program, targeted communications and sales incentives, as well as modernizing our technological tools including digital start-up kits and E-commerce tools, in order to enhance our Members’ ability to market and sell our products and promote business opportunities. During the first quarter of 2026, our preferred members in the North America region began transitioning to our new E-commerce platform and we implemented updates to our preferred member loyalty program. In July 2026, we launched Bioniq, our next generation of personalized products, as well as new products within our Life I/O portfolio in North America, which includes a protein-based product and a ketone-based energy product. These launches are part of our ongoing efforts to provide innovative product offerings and support Member engagement. We will continue to monitor market adoption and the impact of these initiatives on future operating results. The majority of the region implemented 3.0% price increases during January 2026. The majority of the region implemented 2.3% price increases during January 2025.

The Latin America region reported net sales of $242.0$245.0 million and $487.0 million for the three and six months ended MarchJune 31,30, 2026.2026, respectively. Net sales increased $35.3$34.8 million, or 17.1%,16.6%, and $70.1 million, or 16.8%, for the three and six months ended MarchJune 31,30, 20262026, respectively, as compared to the same periodperiods in 2025. In local currency, net sales increased 6.8%8.2% and 7.5% for the three and six months ended MarchJune 31,30, 20262026, respectively, as compared to the same periodperiods in 2025. The 17.1%16.6% increase in net sales for the three months ended MarchJune 31,30, 2026 was primarily due to a 10.3%8.4% favorable impact of fluctuations in foreign currency exchange rates, a 7.0%4.9% favorable impact of price increases, a 1.9% increase in sales volume, and a 1.4% favorable impact of sales mix. The 16.8% increase in net sales for the six months ended June 30, 2026 was primarily due to a 9.3% favorable impact of fluctuations in foreign currency exchange rates, a 6.1% favorable impact of price increases, and a 1.7%1.5% favorable impact of sales mix, partially offset by a 1.9%0.1% decrease in sales volume. Latin America’s sales volume decreasedincreased for the threesecond monthsquarter ended March 31,of 2026 as compared to the same period in 2025, and the increase was less than the prior year period increase, and sales volume slightly decreased for the first half of 2026, after having an increase for the threesame monthsperiod ended March 31,in 2025.

Net sales in Mexico were $154.1$161.0 million and $315.1 million for the three and six months ended MarchJune 31,30, 2026.2026, respectively. Net sales increased $27.6$23.8 million, or 21.8%,17.3%, and $51.4 million, or 19.5%, for the three and six months ended MarchJune 31,30, 20262026, respectively, as compared to the same periodperiods in 2025. In local currency, net sales increased 4.8%4.7% and 4.7% for the three and six months ended MarchJune 31,30, 20262026, respectively, as compared to the same periodperiods in 2025. The fluctuation of foreign currency exchange rates had a favorable impact of $21.5$17.5 million and $39.0 million on net sales for the three and six months ended MarchJune 31,30, 2026.2026, respectively. Mexico’s sales volume decreasedwas 1.1%flat for the three and six months ended MarchJune 31,30, 20262026, as compared to the same periodperiods in 2025. We believe recent localized initiatives, new product launches, and other promotional efforts have provided additional support for membersMembers and Members’ Nutrition Club operations, which continue to be an important DMO in the market. While we believe macroeconomic conditions, such as prolonged high interest rates are stabilizing, these continue to create challenges for certain of our Members’ and Members’ Nutrition Club operations. The market saw a 3.7% price increase during February 2026 and smaller price increases on certain products during January 2026. The market saw a 4.2% price increase during February 2025.

Across several other markets, net sales increased and were greatest for Peru and Colombia for the three and six months ended MarchJune 31,30, 2026, compared to the same periodperiods in 2025. The majority of markets in the region instituted price increases to address market-specific conditions during the first quarterhalf of 2026 and 2025. We believe local promotional efforts and new product launches may have been a contributing factor for the increases in sales volume for certain markets in the region during the threesix months ended MarchJune 31,30, 2026 and 2025.2026.

