UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September 30, 2021~~March 31, 2022

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .

Commission File Number: 001-34483

NATURE’S SUNSHINE PRODUCTS, INC.

(Exact name of Registrant as specified in its charter)


Utah						87-0327982
(State or other jurisdiction of						(IRS Employer
incorporation or organization)						Identification No.)

2901 Bluegrass Boulevard, Suite 100

Lehi, Utah 84043

(Address of principal executive offices and zip code)

(801) 341-7900

(Registrant’s telephone number including area code)

Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, no par value	NATR	Nasdaq Capital Market

Indicate by check mark whether the registrant; (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ý No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and an “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer o						Accelerated filer ☒

Non-accelerated filer o						Smaller reporting company ☒

						Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ý.

The number of shares of Common Stock, no par value, outstanding on ~~October~~April 22, ~~2021,~~2022, was ~~19,760,612~~19,474,806 shares.

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NATURE’S SUNSHINE PRODUCTS, INC.

FORM 10-Q

For the Quarter Ended ~~September 30, 2021~~March 31, 2022

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Part I. Financial Information			45

	Item 1.	Financial Statements (Unaudited)	45

		Condensed Consolidated Balance Sheets	45
		Condensed Consolidated Statements of ~~Income~~Operations	5
		Condensed Consolidated Statements of Comprehensive Income	7
		Condensed Consolidated Statement s of Changes in Shareholders’ Equity	8
		Condensed Consolidated Statements of Cash Flows	109
		Notes to Condensed Consolidated Financial Statements	1110

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2321

	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	3128

	Item 4.	Controls and Procedures	3128

Part II. Other Information			3230

	Item 1.	Legal Proceedings	3230

	Item 1A.	Risk Factors	3230

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3431

	Item 3.	Defaults Upon Senior Securities	3431

	Item 4.	Mine Safety Disclosures	3431

	Item 5.	Other Information	3431

	Item 6.	Exhibits	3532

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain information included or incorporated herein by reference in this report may be deemed to be “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may include, but are not limited to, statements relating to our objectives, plans and strategies. All statements (other than statements of historical fact) that address activities, events or developments that we intend, expect, project, believe or anticipate will or may occur in the future are forward-looking statements. These statements are often characterized by terminology such as “believe,” “hope,” “may,” “anticipate,” “should,” “intend,” “plan,” “will,” “expect,” “estimate,” “project,” “positioned,” “strategy” and similar expressions, and are based on assumptions and assessments made in light of our experience and perception of historical trends, current conditions, expected future developments and other factors we believe to be appropriate. For example, information appearing under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” includes forward-looking statements. Forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties. Important factors that could cause actual results, developments and business decisions to differ materially from forward-looking statements are more fully described in this report, including the risks set forth under “Risk Factors” in Item 1A, and in the Company's Annual Report on Form 10-K for the year ended December 31, ~~2020,~~2021, but include the following:

•extensive government regulations to which the ~~Company's~~Company’s products, business practices and manufacturing activities are subject;

•registration of products for sale in foreign markets, or difficulty or increased cost of importing products into foreign markets;

•legal challenges to the ~~Company's~~Company’s direct selling program or to the classification of its independent consultants;

•laws and regulations regarding direct selling may prohibit or restrict our ability to sell our products in some markets or require us to make changes to our business model in some markets;

•liabilities and obligations arising from improper activity by the Company’s independent consultants;

•product liability claims;

•~~our cannabidiol (CBD) product line is subject to varying, rapidly changing laws, regulations, and rules;~~

•~~actions on trade relations by the U.S. and foreign governments;~~

•impact of anti-bribery laws, including the U.S. Foreign Corrupt Practices Act;

•the Company’s ability to attract and retain independent consultants;

•the loss of one or more key independent consultants who have a significant sales network;

•the Company’s joint venture for operations in China with Fosun Industrial Co., Ltd.;

•the effect of fluctuating foreign exchange rates;

•failure of the Company’s independent consultants to comply with advertising laws;

•changes to the Company’s independent consultants compensation plans;

•geopolitical issues and conflicts;

•~~we may be adversely affected~~adverse effects caused by the ongoing coronavirus pandemic;

•negative consequences resulting from difficult economic conditions, including the availability of liquidity or the willingness of the Company’s customers to purchase products;

•risks associated with the manufacturing of the ~~Company's~~Company’s products;

•supply chain disruptions, manufacturing interruptions or delays, or the failure to accurately forecast customer demand;

•failure to timely and effectively obtain shipments of products from our manufacturers and deliver products to our independent consultants and customers;

•world-wide slowdowns and delays related to supply chain, ingredient shortages and logistical challenges;

•uncertainties relating to the application of transfer pricing, duties, value-added taxes, and other tax regulations, and changes thereto;

•changes in tax laws, treaties or regulations, or their interpretation;

•cybersecurity threats and exposure to data loss;

•the storage, processing, and use of data, some of which contain personal information, are subject to complex and evolving privacy and data protection laws and regulations;

•reliance on information technology infrastructure; and

•the sufficiency of trademarks and other intellectual property rights.

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All forward-looking statements speak only as of the date of this report and are expressly qualified in their entirety by the cautionary statements included in or incorporated by reference into this report. Except as is required by law, we expressly ~~disclaims~~disclaim any obligation to publicly release any revisions to forward-looking statements to reflect events after the date of this report. Throughout this report, we refer to Nature’s Sunshine Products, Inc., together with our subsidiaries, as "we," "us," "our," "our Company" or “the Company.”

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PART I FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

NATURE’S SUNSHINE PRODUCTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in thousands)

(Unaudited)
September 30,
2021 December 31,
2020
Assets
Current assets:
Cash and cash equivalents $ 75,535 $ 92,069
Accounts receivable, net of allowance for doubtful accounts of $445 and $454, respectively 9,189 7,375
Inventories 57,376 47,683
Prepaid expenses and other 8,627 6,938
Total current assets 150,727 154,065
Property, plant and equipment, net 52,538 54,355
Operating lease right-of-use assets 19,136 20,210
Investment securities - trading 950 989
Deferred income tax assets 5,842 8,693
Other assets 10,559 11,186
Total assets $ 239,752 $ 249,498
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable $ 7,580 $ 6,486
Accrued volume incentives and service fees 21,868 19,481
Accrued liabilities 29,606 31,710
Deferred revenue 1,513 2,092
Related party notes payable 600 1,200
Income taxes payable 3,540 2,387
Current portion of operating lease liabilities 4,495 4,992
Current portion of note payable 1,235 1,306
Total current liabilities 70,437 69,654
Liability related to unrecognized tax benefits 5 92
Long-term portion of operating lease liabilities 16,510 16,412
Long-term note payable 1,488 2,418
Deferred compensation payable 950 989
Deferred income tax liabilities 1,574 1,391
Other liabilities 1,158 1,308
Total liabilities 92,122 92,264
Shareholders’ equity:
Common stock, no par value, 50,000 shares authorized, 19,775 and 19,697 shares issued and outstanding, respectively 134,252 139,311
Retained earnings 21,586 26,030
Noncontrolling interest 2,838 1,848
Accumulated other comprehensive loss (11,046) (9,955)
Total shareholders’ equity 147,630 157,234
Total liabilities and shareholders’ equity $ 239,752 $ 249,498

~~See accompanying notes to condensed consolidated financial statements.~~

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~~NATURE’S SUNSHINE PRODUCTS, INC. AND SUBSIDIARIES~~

~~CONDENSED CONSOLIDATED STATEMENTS OF INCOME~~

~~(Amounts in thousands, except per share information)~~

~~(Unaudited)~~
Three Months Ended
September 30,
2021 2020
Net sales $ 114,746 $ 100,250
Cost of sales 29,419 27,175
Gross profit 85,327 73,075
Operating expenses:
Volume incentives 35,793 34,310
Selling, general and administrative 39,528 33,294
Operating income 10,006 5,471
Other income (loss), net (886) 671
Income before provision for income taxes 9,120 6,142
Provision (benefit) for income taxes 3,662 (1,027)
Net income 5,458 7,169
Net income attributable to noncontrolling interests 600 414
Net income attributable to common shareholders $ 4,858 $ 6,755
Basic and diluted net income per common share:
Basic earnings per share attributable to common shareholders $ 0.24 $ 0.35
Diluted earnings per share attributable to common shareholders $ 0.24 $ 0.34
Weighted average basic common shares outstanding 19,894 19,533
Weighted average diluted common shares outstanding 20,375 19,859


	March 31, 2022		December 31, 2021
Assets
Current assets:
Cash and cash equivalents	$	66,541	$	86,184
Accounts receivable, net of allowance for doubtful accounts of $148 and $143, respectively	7,272		8,871


Inventories	63,928		60,852
Prepaid expenses and other	10,896		8,760
Total current assets	148,637		164,667

Property, plant and equipment, net	49,587		50,857
Operating lease right-of-use assets	18,960		18,349
Restricted investment securities - trading	888		964

Deferred income tax assets	9,836		13,590
Other assets	10,754		10,447
Total assets	$	238,662	$	258,874

Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	8,434	$	9,702
Accrued volume incentives and service fees	22,513		23,131
Accrued liabilities	26,621		31,600
Deferred revenue	2,036		3,694

Related party note	—		302
Income taxes payable	2,976		2,647
Current portion of operating lease liabilities	4,537		4,350
Current installments of long-term debt and revolving credit facility	1,253		1,244
Total current liabilities	68,370		76,670


Long-term portion of operating lease liabilities	16,475		15,919

Long-term debt and revolving credit facility	857		1,174
Deferred compensation payable	888		964
Long-term deferred income tax liabilities	1,131		1,566
Other liabilities	1,163		1,177
Total liabilities	88,884		97,470



Shareholders’ equity:
Common stock, no par value, 50,000 shares authorized, 19,461 and 19,724 shares issued and outstanding, respectively	125,417		133,382
Retained earnings	32,075		35,025
Noncontrolling interest	3,466		3,202
Accumulated other comprehensive loss	(11,180)		(10,205)
Total shareholders’ equity	149,778		161,404
Total liabilities and shareholders’ equity	$	238,662	$	258,874

See accompanying notes to condensed consolidated financial statements.

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NATURE’S SUNSHINE PRODUCTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF ~~INCOME~~OPERATIONS

(Amounts in thousands, except per share information)

(Unaudited)


		Nine Months Ended September 30,					Three Months Ended March 31,
		2021		2020			2022		2021
Net sales	Net sales	$	326,145	$	283,462	Net sales	$	110,494	$	102,421
Cost of sales	Cost of sales	84,861		74,873		Cost of sales	34,460		26,979
Gross profit	Gross profit	241,284		208,589		Gross profit	76,034		75,442

Operating expenses:	Operating expenses:					Operating expenses:
Volume incentives	Volume incentives	105,491		96,493		Volume incentives	34,102		34,255
Selling, general and administrative	Selling, general and administrative	108,666		92,863		Selling, general and administrative	40,623		33,552
Operating income	Operating income	27,127		19,233		Operating income	1,309		7,635
Other loss, net	Other loss, net	(2,290)		(230)		Other loss, net	(314)		(1,933)
Income before provision for income taxes	Income before provision for income taxes	24,837		19,003		Income before provision for income taxes	995		5,702
Provision for income taxes	Provision for income taxes	8,433		2,695		Provision for income taxes	3,681		1,550
Net income		16,404		16,308
Net income (loss)						Net income (loss)	(2,686)		4,152
Net income attributable to noncontrolling interests	Net income attributable to noncontrolling interests	990		837		Net income attributable to noncontrolling interests	264		136
Net income attributable to common shareholders		$	15,414	$	15,471
Net income (loss) attributable to common shareholders						Net income (loss) attributable to common shareholders	$	(2,950)	$	4,016

Basic and diluted net income per common share:	Basic and diluted net income per common share:					Basic and diluted net income per common share:

Basic earnings per share attributable to common shareholders		$	0.77	$	0.79
Basic earnings (loss) per share attributable to common shareholders						Basic earnings (loss) per share attributable to common shareholders	$	(0.15)	$	0.20

Diluted earnings per share attributable to common shareholders		$	0.76	$	0.78
Diluted earnings (loss) per share attributable to common shareholders						Diluted earnings (loss) per share attributable to common shareholders	$	(0.15)	$	0.20

Weighted average basic common shares outstanding	Weighted average basic common shares outstanding	19,896		19,493		Weighted average basic common shares outstanding	19,573		19,794
Weighted average diluted common shares outstanding	Weighted average diluted common shares outstanding	20,292		19,820		Weighted average diluted common shares outstanding	19,573		20,236

Dividends declared per common share	Dividends declared per common share	$	1.00	$	—	Dividends declared per common share	$	—	$	1.00

See accompanying notes to condensed consolidated financial statements.

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NATURE’S SUNSHINE PRODUCTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Amounts in thousands)

(Unaudited)
Three Months Ended
September 30,
2021 2020
Net income $ 5,458 $ 7,169
Foreign currency translation income (loss) (net of tax) (925) 718
Total comprehensive income $ 4,533 $ 7,887

Nine Months Ended
September 30,
2021 2020
Net income $ 16,404 $ 16,308
Foreign currency translation income (loss) (net of tax) (1,091) 458
Total comprehensive income $ 15,313 $ 16,766


	Three Months Ended March 31,
	2022		2021
Net income (loss)	$	(2,686)	$	4,152
Foreign currency translation loss (net of tax)	(975)		(121)



Total comprehensive income (loss)	$	(3,661)	$	4,031

See accompanying notes to condensed consolidated financial statements.

