Stonegate Capital Partners has updated its coverage on Nu Skin Enterprises Inc. (NYSE: NUS), following the company's second-quarter 2026 earnings report. The investment firm noted that NUS reported revenue of $320.1 million, adjusted net income of $10.0 million, and adjusted earnings per share of $0.20. These figures compared to Stonegate's estimates of $345.2 million in revenue and $0.20 adjusted EPS, with adjusted net income slightly below the projected $10.3 million. The company's GAAP EPS was a loss of $5.14, primarily due to a $78.9 million non-cash goodwill impairment and a $167.5 million deferred-tax valuation allowance, both of which were excluded from adjusted results.
Operationally, Nu Skin's core gross margin improved by 20 basis points year-over-year to 77.7%, but consolidated gross margin declined 60 basis points to 68.2%. Adjusted operating margin fell 190 basis points to 6.1%. Revenue from Nu Skin and its subsidiary Rhyz declined 15.5% and 25.0% year-over-year, respectively. Management also reduced its full-year 2026 revenue guidance to $1.28 billion to $1.35 billion, down from the previous range of $1.35 billion to $1.50 billion, and adjusted EPS guidance to $0.70 to $0.90 from $0.80 to $1.20.
One notable strategic shift is the delay of the India market launch to the first half of 2027 from year-end 2026. The company is refining local sourcing, logistics, technology integration, and its affiliate model to ensure a successful entry. Stonegate believes the revised outlook reflects a lower near-term setup, but identifies Prysm iO adoption, sales-force productivity, and cost actions as primary drivers for 2027.
Prysm iO, Nu Skin's AI-powered beauty and wellness device, remains a central long-term growth initiative. To date, more than 39,000 devices have been placed, and 2.5 million scans have been completed. The company targets 50,000 to 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. Sales leaders declined 9% year-over-year, compared to a 13% decline in the first quarter, and were essentially flat quarter-over-quarter. Mainland China sales leaders increased 2% year-over-year. While recruiting remains below levels required for sustainable growth, Stonegate notes that 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.
For investors, the guidance cut signals a softer near-term outlook, but the margin improvement and cost optimization efforts could position Nu Skin for a stronger 2027. The company's focus on Prysm iO and sales-force stabilization may offer a path to recovery, though execution remains key. Stonegate Capital Partners, a capital markets advisory firm, provides this analysis to help investors understand the implications of Nu Skin's latest results and strategic direction.