The EMEA region reported net sales of $274.8$277.8 million and $552.6 million for the three and six months ended MarchJune 31,30, 2026.2026, respectively. Net sales increaseddecreased $1.5$10.1 million, or 0.5%,3.5%, and $8.6 million, or 1.5%, for the three and six months ended MarchJune 31,30, 20262026, respectively, as compared to the same periodperiods in 2025. In local currency, net sales decreased 6.5%5.6% and 6.0% for the three and six months ended MarchJune 31,30, 20262026, respectively, as compared to the same periodperiods in 2025. The 0.5%3.5% increasedecrease in net sales for the three months ended MarchJune 31,30, 2026 was primarily due to a 7.0%12.1% decrease in sales volume, partially offset by a 5.3% favorable impact of price increases, a 2.1% favorable impact of fluctuations in foreign currency exchange ratesrates, and a 4.9%1.2% favorable impact of sales mix. The 1.5% decrease in net sales for the six months ended June 30, 2026 was primarily due to a 11.5% decrease in sales volume, partially offset by a 5.1% favorable impact of price increases,increases partially offset byand a 10.9%4.5% decreasefavorable impact of fluctuations in salesforeign volume.currency exchange rates. EMEA region’s sales volume decreased for the three and six months ended MarchJune 31,30, 2026 as compared to the same periodperiods in 2025, and the decreasedecreases waswere more than the prior year period decrease.decreases. The EMEA region has no single market that accounts for a significant portion of our consolidated net sales.

Certain markets in the region continue to experience adverse economic conditions, such as inflation, weakened consumer confidence, and foreign exchange rate fluctuations, as well as political uncertainty and also experienced declines in net sales for the threecurrent monthsquarter endedand Marchfirst 31,half of 2026, as compared to the same periodperiods in 2025. The net sales increasedecrease for the three months ended MarchJune 31,30, 2026 as compared to the same period in 2025, was primarily driven by increasesdecreases in net sales in Kazakhstan,Italy and Germany and the net sales decrease for the six months ended June 30, 2026 as compared to the same period in 2025, was primarily driven by decreases in net sales in Germany and Spain. These decreases in net sales for the three and six months ended June 30, 2026, as compared to the same periods in 2025, were partially offset by declinesincreased occurringpurchases in Germany, Belgium, and Spain. Our Russia entity had no sales during the three months ended March 31, 2026 due to the suspension of product shipments to our Russia entity where its inventory had been fully depleted as of September 30, 2023; therefore our Russia entity will not have any product sales in future periods while its inventory remains fully depleted. As a result,by Russian Members are purchasing products fromthrough Kazakhstan, amongresulting otherin neighboringincreases markets.in net sales for Kazakhstan.

Focus areas for Herbalife and our Members in the region include promotions and events, simplification of the marketing plan, launching new products, enhancing both online and in person training programs and meetings to help distributors improve their business, supporting Members' Nutrition clubs and other DMOs, and other promotional activities in order to grow our sales in the region. During the second quarter of 2026, we launched Bioniq, our next generation of personalized products in certain markets within the region, including a subscription-based offering. The launch did not have a direct material impact to our net sales during the period. The majority of the markets in the region instituted price increases to address market-specific conditions during the threesix months ended MarchJune 31,30, 2026 and 2025.

The Asia Pacific region, which excludes China, reported net sales of $495.8$470.6 million and $966.4 million for the three and six months ended MarchJune 31,30, 2026.2026, respectively. Net sales increased $73.3$62.0 million, or 17.3%,15.2%, and $135.3 million, or 16.3%, for the three and six months ended MarchJune 31,30, 20262026, respectively, as compared to the same periodperiods in 2025. In local currency, net sales increased 20.8%23.1% and 21.9% for the three and six months ended MarchJune 31,30, 20262026, respectively, as compared to the same periodperiods in 2025. The 17.3%15.2% increase in net sales for the three months ended MarchJune 31,30, 2026 was primarily due to a 22.1%26.2% increase in sales volume and a 1.2%0.9% favorable impact of price increases, partially offset by a 3.5%7.9% unfavorable impact of fluctuations in foreign currency exchange rates and a 2.5%4.0% unfavorable impact of sales mix. The 16.3% increase in net sales for the six months ended June 30, 2026 was primarily due to a 24.1% increase in sales volume and a 1.1% favorable impact of price increases, partially offset by a 5.6% unfavorable impact of fluctuations in foreign currency exchange rates and a 3.3% unfavorable impact of sales mix. The Asia Pacific region saw a sales volume increaseincreases for the three and six months ended MarchJune 31,30, 2026, compared to the same periodperiods in 2025, after having a decreasedecreases for the threesame monthsperiods ended March 31,in 2025.

