About Herbalife

Herbalife Ltd. operates as a global nutrition company. The company provides health and wellness products to consumers in 95 markets, which consists of countries and territories, through its direct-selling business model. The company’s products are primarily in the categories of weight management, targeted nutrition, and sports nutrition. The company uses a direct-selling business model to distribute and market its nutrition products to and through a global network of independent members, or Members. Members include consumers who purchase products for their own personal use and distributors who wish to resell products or build a sales organization. Direct selling is ideally suited for the company’s business because the distribution and sales of its products with personalized support, coaching, and education provide a supportive and understanding community of like-minded people who prioritize health and nutrition. In addition to the effectiveness of personalized selling through a direct-selling business model, the primary drivers for the company’s success throughout its 44-year operating history have been enhanced consumer awareness and demand for its products due to global trends such as the obesity epidemic, increasing interest in a fit and active lifestyle, living healthier, and the rise of entrepreneurship. Product Sales The company’s science-backed products help Members and their customers improve their overall health, enhance their wellness, and achieve their fitness and sport goals. As of December 31, 2023, the company marketed and sold approximately 136 product types. The company’s products are often sold as part of a program and therefore its portfolio consisted of a series of related products designed to simplify weight management, health and wellness, and overall nutrition for its Members and their customers. The company’s Formula 1 Nutritional Shake Mix, its best-selling product line, approximated 26% of its net sales for the year ended December 31, 2023. Weight Management: The company’s representative products include Formula 1 Healthy Meal, Herbal Tea Concentrate, Protein Drink Mix, Personalized Protein Powder, Total Control, Formula 2 Multivitamin Complex, Prolessa Duo, and Protein Bars. Targeted Nutrition: The company’s representative products include Herbal Aloe Concentrate, Active Fiber Complex, Niteworks, and Herbalifeline. Energy, Sports, and Fitness: The company’s representative products include Herbalife24 product line, N-R-G Tea, and Liftoff energy drink. Outer Nutrition: The company’s representative products include Herbalife SKIN line and Herbal Aloe Bath and Body Care line. Literature, Promotional, and Other: The company’s representative products include Herbalife Member Packs and BizWorks. Product Returns and Buyback Policies The company offers a customer satisfaction guarantee in substantially all markets where its products are sold. Competition The company’s competitors include companies, such as BellRing Brands, Inc., Conagra Brands, Inc., The Hain Celestial Group, Inc., Post Holdings, Inc., and The Simply Good Foods Company. The company’s direct-selling competitors include companies such as Medifast, Inc., Nu Skin Enterprises, Inc., Tupperware Brands Corporation, USANA Health Sciences Inc., and Amway Corp. Network Marketing Program The company’s products are sold and distributed through a global direct selling business model which individuals may join to become a Member of its network marketing program. Sales of nutrition products are reinforced by the ongoing personal contact, coaching, behavior motivation, education, and the creation of supportive communities. This frequent, personal contact can enhance consumers’ nutritional and health education as well as motivate healthy behavioral changes in consumers to begin and maintain an active lifestyle through wellness and weight management programs. In addition, the company’s Members consume its products themselves, and, therefore, can provide first-hand testimonials of the use and effectiveness of its products and programs to their customers. The personalized experience of the company’s Members has served as a very powerful sales tool for its products. Segmentation In many of its markets, including certain of the company’s largest markets such as the United States, Mexico, and India, it has segmented its Member base into two categories: preferred members – who are consumers who wish to purchase product for their own household use, and distributors – who are Members who also wish to resell products or build a sales organization. As of December 31, 2023, the company had approximately 6.5 million Members, including 3.5 million preferred members and 2.0 million distributors in the markets where it has established these two categories and 0.2 million sales representatives and independent service providers in China. Members Members in Mexico developed businesses that became known as Nutrition Clubs, marketing techniques that improve the productivity and efficiency of the company’s Members, as well as the affordability of its weight loss products for their customers. The company refers to successful Member marketing techniques that it disseminates throughout its Member network, such as Nutrition Clubs, Weight Loss Challenges, and Fit Camps, as Daily Methods of Operations, or DMOs. The company and its Member leadership, which consists of sales leaders, conduct in-person and virtual training sessions on local, regional, and global levels attended by thousands of Members to provide updates on product education, sales and marketing training, and instruction on available tools. These events are opportunities to showcase and disseminate the company’s Members’ evolving best marketing practices and DMOs from around the world and to introduce new or upgraded products. In 2002, the company entered into an agreement with its Members that provides that it will continue to distribute Herbalife products exclusively to and through its Members. Member Compensation and Sales