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NATURE’S SUNSHINE PRODUCTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(Amounts in thousands)

(Unaudited)


		Common Stock			Retained Earnings				Noncontrolling Interest			Accumulated Other Comprehensive Loss				Total				Common Stock					Retained Earnings			Noncontrolling Interest			Accumulated Other Comprehensive Loss			Total
		Shares	Amount								Shares								Amount
Balance at December 31, 2020		19,697	$	139,311			$	26,030						$	1,848			$	(9,955)		$	157,234
Share-based compensation expense		—	1,005		—				—			—				1,005
Shares issued from the exercise of stock options and vesting of restricted stock units, net of shares exchanged for withholding tax		218	(914)		—				—			—				(914)
Cash dividends ($1.00 per share)		—	—		(19,858)				—			—				(19,858)
Net income		—	—		4,016				136			—				4,152
Other comprehensive loss		—	—		—				—			(121)				(121)
Balance at March 31, 2021		19,915	$	139,402	$	10,188			$	1,984		$	(10,076)			$	141,498
Balance at December 31, 2021																			Balance at December 31, 2021	19,724			$	133,382		$	35,025		$	3,202		$	(10,205)		$	161,404
Share-based compensation expense	Share-based compensation expense	—	1,066		—				—			—				1,066			Share-based compensation expense	—			801		—			—			—			801
Shares issued from the exercise of stock options and vesting of restricted stock units, net of shares exchanged for withholding tax	Shares issued from the exercise of stock options and vesting of restricted stock units, net of shares exchanged for withholding tax	152	(660)		—				—			—				(660)			Shares issued from the exercise of stock options and vesting of restricted stock units, net of shares exchanged for withholding tax	188			(795)		—			—			—			(795)
Repurchase of common stock	Repurchase of common stock	(77)	(1,500)		—				—			—				(1,500)			Repurchase of common stock	(451)			(7,971)		—			—			—			(7,971)
Net income		—	—		6,540				254			—				6,794
Net income (loss)																			Net income (loss)	—			—		(2,950)			264			—			(2,686)
Other comprehensive loss	Other comprehensive loss	—	—		—				—			(45)				(45)			Other comprehensive loss	—			—		—			—			(975)			(975)
Balance at June 30, 2021		19,990	$	138,308	$	16,728			$	2,238		$	(10,121)			$	147,153
Share-based compensation expense		—	886		—				—			—				886
Shares issued from the exercise of stock options and vesting of restricted stock units, net of shares exchanged for withholding tax		58	(442)		—				—			—				(442)
Repurchase of common stock		(273)	(4,500)		—				—			—				(4,500)
Net income		—	—		4,858				600			—				5,458
Other comprehensive loss		—	—		—				—			(925)				(925)
Balance at September 30, 2021		19,775	$	134,252	$	21,586			$	2,838		$	(11,046)			$	147,630
Balance at March 31, 2022																			Balance at March 31, 2022	19,461			$	125,417	$	32,075		$	3,466		$	(11,180)		$	149,778

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		Common Stock			Retained Earnings				Noncontrolling Interest			Accumulated Other Comprehensive Loss				Total				Common Stock					Retained Earnings			Noncontrolling Interest			Accumulated Other Comprehensive Loss			Total
		Shares	Amount								Shares								Amount
Balance at December 31, 2019		19,410	$	135,741			$	4,693						$	227			$	(11,225)		$	129,436
Balance at December 31, 2020																			Balance at December 31, 2020	19,697			$	139,311		$	26,030		$	1,848		$	(9,955)		$	157,234
Share-based compensation expense	Share-based compensation expense	—	394		—				—			—				394			Share-based compensation expense	—			1,005		—			—			—			1,005
Shares issued from the exercise of stock options and vesting of restricted stock units, net of shares exchanged for withholding tax	Shares issued from the exercise of stock options and vesting of restricted stock units, net of shares exchanged for withholding tax	60	(159)		—				—			—				(159)			Shares issued from the exercise of stock options and vesting of restricted stock units, net of shares exchanged for withholding tax	218			(914)		—			—			—			(914)
Cash dividends ($1.00 per share)																			Cash dividends ($1.00 per share)	—			—		(19,858)			—			—			(19,858)
Net income	Net income	—	—		2,962				44			—				3,006			Net income	—			—		4,016			136			—			4,152
Other comprehensive loss	Other comprehensive loss	—	—		—				—			(109)				(109)			Other comprehensive loss	—			—		—			—			(121)			(121)
Balance at March 31, 2020		19,470	$	135,976	$	7,655			$	271		$	(11,334)			$	132,568
Share-based compensation expense		—	736		—				—			—				736
Shares issued from the exercise of stock options and vesting of restricted stock units, net of shares exchanged for withholding tax		40	(51)		—				—			—				(51)
Net income		—	—		5,754				379			—				6,133
Other comprehensive loss		—	—		—				—			(151)				(151)
Balance at June 30, 2020		19,510	$	136,661	$	13,409			$	650		$	(11,485)			$	139,235
Share-based compensation expense		—	1,011		—				—			—				1,011
Shares issued from the exercise of stock options and vesting of restricted stock units, net of shares exchanged for withholding tax		82	104		—				—			—				104
Net income		—	—		6,755				414			—				7,169
Other comprehensive income		—	—		—				—			718				718
Balance at September 30, 2020		19,592	$	137,776	$	20,164			$	1,064		$	(10,767)			$	148,237
Balance at March 31, 2021																			Balance at March 31, 2021	19,915			$	139,402	$	10,188		$	1,984		$	(10,076)		$	141,498

See accompanying notes to condensed consolidated financial statements.

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NATURE’S SUNSHINE PRODUCTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

(Unaudited)


		Nine Months Ended September 30,					Three Months Ended March 31,
		2021		2020			2022		2021
CASH FLOWS FROM OPERATING ACTIVITIES:	CASH FLOWS FROM OPERATING ACTIVITIES:					CASH FLOWS FROM OPERATING ACTIVITIES:
Net income		$	16,404	$	16,308
Adjustments to reconcile net income to net cash provided by operating activities:
Net income (loss)						Net income (loss)	$	(2,686)	$	4,152
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:						Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Provision for doubtful accounts	Provision for doubtful accounts	—		116		Provision for doubtful accounts	6		—
Depreciation and amortization	Depreciation and amortization	8,276		7,834		Depreciation and amortization	2,766		2,736
Non-cash lease expense	Non-cash lease expense	4,043		2,398		Non-cash lease expense	1,173		1,311
Share-based compensation expense	Share-based compensation expense	2,957		2,141		Share-based compensation expense	801		1,005
Loss on sale of property, plant and equipment		24		7

Deferred income taxes	Deferred income taxes	2,891		1,210		Deferred income taxes	3,844		561
Purchase of trading investment securities	Purchase of trading investment securities	(30)		(47)		Purchase of trading investment securities	(12)		(16)
Proceeds from sale of trading investment securities	Proceeds from sale of trading investment securities	175		221		Proceeds from sale of trading investment securities	35		175
Realized and unrealized gains on investments		(62)		(41)
Realized and unrealized losses (gains) on investments						Realized and unrealized losses (gains) on investments	58		(16)
Foreign exchange losses	Foreign exchange losses	2,483		354		Foreign exchange losses	402		1,529
Changes in assets and liabilities:	Changes in assets and liabilities:					Changes in assets and liabilities:
Accounts receivable	Accounts receivable	(2,054)		(1,692)		Accounts receivable	1,447		(2,689)
Inventories	Inventories	(10,771)		(1,361)		Inventories	(3,489)		536
Prepaid expenses and other current assets	Prepaid expenses and other current assets	(1,787)		(798)		Prepaid expenses and other current assets	(2,518)		(272)
Other assets	Other assets	(267)		(30)		Other assets	(20)		24
Accounts payable	Accounts payable	421		1,102		Accounts payable	(946)		598
Accrued volume incentives and service fees	Accrued volume incentives and service fees	2,750		(1,370)		Accrued volume incentives and service fees	(464)		1,644
Accrued liabilities	Accrued liabilities	(1,646)		5,106		Accrued liabilities	(5,386)		(6,248)
Deferred revenue	Deferred revenue	(551)		295		Deferred revenue	(1,632)		(394)
Lease liabilities	Lease liabilities	(4,170)		(2,276)		Lease liabilities	(1,031)		(1,170)
Income taxes payable	Income taxes payable	1,316		(1,078)		Income taxes payable	(191)		(699)
Liability related to unrecognized tax benefits	Liability related to unrecognized tax benefits	(87)		(1,417)		Liability related to unrecognized tax benefits	—		(10)
Deferred compensation payable	Deferred compensation payable	(34)		(133)		Deferred compensation payable	(81)		(22)
Net cash provided by operating activities		20,281		26,849
Net cash provided by (used in) operating activities						Net cash provided by (used in) operating activities	(7,924)		2,735
CASH FLOWS FROM INVESTING ACTIVITIES:	CASH FLOWS FROM INVESTING ACTIVITIES:					CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment	Purchases of property, plant and equipment	(4,626)		(3,487)		Purchases of property, plant and equipment	(1,518)		(983)

Net cash used in investing activities	Net cash used in investing activities	(4,626)		(3,487)		Net cash used in investing activities	(1,518)		(983)
CASH FLOWS FROM FINANCING ACTIVITIES:	CASH FLOWS FROM FINANCING ACTIVITIES:					CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of cash dividends		(19,858)		—

Principal payments of long-term debt	Principal payments of long-term debt	(1,001)		—		Principal payments of long-term debt	(308)		(397)

Proceeds from note payable		—		5,374

Principal payments of related party borrowing	Principal payments of related party borrowing	(600)		(243)		Principal payments of related party borrowing	(300)		—
Proceeds from the exercise of stock awards	Proceeds from the exercise of stock awards	—		192		Proceeds from the exercise of stock awards	(795)		(914)
Payments related to tax withholding for net-share settled equity awards		(2,016)		—
Tax benefit from exercise of stock options		—		(298)

Repurchase of common stock	Repurchase of common stock	(6,000)		—		Repurchase of common stock	(7,971)		—
Net cash provided by (used in) financing activities		(29,475)		5,025
Net cash used in financing activities						Net cash used in financing activities	(9,374)		(1,311)
Effect of exchange rates on cash and cash equivalents	Effect of exchange rates on cash and cash equivalents	(2,714)		244		Effect of exchange rates on cash and cash equivalents	(827)		(1,257)
Net increase (decrease) in cash and cash equivalents		(16,534)		28,631
Net decrease in cash and cash equivalents						Net decrease in cash and cash equivalents	(19,643)		(816)
Cash and cash equivalents at the beginning of the period	Cash and cash equivalents at the beginning of the period	92,069		53,629		Cash and cash equivalents at the beginning of the period	86,184		92,069
Cash and cash equivalents at the end of the period	Cash and cash equivalents at the end of the period	$	75,535	$	82,260	Cash and cash equivalents at the end of the period	$	66,541	$	91,253
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:	SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:					SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for income taxes, net of refunds	Cash paid for income taxes, net of refunds	$	4,431	$	3,293	Cash paid for income taxes, net of refunds	$	1,809	$	2,026
Cash paid for interest	Cash paid for interest	156		24		Cash paid for interest	45		50

See accompanying notes to condensed consolidated financial statements.

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NATURE’S SUNSHINE PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(1) Basis of Presentation

We are a natural health and wellness company primarily engaged in the manufacture and sale of nutritional and personal care products. We are a Utah corporation with our principal place of business in Lehi, Utah, and sell our products to a sales force of independent consultants who use the products themselves or resell them to consumers.

Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the U.S. (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by ~~generally accepted accounting principles~~GAAP for complete financial statements. The unaudited condensed consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany accounts and transactions are eliminated in consolidation. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting of normal recurring accruals), considered necessary for a fair presentation of our financial information as of ~~September 30, 2021,~~March 31, 2022, and for the three months ended March 31, 2022 and ~~nine-month periods ended September 30, 2021 and 2020.~~2021. The results of operations of any interim period are not necessarily indicative of the results of operations to be expected for the year ending December 31, ~~2021.~~2022.

These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the year ended December 31, ~~2020 as amended by Form 10-K/A on July 9,~~ 2021.

Use of Estimates

The preparation of consolidated financial statements in accordance with ~~accounting principles generally accepted in the United States (“GAAP”)~~GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities, in these financial statements and accompanying notes. Actual results could differ from these estimates due to the uncertainty around the magnitude and duration of the COVID-19 pandemic, the current conflict between Russia and Ukraine, inflationary pressures and supply chain challenges as well as other factors and those differences could have a material effect on our financial position and results of operations.

The significant accounting estimates inherent in the preparation of our financial statements include estimates associated with our determination of liabilities related to independent consultant incentives, the determination of income tax assets and liabilities, certain other non-income tax and value-added tax contingencies, and legal contingencies. In addition, significant estimates form the basis for allowances with respect to inventory valuations. Various assumptions and other factors enter into the determination of these significant estimates. The process of determining significant estimates takes into account historical experience and current and expected economic conditions.

Noncontrolling Interests

Noncontrolling interests changed as a result of the net income attributable to noncontrolling interests of ~~$0.6~~$0.3 million and ~~$1.0~~$0.1 million for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021, ~~respectively. Net income attributable to the noncontrolling interests was $0.4 million and $0.8 million for the three and nine months ended September 30, 2020,~~ respectively. As of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, noncontrolling interests were ~~$2.8~~$3.5 million and ~~$1.8~~$3.2 million, respectively.

Restructuring Related Accruals and Expenses

We recorded $0$0.3 million and $48,000 of restructuring related expenses during the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021, ~~respectively. We recorded $0 and $0.1 million of restructuring related expenses during the three and nine months ended September 30, 2020,~~ respectively. Accrued severance and restructuring related costs were $0$0.1 million and ~~$0.4~~$0.2 million as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively.

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Recent Accounting Pronouncements

In December 2019, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. This ASU eliminates certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating taxes during the quarters and the recognition of deferred tax liabilities for outside basis differences. The amendments in this update are effective for reporting periods beginning after December 15, 2020. The adoption of this ASU did not have a significant impact on our Consolidated Financial Statements.

In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. This ASU provides optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. The amendments in this update are elective and subject to meeting certain criteria, that have contracts, hedging relationships, and other

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transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. This could affect balances of right of use assets, lease liabilities, and notes payables. The amendments in this update are effective as of March 12, 2020 through December 21, 2022. The adoption of this ASU is not expected to have a significant impact on our Consolidated Financial Statements.

(2) Inventories

The composition of inventories is as follows (dollar amounts in thousands):


		September 30, 2021		December 31, 2020			March 31, 2022		December 31, 2021
Raw materials	Raw materials	$	19,603	$	13,956	Raw materials	$	25,192	$	22,494
Work in progress	Work in progress	1,619		1,351		Work in progress	1,820		1,746
Finished goods	Finished goods	36,154		32,376		Finished goods	36,916		36,612
Total inventories	Total inventories	$	57,376	$	47,683	Total inventories	$	63,928	$	60,852

(3) Investment Securities - Trading

Our trading securities portfolio totaled ~~$1.0~~$0.9 million at ~~September 30, 2021,~~March 31, 2022, and $1.0 million at December 31, ~~2020,~~2021, and generated losses of ~~$4,000~~$58,000 and gains of ~~$45,000~~$16,000 for the three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020, respectively, and gains of $62,000 and gains of $41,000 for the nine months ended September 30, 2021 and 2020,~~ respectively.

