Health is a matter of science at USANA Health Sciences. The company makes nutritional, personal care, and weight management products, selling them through a direct-sales network marketing system of more than 250,000 independent distributors (or associates). USANA Health Sciences also sells directly to 64,000 customers deemed preferred. USANA's associates operate throughout North America, as well as the Asia/Pacific region. The company's products portfolio includes nutritional supplements (76% of sales) and foods (12%) sold under the USANA brand and a line of skin and hair care products (9%) marketed under the Sensé label. Chairman Myron Wentz owns more than 50% of the company he founded.
USANA operates its business through one reportable business segment. The direct seller, which has operations in 20 markets worldwide, makes the majority of its products at its facilities in Utah. It manufactures all of its tablet products and its beauty products in-house. It also develops capsules, drink mixes, nutrition bars, and personal care items. Previously, USANA served as a third-party manufacturer for a limited number of body care companies. At the time, contract manufacturing accounted for a larger share of the company's sales. However, once the Sensé line took off, USANA sold its third-party manufacturing business and devoted its manufacturing capacity to its own products. In keeping with its emphasis on developing science-based products, the company has a collaboration with the Linus Pauling Institute at Oregon State University to research the role of vitamins and minerals in human health.
The company divides its operations into two regions: North America/Europe and Asia/Pacific. Together they cover about 15 countries. The latter accounts for more than 60% of revenue.
Sales and Marketing
USANA intends to fight sagging sales by increasing brand awareness and acquiring more associates and preferred customers in North America. Along with direct selling, USANA sells its products in natural health food retailers, via mail order and the Internet, and in drug stores and supermarkets.
Sales growth in most countries where it operates helped USANA log an 11% increase in revenue in 2012. The results represented strong growth in the Phillipines, China, Mexico, France, and Belgium.The higher sales led to a 30% increase in net income; cash flow dipped slightly as the company bought back some of its stock.
USANA looks to grow its business through efforts overseas. In 2012 it entered the Thailand market with a dozen products, consisting of four key nutritional supplements and eight skin-care products. The company also expanded its operations into France and Belgium, as well.
The company builds sales by getting its associates to manage their own business groups by recruiting and training others to sell the company's products. Sales associates are paid on sales generated by those groups. They might also receive compensation by purchasing products at wholesale prices and reselling them at retail prices. USANA attempts to recruit sales people who are looking for a second income and want to start a home-based business.