Net sales in India were $275.4$270.6 million and $546.0 million for the three and six months ended MarchJune 31,30, 2026.2026, respectively. Net sales increased $66.1$67.0 million, or 31.6%,32.9%, and $133.1 million, or 32.2% for the three and six months ended MarchJune 31,30, 2026 as compared to the same periodperiods in 2025. In local currency, net sales increased 39.0%47.0% and 42.9% for the three and six months ended MarchJune 31,30, 2026 as compared to the same periodperiods in 2025.2025, respectively. The fluctuation of foreign currency exchange rates had an unfavorable impact of $15.5$28.6 million and $44.1 million on net sales for the three and six months ended MarchJune 31,30, 2026.2026, respectively. The sales volume in India increased 36.9%45.1% and 40.9% for the three and six months ended MarchJune 31,30, 2026, respectively, as compared to the same periodperiods in 2025. OurIndia’s growthsales ratevolume increased for the second quarter of 2026, after having a decrease for the same period in 2025 and the sales volume increase in the India market for the threefirst monthshalf ended March 31,of 2026 was more than the growthsales ratevolume increase experienced during the same period in 2025. To stimulate consumer spending, the India government announced a reduction in Goods and Services Tax (“GST”) rates across multiple sectors, effective on September 22, 2025, which resulted in a tax rate reduction from 18% to 5% for the majority of our products being sold to our Members. We believe the continued impact of this GST rate reduction may have contributed to higher net sales and growth in the India market during the three and six months ended MarchJune 31,30, 2026 as compared to the same periodperiods in 2025. We continue to promote our brand, such as through launching new products, sports sponsorshipssponsorships, and in-person events. The India market had no price increase during the threesix months ended MarchJune 31,30, 2026 and twelve months ended December 31, 2025.

Net sales in Vietnam were $77.5$64.6 million and $142.1 million for the three and six months ended MarchJune 31,30, 2026.2026, respectively. Net sales increased $2.1$4.4 million, or 2.8%,7.3%, and $6.5 million, or 4.8%, for the three and six months ended MarchJune 31,30, 20262026, respectively, as compared to the same periodperiods in 2025. In local currency, net sales increased 5.7%8.9% and 7.1% for the three and six months ended MarchJune 31,30, 2026, respectively, as compared to the same periodperiods in 2025. The fluctuation of foreign currency exchange rates had an unfavorable impact of $2.3$1.0 million and $3.2 million on net sales for the three and six months ended MarchJune 31,30, 2026.2026, respectively. The sales volume in Vietnam increased 3.3%6.1% and 4.5% for the three and six months ended MarchJune 31,30, 20262026, respectively, as compared to the same periodperiods in 2025. Further changes to Vietnam's direct-selling regulations became effective on July 1, 2026. While certain provisions required immediate compliance, most provisions do not require compliance and implementation until July 1, 2027. We continue to assess the implementation and interpretation of these regulations and monitor their potential impact on our business in Vietnam. Focus areas for the Vietnam market include sports sponsorships, promotional initiatives, and sales events. Members’ Nutrition Club operations continue to be an important DMO in the market which management continues to support and monitor.support. The market implemented a 2.5% price increase in both March 2026 and March 2025.