(4) Revolving Credit Facility and Other Obligations

On July 11, 2017, we entered into a revolving credit agreement with Bank of America, N.A., with a borrowing limit of $25.0 million (the “Credit Agreement”). On June 11, 2020 the credit agreement was amended to extend the term to mature on July 1, 2023. The amendment also allows for additional borrowings of $15.0 million or up to 3 separate increases of no less than $5.0 million each. On March 8, 2021, we signed an amendment to the credit agreement that eliminates the Index floor from the calculation of interest. ~~We pay interest on any borrowings~~Interest under the amended Credit Agreement ~~which through March 8, 2021, was~~is at the LIBOR ~~or the Index floor of 0.75 percent,~~daily floating rate, plus 2.25 percent ~~(3.00~~(2.71 percent as of ~~December~~March 31, ~~2020)~~2022), and an annual commitment fee of 0.25 percent on the unused portion of the commitment. ~~Interest under the amended Credit Agreement is at LIBOR, plus 2.25 percent (2.33 percent as of September 30, 2021),~~At March 31, 2022 and an annual commitment fee of 0.25 percent on the unused portion of the commitment. We are required to settle our net borrowings under the Credit Agreement only upon maturity, and as a result, have classified prior outstanding borrowings as non-current on our condensed consolidated balance sheet. At September 30,December 31, 2021, there was no outstanding balance under the Credit Agreement.

The Credit Agreement contains customary financial covenants, including financial covenants relating to our solvency and leverage. In addition, the Credit Agreement restricts certain capital expenditures, lease expenditures, other indebtedness, liens on assets, guarantees, loans and advances, dividends, mergers, consolidations and transfers of assets except as permitted in the Credit Agreement. The Credit Agreement is collateralized by our manufacturing facility, accounts receivable, inventories and other assets. As of ~~September 30, 2021,~~March 31, 2022, we were in compliance with the debt covenants set forth in the Credit Agreement.

On April 21, 2020, we entered into a credit agreement with Banc of America Leasing and Capital, LLC, with a borrowing limit of $6.0 million (the "Capital Credit Agreement"). On November 19, 2020, we executed on the Capital Credit Agreement and borrowed $3.7 million. We ~~currently do not expect to make any additional borrowings under the Capital Credit Agreement. We~~ pay interest on any borrowings under the Capital Credit Agreement at a fixed rate of 3.00 percent and are

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required to settle our borrowings under the Capital Credit Agreement in 36 monthly payments, of $0.1 million. The Capital Credit Agreement is collateralized by any new equipment purchased under the agreement. As of ~~September 30, 2021,~~March 31, 2022, there was ~~$2.7~~$2.1 million outstanding balance under the Capital Credit Agreement, of which ~~$1.2~~$1.3 million was classified as current.

(5) Net Income (Loss) Per Share

Basic net income (loss) per common share (“Basic EPS”), is computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted net income per common share (“Diluted EPS”) reflects the potential dilution that could occur if stock options or other contracts to issue common stock were exercised or converted into common stock. The computation of Diluted EPS does not assume exercise or conversion of securities that would have an anti-dilutive effect on net income per common share.

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Following is a reconciliation of the numerator and denominator of Basic EPS to the numerator and denominator of Diluted EPS for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~ (dollar and share amounts in thousands, except for per share information):


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2021		2020		2021		2020			2022			2021

Net income attributable to common shareholders		$	4,858	$	6,755	$	15,414	$	15,471
Net income (loss) attributable to common shareholders										Net income (loss) attributable to common shareholders	$	(2,950)		$	4,016

Basic weighted average shares outstanding	Basic weighted average shares outstanding	19,894		19,533		19,896		19,493		Basic weighted average shares outstanding	19,573			19,794

Basic earnings per share attributable to common shareholders		$	0.24	$	0.35	$	0.77	$	0.79
Basic earnings (loss) per share attributable to common shareholders										Basic earnings (loss) per share attributable to common shareholders	$	(0.15)		$	0.20

Diluted shares outstanding:	Diluted shares outstanding:									Diluted shares outstanding:
Basic weighted-average shares outstanding	Basic weighted-average shares outstanding	19,894		19,533		19,896		19,493		Basic weighted-average shares outstanding	19,573			19,794
Stock-based awards	Stock-based awards	481		326		396		327		Stock-based awards	—			442
Diluted weighted-average shares outstanding	Diluted weighted-average shares outstanding	20,375		19,859		20,292		19,820		Diluted weighted-average shares outstanding	19,573			20,236

Diluted earnings per share attributable to common shareholders		$	0.24	$	0.34	$	0.76	$	0.78
Diluted earnings (loss) per share attributable to common shareholders										Diluted earnings (loss) per share attributable to common shareholders	$	(0.15)		$	0.20

Dilutive shares excluded from diluted-per-share amounts:	Dilutive shares excluded from diluted-per-share amounts:									Dilutive shares excluded from diluted-per-share amounts:
Stock options		460		791		460		791
Share-based awards										Share-based awards	—			629

Anti-dilutive shares excluded from diluted-per-share amounts:	Anti-dilutive shares excluded from diluted-per-share amounts:									Anti-dilutive shares excluded from diluted-per-share amounts:
Stock options		—		199		—		199
Share-based awards										Share-based awards	282		(1)	—

(1) As a result of the net loss for the three months ended March 31, 2022, no potentially dilutive securities are included in the calculation of diluted earnings (loss) per share because such effect would be anti-dilutive. Potentially dilutive securities for the three months ended March 31, 2022 include 282 restricted stock units.

Potentially dilutive shares excluded from diluted-per-share amounts include performance-based options to purchase shares of common stock for which certain earnings metrics have not been achieved. Potentially anti-dilutive shares excluded from diluted-per-share amounts include both non-qualified stock options and unearned performance-based options to purchase shares of common stock with exercise prices greater than the ~~weighted- average~~weighted-average share price during the period and shares that would be anti-dilutive to the computation of diluted net income per share for each of the periods presented.

(6) Capital Transactions

Dividends

On March 10, 2021, we announced a special non-recurring cash dividend of $1.00 per common share in an aggregate amount of $19.9 million that was paid on April 5, 2021, to shareholders of record on March 29, 2021. In accordance with the provisions of our 2012 Stock Incentive Plan (the "2012 Incentive Plan"), as a result of the special dividend we are required to make the participant's original grant whole by preventing either dilution or enlargement of the benefits or potential benefits intended by the original grant. The 2012 Incentive Plan provides our Compensation Committee with the discretion to meet this requirement. See further discussion in the Share-Based Compensation section of this Note.

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The declaration of future dividends is subject to the discretion of our Board of Directors and will depend upon various factors, including our earnings, financial condition, restrictions imposed by any indebtedness that may be outstanding, cash requirements, future prospects and other factors deemed relevant by our Board of Directors.

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Share Repurchase Program

On March 10, 2021, we announced a $15.0 million common share repurchase program. On March 8, 2022 we announced an amendment to the share repurchase program allowing the repurchase of an additional $30.0 million shares. The repurchases may be made from time to time as market conditions warrant and are subject to regulatory considerations. For the three months ended March 31, 2022, we repurchased 451,000 shares of our common stock for $8.0 million. No shares were purchased for the three months ended March 31, 2021. At ~~September 30, 2021,~~March 31, 2022, the remaining balance available for repurchases under the program was ~~$9.0~~$29.6 million.

Share-Based Compensation

During the year ended December 31, 2012, our shareholders adopted and approved the Nature’s Sunshine Products, Inc. 2012 Stock Incentive Plan. The 2012 Incentive Plan provides for the grant of incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock, restricted stock units, dividend equivalent rights, performance awards, stock awards and other stock-based awards. The Compensation Committee of the Board of Directors has authority and discretion to determine the type of award, as well as the amount, terms and conditions of each award under the 2012 Incentive Plan, subject to the limitations of the 2012 Incentive Plan. A total of 1,500,000 shares of our common stock were originally authorized for the granting of awards under the 2012 Incentive Plan. In 2015, our shareholders approved an amendment to the 2012 Incentive Plan, to increase the number of shares of common stock reserved for issuance by 1,500,000 shares. On May 5, 2021, our shareholders approved the Amended and Restated 2012 Stock Incentive Plan, which among other amendments, increased the number of shares of common stock reserved for issuance by 2,000,000 shares. The number of shares available for awards, as well as the terms of outstanding awards, are subject to adjustment as provided in the Amended and Restated 2012 Incentive Plan for stock splits, stock dividends, recapitalizations and other similar events.

We have also maintained a stock incentive plan, which was approved by shareholders in 2009 (the “2009 Incentive Plan"), which provided for the grant of incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock, restricted stock units, dividend equivalent rights, performance awards, stock awards and other stock-based awards. As of September 30, 2021, there were no outstanding awards under the 2009 Incentive Plan.

Stock Options

Our outstanding stock options include time-based stock options, which vest over differing periods of time ranging from the date of issuance to up to 48 months from the option grant date, and performance-based stock options, which have already vested upon achieving operating income margins of 6, 8 and 10 percent as reported in four of five consecutive quarters over the term of the options.

Stock option activity for the ~~nine-month period~~three months ended ~~September 30, 2021,~~March 31, 2022, is as follows (amounts in thousands, except per share information):


		Number of Shares	Weighted Average Exercise Price Per Share		Weighted Average Grant Date Fair Value			Number of Shares	Weighted Average Exercise Price Per Share		Weighted Average Grant Date Fair Value
Options outstanding at December 31, 2020		226	$	12.10	$	5.42
Options outstanding at December 31, 2021							Options outstanding at December 31, 2021	172	$	12.13	$	5.05
Granted	Granted	—	—		—		Granted	—	—		—
Forfeited or canceled	Forfeited or canceled	—	—		—		Forfeited or canceled	—	—		—
Exercised	Exercised	(53)	12.00		6.61		Exercised	(29)	9.17		3.92
Options outstanding at September 30, 2021		173	$	12.13	$	5.05
Options outstanding at March 31, 2022							Options outstanding at March 31, 2022	143	$	12.72	$	5.28

There was no share-based compensation expense for the ~~three-~~three months ended March 31, 2022 and ~~nine-month periods ended September 30, 2021 and 2020.~~2021. As of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, there was no unrecognized share-based compensation expense related to the grants described above.

As a result of the special dividend, we issued 4,300 shares to outstanding option holders as dividend equivalents in order to keep the participant's original grant whole. Because this modification was required under the provisions of our stock incentive plans, no additional share-based compensation expense was recorded.

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At ~~September 30, 2021,~~March 31, 2022, the aggregate intrinsic value of outstanding and exercisable stock options to purchase ~~173,000~~143,000 shares of common stock was ~~$0.5~~$0.6 million. At December 31, ~~2020,~~2021, the aggregate intrinsic value of outstanding and exercisable options to purchase ~~226,000~~172,000 shares of common stock was ~~$0.7~~$1.1 million.

For the ~~nine-month periods~~three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ we issued ~~53,000~~29,000 and ~~41,000~~2,500 shares of common stock upon the exercise of stock options at an average exercise price of ~~$12.00~~$9.17 and ~~$7.92~~$11.98 per share, respectively. The aggregate intrinsic value of options exercised during the ~~nine-month periods~~three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ was ~~$0.4~~$0.3 million and ~~$0.1 million,~~$19,000, respectively. For the ~~nine-month periods~~three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ the Company recognized ~~$0.2~~$0.1 million and ~~$0.1 million~~$9,000 of tax benefits from the exercise of stock options, respectively.

As of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, we did not have any unvested ~~performance-based stock~~ options outstanding.

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Restricted Stock Units

Our outstanding restricted stock units (“RSUs”), include time-based RSUs, which vest over differing periods of time ranging from 12 months to up to 36 months from the RSU grant date, as well as performance-based RSUs, which vest upon achieving targets relating to revenue and earnings growth, earnings-per-share, and/or stock price levels. RSUs granted to members of the Board of Directors contain a restriction period in which the shares are not issued until two years after vesting. At ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, there were ~~94,000~~95,000 and ~~82,000~~88,000 vested RSUs, respectively, granted to the Board of Directors with an accompanying restriction period.

Restricted stock unit activity for the ~~nine-month period~~three months ended ~~September 30, 2021,~~March 31, 2022, is as follows (amounts in thousands, except per share information):


		Number of Shares	Weighted Average Grant Date Fair Value			Number of Shares	Weighted Average Grant Date Fair Value
Restricted Stock Units outstanding at December 31, 2020		1,179	$	6.18
Restricted Stock Units outstanding at December 31, 2021					Restricted Stock Units outstanding at December 31, 2021	830	$	9.46
Granted	Granted	306	13.48		Granted	2	16.35
Forfeited	Forfeited	(94)	6.91		Forfeited	(57)	3.96
Issued	Issued	(519)	6.38		Issued	(220)	8.08
Restricted Stock Units outstanding at September 30, 2021		872	8.55
Restricted Stock Units outstanding at March 31, 2022					Restricted Stock Units outstanding at March 31, 2022	555	10.60

During the ~~nine-month period~~three months ended ~~September 30, 2021,~~March 31, 2022, we granted ~~306,000~~2,000 time-based RSUs under the 2012 Incentive Plan to new members of the Board of ~~Directors, executive officers and other employees, which were comprised of both time-based RSUs and share-priced performance-based RSUs.~~Directors. The ~~time-based~~ RSUs were issued with a weighted-average grant date fair value of ~~$18.05~~$16.35 per share and vest in ~~annual~~monthly installments over a ~~three-year~~ period from the grant date. The share-priced performance-based RSUs were issued with a weighted-average grant date fair value of $13.87 per share and vest upon achieving share-priced targets over a three-year periodless than one year from the grant date.

Except for share-priced performance RSUs, RSUs are valued at market value on the date of grant, which is the grant date share price discounted for expected dividend payments during the vesting period. For RSUs with post-vesting restrictions, a Finnerty Model was utilized to calculate a valuation discount from the market value of common shares reflecting the restriction embedded in the RSUs preventing the sale of the underlying shares over a certain period of time. Using assumptions previously determined for the application of the option pricing model at the valuation date, the Finnerty Model discount for lack of marketability is approximately ~~12.7~~12.9 percent for a common share.

~~Share-price~~During the three months ended March 31, 2022, no share-price performance-based RSUs were issued. Historically, share-price performance-based RSUs were estimated using the Monte Carlo simulation model. The Monte Carlo simulation model utilizes multiple input variables to estimate the probability that market conditions will be achieved. ~~Our assumptions include a performance period of three years, expected volatility of between 50.0 percent and 54.70 percent, and a range of risk-free rates between 0.3 percent and 2.9 percent.~~

Share-based compensation expense ~~for~~related to time-based RSUs for the ~~three-month periods~~three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ was approximately ~~$0.6~~$0.5 million and ~~$0.5 million, respectively. Share-based compensation expense from RSUs for the nine-month periods ended September 30, 2021 and 2020, was approximately $1.6 million and $1.4~~$0.4 million, respectively. As of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, the unrecognized share-based compensation expense related to the grants described above, excluding incentive awards discussed below, was ~~$2.0~~$1.0 million and ~~$1.3~~$1.6 million, respectively. ~~The~~As of March 31, 2022, the remaining compensation expense is expected to be recognized over the weighted average period of approximately ~~0.8~~0.5 years.

