Stonegate Updates Coverage on Nu Skin After Q2 Miss

Stonegate Capital Partners has updated its coverage on NU Skin Enterprises Inc. (NYSE: NUS), a global beauty and wellness company, following the release of its second-quarter 2026 results. The company reported revenue of $320.1 million, adjusted net income of $10.0 million, and adjusted EPS of $0.20, which matched Stonegate's estimate despite a weaker top line. However, GAAP EPS came in at $(5.14), primarily due to a $78.9 million non-cash goodwill impairment and a $167.5 million deferred-tax valuation allowance, both excluded from adjusted results. Core Nu Skin gross margin improved 20 basis points year-over-year to 77.7%, but consolidated gross margin declined 60 basis points to 68.2%, and adjusted operating margin fell 190 basis points to 6.1%. Revenue declined 15.5% for Nu Skin and 25.0% for Rhyz, the company's manufacturing and technology segment. Management also reduced its full-year 2026 revenue guidance to $1.28B-$1.35B from a previous range of $1.35B-$1.50B, and adjusted EPS guidance to $0.70-$0.90 from $0.80-$1.20. Additionally, the launch in India has been pushed to the first half of 2027 as the company refines local sourcing, logistics, technology integration, and its affiliate model. To view the full announcement, including downloadable images, bios, and more, click here.

Despite the lowered guidance, Stonegate highlights several positive developments. Prysm iO, the company's AI-powered beauty and wellness device, remains a central longer-term growth initiative, with more than 39,000 devices placed and 2.5 million scans completed, targeting 50,000-60,000 devices by year-end. Stonegate views Prysm iO as a sales-force productivity tool, with AI-enabled assessments, recommendations, and 90-day wellness plans expected to help leaders deepen customer engagement, improve conversion, and broaden monetization across beauty and wellness. Sales-force trends showed early signs of stabilization, with sales leaders down only 9% year-over-year versus a 13% decline in the first quarter, and essentially flat quarter-over-quarter. Mainland China sales leaders increased 2% year-over-year. Although recruiting remains below levels required for sustainable growth and India has shifted to the first half of 2027, Prysm iO training, compensation changes, leadership development initiatives, and the East-West operating model provide several potential drivers for improved productivity and profitability next year.