Natural Alternatives 2025 Q3 Earnings Misses Targets as Net Loss Widens 38.5%

Natural Alternatives International (NAII) reported its fiscal 2025 Q3 earnings on May 14th, 2025. Natural Alternatives missed expectations with a net loss of $2.19 million, widening from $1.58 million in the previous year. Despite a 14% increase in revenue, operational challenges persisted. The company adjusted its guidance, anticipating continued net losses due to underutilized factory capacities and rising costs, while remaining optimistic about new product launches.

Revenue
Natural Alternatives demonstrated a 14.4% increase in total revenue, reaching $28.77 million for Q3 2025, compared to $25.14 million in Q3 2024. This growth was primarily driven by private-label contract manufacturing, which contributed $27.07 million, marking a significant increase. Meanwhile, patent and trademark licensing revenue amounted to $1.69 million, reflecting a decline in CarnoSyn® beta-alanine sales. Corporate expenses remained unallocated, resulting in total net sales of $28.77 million.

Earnings/Net Income
Natural Alternatives reported a deeper loss of $0.37 per share in Q3 2025, compared to $0.27 per share in Q3 2024, resulting in a 37% wider loss. The net loss expanded to $2.19 million, a 38.5% increase from the $1.58 million loss in Q3 2024, indicating unfavorable earnings performance.

Post-Earnings Price Action Review
The strategy of purchasing Natural Alternatives (NAII) shares following revenue increases on the earnings report date and holding them for 30 days has been notably unsuccessful over the past five years. This approach resulted in a negative return of 53.06%, underperforming the benchmark return of 92.45%. The excess return was -145.51%, with a compound annual growth rate (CAGR) of -14.08%, highlighting significant losses. The strategy also experienced a high maximum drawdown of -86.50% and a Sharpe ratio of -0.26, illustrating considerable risk and negative returns. Despite the recent revenue growth, the company's stock performance continues to be volatile, leading to poor long-term investment outcomes. Investors should approach this strategy with caution, considering the historical performance and associated risks.

CEO Commentary
Mark A. Le Doux, Chairman and Chief Executive Officer of Natural Alternatives International, Inc., expressed optimism about the company's revenue growth, highlighting a 14% increase in net sales to $28.8 million driven by a 20% rise in private-label contract manufacturing sales. However, he acknowledged challenges such as a 36% decline in CarnoSyn® beta-alanine revenue, operational inefficiencies due to underutilization of factory capacities, and rising costs affecting profitability. He emphasized the importance of monitoring supply chain issues and expressed encouragement regarding the interest in the new TriBsyn™ product, suggesting this could lead to profitability in the future.

Guidance
For the remainder of fiscal 2025, Natural Alternatives anticipates continued net losses despite expected sales growth in Q4. The management forecasts overall net sales for the year will reflect a 14% increase compared to the previous year, while operational challenges, particularly related to manufacturing efficiency and declining CarnoSyn® revenues, are expected to persist. The company remains focused on addressing these issues and is optimistic about the potential impact of new product launches in the near future.

Additional News
In recent developments, CarnoSyn® Brands unveiled TriBsyn™, a revolutionary carnosine booster, which aims to eliminate paresthesia and improve beta-alanine absorption. This innovation targets the aging population and those with plant-based diets. Additionally, CarnoSyn® Brands announced a new U.S. distribution agreement with B&D Nutritional Ingredients, effective October 1st, focusing on distributing TriBsyn™ to supplement and functional food markets. Moreover, Natural Alternatives International is scheduled to showcase TriBsyn™ at the 46th ESPEN Congress on Clinical Nutrition & Metabolism in Milan, Italy, highlighting its potential in healthy aging and wellness solutions.