Segment Information

9 Months Ended

Sep. 30, 2022

Segment Information [Abstract]

Segment Information

10. Segment Information

The Company reports revenue from nine segments, consisting of its seven geographic Nu Skin segments—Americas, Mainland China, Southeast Asia/Pacific, South Korea, Japan, EMEA, and Hong Kong/Taiwan—and two Rhyz Investments segments—Manufacturing and Rhyz other. The Nu Skin other category includes miscellaneous corporate revenue and related adjustments. The Rhyz other segment includes other investments by our Rhyz strategic investment arm. These segments reflect the way the chief operating decision maker evaluates the Company’s business performance and allocates resources. Reported revenue includes only the revenue generated by sales to external customers.

Profitability by segment as determined under US GAAP is driven primarily by the Company’s transfer pricing policies. Segment contribution, which is the Company’s segment profitability metric presented in the table below, excludes certain intercompany charges, specifically royalties, license fees, transfer pricing, discrete charges and other miscellaneous items. These charges have been included in Corporate and other expenses. Corporate and other expenses also include costs related to the Company’s executive and administrative offices, information technology, research and development, and marketing and supply chain functions not recorded at the segment level.

Prior year segment information has been recast to reflect the move of the Pacific components from the “America/Pacific” operating segment to the “Southeast Asia/Pacific” operating segment to comply with current segment presentation. Prior year segment information has been recast to reflect the fourth quarter 2021 exit of the Grow Tech segment, which has been recast to Corporate and other expenses. Consolidated financial information is not affected.

The accounting policies of the segments are the same as those described in Note 2 – Summary of Significant Accounting Policies. The Company evaluates the performance of its segments based on revenue and segment contribution. Each segment records direct expenses related to its employees and its operations.

Summarized financial information for the Company’s reportable segments is shown in the following tables. Asset information is not reviewed or included with the Company’s internal management reporting. Therefore, the Company has not disclosed asset information for each reportable segment.

Revenue by Segment

	Three Months Ended September 30,				Nine Months Ended September 30,
(U.S. dollars in thousands)	2022		2021		2022		2021
Nu Skin
Americas	$	131,591	$	131,482	$	379,616	$	403,755
Mainland China		75,151		134,291		286,454		438,066
Southeast Asia/Pacific		83,502		79,081		267,805		246,338
South Korea		67,237		91,989		208,678		261,724
Japan		53,276		65,117		171,019		203,001
EMEA		45,099		55,839		148,938		215,134
Hong Kong/Taiwan		39,587		39,921		117,408		114,795
Nu Skin other		496		1,672		2,434		3,497
Total Nu Skin		495,939		599,392		1,582,352		1,886,310
Rhyz Investments
Manufacturing (1)		41,328		41,635		119,898		135,760
Rhyz other		538		125		1,069		163
Total Rhyz Investments		41,866		41,760		120,967		135,923
Total	$	537,805	$	641,152	$	1,703,319	$	2,022,233

(1) The Manufacturing segment had $17.5 million and $27.4 million of intersegment revenue for the three months ended September 30, 2022 and 2021, respectively, and $48.9 million and $68.0 million for the nine months ended September 30, 2022 and 2021, respectively. Intersegment revenue is eliminated in the consolidated financial statements, as well as the reported segment revenue in the table above.

Segment Contribution

	Three Months Ended September 30,						Nine Months Ended September 30,
(U.S. dollars in thousands)	2022			2021			2022			2021
Nu Skin
Americas	$	23,016		$	25,752		$	78,165		$	83,495
Mainland China		12,933			30,677			54,873			121,596
Southeast Asia/Pacific		20,719			19,020			68,492			59,881
South Korea		20,455			28,984			63,776			84,401
Japan		13,103			16,267			41,867			50,709
EMEA		3,379			6,693			13,377			29,270
Hong Kong/Taiwan		8,425			8,940			26,276			24,848
Nu Skin contribution		102,030			136,333			346,826			454,200
Rhyz Investments
Manufacturing		1,755			3,059			6,235			15,649
Rhyz other		(1,724	)		(659	)		(4,069	)		(1,178	)
Rhyz Investments contribution		31			2,400			2,166			14,471
Total segment contribution		102,061			138,733			348,992			468,671
Corporate and other		(122,345	)		(73,349	)		(265,604	)		(254,998	)
Operating income		(20,284	)		65,384			83,388			213,673
Other income (expense)		(8,680	)		2,781			(18,773	)		351
Income before provision for income taxes	$	(28,964	)	$	68,165		$	64,615		$	214,024

Depreciation and Amortization

	Three Months Ended September 30,				Nine Months Ended September 30,
(U.S. dollars in thousands)	2022		2021		2022		2021
Nu Skin
Americas	$	89	$	190	$	480	$	656
Mainland China		3,528		3,253		9,088		9,868
Southeast Asia/Pacific		382		359		1,144		1,096
South Korea		377		805		1,137		2,768
Japan		148		220		670		699
EMEA		125		281		599		850
Hong Kong/Taiwan		743		1,004		2,152		2,794
Total Nu Skin		5,392		6,112		15,270		18,731
Rhyz Investments
Manufacturing		3,161		3,069		9,773		8,644
Rhyz other		592		592		1,776		987
Total Rhyz Investments		3,753		3,661		11,549		9,631
Corporate and other		9,025		10,160		27,116		29,496
Total	$	18,170	$	19,933	$	53,935	$	57,858

Capital Expenditures

	Three Months Ended September 30,				Nine Months Ended September 30,
(U.S. dollars in thousands)	2022		2021		2022		2021
Nu Skin
Americas	$	23	$	95	$	152	$	294
Mainland China		2,946		3,237		9,066		15,170
Southeast Asia/Pacific		19		92		143		1,015
South Korea		35		—		613		508
Japan		16		3		200		94
EMEA		183		391		961		821
Hong Kong/Taiwan		587		110		1,386		222
Total Nu Skin		3,809		3,928		12,521		18,124
Rhyz Investments
Manufacturing		1,923		2,604		4,353		11,604
Rhyz other		—		—		—		—
Total Rhyz Investments		1,923		2,604		4,353		11,604
Corporate and other		19,723		7,003		28,400		20,656
Total	$	25,455	$	13,535	$	45,274	$	50,384