Leader Retention and Requalification In addition to benefiting from discounted prices, Members interested in the entrepreneurial opportunity may earn profit from several sources. First, Members may earn profits by purchasing the company’s products at wholesale prices, discounted depending on the Member’s level within its Marketing Plan, and reselling those products at prices they establish for themselves to generate retail profit. Second, Members who sponsor other Members and establish, maintain, coach, and train their own sales organizations may earn additional income based on the sales of their organization, which may include royalty overrides, production bonuses, and other bonuses. The company assigns point values, known as Volume Points, to each of its products to determine a Member’s level within the Marketing Plan. The company has initial qualification methods of up to 12 months to encourage a more gradual qualification. Business in China The company’s business model in China includes unique features as compared to its traditional business model in order to ensure compliance with Chinese regulations. As a result, the company’s business model in China differs from that used in other markets. Members in China are categorized differently than those in other markets. In China, the company sells its products to and through independent service providers and sales representatives to customers and preferred customers, as well as through company-operated retail platforms when necessary. In China, while multi-level marketing is not permitted, direct selling is permitted. Chinese citizens who apply and become Members are referred to as sales representatives. These sales representatives are permitted to sell away from fixed retail locations in the provinces where it has direct selling licenses, including in the provinces of Jiangsu, Guangdong, Shandong, Zhejiang, Guizhou, Beijing, Fujian, Sichuan, Hubei, Shanxi, Shanghai, Jiangxi, Liaoning, Jilin, Henan, Chongqing, Hebei, Shaanxi, Tianjin, Heilongjiang, Hunan, Guangxi, Hainan, Anhui, Yunnan, Gansu, Ningxia, and Inner Mongolia. In China, the company’s independent service providers are compensated for marketing, sales support, and other services, instead of the Member allowances and royalty overrides utilized in its global Marketing Plan. The service hours and related fees eligible to be earned by the independent service providers are based on a number of factors, including the sales generated through them and through others to whom they may provide marketing, sales support and other services, the quality of their service, and other factors. Intellectual Property and Branding The company uses the umbrella trademarks Herbalife, Herbalife Nutrition, the Tri-Leaf, and the Rising Leaf designs worldwide, and protect several other trademarks and trade names related to its products and operations, such as Niteworks and Liftoff. Regulation In the United States, the formulation, manufacturing, packaging, holding, labeling, promotion, advertising, distribution, and sale of the company’s products are subject to regulation by various federal governmental agencies, including the U.S. Food and Drug Administration (FDA); the Federal Trade Commission (FTC); the Consumer Product Safety Commission, or CPSC; the United States Department of Agriculture, or USDA; the Environmental Protection Agency, or EPA; the United States Postal Service; the United States Customs and Border Protection; and the Drug Enforcement Administration. The FDA, in particular, regulates the formulation, manufacture, and labeling of over-the-counter, or OTC, drugs, conventional foods, dietary supplements, and cosmetics, such as those distributed by the company. The majority of the products marketed by the company in the United States are classified as conventional foods or dietary supplements under the Federal Food, Drug and Cosmetic Act, or FFDCA. Internationally, the majority of products marketed by the company are classified as foods, health supplements, or food supplements. FDA regulations govern the preparation, packaging, labeling, holding, and distribution of foods, OTC drugs, cosmetics, and dietary supplements. Among other obligations, they require the company and its contract manufacturers to meet relevant CGMP (Current Good Manufacturing Practice) regulations for the preparation, packaging, holding, and distribution of OTC drugs and dietary supplements. The company and its contract manufacturers are compliant with the FDA’s CGMPs and other applicable manufacturing regulations in the United States. Some of the products marketed by the company are considered conventional foods and are labeled as such. Within the United States, this category of products is subject to the federal Nutrition, Labeling and Education Act, or NLEA, and regulations promulgated under the NLEA. The federal Food Safety Modernization Act, or FSMA, is also applicable to some of the company’s business. The company follows a food safety plan and has implemented preventive measures required by the FSMA. Foreign suppliers of its raw materials are also subject to FSMA requirements, and the company has implemented a verification program to comply with the FSMA. The FTC exercises jurisdiction over the advertising of all of the company’s products in the United States. The company is subject to a permanent injunction issued in October 1986 pursuant to the settlement of an action instituted by the California Attorney General, the State Health Director, and the Santa Cruz County District Attorney. The company’s network marketing program is subject to a number of federal and state regulations administered by the FTC and various state regulators, as well as regulations in foreign markets administered by foreign regulators. History The company, a Cayman Islands exempt limited liability company, was founded in 1980. The company was incorporated in 2002. It was formerly known as Herbalife Ltd. and changed its name to Herbalife Nutrition Ltd. in 2018 and then to Herbalife Ltd. in 2023.