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Share-based compensation expense related to performance-based RSUs for the ~~three-month periods~~three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ was $0.3 million and ~~$0.5 million, respectively. Share-based compensation expense related to performance-based RSUs for the nine-month periods ended September 30, 2021 and 2020, was $1.2 million and $0.8~~$0.4 million, respectively. Should we attain all of the metrics related to performance-based RSU grants, we would, and expect to, recognize up to ~~$1.8~~$2.0 million of potential share-based compensation expense.

As a result of the special dividend, we issued 22,000 time-based RSUs and 26,200 performance-based RSUs that mirror the original grant time and performance-based vesting targets and requirements as dividend equivalents in order to keep the participant's original grant whole. These awards are included in the granted share total in the table above. Because this modification was required under the provisions of our stock incentive plans, no additional share-based compensation expense was recorded.

The number of shares issued upon vesting of RSUs granted pursuant to our share-based compensation plans is net of the minimum statutory withholding requirements that we pay on behalf of our employees, which was ~~150,000~~60,000 and ~~41,000~~75,000 shares for the ~~nine-month periods~~three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ respectively. Although shares withheld are not issued, they are treated as common share repurchases for accounting purposes, as they reduce the number of shares that would have been issued upon vesting. These shares do not count against the authorized capacity under the repurchase program described above.

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(7) Segment Information

We have 4 business segments (Asia, Europe, North America, and Latin America and Other) based primarily upon the geographic region where each segment operates, as well as the internal organization of our officers and their responsibilities. Each of the geographic segments operate under the Nature’s Sunshine Products and Synergy® WorldWide brands. The Latin America and Other segment includes our wholesale business in which we sell products to various locally-managed entities independent of the Company that we have granted distribution rights for the relevant market.

Net sales for each segment have been reduced by intercompany sales as they are not included in the measure of segment profit or loss reviewed by the chief executive officer. We evaluate performance based on contribution margin by segment before consideration of certain inter-segment transfers and expenses.

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Reportable business segment information is as follows (dollar amounts in thousands):


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2021		2020		2021		2020			2022		2021
Net sales:	Net sales:									Net sales:
Asia	Asia	$	48,417	$	38,099	$	127,708	$	101,814	Asia	$	46,110	$	35,755
Europe	Europe	21,813		18,006		65,468		54,098		Europe	21,777		22,200
North America	North America	37,738		37,557		112,872		110,785		North America	35,981		37,762
Latin America and Other	Latin America and Other	6,778		6,588		20,097		16,765		Latin America and Other	6,626		6,704
Total net sales	Total net sales	114,746		100,250		326,145		283,462		Total net sales	110,494		102,421

Contribution margin (1):	Contribution margin (1):									Contribution margin (1):
Asia	Asia	21,421		17,981		55,203		48,560		Asia	21,939		15,319
Europe	Europe	6,959		5,954		20,343		17,987		Europe	4,373		6,796
North America	North America	17,193		12,065		48,892		38,388		North America	12,719		15,440
Latin America and Other	Latin America and Other	3,961		2,765		11,355		7,161		Latin America and Other	2,901		3,632
Total contribution margin	Total contribution margin	49,534		38,765		135,793		112,096		Total contribution margin	41,932		41,187

Selling, general and administrative expenses (2)	Selling, general and administrative expenses (2)	39,528		33,294		108,666		92,863		Selling, general and administrative expenses (2)	40,623		33,552
Operating income	Operating income	10,006		5,471		27,127		19,233		Operating income	1,309		7,635

Other income (loss), net		(886)		671		(2,290)		(230)
Other loss, net										Other loss, net	(314)		(1,933)
Income before provision for income taxes	Income before provision for income taxes	$	9,120	$	6,142	$	24,837	$	19,003	Income before provision for income taxes	$	995	$	5,702

(1) Contribution margin consists of net sales less cost of sales and volume incentives expense.

(2) Service fees in China totaled ~~$5.2~~$4.9 million and ~~$11.7~~$2.8 million for the three months ended March 31, 2022, and ~~nine-month periods ended September 30,~~March 31, 2021, ~~respectively, compared to $3.2 million and $8.0 million for the three and nine-month periods ended September 30, 2020.~~respectively. These service fees are included in selling, general and administrative expenses.

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From an individual country perspective, the United States and South Korea comprise 10 percent or more of consolidated net sales for the three months ended March 31, 2022 and ~~nine-month periods ended September 30,~~ 2021, ~~and 2020,~~ as follows (dollar amounts in thousands):


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2021		2020		2021		2020			2022		2021
Net sales:	Net sales:									Net sales:
United States	United States	$	34,960	$	35,062	$	104,258	$	103,048	United States	$	33,229	$	34,920
South Korea	South Korea	15,985		16,592		48,340		47,447		South Korea	13,653		14,809
Other	Other	63,801		48,596		173,547		132,967		Other	63,612		52,692
		$	114,746	$	100,250	$	326,145	$	283,462		$	110,494	$	102,421

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Net sales generated by each of our product lines is set forth below (dollar amounts in thousands):


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2021		2020		2021		2020			2022		2021
Asia	Asia									Asia
General health	General health	$	13,150	$	10,055	$	37,140	$	27,364	General health	$	12,986	$	11,292
Immune	Immune	463		85		1,048		465		Immune	1,344		203
Cardiovascular	Cardiovascular	13,018		10,622		35,181		29,284		Cardiovascular	13,630		9,903
Digestive	Digestive	10,427		9,935		25,045		24,482		Digestive	9,036		6,871
Personal care	Personal care	4,201		2,575		12,015		7,457		Personal care	2,543		2,524
Weight management	Weight management	7,158		4,827		17,279		12,762		Weight management	6,571		4,962
		48,417		38,099		127,708		101,814			46,110		35,755
Europe	Europe									Europe
General health	General health	$	9,308	$	7,725	$	28,447	$	22,501	General health	$	9,196	$	9,472
Immune	Immune	2,285		1,510		6,119		5,324		Immune	2,631		2,016
Cardiovascular	Cardiovascular	2,774		2,581		8,602		7,693		Cardiovascular	2,633		2,992
Digestive	Digestive	5,700		4,541		16,807		13,254		Digestive	5,591		5,540
Personal care	Personal care	1,167		1,023		3,592		3,492		Personal care	1,233		1,426
Weight management	Weight management	579		626		1,901		1,834		Weight management	493		754
		21,813		18,006		65,468		54,098			21,777		22,200
North America	North America									North America
General health	General health	$	16,573	$	15,839	$	49,192	$	46,190	General health	$	15,314	$	16,270
Immune	Immune	5,056		5,790		14,031		18,637		Immune	4,872		4,874
Cardiovascular	Cardiovascular	4,171		4,138		12,406		11,984		Cardiovascular	3,842		4,225
Digestive	Digestive	9,079		8,635		28,558		24,734		Digestive	8,594		9,463
Personal care	Personal care	1,978		1,963		5,631		5,867		Personal care	2,175		1,819
Weight management	Weight management	881		1,192		3,054		3,373		Weight management	1,184		1,111
		37,738		37,557		112,872		110,785			35,981		37,762
Latin America and Other	Latin America and Other									Latin America and Other
General health	General health	$	1,959	$	2,038	$	5,807	$	5,002	General health	$	1,818	$	1,976
Immune	Immune	806		837		2,314		2,326		Immune	761		811
Cardiovascular	Cardiovascular	448		429		1,351		1,070		Cardiovascular	357		478
Digestive	Digestive	2,941		2,682		8,813		7,008		Digestive	2,841		2,870
Personal care	Personal care	406		384		1,149		848		Personal care	641		345
Weight management	Weight management	218		218		663		511		Weight management	208		224
		6,778		6,588		20,097		16,765			6,626		6,704
		$	114,746	$	100,250	$	326,145	$	283,462		$	110,494	$	102,421

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From an individual country perspective, only the United States comprised 10 percent or more of consolidated property, plant and equipment as follows (dollar amounts in thousands):


		September 30, 2021		December 31, 2020			March 31, 2022		December 31, 2021
Property, plant and equipment:	Property, plant and equipment:					Property, plant and equipment:
United States	United States	$	48,176	$	50,025	United States	$	45,769	$	46,595
Other	Other	4,362		4,330		Other	3,818		4,262
Total property, plant and equipment, net	Total property, plant and equipment, net	$	52,538	$	54,355	Total property, plant and equipment, net	$	49,587	$	50,857

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Total assets per segment is set forth below (dollar amounts in thousands):


		September 30, 2021		December 31, 2020			March 31, 2022		December 31, 2021
Assets:	Assets:					Assets:
Asia	Asia	$	96,522	$	82,572	Asia	$	93,957	$	104,659
Europe	Europe	17,931		16,398		Europe	14,233		15,486
North America	North America	117,215		142,324		North America	122,779		131,207
Latin America and Other	Latin America and Other	8,084		8,204		Latin America and Other	7,693		7,522
Total assets	Total assets	$	239,752	$	249,498	Total assets	$	238,662	$	258,874

(8) Income Taxes

For the three months ended ~~September 30,~~March 31, 2022 and 2021, and 2020, our provision (benefit) for income taxes, as a percentage of income before income taxes was 40.2 percent and (16.7) percent, respectively, compared with a U.S. federal statutory rate of 21.0 percent. For the nine months ended September 30, 2021 and 2020, our provision for income taxes, as a percentage of income before income taxes was ~~34.0~~369.9 percent and ~~14.2~~27.2 percent, respectively, compared with a U.S. federal statutory rate of 21.0 percent.

The difference between the effective tax rate and the U.S. federal statutory tax rate for the three ~~and nine~~ months ended ~~September 30, 2021,~~March 31, 2022, was primarily attributed to ~~an increase in~~recording a valuation allowance against deferred tax liability associated with transfer pricing adjustments, non-deductible executive compensation, and net unfavorable foreign tax related items, partially offset by favorable deductions for stock compensation.assets which are expected to expire before utilization.

The difference between the effective tax rate and the U.S. federal statutory tax rate for the three months ended ~~September 30, 2020,~~March 31, 2021, was primarily attributed to a decrease in tax liability associated with uncertain tax positions and release of valuation allowance for deferred tax assets expected to be utilized in the prior year. The difference between the effective tax rate and the U.S. federal statutory tax rate for the nine months ended September 30, 2020, was primarily attributed to a decrease in tax liability associated with uncertain tax positions and release of valuation allowance for deferred tax assets expected to be utilized in the prior year, partially offset by transfer pricing adjustments and foreign losses during that period that were not expected to provide future tax benefit, as well as net unfavorable foreign tax related items.

The difference between the effective tax rate for the three and nine months ended September 30, 2021 compared to September 30, 2020 is primarily caused by an increase in the current period tax liability associated with transfer pricing adjustments and non-deductible executive compensation, partially offset by favorable deductions for stock ~~compensation~~compensation.

The difference between the effective tax rate for the three months ended March 31, 2022 compared to March 31, 2021 is primarily caused by recording a valuation allowance in the current period ~~as well as decreases in prior period uncertain tax positions and valuation allowances which did not repeat in the current period.~~

~~As the U.S. Department of the Treasury is working on finalizing Treasury Regulations with respect to the Tax Cuts and Jobs Act (Tax Reform Act), future changes could likewise affect recorded~~against deferred tax assets ~~and liabilities in later periods. Management is not aware of any such additional changes that would have a material effect on our results of operations, cash flows or financial position.~~which are expected to expire before utilization.

Our U.S. federal income tax returns for ~~2017~~2018 through 2020 are open to examination for federal tax purposes. We have several foreign tax jurisdictions with open tax years from ~~2014~~2016 through ~~2020.~~2021.

As of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, we do not have any amounts accrued ~~$5,000 and $0.1 million, respectively, related to~~for unrecognized tax positions.

Interim income taxes are based on an estimated annualized effective tax rate applied to the respective quarterly periods, adjusted for discrete tax items in the period in which they occur. Although we believe our tax estimates are reasonable, we can make no assurance that the final tax outcome of these matters will not be different from that which we have reflected in our historical income tax provisions and accruals. Such differences could have a material impact on our income tax provision and operating results in the period in which we make such determination.

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(9) Commitments and Contingencies

Legal Proceedings

We are party to various legal proceedings and disputes. Management cannot predict the ultimate outcome of these matters, individually or in the aggregate, or their resulting effect on our business, financial position, results of operations or cash flows as litigation and related matters are subject to inherent uncertainties, and unfavorable rulings could occur. Were an unfavorable outcome to occur, there exists the possibility of a material adverse impact on our business, financial position, results of operations, or cash flows for the period in which the ruling occurs and/or future periods. We maintain product liability, general liability and excess liability insurance coverage. However, insurance may not continue to be available at an acceptable cost to us, such coverage may not be sufficient to cover 1 or more large claims, or the insurers may successfully disclaim coverage as to a pending or future claim.

Non-Income Tax Contingencies

We have reserved for certain state sales and use tax and foreign non-income tax contingencies based on the likelihood of an obligation in accordance with accounting guidance for probable loss contingencies. Loss contingency provisions are recorded for probable losses at management’s best estimate of a loss, or when a best estimate cannot be made, a minimum loss contingency amount is recorded. We provide provisions for potential payments of tax to various tax authorities for contingencies related to non-income tax matters, including value-added taxes and sales tax. We provide provisions for U.S. state sales taxes in each of the states where we have nexus. As of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, accrued liabilities were $0.2 million and $0.2 million, respectively, related to non-income tax contingencies. While we believe that the assumptions and estimates used to determine contingent liabilities are reasonable, the ultimate outcome of these matters cannot presently be determined. We believe future payments related to these matters could range from $0 to approximately ~~$2.5~~$3.1 million.

Other Litigation

We are a party to various other legal proceedings and disputes in the United States and foreign jurisdictions. As of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, accrued liabilities were $0.5 million, respectively, related to the estimated outcome of these proceedings. In addition, we are a party to other litigation where there is a reasonable possibility that a loss may be incurred, but either the losses are not considered to be probable or we cannot at this time estimate the loss, if any; therefore, no provision for losses has been provided. We believe future payments related to these matters could range from $0 to approximately ~~$0.3~~$0.5 million.

(10) Related Party Transactions

During the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ our joint venture in China, owned 80 percent by us and 20 percent by a wholly owned subsidiary of Fosun Pharma, did not borrow any amounts from the Company or our joint venture partner. As of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021 outstanding borrowings by NSP China from the Company were ~~$2.4 million~~$0 and ~~$4.8~~$1.2 million, respectively. As of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021 outstanding borrowings by NSP China from our joint venture partner were ~~$0.6 million~~$0 and ~~$1.2~~$0.3 million, respectively. These notes ~~are~~were payable in less than one year and ~~bear~~bore interest of 3.0 percent. The notes between NSP China and the Company ~~eliminate~~eliminated in consolidation. In March 2022 the outstanding principal and interest amounts were repaid.

