Natural Alternatives Q2 Loss Widens Y/Y, Sales Increase

Shares of Natural Alternatives International, Inc. NAII have declined 25.3% since reporting results for the second quarter of fiscal 2026. This compares with the S&P 500 index’s 0.3% return over the same time frame. Over the past month, the stock has declined 45.6% compared with the S&P 500’s 1.9% fall.

For the second quarter ended Dec. 31, 2025, Natural Alternatives reported a net loss of $2.6 million, or 42 cents per diluted share, compared with a net loss of $2.2 million, or 37 cents per diluted share, in the prior-year period. Net sales rose 2% year over year to $34.8 million from $34.1 million. Gross profit improved to $2.5 million, or 7.2% of net sales, from $1.7 million, or 4.9%, reflecting improved production efficiency and cost controls.

For the first six months of fiscal 2026, net sales increased 8% to $72.5 million from $67.2 million, while the net loss narrowed to $2.8 million, or 47 cents per share, from a $4.2-million loss, or 70 cents per share, a year earlier.

Natural Alternatives International, Inc. Price, Consensus and EPS Surprise

 

Natural Alternatives International, Inc. price-consensus-eps-surprise-chart | Natural Alternatives International, Inc. Quote

Segment & Channel Performance

Private-label contract manufacturing, the company’s core business, increased 2% in the quarter to $32.8 million. For the first six months of fiscal 2026, private-label sales climbed 9% to $68.9 million. On a trailing 12-month basis, private-label manufacturing represented approximately 94.5% of the total revenues, underscoring its central role in the company’s revenue mix.

CarnoSyn beta-alanine royalty, licensing and raw material sales rose 13% year over year in the second quarter to $2 million from $1.8 million. However, for the first six-month period, CarnoSyn revenues declined 15% to $3.7 million from $4.3 million, reflecting variability in royalty streams and customer ordering patterns.

Historically, direct sales have comprised the largest portion of revenues, supplemented by retail, and patent and trademark licensing channels. Management noted that recent sales growth has been supported by customer acquisitions and expanded product offerings from existing clients, following a period in fiscal 2024 when several key customers reduced purchases to rebalance inventory levels after pandemic-driven demand peaks.

Management Commentary & Operating Environment

Chairman and chief executive officer Mark A. LeDoux said that the company is facing challenges related to forecasting demand from clients operating in multi-level marketing and direct selling channels in China, Europe and parts of North America. Reductions in customer forecasts and delayed product launches contributed to the underutilization of manufacturing capacity during the first half of fiscal 2026.

Although the gross margin expanded, and selling, general and administrative expenses declined modestly in both the three and six-month periods, the company continued to post operating losses due largely to fixed manufacturing costs being spread across lower-than-expected volumes. Management indicated that other channels, including large retailers, warehouse stores and internet-based direct-to-consumer sales, are experiencing growth.

LeDoux also emphasized the strategic importance of expanding the CarnoSyn patent estate, particularly through TriBsyn, a patent-pending beta-alanine formulation designed to improve bioavailability and reduce paresthesia. Management sees opportunities for TriBsyn and sustained-release CarnoSyn in wellness and healthy aging markets, including potential applications tied to the growing use of GLP-1 medications and concerns around muscle preservation.

Liquidity & Financial Position

As of Dec. 31, 2025, cash and cash equivalents totaled $3.8 million, down from $12.3 million at June 30, 2025. Working capital stood at $28.7 million, down from $30.5 million at the end of fiscal 2025. The company had $5.8 million outstanding under its line of credit, with $10 million in available borrowing capacity. Total assets were $153.3 million and stockholders’ equity was $67 million at the quarter-end.

Outlook

Management expects sales revenues to increase in the remaining two quarters of fiscal 2026 compared with both the prior-year periods and the first half of the current fiscal year. However, the company anticipates a net loss in the second half of fiscal 2026 and for the full fiscal year, citing reduced customer forecasts and delayed product introductions.

The company highlighted previously completed capacity expansions, including a high-volume powder manufacturing facility and increased blending capacity in the United States, which expanded available capacity significantly.

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