Quarterly report [Sections 13 or 15(d)]

Segment Information

v3.26.1
Segment Information
 3 Months Ended
Mar. 31, 2026
Segment Reporting [Abstract]  
Segment Information

6. Segment Information

The Company is a nutrition company that sells a wide range of weight management; targeted nutrition; energy, sports, and fitness; and outer nutrition products. The Company’s products are manufactured by the Company in its Changsha, Hunan, China extraction facility; Suzhou, China facility; Lake Forest, California facility; and Winston-Salem, North Carolina facility, as well as by third-party providers, and then are sold to Members who consume and sell Herbalife products to retail consumers or other Members. Revenues reflect sales of products by the Company to its Members and are categorized based on geographic location.

As of March 31, 2026, the Company sold products in 95 markets throughout the world and was organized and managed by five geographic regions: North America, Latin America, EMEA, Asia Pacific, and China. The Company defines its operating segments as those geographical operations. The Company aggregates its operating segments, excluding China, into a reporting segment, or the Primary Reporting Segment, as management believes that the Company’s operating segments have similar operating characteristics and similar long-term operating performance. In making this determination, management believes that the operating segments are similar in the nature of the products sold, the product acquisition process, the types of customers to whom products are sold, the methods used to distribute the products, the nature of the regulatory environment, and their economic characteristics. China has been identified as a separate reporting segment as it does not meet the criteria for aggregation. The Company determined the Chief Operating Decision Maker (CODM) as its Chief Executive Officer. The CODM reviews financial information, including net sales and contribution margin by operating segment, in order to determine how to allocate the Company’s resources across its operating segments, and reviews its assets and capital expenditures on a consolidated basis and not by operating segment. Therefore, net sales and contribution margin are presented by reportable segment and assets and capital expenditures by segment are not presented.

Operating information for the two reportable segments is as follows:

 

 

 

Three Months Ended

 

 

 

March 31,
2026

 

 

March 31,
2025

 

 

 

(in millions)

 

Net sales:

 

 

 

 

 

 

Primary Reporting Segment

 

$

1,260.2

 

 

$

1,156.9

 

China

 

 

57.0

 

 

 

64.8

 

Total net sales

 

$

1,317.2

 

 

$

1,221.7

 

Significant segment expenses

 

 

 

 

 

 

Cost of Sales (4):

 

 

 

 

 

 

Primary Reporting Segment

 

$

282.6

 

 

$

255.9

 

China

 

 

8.5

 

 

 

9.3

 

Total cost of sales

 

$

291.1

 

 

$

265.2

 

Selling expenses (4):

 

 

 

 

 

 

Primary Reporting Segment (2)

 

$

433.7

 

 

$

401.2

 

China (3)

 

 

28.1

 

 

 

32.2

 

Total selling expenses

 

$

461.8

 

 

$

433.4

 

Contribution margin(1):

 

 

 

 

 

 

Primary Reporting Segment

 

$

543.9

 

 

$

499.8

 

China

 

 

20.4

 

 

 

23.3

 

Total contribution margin

 

$

564.3

 

 

$

523.1

 

General and administrative expenses

 

 

431.4

 

 

 

400.3

 

Other operating income

 

 

(5.5

)

 

 

—

 

Interest expense, net

 

 

46.8

 

 

 

52.0

 

Income before income taxes

 

 

91.6

 

 

 

70.8

 

Income taxes

 

 

30.4

 

 

 

20.4

 

Net income

 

$

61.2

 

 

$

50.4

 

 

(1)
Contribution margin consists of net sales less cost of sales and selling expenses.
(2)
For the Primary Reporting Segment, selling expenses consists of Member compensation, which was previously presented as Royalty Overrides, as described further in Note 2, Significant Accounting Policies.
(3)
In China, selling expenses primarily consists of service fees to China independent service providers, which totaled $27.4 million and $31.6 million for the three months ended March 31, 2026 and 2025, respectively, as described further in Note 2, Significant Accounting Policies.
(4)
The significant expense categories and amounts align with the segment-level information that is regularly provided to the CODM.

The following table sets forth net sales by geographic area:

 

 

 

Three Months Ended

 

 

 

March 31,
2026

 

 

March 31,
2025

 

 

 

(in millions)

 

Net sales:

 

 

 

 

 

 

India

 

$

275.4

 

 

$

209.3

 

United States

 

 

241.3

 

 

 

247.7

 

Mexico

 

 

154.1

 

 

 

126.5

 

Vietnam

 

 

77.5

 

 

 

75.4

 

China

 

 

57.0

 

 

 

64.8

 

Others

 

 

511.9

 

 

 

498.0

 

Total net sales

 

$

1,317.2

 

 

$

1,221.7