(11) Fair Value Measurements

The fair value of a financial instrument is the amount that could be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Financial assets are marked to bid prices and financial liabilities are marked to offer prices. Fair value measurements do not include transaction costs. A fair value hierarchy is used to prioritize the quality and reliability of the information used to determine fair values of each financial instrument. Categorization within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The fair value hierarchy is defined into the following three categories:

Level 1: Quoted market prices in active markets for identical assets or liabilities.

Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data.

Level 3: Unobservable inputs that are not corroborated by market data.

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The following table presents our hierarchy for our assets, measured at fair value on a recurring basis, as of ~~September 30, 2021~~March 31, 2022 (dollar amounts in thousands):


		Level 1		Level 2		Level 3					Level 1		Level 2		Level 3
		Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs		Total			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs		Total
Investment securities - trading	Investment securities - trading	$	950	$	—	$	—	$	950	Investment securities - trading	$	888	$	—	$	—	$	888
Total assets measured at fair value on a recurring basis	Total assets measured at fair value on a recurring basis	$	950	$	—	$	—	$	950	Total assets measured at fair value on a recurring basis	$	888	$	—	$	—	$	888

The following table presents our hierarchy for our assets, measured at fair value on a recurring basis, as of December 31, ~~2020~~2021 (dollar amounts in thousands):


		Level 1		Level 2		Level 3					Level 1		Level 2		Level 3
		Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs		Total			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs		Total

Investment securities - trading	Investment securities - trading	$	989	$	—	$	—	$	989	Investment securities - trading	$	964	$	—	$	—	$	964
Total assets measured at fair value on a recurring basis	Total assets measured at fair value on a recurring basis	$	989	$	—	$	—	$	989	Total assets measured at fair value on a recurring basis	$	964	$	—	$	—	$	964

Investment securities - trading — Our trading portfolio consists of various marketable securities that are valued using quoted prices in active markets.

For the ~~nine~~three months ended ~~September 30, 2021,~~March 31, 2022, and for the year ended December 31, ~~2020,~~2021, there were no fair value measurements using significant other observable inputs (Level 2) or significant unobservable inputs (Level 3).

The carrying amounts reflected on the condensed consolidated balance sheets for cash and cash equivalents, accounts receivable, and accounts payable approximate fair value due to their short-term nature. The carrying value of our debt approximates fair value due to its recent acquisition and short maturity. During the ~~nine~~three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ we did not have any re-measurements of non-financial assets at fair value on a nonrecurring basis subsequent to their initial recognition.

(12) Revenue Recognition

Revenue Recognition

Net sales include sales of products and shipping and handling charges, net of estimates for product returns and any related sales incentives or rebates based upon historical information and current trends. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring products. All revenue is recognized when ~~the Company satisfies its~~we satisfy our performance obligations under the contract. We recognize revenue by transferring the promised products to the customer, with revenue recognized at ~~shipping point,~~ the point in time in which the customer obtains control of the ~~products.~~products, per the agreed shipping terms in the respective market. The majority of our contracts have a single performance obligation and are short term in nature. Contracts with multiple performance obligations are insignificant. Sales taxes and value-added taxes in the United States and foreign jurisdictions that are collected from customers and remitted to governmental authorities are accounted for on a net basis and therefore are excluded from net sales. Amounts received for unshipped merchandise are recorded as deferred revenue. ~~Amounts for membership~~Membership fees are deferred and amortized as revenue over the life of the membership, primarily one year.

A reserve for product returns is recorded based upon historical experience and current trends. We allow independent consultants to return the unused portion of products within ninety days of purchase if they are not satisfied with the product. In some of our markets, the requirements to return product are more restrictive.

From time to time, our U.S. operations extend short-term credit associated with product promotions. In addition, for certain of our international operations, we offer credit terms consistent with industry standards within the country of operation.

Volume incentives and other sales incentives or rebates are a significant part of our direct sales marketing program and represent commission payments made to independent consultants. These payments are designed to provide incentives for reaching higher sales levels. The amount of volume incentive expense recognized is determined based upon the amount of qualifying purchases in a given month and recorded as volume incentive expense. Payments to independent consultants for

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sales incentives or rebates related to their own purchases are recorded as a reduction of revenue. Some payments for sales incentives are processed daily; while others, including rebates, are calculated monthly based upon qualifying sales.

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Contract Liabilities - Customer Loyalty Programs

Historically, we have offered loyalty point programs which allowed customers to earn loyalty points on personal orders. Loyalty points were recorded as contract liabilities in deferred revenue. These programs were accounted for as a reduction in the transaction price and generally recognized as points that were redeemed for additional products. During the year ended December 31, 2020 these programs were discontinued. As of ~~September 30, 2021,~~March 31, 2022, there were no outstanding loyalty points.

Disaggregation of Revenue

Our products are grouped into 6 principal categories: general health, immune, cardiovascular, digestive, personal care and weight management. We have 4 business segments that are based primarily upon the geographic region where each segment operates. Each of the geographic segments operate under the Nature’s Sunshine Products and Synergy® WorldWide brands. See Note 7, Segment Information, for further information on our reportable segments and presentation of disaggregated revenue by reportable segment and product category.

Practical Expedients and Exemptions

We have made the accounting policy election to treat shipping and handling as a fulfillment activity rather than a promised service under Topic 606.

We generally expense volume incentives when incurred because the amortization period would have been one year or less.

All of our contracts with customers have a duration of less than one year. The value of any unsatisfied performance obligations is insignificant.

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following Management’s Discussion and Analysis should be read in conjunction with the unaudited condensed consolidated financial statements and notes thereto included in this report, as well as the consolidated financial statements, the notes thereto, and management’s discussion and analysis included in our Annual Report on Form 10-K for the year ended December 31, ~~2020,~~2021, and our other reports filed since the date of such Form 10-K.

OVERVIEW

We are a natural health and wellness company primarily engaged in the manufacture and sale of nutritional and personal care products. We are a Utah corporation with our principal place of business in Lehi, Utah, and sell our products ~~directly to customers and~~ to a sales force of independent consultants who use the products themselves or resell ~~our products~~them to consumers.

Our independent consultants market and sell our products to customers and sponsor other independent consultants who also market our products to customers. ~~Because a significant amount of revenue is generated through the~~Our sales ~~or our independent consultants, our revenue can be impacted by~~are highly dependent upon the number and productivity of our independent consultants. Growth in sales volume generally requires an increase in the productivity of our independent consultants and/or growth in the total number of independent consultants. We seek to motivate and provide incentives to our independent consultants by offering high quality products and providing independent consultants with product support, training seminars, sales conventions, travel programs and financial ~~incentives, among other considerations.~~incentives.

In or about December 2019, a novel strain of coronavirus, SARS-CoV-2 ~~"COVID-19"~~“COVID-19”, began aggressively spreading throughout the world, including all the primary markets where we conduct business. As COVID-19 has spread throughout the world, it has impacted our markets differently. At various times during the course of the pandemic and throughout our markets, governments have issued orders and restrictions that have limited the ability of our consultants to meet with consumers, put downward pressure on our sales in many of our markets and added substantial uncertainties to our global supply chain. ~~However, despite such restrictions, we experienced an increase in sales during the third quarter due primarily~~We continue to ~~increased demand for nutritional supplements. Although we are taking appropriate~~take actions to mitigate the effects COVID-19 may have on our business, such actions may ultimately be insufficient to avoid substantial impact on the consolidated financial statement or material health of the Company. At this time, the duration of any business disruption and related financial impact cannot be reasonably estimated.

On February 24, 2022, Russian forces launched significant military action against Ukraine, and sustained conflict and disruption in the region is likely. In response to the ongoing conflict in Ukraine, we have currently suspended the shipment of products to Russia. However, our consultants in our Russia and Other market, a market within our Europe business segment that includes Russia, Ukraine, Belarus and other Common Independent States in the region, continue to operate their independent businesses, albeit at a reduced level than prior to the start of the conflict. We have recorded a pretax charge of $3.1 millionin the first quarter of 2022, primarily related to the impairment of inventory, as well as accruals for contractual obligations related to Russian operations. We expect that this will continue to impact our business for the foreseeable future. We will continue monitoring the social, political, regulatory and economic environment in Ukraine and Russia, and will consider further actions as appropriate.

For the year ended December 31, 2021, Russia and Other had net sales and operating income of $61.4 million and $5.8 million, respectively. For the three months ended March 31, 2022, net sales were $14.5 million and operating income was $1.2 million, prior to the charges noted above. As of March 31, 2022, Russia and Other had assets of $4.2 million which primarily consisted of inventories.

More broadly, there could be additional negative impacts to our net sales, earnings and cash flows should the situation escalate beyond its current scope, including, among other potential impacts, economic recessions in certain neighboring countries or globally due to inflationary pressures and supply chain cost increases or the geographic proximity of the war relative to the rest of Europe.

In 2021, the inflation rate in the U.S. began to increase significantly. In 2022, the inflation rate increase accelerated and during the three months ended March 31, 2022, was the highest in 40 years. Our operations can be adversely impacted by inflation, primarily from higher costs of raw materials, labor, production and transportation costs.

In the ~~third~~first quarter of ~~2021,~~2022, we experienced an increase in our consolidated net sales of ~~14.5~~7.9 percent (or ~~12.9~~10.3 percent in local currencies) compared to the same period in ~~2020.~~2021. Asia net sales increased approximately ~~27.1~~29.0 percent (or ~~24.0~~34.1 percent in local currencies) compared to the same period in ~~2020.~~2021. Europe net sales ~~increased~~decreased approximately ~~21.1~~1.9 percent (or ~~20.6~~increased 0.6 percent in local currencies) compared to the same period in ~~2020.~~2021. North America net sales ~~increased~~decreased approximately ~~0.5~~4.7 percent ~~(or 0.1~~

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(or 4.7 percent in local currencies) compared to the same period in ~~2020.~~2021. Latin America and Other net sales ~~increased~~decreased approximately ~~2.9~~1.2 percent (or ~~0.9~~0.2 percent in local currencies) compared to the same period in ~~2020.~~2021. The ~~weakening~~strengthening of the U.S. dollar versus the local currencies, primarily in our Asian and European markets, resulted in an approximate ~~1.6~~2.4 percent, or ~~$1.6~~$2.5 million, ~~increase~~decrease of our net sales during the quarter.

~~Selling, general and administrative expenses~~Cost of sales increased $7.5 million during the three months ended ~~September 30, 2021, increased $6.2 million~~March 31, 2022, compared to the same period in ~~2020,~~2021, and ~~remained consistent~~ as a percentage of net sales ~~at 34.4 percent.~~were 31.2 and 26.3 percent for the three months ended March 31, 2022 and 2021, respectively. The increase in cost of sales percentage is primarily due to changes in inventory valuation reserves as a result of the conflict between Russia and Ukraine, as well as reserves for other markets, changes in market mix, persistent inflation, and increases in raw materials, production and transportation costs. For the three months ended March 31, 2022, we had incremental valuation charges of $4.2 million related to inventory. Of that amount $3.1 million related to the conflict between Russia and Ukraine, and $1.1 million related to changes in forecast demand and production issues, among other factors.

In absolute terms, selling, general and administrative expenses increased $7.1 million during the three months ended March 31, 2022, compared to the same period in 2021, and as a percentage of net sales were 36.8 percent and 32.8 percent for the three months ended March 31, 2022 and 2021, respectively. The dollar increase in selling, general and administrative expenses was primarily related to higher service fees that resulted from growth in China's net sales, increased selling costs and direct marketing spend intended to drive growth, ~~including the rollout~~increase in expected level of ~~a new compensation plan for independent consultants, introduction of virtual~~convention and distributor events, as well as growth in markets with higher variable costs.

As an international business, we have significant sales and costs denominated in currencies other than the U.S. Dollar. Sales in international markets denominated in foreign currencies are expected to continue to represent a substantial portion of our sales. Likewise, we expect foreign markets with functional currencies other than the U.S. Dollar will continue to represent a substantial portion of our overall sales and related operating expenses. Accordingly, changes in foreign currency exchange rates could materially affect sales and costs or the comparability of sales and costs from period to period as a result of translating foreign markets financial statements into our reporting currency.

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RESULTS OF OPERATIONS

The following table summarizes our unaudited consolidated operating results from continuing operations in U.S. dollars and as a percentage of net sales for the three months ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~ (dollar amounts in thousands):


		Three Months Ended September 30, 2021				Three Months Ended September 30, 2020				Change					Three Months Ended March 31, 2022				Three Months Ended March 31, 2021				Change
		Total dollars		Percent of net sales		Total dollars		Percent of net sales		Total dollars		Percentage			Total dollars		Percent of net sales		Total dollars		Percent of net sales		Total dollars		Percentage
Net sales	Net sales	$	114,746	100.0	%	$	100,250	100.0	%	$	14,496	14.5	%	Net sales	$	110,494	100.0	%	$	102,421	100.0	%	$	8,073	7.9	%
Cost of sales	Cost of sales	29,419		25.6		27,175		27.1		2,244		8.3		Cost of sales	34,460		31.2		26,979		26.3		7,481		27.7
Gross profit	Gross profit	85,327		74.4		73,075		72.9		12,252		16.8		Gross profit	76,034		68.8		75,442		73.7		592		0.8
Volume incentives	Volume incentives	35,793		31.2		34,310		34.2		1,483		4.3		Volume incentives	34,102		30.9		34,255		33.4		(153)		(0.4)
SG&A expenses	SG&A expenses	39,528		34.4		33,294		33.2		6,234		18.7		SG&A expenses	40,623		36.8		33,552		32.8		7,071		21.1
Operating income	Operating income	10,006		8.7		5,471		5.5		4,535		82.9		Operating income	1,309		1.2		7,635		7.5		(6,326)		(82.9)
Other income (loss), net		(886)		(0.8)		671		0.7		(1,557)		(232.0)
Other loss, net														Other loss, net	(314)		(0.3)		(1,933)		(1.9)		1,619		83.8
Income before income taxes	Income before income taxes	9,120		7.9		6,142		6.1		2,978		48.5		Income before income taxes	995		0.9		5,702		5.6		(4,707)		(82.5)
Provision (benefit) for income taxes		3,662		3.2		(1,027)		(1.0)		4,689		456.6
Net income		$	5,458	4.8	%	$	7,169	7.2	%	$	(1,711)	(23.9)	%
Provision for income taxes														Provision for income taxes	3,681		3.3		1,550		1.5		2,131		137.5
Net income (loss)														Net income (loss)	$	(2,686)	(2.4)	%	$	4,152	4.1	%	$	(6,838)	(164.7)	%

~~The following table summarizes our unaudited consolidated operating results from continuing operations in U.S. dollars and as a percentage~~

Table of ~~net sales for the nine months ended September 30, 2021 and 2020 (dollar amounts in thousands):~~