Across several other markets, net sales increaseddecreased for the three months ended MarchJune 31,30, 2026 as compared to the same period in 2025, with the greatest decreases in South Korea and Hong Kong, and net sales also decreased for the six months ended June 30, 2026 as compared to the same period in 2025, with the greatest decreases in South Korea and Hong Kong, partially offset by increases in Malaysia, Taiwan,Malaysia and South Korea.Taiwan. In addition, Members’ Nutrition Club operations continue to recover from macroeconomic conditions includingacross the region improved as inflationary pressure and high interest ratespressures in certain markets thatgenerally have also challenged some areas of customer demand.moderated. Our efforts in the region include programs and promotional initiatives to incentivize sales, and launching new products. SomeMost markets in the region instituted price increases to address market-specific conditions during the threesix months ended MarchJune 31,30, 2026 and 2025.

The China region reported net sales of $57.0$60.4 million and $117.4 million for the three and six months ended MarchJune 31,30, 2026.2026, respectively. Net sales decreased $7.8$19.6 million, or 12.0%,24.5%, and $27.4 million, or 18.9%, for the three and six months ended MarchJune 31,30, 2026, respectively, as compared to the same periodperiods in 2025. In local currency, net sales decreased 16.2%29.0% and 23.3% for the three and six months ended MarchJune 31,30, 20262026, respectively, as compared to the same periodperiods in 2025. The 12.0%24.5% decrease in net sales for the three months ended MarchJune 31,30, 2026 was primarily due to a 17.6%28.7% decrease in sales volume, partially offset by a 4.2%4.5% favorable impact of fluctuations in foreign currency exchange ratesrates. andThe 18.9% decrease in net sales for the six months ended June 30, 2026 was primarily due to a 1.4%23.7% decrease in sales volume, partially offset by a 4.4% favorable impact of salesfluctuations mix.in foreign currency exchange rates. China’s sales volume decreased for the three and six months ended MarchJune 31,30, 2026 as compared to the same periodperiods in 2025, and the decreasedecreases waswere more than the prior year period decrease.decreases. The China region had no price increase during the threesix months ended MarchJune 31,30, 2026 and 2025.

In China we continue to enhance our digital capabilities and offerings, such as improving the integration of our technological and enhanced tools to make it easier for our Members to do business, encouraging a customer-based approach through customer loyalty programs which we continue to enhance to engage customers,approach, and supporting Nutrition Clubs. We have expanded our product line for the China market and continue to conduct sales promotions in the region.

Gross profit was $1,026.1$1,030.5 million and $956.5$982.2 million for the three months ended MarchJune 31,30, 2026 and 2025, respectively, and $2,056.6 million and $1,938.7 million for the six months ended June 30, 2026 and 2025, respectively. Gross profit as a percentage of net sales was 77.9%77.7% and 78.3%78.0% for the three months ended MarchJune 31,30, 2026 and 2025, respectively, or an unfavorable net decrease of 3934 basis points, and 77.8% and 78.1% for the six months ended June 30, 2026 and 2025, respectively, or an unfavorable net decrease of 36 basis points.

The decrease in gross profit as a percentage of net sales for the three months ended MarchJune 31,30, 2026 as compared to the same period in 2025 included unfavorable changes in sales mix of 47 basis points; unfavorable other cost changes of 22 basis points; the unfavorable impact of higher inventory write-downs of 20 basis points; and unfavorable cost changes related to self-manufacturing and sourcing of 539 basis points primarily related to increased allocated overhead costs; the unfavorable impact of foreign currency fluctuations of 50 basis points; unfavorable changes in sales mix of 28 basis points; and unfavorable other cost changes of 22 basis points; partially offset by the favorable impact of price increases of 71 basis points; and the favorable impact of lower inventory write-downs of 4364 basis points.

Selling expenses were $461.8$466.0 million and $433.4$445.9 million for the three months ended MarchJune 31,30, 2026 and 2025, respectively, and $927.8 million and $879.3 million for the six months ended June 30, 2026 and 2025, respectively. Selling expenses as a percentage of net sales were 35.0%35.1% and 35.4% for the three months ended MarchJune 31,30, 2026 and 2025, respectively, and 35.1% and 35.4% for the six months ended June 30, 2026 and 2025, respectively.

