Business Overview
Nu Skin Enterprises, Inc. (NYSE: NUS) is a global direct-selling leader in beauty and wellness, delivering personal
care, nutrition, and smart device systems. Operating in nearly 50 international markets through a network of
independent Brand Affiliates, the Company integrates product innovation, bio-device R&D, and digital platforms
through its Rhyz ecosystem.

In addition to the core Nu Skin business, the Company also explores new areas of synergistic and adjacent growth through its business arm known as Rhyz Inc. This arm reports through two segments, Manufacturing and Other, which encompass six businesses. In January of 2025, the Company sold Mavely, a business under the Rhyz arm, for ~$250.0M which was ~3.6x FY24 revenues, illustrating the potential that Rhyz Businesses have. Of note, the Company has an extensive history of research and development leading to a constantly evolving product pipeline.

Wellness Products: Wellness products for NUS fall under
the Pharmanex brand. The Company’s strategy for its wellness category is to continue to introduce innovative,
substantiated nutritional supplements, based on research and development and quality manufacturing. Direct selling has proven to be an effective method of marketing the high-quality wellness products because the sales force can personally educate consumers on the quality and benefits of wellness products, differentiating them from competitors’ offerings.

Rhyz: The Rhyz businesses primarily consist of consumer, technology, and manufacturing companies. In 2024,
the Rhyz companies generated $286.6 million, or 17% of our 2024 reported revenue. Rhyz is a key component of
the business, and these companies enable NUS to reduce the cost of goods, improve lead times, diversify revenue
mix, and create synergies for its owned brands. In January of 2025, NUS sold one of its businesses under the Rhyz
umbrella, showing the ability to monetize portions of this incubator should the opportunity arise.

Sales Channel Overview
Nu Skin maintains a global philosophy of person-to-person marketing believing that the direct selling distribution
is an effective vehicle to distribute products. This is through the rapid outreach to potential customers through the
existing social networks of the Company’s sellers, personalized product demonstrations and offerings, and aftersales servicing from sellers. The Company breaks its sales channel down between its consumer group and its sales network. The consumer group is made up of individuals who buy NUS products primarily for personal or family consumption either through Brand Affiliates or directly from the Company. This group does not have the authority to build a Nu Skin business by reselling products or by recruiting others, and therefore they do not earn any sales compensation.


The sales network is made up of individuals who personally buy, use and resell products, and who also acquire new consumers, and attract, train and develop new sellers. Brand Affiliates both purchase products for personal use as well as for resale to other customers. These individuals are eligible to receive certain compensation under the Company’s global sales compensation plan by selling product to customers and by developing other Brand Affiliates who sell products to consumers, but they are not eligible for other compensation unless they elect to qualify as a Sales Leader. The two ways that Brand Affiliates make money is through retail markups and sales compensation earned under the global sales compensation plan. Importantly there are no requirements to purchase products to become a Brand Affiliate, and no commissions are paid on any purchase of a business portfolio.


Sales Leaders are Brand Affiliates who are qualified and have elected to pursue the business opportunity of
attracting consumers and building a sales network. Where all Brand Affiliates receive compensation for sales to
their own consumer group, Sales Leaders also receive compensation for sales to their own consumer group as
well as sales to other Sales Leaders. There is no requirement to recruit or sponsor other Brand Affiliates, and
there is no compensation for recruiting or sponsoring.

These sales channels are a breakout for Nu Skin’s geographies outside of Mainland China. More information on
how Mainland China differs from the Company’s other geographies can be found in the Geographic Overview
section of this report.

While there are nuances betweenall of the Company’s segments such as product mix and pricing, different engagement tools, and compensation structures, all geographies with the exception of Mainland China tend to operate following similar structures described in the Sales Channel Overview. We are encouraged by the continued geographic diversification that the Company has seen as demonstrated by the top three segments by revenuein Exhibit 5, with no geography accounting for more than 20% of consolidated revenues. Due to restrictions on direct selling and multi-level commissions in Mainland China, the Company has implemented a business model for that market that is different from the business model used in other markets.

In Mainland China, NUS utilizes sales employees to sell products through retail stores, website and
digital platforms; independent direct sellers, who can sell away from stores where the Company has a direct selling
license and a service center and can also sell through the website and digital platform; and independent
marketers, who are licensed business owners authorized to sell products at their own approved premises or
through NUS stores, website and digital platforms. These three types of sellers in the Company’s Mainland China
sales force are also compensated differently from how the Company compensates its sales force in the rest of
the world with Mainland China sales employees receiving both monthly bonuses based on product sales among
other metrics as well as a salary or service fee that is reviewed and adjusted on a quarterly basis based on
performance.

Growth Drivers

Nu Skin Enterprises Inc. is strategically positioned to achieve significant growth through multiple avenues and
market opportunities:

1. Strategic Restructuring & Cost Discipline: Nu Skin’s aggressive restructuring efforts in 2024 have
   improved operational efficiency, as evidenced by lower general & administrative costs. These measures
   restored adjusted EPS to a positive $0.23 in 1Q25, reversing previous losses, and have strengthened
   margins despite a revenue decline driven by macroeconomic headwinds.
   