Contents

Nine Months Ended
September 30, 2021 Nine Months Ended
September 30, 2020 Change
Total
dollars Percent of
net sales Total
dollars Percent of
net sales Total
dollars Percentage
Net sales $ 326,145 100.0 % $ 283,462 100.0 % $ 42,683 15.1 %
Cost of sales 84,861 26.0 74,873 26.4 9,988 13.3
Gross profit 241,284 74.0 208,589 73.6 32,695 15.7
Volume incentives 105,491 32.3 96,493 34.0 8,998 9.3
SG&A expenses 108,666 33.3 92,863 32.8 15,803 17.0
Operating income 27,127 8.3 19,233 6.8 7,894 41.0
Other loss, net (2,290) (0.7) (230) (0.1) (2,060) (895.7)
Income before income taxes 24,837 7.6 19,003 6.7 5,834 30.7
Provision for income taxes 8,433 2.6 2,695 1.0 5,738 212.9
Net income $ 16,404 5.0 % $ 16,308 5.8 % $ 96 0.6 %

Net Sales

International operations have provided, and are expected to continue to provide, a significant portion of our total net sales. As a result, total net sales will continue to be affected by fluctuations in the U.S. dollar against foreign currencies. In order to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency fluctuations, in addition to comparing the percent change in net sales from one period to another in U.S. dollars, we present net sales excluding the impact of foreign exchange fluctuations. We compare the percentage change in net sales from one period to another period by excluding the effects of foreign currency exchange as shown below. Net sales excluding the impact of foreign exchange fluctuations is not a U.S. GAAP financial measure and removes from net sales in U.S. dollars the impact of changes in exchange rates between the U.S. dollar and the functional currencies of our foreign subsidiaries, by translating the current period net sales into U.S. dollars using the same foreign currency exchange rates that were used to translate the net sales for the previous comparable period. We believe presenting the impact of foreign currency fluctuations is useful to investors because it allows a more meaningful comparison of net sales of our foreign operations from period to period. However, net sales excluding the impact of foreign currency fluctuations should not be considered in isolation or as an alternative to net sales in U.S. dollar measures that reflect current period exchange rates, or to other financial measures calculated and presented in accordance with U.S. GAAP. Throughout the last five years, foreign currency exchange rates have fluctuated significantly. See Item 3. Quantitative and Qualitative Disclosures about Market Risk.

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The following table summarizes the changes in net sales by operating segment with a reconciliation to net sales excluding the impact of currency fluctuations for the three months ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~ (dollar amounts in thousands):


		Net Sales by Operating Segment											Net Sales by Operating Segment
		Three Months Ended September 30, 2021		Three Months Ended September 30, 2020		Percent Change		Impact of Currency Exchange		Percent Change Excluding Impact of Currency			Three Months Ended March 31, 2022		Three Months Ended March 31, 2021		Percent Change		Impact of Currency Exchange		Percent Change Excluding Impact of Currency
Asia	Asia	$	48,417	$	38,099	27.1	%	$	1,165	24.0	%	Asia	$	46,110	$	35,755	29.0	%	$	(1,850)	34.1	%
Europe	Europe	21,813		18,006		21.1		105		20.6		Europe	21,777		22,200		(1.9)		(554)		0.6
North America	North America	37,738		37,557		0.5		151		0.1		North America	35,981		37,762		(4.7)		(1)		(4.7)
Latin America and Other	Latin America and Other	6,778		6,588		2.9		130		0.9		Latin America and Other	6,626		6,704		(1.2)		(62)		(0.2)
		$	114,746	$	100,250	14.5	%	$	1,551	12.9	%		$	110,494	$	102,421	7.9	%	$	(2,467)	10.3	%

The following table summarizes the changes in net sales by operating segment with a reconciliation to net sales excluding the impact of currency fluctuations for the nine months ended September 30, 2021 and 2020 (dollar amounts in thousands):

Net Sales by Operating Segment
Nine Months Ended
September 30, 2021 Nine Months Ended
September 30, 2020 Percent
Change Impact of
Currency
Exchange Percent
Change
Excluding
Impact of
Currency
Asia $ 127,708 $ 101,814 25.4 % $ 5,409 20.1 %
Europe 65,468 54,098 21.0 1,479 18.3
North America 112,872 110,785 1.9 646 1.3
Latin America and Other 20,097 16,765 19.9 298 18.1
$ 326,145 $ 283,462 15.1 % $ 7,832 12.3 %

Consolidated net sales for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021, were ~~$114.7~~$110.5 million and ~~$326.1~~$102.4 million, respectively, ~~compared to $100.3 million and $283.5 million for the same period in 2020,~~ which represents ~~increases~~an increase of ~~14.5 percent and 15.1 percent, respectively.~~7.9 percent. The increase for the three ~~and nine~~ months ended ~~September 30, 2021,~~March 31, 2022, was primarily related to notable product sales growth in ~~all of~~ our Asia operating ~~segments.~~segment. Excluding the impact of foreign currency exchange rate fluctuations, consolidated net sales for the three ~~and nine~~ months ended ~~September 30, 2021,~~March 31, 2022, increased ~~12.9~~10.3 percent ~~and 12.3 percent, respectively,~~ from the same ~~periods~~period in ~~2020.~~2021.

Asia

Net sales related to Asia for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021, were ~~$48.4~~$46.1 million and ~~$127.7~~$35.8 million, respectively, ~~compared to $38.1 million and $101.8 million for the same periods in 2020,~~ or ~~increases~~an increase of ~~27.1 percent and 25.4 percent, respectively.~~29.0 percent. In local currency, net sales for the three ~~and nine~~ months ended ~~September 30, 2021,~~March 31, 2022, increased ~~24.0~~34.1 percent ~~and 20.1 percent, respectively,~~ compared to the same ~~periods~~period in ~~2020.~~2021. Fluctuations in foreign exchange rates had an unfavorable impact on net sales of $1.9 million for the three months ended March 31, 2022.

Notable activity in the following markets contributed to the results of Asia:

In our South Korea market, net sales decreased ~~$0.6 million and increased $0.9~~$1.2 million, or ~~decreased 3.7 percent and increased 1.9~~7.8 percent, for the three ~~and nine~~ months ended ~~September 30, 2021, respectively,~~March 31, 2022, compared to the same ~~periods~~period in ~~2020.~~2021. In local currency, net sales for the three ~~and nine~~ months ended ~~September 30, 2021,~~March 31, 2022, decreased ~~6.1~~0.3 percent, ~~and 4.0 percent, respectively,~~ compared to the same ~~periods~~period in 2020. The decrease in local currency for the three and nine months ended September 30, 2021, was primarily the result of new product launches and extended promotions in 2020 that did not recur in 2021, as well as more pressure from government restrictions in the market intended to slow the spread of COVID-19.2021.

In our Japan market, net sales increased ~~$2.5 million and $7.3~~$1.6 million, or ~~31.7 percent and 37.4~~20.9 percent, for the three ~~and nine~~ months ended ~~September 30, 2021, respectively,~~March 31, 2022, compared to the same ~~periods~~period in ~~2020.~~2021. In local currencies, net sales for the three ~~and nine~~ months ended ~~September 30, 2021,~~March 31, 2022, increased ~~35.7~~32.6 percent, ~~and 38.5 percent, respectively,~~ compared to the

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same ~~periods~~period in ~~2020.~~2021. We attribute the growth in net sales primarily to product promotions intended to stimulate activity as well as an increase in demand for nutritional supplements.

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In our China market, net sales increased ~~$2.6 million and $7.2~~$4.0 million, or ~~25.6 percent and 29.6~~48.2 percent, for the three ~~and nine~~ months ended ~~September 30, 2021, respectively,~~March 31, 2022, compared to the same ~~periods~~period in ~~2020.~~2021. In local currencies, net sales for the three ~~and nine~~ months ended ~~September 30, 2021,~~March 31, 2022, increased ~~18.7~~45.8 percent, ~~and 21.9 percent, respectively,~~ compared to the same ~~periods~~period in ~~2020. Although net sales in 2020 were affected by government restrictions in the market intended to slow the spread of COVID-19, we~~2021. We attribute the growth in net sales primarily to initiatives designed to increase independent service providers’ engagement levels and gain market share. During March 2022, the government has instituted additional restrictions in the market intended to slow the spread of COVID-19, that may impact our sales activities during the rest of 2022.

In our Taiwan market, net sales increased $7.0 million, or 252.2 percent, for the three months ended March 31, 2022, compared to the same period in 2021. In local currencies, net sales for the three months ended March 31, 2022, increased 251.0 percent, compared to the same period in 2021. We attribute the growth in net sales primarily to product promotions intended to stimulate activity as well as an increase in demand for nutritional supplements.

Europe

Net sales related to Europe for the three ~~and nine~~ months ended ~~September 30, 2021,~~March 31, 2022, were $21.8 million, ~~and $65.5 million, respectively,~~ compared to ~~$18.0 million and $54.1~~$22.2 million for the same ~~periods~~period in ~~2020,~~2021, or ~~increases~~a decrease of ~~21.1 percent and 21.0 percent, respectively.~~1.9 percent. In local currency, net sales for the three ~~and nine~~ months ended ~~September 30, 2021,~~March 31, 2022, increased ~~20.6~~0.6 percent, ~~and 18.3 percent, respectively,~~ compared to the same ~~periods~~period in ~~2020.~~2021. The functional currency for many of these markets is the U.S. Dollar which reduces the effect from foreign currency fluctuations. Fluctuations in foreign exchange rates had ~~favorable impacts~~an unfavorable impact on net sales of ~~$0.1 million and $1.5~~$0.6 million for the three ~~and nine~~ months ended September 30, 2021, respectively. Net sales increased primarily as a result of product promotions that have improved consultant engagement as well as an increase in demand for nutritional supplements, among other factors.March 31, 2022.

North America

Net sales related to North America for the three ~~and nine~~ months ended ~~September 30, 2021,~~March 31, 2022, were ~~$37.7~~$36.0 million, ~~and $112.9 million, respectively,~~ compared to ~~$37.6 million and $110.8~~$37.8 million for the same ~~periods~~period in ~~2020,~~2021, or ~~increases~~a decrease of ~~0.5 percent and 1.9 percent, respectively.~~4.7 percent. In local currency, net sales for the three ~~and nine~~ months ended ~~September 30, 2021, increased 0.1~~March 31, 2022, decreased 4.7 percent, ~~and 1.3 percent, respectively,~~ compared to the same ~~periods~~period in ~~2020.~~2021.

In the United States, net sales decreased ~~$0.1 million and increased $1.2~~$1.7 million, or ~~decreased 0.3 percent and increased 1.2~~4.8 percent, for the three ~~and nine~~ months ended ~~September 30, 2021,~~March 31, 2022, respectively, compared to the same ~~periods~~period in ~~2020.~~2021. The ~~year-to-date increase~~decrease in sales is due primarily to stock outs of certain products as a result of supply chain challenges, and a reduction in the ~~market is~~average order size attributed to customer sensitivity due to ~~several factors including,~~inflationary pressures, among ~~others, rebranding and rebuilding efforts of the Nature's Sunshine brand and consultant tools in the U.S. and an increase in demand for nutritional supplements in the U.S..~~other factors.

Latin America and Other

Net sales related to Latin America and Other markets for the three ~~and nine~~ months ended ~~September 30, 2021,~~March 31, 2022, were ~~$6.8~~$6.6 million, ~~and $20.1 million, respectively,~~ compared to ~~$6.6 million and $16.8~~$6.7 million for the same ~~periods~~period in ~~2020,~~2021, or ~~increases~~a decrease of ~~2.9 percent and 19.9~~1.2 percent, respectively. In local currency, net sales for the three ~~and nine~~ months ended ~~September 30, 2021, increased 0.9~~March 31, 2022, decreased 0.2 percent, ~~and 18.1 percent, respectively,~~ compared to the same ~~periods~~period in ~~2020.~~2021. Fluctuations in foreign currency had ~~favorable~~unfavorable impacts on net sales of $0.1 million ~~and $0.3 million~~ for the three ~~and nine~~ months ended September 30, 2021, respectively. The increase for the three and nine months ended September 30, 2021, was primarily the result of changes in the independent consultant compensation plan as well as an increase in demand for nutritional supplements and new product offerings.March 31, 2022.

Further information related to our Asia, Europe, North America, and Latin America and Other business segments is set forth in Note 7 to the Unaudited Condensed Consolidated Financial Statements in Part 1, Item 1 of this report.

Cost of Sales

Cost of sales as a percent of net sales was ~~25.6 percent and 26.0~~31.2 percent for the three ~~and nine~~ months ended ~~September 30, 2021,~~March 31, 2022, compared to ~~27.1 percent and 26.4~~26.3 percent for the same ~~periods~~period in ~~2020.~~2021. The ~~decrease~~increase in cost of sales percentage ~~for the three and nine months ended September 30, 2021~~ is primarily due to changes in inventory valuation reserves as a result of the conflict between Russia and Ukraine, as well as reserves for other markets, changes in market mix, persistent inflation, and ~~reserves taken~~increases in ~~the prior year, partially offset by increased~~raw materials, production and transportation costs. For the three months ended March 31, 2022, we had incremental valuation charges of $4.2 million related to inventory. Of that amount $3.1 million related to the conflict between Russia and Ukraine, and $1.1 million related to changes in forecast demand and production issues, among other factors.

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Volume Incentives

Volume incentives expense as a percent of net sales was ~~31.2 percent and 32.3~~30.9 percent for the three ~~and nine~~ months ended ~~September 30, 2021,~~March 31, 2022, respectively, compared to ~~34.2 percent and 34.0~~33.4 percent for the same ~~periods~~period in ~~2020.~~2021. These payments are designed to provide incentives for reaching certain sales levels. Volume incentives vary slightly, on a percentage basis, by product due to pricing policies and commission plans in place in our various operations. We do not pay volume incentives in China, instead we pay independent service fees which are included in selling, general and administrative expenses. Volume incentives as a percentage of net sales can fluctuate based on promotional activity and mix of sales by market. The decrease in volume incentives as a percent of net sales ~~for the three and nine months ended September 30, 2021~~ is primarily due to change in market mix, reflecting growth in markets where volume incentives as a percentage of net sales are lower than the consolidated average, and the growth in NSP China. The decrease also reflects ~~expected~~ cost savings from the September 2020 launch of our new consultant sales and compensation plan in North America and LATAM.

Selling, General and Administrative

Selling, general and administrative expenses represent operating expenses, components of which include labor and benefits, sales events, professional fees, travel and entertainment, marketing, occupancy costs, communications costs, bank fees, depreciation and amortization, independent services fees paid in China, and other miscellaneous operating expenses.