The decrease in selling expenses as a percentage of net sales for both the three and six months ended MarchJune 31,30, 2026 as compared to the same periodperiods in 2025 was primarily due to favorable changes in mix of products and countries. Generally, selling expenses as a percentage of net sales may vary from period to period due to changes in the mix of products and countries.

General and administrative expenses were $431.4$436.2 million and $400.3$408.5 million for the three months ended MarchJune 31,30, 2026 and 2025, respectively, and $867.6 million and $808.8 million for the six months ended June 30, 2026 and 2025, respectively. General and administrative expenses as a percentage of net sales was 32.8%32.9% and 32.5% for both the three months ended MarchJune 31,30, 2026 and 2025.2025, respectively, and 32.8% and 32.6% for the six months ended June 30, 2026 and 2025, respectively.

The $31.1$27.7 million increase in general and administrative expenses for the three months ended MarchJune 31,30, 2026 as compared to the same period in 2025 was primarily driven by $17.7 million in higher labor and benefits costs and $8.0$12.0 million in higher non-income tax expenses mainly from higher India GST expenses.expenses and $9.0 million higher labor and benefits costs.

We did not recognize any government grant income related to our regional headquarters and distribution centers within China during the three months ended MarchJune 31,30, 2025.2026. The $4.8 million of other operating income for the three months ended June 30, 2025 consisted of $4.8 million of government grant income for China.

The decrease in interest expense, net for the three and six months ended MarchJune 31,30, 2026 as compared to the same periodperiods in 2025 was primarily due to a decrease in our weighted-average interest rate as a result of April 2026 debt refinancing transactions and a decrease in our overall weighted-average borrowings. See Note 4, Long-Term Debt, to the Condensed Consolidated Financial Statements included in Part I, Item 1, Financial Statements, of this Quarterly Report on Form 10-Q for further discussion.

Income taxes were $30.4$22.8 million and $20.4$29.8 million for the three months ended MarchJune 31,30, 2026 and 2025, respectively, and $53.2 million and $50.2 million for the six months ended June 30, 2026 and 2025, respectively. The effective income tax rateexpense was 33.2% and 28.8%decreased for the three months ended MarchJune 31,30, 2026 and 2025, respectively. The increase in the effective tax rate for the three months ended March 31, 2026, as compared to the same period in 2025, was primarily due to aan decreaseincrease in the tax benefits from discrete eventsevents, andwhich includes the tax impact of the loss on extinguishment of debt, partially offset by changes in the geographic mix of our income. The income tax expense increased for the six months ended June 30, 2026 as compared to the same period in 2025, primarily due to changes in the geographic mix of our income, partially offset by an increase in the tax benefits from discrete events, which includes the tax impact of the loss on extinguishment of debt.

We have historically met our short- and long-term working capital and capital expenditure requirements, including funding for expansion of operations, through net cash flows provided by operating activities. Variations in sales of our products directly affect the availability of funds. There are no material contractual restrictions on our ability to transfer and remit funds among our international affiliated companies. However, there are foreign currency restrictions in certain countries which could reduce our ability to timely obtain U.S. dollars. Even with these restrictions and the current inflationary environment, which is improving but has remained elevated in certain markets during the threesix months ended MarchJune 31,30, 2026, we believe we will have sufficient resources, including cash flow from operating activities and longer-term access to capital markets, to meet debt service obligations in a timely manner and be able to continue to meet our objectives.

Historically, our debt has not resulted from the need to fund our normal operations, but instead has resulted primarily from our share repurchase programs. Since inception in 2007, total share repurchases amounted to approximately $6.5 billion. While a significant net sales decline could potentially affect the availability of funds, many of our largest expenses are variable in nature, which we believe protects our funding in all but a dramatic net sales downturn. Our $451.2$370.5 million cash and cash equivalents as of MarchJune 31,30, 2026 and our senior secured credit facility, in addition to cash flow from operations, can be used to support general corporate purposes, including any future strategic investment opportunities, share repurchases, and dividends.