2. Expansion in High-Growth and Emerging Markets: The company is tapping into underpenetrated
   regions. In 1Q25, Latin America delivered a remarkable 144% year-over-year revenue increase, signaling
   success in its developing markets strategy. Management has also identified India as a critical entry point,
   with pre-launch activities underway in late 2025 and full operations planned for mid-2026, aiming to
   capitalize on one of the world’s fastest-growing direct selling markets.
   
3. Product Innovation: Connecting Beauty & Wellness: Nu Skin continues evolving beyond cosmetics.
   The upcoming Prysm iO wellness device, slated for later in FY25, is positioned to deepen customer
   engagement via nutritional insights and personalized wellness. The recent launch of devices like the
   RenuSpa iO microcurrent system and MYND360 cognitive wellness line reflect the firm’s pivot toward
   connected beauty-health platforms.
   
4. Rhyz Platform: Incubation, M&A and Capital Deployment: Rhyz, Nu Skin’s internal venture arm
   launched in 2018, supported by beauty-tech initiatives. While Nu Skin sold its Mavely affiliate-marketing
   platform for $250M in early 2025, the sale highlights strategic capital recycling and successful business
   incubation. Rhyz’s recent acquisition of BeautyBio enabled expansion into microneedling and hydration
   device markets, strengthening Nu Skin’s position in the broader wellness ecosystem.
   
5. Balanced Balance Sheet & Capital Return: Nu Skin has methodically reduced debt (now at decade-low
   levels), facilitated by disciplined Capex and the Mavely sale.
   
6. FX Mitigation & Geographic Diversification: A substantial foreign exchange impact is acknowledged,
   yet the diversification across ~50 markets and emphasis on stronger-performing regions like Latin America
   and Japan provides natural hedging and opportunity.
   
   Nu Skin’s strategic pivot—combining cost optimization, sharper compensation structures, expansion into highgrowth regions, and an emphasis on wellness-connected devices—offers a robust multi-pronged growth
   framework poised to offset near-term headwinds and reaccelerate top-line growth.
   • 
     

Beauty & Personal Care Products: The global beauty
and personal care market is extremely large and growing – estimated at approximately $519 billion in2024 and projected to reach $550.9 billion in 2025, growing at a CAGR of ~6.1%, and expected to hit ~$700 billion by 2029. Beauty & Wellness Products Market: When including supplements, wellness treatments and services, the broader beauty‑wellness market was valued at around $1.73 trillion in 2024 and is expected to reach $1.86 trillion by 2025, with a strong 8.6% CAGR toward over $3.3 trillion by 2032. Beauty & Skincare Devices: Home beauty devices alone constituted a $52 billion market in 2024, forecasted to grow to $60.5 billion in 2025 (~16% YoY) and doubling to over $111 billion by 2029 at ~16.5% CAGR.
Beauty Tech / Wearables: The beauty tech sector (IoT, app-integrated devices) was estimated at ~$68.9 billion in 2024, projecting to $79.9 billion in 2025 (~16% growth), and reaching ~$131 billion by 2029 (~13% CAGR). Additionally, the broader wearable device market, including wellness wearables—is expected to grow from $84.2 billion in 2024 to $186 billion by 2030 (~13.6% CAGR). These overlapping growth drivers—consumer trends toward personalization, at-home regimes, clean and functional beauty, smart devices, and wellness integration—provide multiple avenues for disruption and platform convergence.

Market Opportunities and Strategic Positioning
Nu Skin is strategically positioned to capitalize on global trends favoring wellness and personalized beauty
technology. The global beauty and wellness device market continues to expand robustly, driven by increasing
consumer health consciousness and demand for at-home beauty solutions. Nu Skin’s upcoming launch of its
Prysm iO intelligent wellness device aligns directly with these market trends, offering personalized health insights
and tailored product recommendations aimed at boosting loyalty and driving subscription revenues.
Additionally, the company’s planned market entry into India, commencing pre-launch activities in late 2025 and a
formal launch scheduled for mid-2026, represents a significant strategic initiative to penetrate a high-potential
emerging market characterized by rapid growth in consumer spending and acceptance of direct-selling models.
Operationally, Nu Skin has strategically prioritized margin improvements through restructuring initiatives and cost
optimization, successfully enhancing operating efficiencies amid challenging market conditions. The sustained
emphasis on affiliate incentives, targeted promotional activities, and digital transformation efforts further
strengthens its competitive positioning and ability to adapt to evolving consumer expectations across diverse
international markets.

We believe that Nu Skin is tapping into multibillion-dollar growth waves such as personal care products expected
to grow to a TAM of $3.3T by 2032 and beauty devices expected to grow to a TAM of $131B by 2029. Its combined
strengths in connected-device innovation, wellness integration, and science-backed personalization, delivered
through a community-driven sales model, position the company to capitalize on long-term consumer trends in
health, self-care, and technology-enabled beauty.
In conclusion, despite short-term challenges stemming from macroeconomic and regulatory pressures in key
markets, Nu Skin’s strategic initiatives focused on product innovation, market diversification, and operational
efficiency position the company favorably to capitalize on emerging global opportunities in the beauty and wellness
sectors. Risks As with any investment, there are certain risks associated with Nu Skin’s operations as well as with the
surrounding economic and regulatory environments common to the personal care products industry.