Selling, general and administrative expenses increased by ~~$6.2~~$7.1 million, ~~and $15.8 million, respectively,~~ to ~~$39.5 million and $108.7~~$40.6 million for the three ~~and nine~~ months ended ~~September 30, 2021, respectively,~~March 31, 2022, compared to the same ~~periods~~period in ~~2020.~~2021. Selling, general and administrative expenses were ~~34.4 percent and 33.3~~36.8 percent of net sales for the three ~~and nine~~ months ended ~~September 30, 2021,~~March 31, 2022, compared to ~~33.2 percent and~~ 32.8 percent for the same ~~periods~~period in ~~2020.~~2021. The dollar increase in selling, general and administrative expenses ~~for the three and nine months ended September 30, 2021,~~ was primarily related to higher service fees that resulted from growth in China's net sales, increased selling costs and direct marketing spend intended to drive growth, increase in expected level of convention and distributor events, as well as growth in markets with higher variable costs.

Other ~~Income (Loss),~~Loss, Net

Other ~~income (loss),~~loss, net, for the three ~~and nine~~ months ended ~~September 30, 2021, were losses of $0.9~~March 31, 2022, was $0.3 million, ~~and $2.3 million, respectively,~~ compared to ~~gains of $0.7 million and losses of $0.2~~$1.9 million during the same ~~periods~~period in ~~2020, respectively.~~2021. Other ~~income (loss),~~loss, for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021 primarily consisted of foreign exchange gains and losses as a result of overall unfavorable net changes in foreign currencies primarily in Asia, Europe and Latin America.

Income Taxes

For the three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ our provision for income taxes, as a percentage of income before income taxes was ~~40.2~~369.9 percent and (16.7) percent, respectively, compared with a U.S. federal statutory rate of 21.0 percent. For the nine months ended September 30, 2021 and 2020, our provision for income taxes, as a percentage of income before income taxes was 34.0 percent and 14.227.2 percent, respectively, compared with a U.S. federal statutory rate of 21.0 percent.

The ~~difference between~~large increase in the ~~effective tax rate and the U.S. federal statutory tax~~ rate for the ~~three and nine months ended September 30, 2021, was~~current period is primarily attributed to an increase in tax liability associated with transfer pricing adjustments, non-deductible executive compensation, and net unfavorable foreign tax related items, partially offset by favorable deductions for stock compensation.

~~The difference between the effective tax rate and the U.S. federal statutory tax rate for the three months ended September 30, 2020, was primarily attributed to~~recording a ~~decrease in tax liability associated with uncertain tax positions and release of~~ valuation allowance ~~for~~against deferred tax assets which are expected to ~~be utilized~~expire before utilization. The current conflict between Russia and Ukraine has created significant uncertainty in ~~the prior year. The difference between the effective tax rate and the U.S. federal statutory tax rate for the nine months ended September 30, 2020, was primarily attributed~~our ability to a decrease in tax liability associated with uncertain tax positions and release of valuation allowance for deferred tax assets expected to be utilized in the prior year, partially offset by transfer pricing adjustments and foreign losses during that period that were not expected to provide future tax benefit, as well as net unfavorableutilize existing foreign tax ~~related items.~~

credits. The ~~difference between the effective tax rate~~carryforward period for ~~the three~~many of these existing credits expires in 2024. This is a matter which requires significant accounting estimates and nine months ended September 30, 2021 compared to September 30, 2020 is primarily caused by an increase in the current period tax liability associated with transfer pricing adjustments and non-deductible executive compensation, partially offset by favorable deductions for stock compensation in the

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~~current period, as well as decreases in prior period uncertain tax positions and valuation allowances which did not repeat in the current period.~~

~~Our U.S. federal income tax returns for 2017 through 2020 are open to examination for federal tax purposes. We have several foreign tax jurisdictions that have open tax years~~actual results could differ from ~~2014 through 2020.~~

~~As of September 30, 2021 and December 31, 2020, we had accrued $5,000 and $0.1 million, respectively, related to unrecognized tax positions.~~these estimates.

Product Categories

Our line of over 700 products includes several ~~different~~ product classifications, such as immune, cardiovascular, digestive, personal care, weight management and other general health products. We purchase herbs and other raw materials in bulk, and after rigorous quality control testing, we formulate, encapsulate, tablet or concentrate them, label and package them for shipment. Most of our products are manufactured at our facility in Spanish Fork, Utah. Contract manufacturers produce some of our products in accordance with our specifications and standards. We have implemented stringent quality control procedures to verify that our contract manufacturers have complied with our specifications and standards.

See Note 7, Segment Information, for a summary of the U.S. dollar amounts from the sale of general health, immune, cardiovascular, digestive, personal care and weight management products for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ by business segment.

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Distribution and Marketing

We market our products primarily through our network of independent consultants, who market our products to customers through direct selling techniques and sponsor other independent consultants who also market our products to customers. We seek to motivate and provide incentives to our independent consultants by offering high quality products and providing independent consultants with product support, training seminars, sales conventions, travel programs and financial incentives.

Our products sold in the United States are shipped directly from our manufacturing and warehouse facilities located in Spanish Fork, Utah, as well as from our regional warehouses located in Georgia, Ohio and Texas. Many of our international operations maintain warehouse facilities and inventory to supply their independent consultants. However, in foreign markets where we do not maintain warehouse facilities, we have contracted with third-parties to distribute our products and provide support services to our force of independent consultants.

In the United States, we generally sell our products on a cash or credit card basis. From time to time, our U.S. operations extend short-term credit associated with product promotions. For certain of our international operations, we use independent distribution centers and offer credit terms that are generally consistent with industry standards within each respective country.

We pay sales commissions, or “volume incentives” to our independent consultants based upon their own product sales and the product sales of their sales organization. As an exception, in NSP China, we do not pay volume incentives; rather, we pay independent service fees, which are included in selling, general and administrative expenses. These volume incentives are recorded as an expense in the year earned. The amounts of volume incentives that we expensed during the quarters ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ are set forth in the Condensed Consolidated Financial Statements in Item 1 of this report. In addition to the opportunity to receive volume incentives, independent ~~Managers~~consultants who attain certain levels of monthly product sales are eligible for additional incentive programs including automobile allowances, sales convention privileges and travel awards.

LIQUIDITY AND CAPITAL RESOURCES

Our principal use of cash is to pay for operating expenses, including volume incentives, inventory and raw material purchases, capital assets and funding of international expansion. As of ~~September 30, 2021,~~March 31, 2022, working capital was $80.3 million, compared to ~~$84.4~~$88.0 million as of December 31, ~~2020.~~2021. At ~~September 30, 2021,~~March 31, 2022, we had ~~$75.5~~$66.5 million in cash, of which ~~$13.7~~$8.5 million was held in the U.S. and ~~$61.8~~$58.0 million was held in foreign markets and may be subject to various withholding taxes and other restrictions related to repatriation before becoming available to be used along with the normal cash flows from operations to fund any unanticipated shortfalls in future cash flows.

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Our net consolidated cash inflows (outflows) are as follows (in thousands):


		Nine Months Ended September 30,					Three Months Ended March 31,
		2021		2020			2022		2021
Operating activities	Operating activities	$	20,281	$	26,849	Operating activities	$	(7,924)	$	2,735
Investing activities	Investing activities	(4,626)		(3,487)		Investing activities	(1,518)		(983)
Financing activities	Financing activities	(29,475)		5,025		Financing activities	(9,374)		(1,311)

Operating Activities

For the ~~nine~~three months ended ~~September 30, 2021,~~March 31, 2022, operating activities ~~provided~~used cash of ~~$20.3~~$7.9 million, compared to ~~$26.8~~providing cash of $2.7 million in the same period in ~~2020.~~2021. Operating cash flows decreased primarily due to ~~an investment~~increased inventory purchases before any changes in ~~inventory~~reserves and timing of payments on accounts payable and accrued liabilities partially offset by the timing of receivable payments.

Investing Activities

For the ~~nine~~three months ended ~~September 30, 2021,~~March 31, 2022, investing activities used ~~$4.6~~$1.5 million, compared to ~~$3.5~~$1.0 million for the same period in ~~2020.~~2021. Capital expenditures related to the purchase of equipment, computer systems and software for the ~~nine~~three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ were ~~$4.6~~$1.5 million and ~~$3.5~~$1.0 million, respectively.

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Financing Activities

For the ~~nine~~three months ended ~~September 30, 2021,~~March 31, 2022, financing activities used ~~$29.5~~$9.4 million, compared to providing ~~$5.0~~$1.3 million in cash for the same period in ~~2020.~~2021.

During the ~~nine~~three months ended ~~September 30, 2021, we used cash to pay a special non-recurring cash dividend of $1.00 per common share in an aggregate amount of $19.9 million.~~

~~During the nine months ended September 30, 2021,~~March 31, 2022, we used cash to repurchase ~~350,000~~451,000 shares of our common stock under the share repurchase program for ~~$6.0~~$8.0 million. At ~~September 30, 2021,~~March 31, 2022, the remaining balance available for repurchases under the program was ~~$9.0~~$29.6 million.

We maintain a revolving credit agreement with Bank of America, N.A (the “Credit Agreement”), as well as a credit agreement with Banc of America Leasing and Capital, LLC (the "Capital Credit Agreement"). During the ~~nine~~three months ended ~~September 30, 2021,~~March 31, 2022, we made no additional borrowings from either agreement. At ~~September 30, 2021,~~March 31, 2022, there was no outstanding balance under the Credit Agreement. During the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 we made monthly payments of $0.1 million pursuant to the Capital Credit Agreement. As of ~~September 30, 2021,~~March 31, 2022, there was ~~$2.7~~$2.1 million outstanding balance under the Capital Credit Agreement, ~~$1.2~~$1.3 million of which was classified as current. Our debt obligations are discussed in greater detail in Note 4, “~~Revolving~~“Revolving Credit Facility and Other Obligations,” to our Condensed Consolidated Financial Statements in Item 1, Part 1 of this report.

We believe that cash generated from operations, along with available cash and cash equivalents, will be sufficient to fund our normal operating needs, including capital expenditures, on both a short- and long-term basis.

~~In addition, other things~~Events, such as a prolonged economic downturn, an increase in geopolitical issues, a decrease in demand for our products, an unfavorable settlement of our unrecognized tax positions or non-income tax contingencies could adversely affect our long-term liquidity.

~~OFF-BALANCE SHEET ARRANGEMENTS~~

~~We have no off-balance sheet arrangements.~~

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our consolidated financial statements have been prepared in accordance with U.S. GAAP and form the basis for the following discussion and analysis on critical accounting policies and estimates. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On a regular basis, we evaluate our estimates and assumptions. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that

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are not readily apparent from other sources. Actual results could differ from these estimates and those differences could have a material effect on our financial position and results of operations. We have discussed the development, selection and disclosure of these estimates with the Board of Directors and our Audit Committee.

A summary of our significant accounting policies is provided in Note 1 of the Notes to Consolidated Financial Statements in Item 8 of the Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021. We believe the critical accounting policies and estimates described below reflect our more significant estimates and assumptions used in the preparation of the consolidated financial statements. The impact and any associated risks on our business that are related to these policies are also discussed throughout this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” where such policies affect reported and expected financial results.

Revenue Recognition

Our revenue recognition practices are discussed in Note 12, “Revenue Recognition,” to our Condensed Consolidated Financial Statements in Item 1, Part 1 of this report.

Inventories

Inventories are adjusted to lower of cost and net realizable value, using the first-in, first-out method. The components of inventory cost include raw materials, labor and overhead. To estimate any necessary adjustments, various assumptions are made in regard to excess or slow-moving inventories, non-conforming inventories, expiration dates, current and future product demand, production planning and market conditions. If future demand and market conditions are less favorable than our assumptions, additional inventory adjustments could be required.

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Incentive Trip Accrual

We accrue for expenses associated with our direct sales program, which rewards independent consultants with paid attendance for incentive trips, including our conventions and meetings. Expenses associated with incentive trips are accrued over qualification periods as they are earned. We specifically analyze incentive trip accruals based on historical and current sales trends as well as contractual obligations when evaluating the adequacy of the incentive trip accrual. Actual results could generate liabilities more or less than the amounts recorded.

Contingencies

We are involved in certain legal proceedings and disputes. When a loss is considered probable in connection with litigation or non-income tax contingencies and when such loss can be reasonably estimated with a range, we record our best estimate within the range related to the contingency. If there is no best estimate, we record the minimum of the range. As additional information becomes available, we assess the potential liability related to the contingency and revise the estimates. Revision in estimates of the potential liabilities could materially affect our results of operations in the period of adjustment. Our contingencies are discussed in further detail in Note 10, “Commitments and Contingencies”, to the Notes of our Condensed Consolidated Financial Statements, of Item 1, Part 1 of this report.

Income Taxes

Our provision for income taxes, deferred tax assets and liabilities and contingent reserves reflect management’s best assessment of estimated future taxes to be paid. We are subject to income taxes in both the United States and numerous foreign jurisdictions. Significant judgments and estimates are required in determining our consolidated provision for income taxes.

Deferred income taxes arise from temporary differences between the tax and financial statement recognition of revenue and expense. In evaluating our ability to recover our deferred tax assets, management considers all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and recent financial operations. In projecting future taxable income, we develop assumptions including the amount of future state, federal and foreign pretax operating income, the reversal of temporary differences, and the implementation of feasible and prudent tax planning strategies. These assumptions require significant judgment about the forecasts of future taxable income, and are consistent with the plans and estimates that we are using to manage the underlying businesses. Valuation allowances are recorded as reserves against net deferred tax assets by us when it is determined that net deferred tax assets are not likely to be realized in the foreseeable future.

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Changes in tax laws and rates could also affect recorded deferred tax assets and liabilities in the future. Management is not aware of any such changes that would have a material effect on our results of operations, cash flows or financial position.

The calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax laws and regulations in a multitude of jurisdictions across our global operations. Income tax positions must meet a more-likely-than-not recognition threshold to be recognized.

Item 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We conduct business in several countries and intend to grow our international operations. Net sales, operating income and net income are affected by fluctuations in currency exchange rates, interest rates and other uncertainties inherent in doing business and selling product in more than one currency. In addition, our operations are exposed to risks associated with changes in social, political and economic conditions inherent in international operations, including changes in the laws and policies that govern international investment in countries where we have operations, as well as, to a lesser extent, changes in U.S. laws and regulations relating to international trade and investment. For further information, see Part II, Item 7A of our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021.

Item 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) are designed to provide reasonable assurance that the information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in rules and forms adopted by the SEC, and that such information is accumulated and communicated to management, including the Chief Executive Officer and the Chief

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Financial Officer, to allow timely decisions regarding required disclosures. Our management, under the supervision and with the participation of the Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of ~~September 30, 2021.~~March 31, 2022. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of ~~September 30, 2021,~~March 31, 2022, at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

There were no changes in our internal controls over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) during the quarter ended ~~September 30, 2021,~~March 31, 2022, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

None.

