Natural Health Stock Down Following Mixed Q3 Earnings & Restructuring

Shares of Natural Health Trends Corp. NHTC have fallen sharply in the wake of their latest earnings release. Since the company reported results for the year ended Sept. 30, 2025, the stock has lost 25.1% compared with the 0.6% decline in the S&P 500 Index over the same period. Over the past month, shares have been down 25.8%, while the S&P 500 has advanced 1.6%.

NHTC’s Earnings Snapshot

Natural Health’s third-quarter 2025 results showed weaker top- and bottom-line trends compared to the prior-year period. Revenue declined 11.4% to $9.5 million from $10.7 million, pressured in part by the timing of a product promotion and the presale of a new skincare line in Hong Kong. Operating loss widened to $0.5 million from $0.3 million a year earlier, while NHTC swung to a net loss of $0.4 million, or a loss of $0.04 per diluted share, from net income of $35,000, or breakeven per share, in the third quarter of 2024.

For the first nine months of 2025, revenue fell 6.5% to $30 million from $32.1 million, and Natural Health reported a net loss of $0.3 million, or a loss of $0.03 per share, against net income of $0.4 million, or $0.03 per share, in the prior-year period.

Natural Health’s Other Key Business Metrics

Orders decreased 5% year over year in the third quarter of 2025, although they improved 5% sequentially, suggesting some stabilization versus the immediately preceding period. Active Members fell to 28,030 as of Sept. 30, 2025, from 30,880 a year earlier, a decline of 9.2%, highlighting ongoing distributor and customer attrition.

Gross margin remained high but contracted modestly. Gross profit for the quarter was $6.9 million, down 11.8% from $7.9 million a year ago, with gross margin at 73.7% compared with 74.1% in third-quarter 2024. Management attributed the slight compression primarily to the write-off of components inventory tied to discontinued products.

Commissions expense declined 10.5% year over year but rose slightly as a percentage of sales to 40.9% from 40.5%, reflecting higher weekly commissions earned by members. Selling, general and administrative expenses decreased 6.8% to $3.6 million from $3.9 million, demonstrating some early cost control even before the fuller impact of planned restructuring.

Natural Health Trends Corp. Price, Consensus and EPS Surprise

Natural Health Trends Corp. price-consensus-eps-surprise-chart | Natural Health Trends Corp. Quote

NHTC’s Management Commentary and Strategic Initiatives

Management acknowledged that the economic outlook in its largest market, Hong Kong, remains challenging. Hong Kong accounted for 81.4% of third-quarter 2025 sales and saw an 8% year-over-year decline in revenue, or a 4% drop when adjusting for the timing effects of promotions and the skincare presale. In response, the company is executing a targeted major restructuring expected to deliver $1.5 million in annualized savings by mid-2026. Measures include reducing the workforce by about 10%, cutting operating costs and trimming or exiting certain facility leases. Additionally, Natural Health is transitioning U.S.-based product manufacturing closer to Asia to mitigate tariff risk, streamline logistics and lower costs.

Management also emphasized investments intended to improve long-term growth prospects. Planned spending encompasses an AI-enabled marketing app, a member-interface business suite and new marketing initiatives aimed at expanding and engaging the member base. Natural Health is layering these efforts onto a calendar of recognition and training events, such as a four-day cruise for top performers in Japan and in-person celebrations in Sweden, to deepen relationships and reinforce leadership development across markets.

Factors Influencing Natural Health’s Performance

NHTC cited a combination of macro and company-specific factors behind the weaker results. On the macro side, the soft economic environment in Greater China continues to weigh on consumer spending and member activity. Company-specific drivers included the timing of promotions and the presale of the new Korean-formulated Soo:vea moisturizing skincare series in Hong Kong, which shifted revenue out of the reported quarter. The write-off of inventory related to discontinued products also negatively impacted gross margin and operating income.

Cash generation remained pressured. Net cash used in operating activities was $5 million for the first nine months of 2025, compared with $3.5 million in the prior-year period. Excluding required annual tax installment payments tied to the 2017 U.S. Tax Cuts and Jobs Act — now fully paid — operating cash flow was only modestly positive at $16,000. Total cash, cash equivalents and marketable securities declined to $32 million as of Sept. 30, 2025, from $43.9 million at year-end 2024, though liquidity remains ample relative to current liabilities.

NHTC’s Guidance and Capital Allocation

While Natural Health did not provide explicit numerical guidance, it offered directional commentary about the quarters ahead. Management expects to incur a one-time restructuring charge of approximately $250,000 in the fourth quarter of 2025 and is targeting the realization of the $1.5 million in annualized cost savings by mid-2026.

As part of the cost-alignment effort, Natural Health anticipates reducing its quarterly cash dividend to $0.10 per share beginning in the first quarter of next year. For now, the board has declared a third-quarter 2025 cash dividend of $0.20 per share, payable on Nov. 28, 2025, to shareholders of record as of Nov. 18, 2025.

Natural Health’s Other Developments

In addition to the restructuring and technology investments, Natural Health is using product innovation and milestone celebrations to energize its network. The company pre-launched the Soo:vea skincare series — a four-step regimen featuring a cleanser, toner, probiotic-infused booster serum and cream — in Hong Kong, with plans to roll out the line globally. It also introduced a limited-edition anti-aging cream in Sweden in conjunction with the market’s 10-year anniversary.

Looking ahead, 2026 will mark NHTC’s 25th anniversary, and management is planning a year-long program of events and marketing campaigns aimed at strengthening the brand and creating fresh growth opportunities.

This article originally published on Zacks Investment Research (zacks.com).

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