• Direct selling laws and regulations vary globally, are subject to interpretation or change, and may prohibit
  or severely restrict direct selling and cause revenues and profitability to decline. If the business practices
  or policies or the actions of the sales force are deemed to be in violation of applicable local regulations,
  then the company could be sanctioned which could significantly harm the business.
• Compensation for the Company’s sales force could be impacted by regulations such as limits on the
  amount of compensation that the Company may provide. This would limit the Company’s ability to attract
  and retain its sales force.
• The Company operates in markets that are intensely competitive and fast moving. The emergence and
  increased adoption of artificial intelligence is a prime example of this. Furthermore, NUS completes with
  both large and small direct selling companies, affiliate marketing companies, and employees in the gig
  economy, illustrating the breadth of competition.
• The Company is subject to financial risks as a result of our international operations, including exposure to
  foreign-currency fluctuations, currency controls and inflation in foreign markets, all of which could impact
  the Company’s financial position and results of operations. To illustrate this, 70% of FY24 sales occurred
  in markets outside of the United States.
  
  

VALUATION

We use a Price to Adj. EPS comparison when valuing NUS. Currently NUS is trading at a multiple of 8.2x, which
is a discount of 78% to average comps at 37.2x. While we believe that fair value for comps tends to be closer to
the 15x to 20x range, we also think that this discount is too steep even when accounting for any size or liquidity
adjustments. We note that recent Adj. Net Income margins for NUS have been challenged and may explain a
portion of the discount.

Looking forward we see the Company’s LTM GPM catching up to and exceeding comps, which we view as a
leading indicator for improved performance on the horizon. We expect that the strengthening of the Company’s
balance sheet along with its cost mitigation measures is well timed for the coming expansion into India and the
Prysm iO launch, both of which we expect to be significant tailwinds for the Company in FY26 and beyond. As we
forecast Adj. Net Income margin to catch up to comps we would expect trading multiples to also improve.
Currently NUS is trading at a forward Price to Adj. EPS of 5.2x, compared to average comps at 16.9x. We are
applying a range of 7.0x to 11.0x with a midpoint of 9.0x when valuing NUS, which is in line with the Company’s
historical multiple and also moves NUS closer to comps. We expect to move this multiple range higher as NUS
executes its current strategies, coming more in line with comps. This returns a per share valuation range of $10.95
to $17.21, with a midpoint of $14.08. Lastly, we note that NUS is significantly undervalued on an EV/Revenue basis. While we do not typically use EV/Revenue when valuing companies, it is worth pointing out the significant dislocation seen here. With NUS trading at 0.3x on a forward basis relative to comps at an average of 1.2x on a forward basis we see significant
room for the market to re-rate NUS upwards as the Company executes on and is rewarded for the future growth we expect.

BALANCE SHEET

INCOME STATEMENT

IMPORTANT DISCLOSURES AND DISCLAIMER


(a) The research analyst and/or a member of the analyst’s household do not have a financial interest in the debt
or equity securities of the subject company.

(b) The research analyst responsible for the preparation of this report has not received compensation that is based upon Stonegate’s investment banking revenues.

(c) Stonegate or any affiliate have not managed or co-managed a public offering of securities for the subject company in the last twelve months, received investment banking compensation from the subject company in the last 12 months, nor expects or receive or intends or seek compensation for investment banking services from the subject company in the next three months.

(d) Stonegate’s equity affiliate, Stonegate Capital Partners, “SCP” has a contractual agreement with the subject company to provide research services, investor relations support, and investor outreach. SCP receives a monthly retainer for these non-investment banking services.

(e) Stonegate or its affiliates do not beneficially own 1% or more of any class of common equity securities of the subject company.

(f) Stonegate does not make a market in the subject company.

(g) The research analyst has not received any compensation from the subject company in the previous 12 months.
(h) Stonegate, the research analyst, or associated person of Stonegate with the ability to influence the content of
the research report knows or has reason to know of any material conflicts of interest at the time of publication or distribution of the research report.

(i) No employee of Stonegate has a position as an officer or director of the subject company. Ratings – Stonegate does not provide ratings for the covered companies. Distribution of Ratings – Stonegate does not provide ratings for covered companies. Price Chart – Stonegate does not have, nor has previously had, a rating for its covered companies. Price Targets – Stonegate does not provide price targets for its covered companies. However, Stonegate does provide valuation analysis. Regulation Analyst Certification: I, Dave Storms, CFA, hereby certify that all views expressed in this report accurately reflect my personal views about the subject company or companies and its or their securities. I also certify that no part of my compensation was, is, or will be directly or indirectly related to the specific recommendations or views expressed in this report.


For Additional Information Contact:
Stonegate Capital Partners, Inc.
Dave Storms, CFA
Dave@stonegateinc.com
214-987-4121

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