Item 1A. RISK FACTORS

In addition to the information set forth in this report, you should carefully consider the risks discussed under the heading “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, ~~2020,~~2021, which could have a material adverse effect on our business or consolidated financial statements, results of operations, and cash flows. Additional risks not currently known, or risks that are currently believed to be not material, may also impair business operations. There have been no material changes to our risk factors since the filing of our Annual Report on Form 10-K for the year ended December 31, ~~2020,~~2021, except as set forth below.

Geopolitical issues, conflicts and other global events could adversely affect our results of operations and financial condition.

Because a substantial portion of our business is conducted outside of the United States, our business is subject to global political issues and conflicts. Such political issues and conflicts could have a material adverse effect on our results of operations and financial condition if they escalate in areas in which we do business. In addition, changes in and adverse actions by governments in foreign markets in which we do business could have a material adverse effect on our results of operations and financial condition. Russia’s invasion of Ukraine and the continuing war between Russia and Ukraine has negatively impacted our operations in both countries and the region. In fiscal 2021, operations in our Russia and Other market, a market within our Europe business segment that includes Russia, Ukraine, Belarus and other Common Independent States in the region, accounted for 13.8% of net sales. As of March 31, 2022, Russia and Other had assets of $4.2 million which primarily consisted of inventories and accounts receivable. We are unable to estimate future impacts to our business due to the high level of uncertainty as to how the war will evolve, its duration, and its ultimate resolution. Within Ukraine, there is a possibility of loss of life, physical damage and destruction of property, and loss of earning opportunities for many of our independent distributors and dealers. We may not be able to operate in many areas due to damage and safety concerns. Within Russia, we may need to further reduce our operations due to sanctions and counter sanctions, currency or payment controls, and supply chain challenges. Certain suppliers, vendors, independent distributors and customers are all impacted by the war and their ability to successfully maintain their operations could also impact our results of operations or product sales throughout the world.

The ongoing coronavirus pandemic and the responses thereto around the world could adversely impact our business and operating results.

In or about December 2019, a novel strain of coronavirus, SARS-CoV-2, began aggressively spreading throughout the world, including all the primary markets where we conduct business. In March 2020, the World Health Organization declared the COVID-19 outbreak a pandemic, and the President of the United States declaredThroughout the COVID-19 pandemic, ~~a national emergency. Governments~~governments around the world have issued ~~and others in the future may issue,~~ orders restricting travel, the number of people who may gather, or for their citizens to shelter-in-place to slow the spread of COVID-19. Such orders, restrictions and recommendations ~~and the anticipation that additional orders, restrictions or recommendations could occur,~~ have resulted in widespread closures of businesses not deemed “essential,” work stoppages, limitations on the number of people allowed to gather in one location, slowdowns and delays in world-wide supply chains, work-from-home policies, travel restrictions and cancellation of events, among other effects. In particular, travel and logistics restrictions, shelter-in-place orders and other measures, including working remotely, social distancing and other policies implemented in foreign and domestic sites to protect the health and safety of employees, have resulted in, and are expected to continue to result in, transportation disruptions (such as reduced availability of air transport, port closures, and increased border controls or closures), production delays and capacity limitations at our facilities and some of our customers and suppliers, as well as reduced workforce availability or productivity. These and other adverse impacts on our supply chain could limit our ability to obtain required materials in a timely manner, maintain adequate inventory levels, and respond to changes in customer demand, which could adversely affect our business and result of operations.

The duration and extent of ~~COVID-19's~~COVID-19’s impact on our business are difficult to assess or predict. ~~The~~While conditions related to the pandemic generally have improved in 2022 compared to 2021, conditions vary significantly by geography. For example, late in the first quarter of 2022, an increase of COVID-19 related cases in certain parts of China resulted in the re-imposition of widespread ~~pandemic has resulted~~lock-downs and restrictions. Stay-at-home and quarantine mandates have disrupted or halted our operations in certain parts of China and may continue to ~~result for an extended period,~~impact our business in ~~significant disruption of global financial markets, reducing our ability to access capital, repatriate funds from foreign markets, which would negatively affect our liquidity.~~ the near-term. Further quarantines, or government ~~reaction~~reactions or shutdowns ~~for COVID-19~~ could disrupt or halt our operations and materially harm our business, financial condition and results of operations. Our manufacturing personnel and other employees could also be affected by COVID-19, potentially reducing their availability, and a widespread outbreak of COVID-19 among our manufacturing or supply-chain employees could disrupt or halt our operations. Further, restrictions on gatherings of individuals may limit the ability of our independent consultants to sell our

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products. Additionally, the procedures we take to mitigate the effect of COVID-19 on our workforce, including but not limited to, social distancing and additional sanitizing measures, could reduce the efficiency of our operations, increase our operating costs or prove insufficient to protect our employees.

~~Supply chain disruptions, manufacturing interruptions or delays, or the failure to accurately forecast customer demand,~~High inflation and other difficult economic conditions could adversely affect our ~~ability to meet customer demand, lead to higher costs, or result in excess or obsolete inventory.~~

Our business depends on the timely supply of materials, services and related products to meet the demands of our customers, which depends in part on the timely delivery of materials and services from suppliers and contract manufacturers. Significant or sudden increases in demand for our products, as well as worldwide demand for the raw materials and services we require to manufacture and sell our products, may result in a shortage of such materials or may cause shipment delays due to transportation interruptions or capacity constraints. Such shortages or delays could adversely impact our suppliers' ability to meet our demand requirements. Difficulties in obtaining sufficient and timely supply of materials or services can have an adverse impact on our manufacturing operations and our ability to meet customer demand.

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~~We may also experience significant interruptions of our manufacturing operations, delays in our ability to deliver products, increased costs or customer order cancellations as a result of:~~

•the failure or inability to accurately forecast demand and obtain sufficient quantities of quality raw materials on a cost-effective basis; volatility in the availability and cost of materials or services, including rising prices due to inflation;

•~~difficulties or delays in obtaining required import or export approvals;~~

•~~shipment delays due to transportation interruptions or capacity constraints, such as reduced availability of air or ground transport or port closures;~~

•~~information technology or infrastructure failures, including those of a third party supplier or service provider; and~~

•natural disasters or other events beyond our control (such as earthquakes, utility interruptions, tsunamis, hurricanes, typhoons, floods, storms or extreme weather conditions, fires, regional economic downturns, regional or global health epidemics, including the ongoing COVID-19 pandemic, geopolitical turmoil, increased trade restrictions between the U.S. and China and other countries, social unrest, political instability, terrorism, or acts of war) in locations where we or our customers or suppliers have manufacturing or other operations.

As more fully discussed in the risk factor "The ongoing coronavirus pandemic and the responses thereto around the world could adversely impact our business and operating results" above, the ongoing COVID-19 pandemic and measures taken in response by governments and businesses worldwide to contain its spread, including quarantines, facility closures, travel and logistics restrictions, border controls, and shelter in place or stay at home and social distancing orders, have adversely impacted and may continue to adversely impact our supply chain, manufacturing, logistics, workforce and operations, as well as the operations of our customers and suppliers globally. Such adverse impacts on our supply chain could limit our ability to manufacture and sell our products on a timely and cost-effective basis, which could adversely affect our business and results of operations.

If we fail to timely and effectively obtain shipments of products from our manufacturers and deliver products to our independent consultants and customers, our business and results of operations could be harmed.

Our business depends on our ability to source and distribute products in a timely manner. However, we cannot control all of the factors that might affect the timely and effective procurement of our products from our third-party contract manufacturers and the delivery of our products to our independent consultants and customers.

We are vulnerable to risks associated with importing and exporting materials and products manufactured both at our manufacturing facility and third-party manufacturing facilities, including, among other things: (a) risks of damage, destruction, or confiscation of products while in transit to our distribution centers; and (b) transportation and other delays in shipments, including as a result of heightened security screening, port congestion, and inspection processes or other port- of-entry limitations or restrictions in the United States. Failure to procure materials needed to manufacture our products and to deliver merchandise to our independent consultants and customers in a timely, effective, and economically viable manner could reduce our sales and gross margins, damage our brand, and harm our business.

We also rely on the timely and free flow of goods through open and operational ports from our suppliers and manufacturers and to our independent consultants and customers. Labor disputes or disruptions at ports, our common carriers, or our suppliers or manufacturers could harm our business, particularly if these disputes result in work slowdowns, lockouts, strikes, or other disruptions during periods of significant importing or manufacturing, potentially resulting in delayed or canceled orders by customers and unanticipated inventory accumulation or shortages. These and similar disruptions could result in harm to our business, results of operations and financial condition.

~~In addition,~~Consumer spending, including spending for our products, is affected by, among other things, prevailing economic conditions, including, among others, unemployment rates, inflation, fuel prices, salaries and wages, the availability of consumer credit, consumer confidence and consumer perception of economic conditions. According to the U.S. Bureau of Labor Statistics, during the twelve-month period ending March 31, 2022, the consumer price index, a measure of the average change over time in the prices paid by consumers, increased by 8.5 percent, which is the highest level of inflation in the U.S. in over forty years. Europe and other areas in which we ~~rely upon independent land-based~~do business are also experiencing higher than desired inflation. Inflation may require consumers to reconsider purchases of items they consider nonessential and, ~~air freight carriers for product shipments~~as a result, consumers may purchase fewer of our products if they consider our products nonessential. We believe high levels of inflation in the U.S. and other regions in which we do business have resulted, and will continue to ~~our independent consultants and customers who purchase~~result, in lower net sales of our products. ~~We may not be able~~A prolonged period of high inflation and other unfavorable economic conditions that adversely affect the ability of consumers to ~~obtain sufficient freight capacity~~pay for our products could have a material adverse effect on ~~a timely basis or at favorable shipping rates~~our business, financial condition, cash flows, and ~~therefore, may not be able to receive products from suppliers or deliver products to retail partners or customers in a timely and cost-effective manner.~~results of operations.

Accordingly, we are subject to the risks, including labor disputes, union organizing activity, inclement weather, public health crises such as the current COVID-19 pandemic (or other future pandemics or epidemics), and increased transportation costs, associated with our third-party contract manufacturers' and carriers' ability to provide products and services to meet our requirements. In addition, if the cost of fuel rises, the cost to deliver products may rise, which could harm our profitability.

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Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following table summarizes the purchases of our common stock during the fiscal quarter ended ~~September 30, 2021:~~March 31, 2022:

Periods Total Number of Shares Purchased
(in thousands) Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
(in thousands)
Maximum Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs(1)
(in thousands)
July 1, 2021 to July 31, 2021 84 $ 17.80 84
August 1, 2021 to August 31, 2021 55 17.10 55
September 1, 2021 to September 30, 2021 134 $ 15.42 134
Total 273 273 $ 9,000


Periods	Total Number of Shares Purchased (in thousands)	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (in thousands)		Maximum Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs(1) (in thousands)
January 1, 2022 to January 31, 2022	133	$	18.04	$	2,399
February 1, 2022 to February 28, 2022	229	17.78		4,072
March 1, 2022 to March 31, 2022	89	$	16.85	1,500
Total	451			$	7,971	$	29,604

(1) On March 10, 2021, we announced a ~~$15~~$15.0 million common share repurchase program. On March 8, 2022 we announced an amendment to the share repurchase program allowing the repurchase of an additional $30.0 million shares. The repurchases may be made from time to time as market conditions warrant and are subject to regulatory considerations. We purchased ~~273,000~~451,000 shares of our common stock during the quarter ended ~~September 30, 2021~~March 31, 2022 under the terms of this Board approved plan.

The actual timing, number, and value of common shares repurchased under our board-approved plan will be determined at our discretion and will depend on a number of factors, including, among others, general market and business conditions, the trading price of common shares, and applicable legal requirements. We have no obligation to repurchase any common shares under the authorization, and the repurchase plan may be suspended, discontinued, or modified at any time for any reason.

Item 3. DEFAULTS UPON SENIOR SECURITIES

None.

Item 4. MINE SAFETY DISCLOSURES

Not applicable.

Item 5. OTHER INFORMATION

None.

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Item 6. EXHIBITS

a) Index to Exhibits


Item No.						Exhibit
~~10.1 (1)~~						~~Amendment to Operating Agreement of Nature’s Sunshine Hong Kong Limited, dated August 13, 2021~~
~~31.1(2)~~31.1(1)						Certification of Chief Executive Officer under SEC Rule 13a-14(a)/15d-14(a) promulgated under the Securities Exchange Act of 1934
~~31.2(2)~~31.2(1)						Certification of Chief Financial Officer under SEC Rule 13a-14(a)/15d-14(a) promulgated under the Securities Exchange Act of 1934
~~32.1(2)~~32.1(1)						Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350 Chief Executive Officer pursuant to 18 U.S.C. Section 1350
~~32.2(2)~~32.2(1)						Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350 Financial Officer pursuant to 18 U.S.C. Section 1350
101.INS						Inline XBRL Instance Document
101.SCH						Inline XBRL Taxonomy Extension Schema Document
101.CAL						Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB						Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE						Inline XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF						Inline XBRL Taxonomy Extension Definition Linkbase Document
104						Cover page Interactive Data File (the cover page XBRL tags are embedded within iXBRL (Inline Extensible Business Reporting Language) document)

(1) ~~Previously filed as Exhibit 99.1 to the Current Report on Form 8-K filed on August 17, 2021 and incorporated by reference herein.~~

~~(2)~~ Filed currently herewith.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


Nature’s Sunshine Products, Inc.






Date:	~~November 4, 2021~~May 5, 2022	/s/ Terrence O. Moorehead
		Terrence O. Moorehead,
		President and Chief Executive Officer
		(Principal Executive Officer)


Date:	~~November 4, 2021~~May 5, 2022	/s/ Joseph W. Baty
		Joseph W. Baty,
		Executive Vice President, Chief Financial Officer and Treasurer
		(Principal Financial Officer)

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	Nine Months Ended September 30, 2021				Nine Months Ended September 30, 2020				Change
	Total dollars		Percent of net sales		Total dollars		Percent of net sales		Total dollars		Percentage
Net sales	$	326,145	100.0	%	$	283,462	100.0	%	$	42,683	15.1	%
Cost of sales	84,861		26.0		74,873		26.4		9,988		13.3
Gross profit	241,284		74.0		208,589		73.6		32,695		15.7
Volume incentives	105,491		32.3		96,493		34.0		8,998		9.3
SG&A expenses	108,666		33.3		92,863		32.8		15,803		17.0
Operating income	27,127		8.3		19,233		6.8		7,894		41.0
Other loss, net	(2,290)		(0.7)		(230)		(0.1)		(2,060)		(895.7)
Income before income taxes	24,837		7.6		19,003		6.7		5,834		30.7
Provision for income taxes	8,433		2.6		2,695		1.0		5,738		212.9
Net income	$	16,404	5.0	%	$	16,308	5.8	%	$	96	0.6	%