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Multilevel marketers in health and wellness continue hot streak

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Pandemic conditions have clearly benefitted the bottom lines of many companies that rely on direct selling to reach home-bound customers seeking nutrition and beauty support products.

Direct selling companies in the health and wellness sector have been on a tear since the pandemic gripped the globe in 2020, and their sales momentum seemingly has carried over into 2021.

First-quarter results for many of the publicly traded multilevel marketers (MLMs) were similarly stellar to their 2020 numbers, with many breaking decades-old records for growth.

Direct sellers reporting record revenue in the first quarter of 2021 include Herbalife Nutrition Ltd. (NYSE: HLF), Nature’s Sunshine (Nasdaq: NATR), Nu Skin Enterprises Inc. (NYSE: NUS), and Medifast Inc. (NYSE: MED).

The pandemic—and its resulting consumer focus on health and wellness, as well as the market’s reliance on home-based buying and services—clearly benefitted the bottom lines of many multilevel marketing companies.

Herbalife cited increased demand for its nutrition products, as well as new consumer-facing technology used by the company’s independent distributors to interact with their customers, when they reported Q1 2021 net sales of $1.5 billion, an 18.9% increase compared to the first quarter of 2020. March worldwide net sales set a single-month, net sales record, Herbalife announced.

Nature’s Sunshine, which bills itself as a direct seller of high-quality herbal and nutritional products, said net sales increased 7% to a record $102.4 million in the first quarter of this year, which CEO Terrence Moorehead described as “the largest sales in the 49-year history of the company.” It was the third-consecutive quarter of net sales over $100 million.

Revenue at Nu Skin—described by Euromonitor as the world’s No. 1 beauty device systems brand—reached $677 million in Q1 2021, a 31% increase from the same time period last year. Part of the company’s success was attributed to a robust and pandemic-friendly social commerce business model.

“Our affiliates are leveraging this model to connect with more consumers and attract people interested in building their own socially enabled affiliate marketing business,” said Ryan Napierski, president and CEO-elect of the company, alluding to the benefits of direct selling in this unusual environment.

Another company cashing in on the current climate is Medifast, which targets weight loss customers with nutrition programs as well as personalized OPTAVIA coaches. The company’s integrated approach to weight loss is working; Q1 revenue increased in 2021 by 90.9% over the prior year, to $340.7 million, and net income increased 122.2% to $41.1 million over the same time period.

“Demand for health and wellness products and services is clearly strong right now with a particularly high addressable market for approaches that leverage healthy habit building over dieting or other weight loss approaches,” Chairman and CEO Dan Chard said in a conference call announcing the numbers.

Analysts with Jefferies, who closely watch the health and wellness space with a particular focus on direct selling companies, were particularly bullish on Medifast after release of the strong numbers.

“(Company growth) is a testament the company is reaping the benefits of a highly successful weight loss program underpinned by a distribution channel that is exploiting its social commerce characteristics while still accessible to the mass market,” Jefferies analysts wrote, in raising their guidance. “Providing a holistic wellness approach with healthy habits at its core is powering OPTAVIA to quickly become the No. 1 weight loss program in the U.S."

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