For the threesix months ended MarchJune 31,30, 2026, we generated $113.8$146.7 million of operating cash flow as compared to $0.2$96.2 million of operating cash flow generated for the same period in 2025. The increase in our operating cash flow was the result of $99.0 million of favorable changes in operating assets and liabilities and $14.6$35.5 million of higher net income excluding non-cash and reconciling items disclosed within our condensed consolidated statement of cash flows.flows, Thepartially $99.0offset by $15.0 million of favorableunfavorable changes in operating assets and liabilities was primarily the result of favorable changes in other current liabilities and inventories; partially offset by an unfavorable change in accounts payable.liabilities. The favorable change in other current liabilities is mainly driven by the timing of employee bonus payments which were paid in the second quarter in 2026, while in 2025, the employee bonus payments were made in the first quarter. The $14.6$35.5 million of higher net income excluding non-cash and reconciling items was primarily driven by higher gross profit driven by higher net sales, and lower interest expense, net; partially offset by higher selling expenses, and general and administrative expenses (See Summary Financial Results above for further discussion). The $15.0 million of unfavorable changes in operating assets and liabilities included unfavorable changes in accounts payable, and other driven by Oracle Software-as-a-Service (SaaS) implementation costs; partially offset by a favorable change in other current liabilities and inventories. The favorable change in other current liabilities is mainly driven by higher employee bonus payments in 2025, favorable changes in advance sales deposits, and favorable changes in accrued member events and promotions.

Capital expenditures, including accrued capital expenditures, were $11.0$23.6 million and $20.0$39.8 million for the threesix months ended MarchJune 31,30, 2026 and 2025, respectively. The majority of these expenditures during the threesix months ended MarchJune 31,30, 2026 represented investments in management information systems, including initiatives to develop enhanced Member tools. We expect to incur total capital expenditures of approximately $50 million to $80$70 million for the full year 2026, which includes normal ongoing digital technology costs and enhancing member and retail customer facing technology. We also had capitalized implementation costs for cloud-based software applications (Software-as-a-ServiceSaaS) of $10.0$18.0 million and $4.7$8.9 million for the threesix months ended MarchJune 31,30, 2026 and 2025, respectively, which are included in prepaid expenses and other current assets and other assets within our condensed consolidated balance sheet. Amortization expenses are recognized in general and administrative expenses within our condensed consolidated statements of income.income (loss). We expect to incur capitalizable implementation costs for cloud-based software applications of approximately $35 million to $55 million for the full year 2026.

During the first quarter of 2024, we initiated a Restructuring Program to streamline our organizational structure to make it more efficient and effective and to allow our management team to work more closely to the markets, distributors, and customers. The Restructuring Program delivered annual savings of approximately $80 million with approximately $50 million of savings realized in 2024 and approximately $80 million of savings realized in 2025 and thereafter. We have incurred total pre-tax expenses of approximately $76.1 million from inception through the end of the Restructuring Program, which was completed as of December 31, 2025. During the three and six months ended MarchJune 31,30, 2025, we incurred $3.3$0.7 million expensesand $4.0 million expenses, respectively, which were recognized in general and administrative expenses within the condensed consolidated statement of income.income (loss).

During April 2025, we initiated a process and organizational redesign project of our global technology infrastructure, or the Technology Realignment Program, to better align with new technologies, enhance operational efficiency, and optimize support of business goals and processes. The Technology Realignment Program is expected to deliver annual savings of approximately $13 million beginning in 2026 with approximately $6 million of savings realized in 2025. We have incurred total pre-tax expenses of approximately $11.5$12.6 million through MarchJune 31,30, 2026, of which $2.4$1.1 million and zero$3.6 million for the three months ended MarchJune 31,30, 2026 and 2025, respectively, whichand $3.5 million and $3.6 million for the six months ended June 30, 2026 and 2025, respectively, were recognized in general and administrative expenses within the condensed consolidated statement of income.income (loss). We expect to incur total pre-tax expenses of approximately $15 million to achieve the projected run-rate savings. Since the Technology Realignment Program is still ongoing and is expected to be completed in 2026, these estimated amounts are preliminary and based on Management’s estimates and actual results could differ from such estimates.