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Natural Health Stock Declines Following Lower Q4 Earnings
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Shares of Natural Health Trends Corp. (NHTC - Free Report) have lost 1.1% since the company reported its earnings for the quarter ended Dec. 31, 2024. This compares to the S&P 500 Index’s 0.4% gain over the same time frame. Over the past month, the stock gained 12.3%, significantly outperforming the S&P 500’s 2.8% rise.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Key Performance Metrics
For the fourth quarter of 2024, Natural Health reported revenues of $10.8 million, which was nearly flat compared with $10.9 million in the same quarter of 2023. Notably, sales in its primary market, Greater China, increased 7% year over year and 9% sequentially, driven by targeted programs and promotions. The company recorded an operating loss of $421,000, widening from a loss of $292,000 in the prior year. Net income for the quarter was $176,000, or $0.02 per diluted share, down 50.8% from $358,000, or $0.03 per diluted share, a year ago.
For the full year, revenue declined 2.2% to $42.9 million from $43.9 million in 2023. Operating loss narrowed to $1.3 million from $1.7 million, reflecting cost control measures. Net income for the year was $572,000, which was consistent with the prior year. Gross profit for the year totaled $31.8 million, with a gross margin of 73.9%, down 2.9% from a gross profit of $32.7 million with a gross margin of 74.6% in 2023 due to higher freight costs.
Natural Health Trends Corp. Price, Consensus and EPS Surprise
Natural Health’s active member count stood at 30,870 as of Dec. 31, 2024, relatively unchanged from 30,880 on Sept. 30, 2024, but decreased 4.8% compared with 32,410 at the end of 2023. Commissions expense, as a percentage of sales, increased marginally to 41.9% in fourth-quarter 2024 from 41.6% in the prior-year quarter. Selling, general, and administrative expenses rose 2.1% to $3.9 million in fourth-quarter 2024 from $3.8 million in the previous year, attributed to the timing of professional services expenses.
Factors Influencing Results
The gross margin of 74.2% in fourth-quarter 2024 was slightly lower than 74.5% in the prior-year quarter, largely due to higher freight costs. Supplemental incentive programs contributed to the increase in commissions expense as a percentage of net sales. Meanwhile, the company continued to face challenges from reduced product promotions and strategic pricing changes, which impacted performance in secondary markets.
Management Commentary
CEO Chris Sharng highlighted resilience in Greater China despite challenging consumer sentiment. Sales growth in the region was supported by promotions and incentives that resonated with consumers and field leaders. Performance in North America and Taiwan remained weak due to strategic price adjustments and fewer promotions, which the company believes will enhance margins and market discipline in the long term.
CFO Scott Davidson emphasized improved cash flows, with net cash provided by operating activities of $88,000 in fourth-quarter 2024 compared with net cash used in operating activities of $69,000 in the prior-year period. Net cash used in operating activities was $3.4 million in 2024 compared with $4.3 million in 2023. Cash, cash equivalents and marketable securities totaled $43.9 million as of Dec. 31, 2024, down from $46.3 million as of Sept. 30, reflecting dividend payouts.
Other Developments
The company introduced two new products — Collagen Supreme in raspberry lemonade flavor and a topical hair serum called Root Revive — in Hong Kong during the fourth quarter of 2024. These products were also launched in Taiwan and North America, with plans to expand into additional markets. Natural Health expanded its global presence by opening operations in Colombia in 2024, and a formal office opening is planned for February 2025.
Additionally, the company hosted various incentive trips and training events in 2024, including a forum in Bangkok with over 430 attendees. These initiatives aim to bolster recruitment, retention, and member engagement.
In February 2025, the company relocated its headquarters from Hong Kong to Rolling Hills Estates, CA, marking a strategic shift in its corporate operations.
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Natural Health Stock Declines Following Lower Q4 Earnings
Shares of Natural Health Trends Corp. (NHTC - Free Report) have lost 1.1% since the company reported its earnings for the quarter ended Dec. 31, 2024. This compares to the S&P 500 Index’s 0.4% gain over the same time frame. Over the past month, the stock gained 12.3%, significantly outperforming the S&P 500’s 2.8% rise.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Key Performance Metrics
For the fourth quarter of 2024, Natural Health reported revenues of $10.8 million, which was nearly flat compared with $10.9 million in the same quarter of 2023. Notably, sales in its primary market, Greater China, increased 7% year over year and 9% sequentially, driven by targeted programs and promotions. The company recorded an operating loss of $421,000, widening from a loss of $292,000 in the prior year. Net income for the quarter was $176,000, or $0.02 per diluted share, down 50.8% from $358,000, or $0.03 per diluted share, a year ago.
For the full year, revenue declined 2.2% to $42.9 million from $43.9 million in 2023. Operating loss narrowed to $1.3 million from $1.7 million, reflecting cost control measures. Net income for the year was $572,000, which was consistent with the prior year. Gross profit for the year totaled $31.8 million, with a gross margin of 73.9%, down 2.9% from a gross profit of $32.7 million with a gross margin of 74.6% in 2023 due to higher freight costs.
Natural Health Trends Corp. Price, Consensus and EPS Surprise
Natural Health Trends Corp. price-consensus-eps-surprise-chart | Natural Health Trends Corp. Quote
Other Key Business Metrics
Natural Health’s active member count stood at 30,870 as of Dec. 31, 2024, relatively unchanged from 30,880 on Sept. 30, 2024, but decreased 4.8% compared with 32,410 at the end of 2023. Commissions expense, as a percentage of sales, increased marginally to 41.9% in fourth-quarter 2024 from 41.6% in the prior-year quarter. Selling, general, and administrative expenses rose 2.1% to $3.9 million in fourth-quarter 2024 from $3.8 million in the previous year, attributed to the timing of professional services expenses.
Factors Influencing Results
The gross margin of 74.2% in fourth-quarter 2024 was slightly lower than 74.5% in the prior-year quarter, largely due to higher freight costs. Supplemental incentive programs contributed to the increase in commissions expense as a percentage of net sales. Meanwhile, the company continued to face challenges from reduced product promotions and strategic pricing changes, which impacted performance in secondary markets.
Management Commentary
CEO Chris Sharng highlighted resilience in Greater China despite challenging consumer sentiment. Sales growth in the region was supported by promotions and incentives that resonated with consumers and field leaders. Performance in North America and Taiwan remained weak due to strategic price adjustments and fewer promotions, which the company believes will enhance margins and market discipline in the long term.
CFO Scott Davidson emphasized improved cash flows, with net cash provided by operating activities of $88,000 in fourth-quarter 2024 compared with net cash used in operating activities of $69,000 in the prior-year period. Net cash used in operating activities was $3.4 million in 2024 compared with $4.3 million in 2023. Cash, cash equivalents and marketable securities totaled $43.9 million as of Dec. 31, 2024, down from $46.3 million as of Sept. 30, reflecting dividend payouts.
Other Developments
The company introduced two new products — Collagen Supreme in raspberry lemonade flavor and a topical hair serum called Root Revive — in Hong Kong during the fourth quarter of 2024. These products were also launched in Taiwan and North America, with plans to expand into additional markets. Natural Health expanded its global presence by opening operations in Colombia in 2024, and a formal office opening is planned for February 2025.
Additionally, the company hosted various incentive trips and training events in 2024, including a forum in Bangkok with over 430 attendees. These initiatives aim to bolster recruitment, retention, and member engagement.
In February 2025, the company relocated its headquarters from Hong Kong to Rolling Hills Estates, CA, marking a strategic shift in its corporate operations.