Shares of Natural Health Trends Corp. (NHTC Quick QuoteNHTC - Free Report) have gained 0.3% since the company reported its second-quarter earnings for the year ended June 30, 2025, outperforming the S&P 500 Index, which declined 2.1% during the same period. However, over the past month, NHTC stock has lost 1.1%, underperforming the S&P 500's 0.4% gain.

NHTC’s Revenue and Earnings Performance

Natural Health Trends reported second-quarter 2025 revenues of $9.8 million, down 6.3% from $10.5 million in the year-ago quarter. The company cited ongoing trade tensions and their impact on consumer confidence in its primary market — Hong Kong — as a key reason for the decline. Net income for the quarter stood at $15,000, a sharp fall from $173,000 last year, translating to breakeven earnings per diluted share versus $0.02 previously.

For the first half of 2025, revenues totaled $20.6 million, representing a 4.1% decrease from $21.4 million in the comparable period in 2024. Net income declined to $0.1 million ($0.01 per share) from $0.4 million ($0.03 per share) in the first half of 2024. Operating losses widened to $0.3 million for the quarter from $0.2 million and $$0.7 million for the first half from $0.6 million.

Sales in Hong Kong—which constituted 81.6% of total quarterly sales—declined 5.5% year over year, according to CFO Scott Davidson.

Natural Health’s Other Key Business Metrics

Gross profit for the second quarter was $7.3 million, down 6.7% from $7.8 million in the prior-year quarter. Gross margin was 73.9% in the second quarter of 2025 compared with 74.2% in the year-ago period. Commissions expense rose to 40.9% of sales from 40.1% a year ago, attributed to higher weekly commissions earned by members. Selling, general and administrative expenses declined 6.2% year over year to $3.6 million from $3.8 million, demonstrating disciplined cost control.

Active members totaled 29,260 as of June 30, 2025, a 5.9% year-over-year decline from 31,110 and down 5.2% from 30,870 at the end of 2024.

Total cash, cash equivalents, and marketable securities stood at $34.2 million at the end of June, down from $43.9 million at the end of 2024, mainly due to a required tax installment payment of $5.1 million in Natural Health’s quarterly dividend payment.

Cash used in operating activities jumped to $5.2 million in the first half of 2025 from $3 million a year ago. Before tax installment payments, operating cash usage was $97,000 compared with cash provided by operating activities of $950,000 last year.

NHTC’s Management Commentary

President Chris Sharng acknowledged the challenges posed by global trade uncertainties, noting that consumer sentiment in the company’s core markets remained weak. In response, Natural Health has started transitioning its supply chain operations from the United States to Asia. This shift aims to reduce exposure to tariffs, consolidate logistics and improve cost efficiency — all while maintaining product quality and enhancing access to regional R&D and support capabilities.

Sharng also highlighted continued efforts to engage the distributor base through training events, incentive programs and regional seminars. Recent incentive trips to the Maldives and Paris were cited as morale boosters for top performers. Importantly, NHTC officially launched its newest market — Colombia — which was met with strong enthusiasm and attendance.

Factors Influencing Natural Health’s Results

Tariff threats and heightened economic uncertainty, particularly in Asia, weighed heavily on the company’s sales performance. The Hong Kong market, being the dominant revenue contributor, was especially impacted. Management pointed to cautious consumer behavior and stressed the importance of ongoing cost containment and margin protection as countermeasures.

On the expense front, Natural Health managed to cut administrative costs, and while commissions rose slightly, this was framed as a positive, indicating strong member engagement.

NHTC’s Guidance and Outlook

Natural Health did not issue specific forward-looking revenue or earnings guidance. However, management expressed confidence that strategic realignment of its supply chain, along with product and program investments, would support long-term growth and resilience.

Natural Health’s Other Developments

A key financial milestone during the quarter was the full settlement of the company’s U.S. Tax Cuts and Jobs Act liability. This payment significantly impacted operating cash flow but removed a lingering liability from the balance sheet. As part of its capital allocation strategy, the board declared a quarterly cash dividend of $0.20 per share, continuing its commitment to shareholder returns. The dividend will be payable on Aug. 22, 2025, to stockholders of record as of Aug. 12, 2025.

Additionally, there were no reported acquisitions, divestitures, or restructurings during the period. However, the supply chain transition underway represents a significant operational shift intended to improve agility and lower costs going forward.