What Herbalife Ltd. told the SEC could break it.

Herbalife is exposed to U.S. and foreign tariff/trade actions. Tariffs and counter-tariffs enacted by foreign governments — such as China, Canada or Mexico — that apply to its products or ingredients have already had, and may continue to have, an adverse impact on the cost and availability of certain ingredients and on sales into those countries. Its U.S. manufacturing operations supply a significant amount of finished-goods inventory to its Mexico market, so U.S.-Mexico tariff/retaliatory measures are a particular exposure. A realized, multi-country trade-policy exposure on a globally sourced and distributed product line.

“tariffs and counter tariffs enacted by foreign governments, such as China, Canada or Mexico, that apply to our products or our ingredients”

Herbalife's multi-level-marketing model faces distinctive regulatory risk, most acutely in China (~6% of 2025 net sales), where it must operate a modified business model to comply with Chinese direct-selling regulations. The Chinese government exercises significant control over the economy and rigorously monitors the direct-selling market, having taken serious action against companies in the past. If Herbalife is deemed in violation (e.g., over service-provider eligibility and fee structures), it could be sanctioned and/or required to change its business model, with a significant adverse impact on its China business. More broadly, its direct-selling/MLM model is subject to ongoing regulatory and legal scrutiny across jurisdictions. A distinctive direct-selling/MLM regulatory exposure.

Herbalife produces at its own Herbalife Innovation and Manufacturing (HIM) facilities (Lake Forest and Winston-Salem in the U.S., Suzhou in China) but also relies heavily on third-party contract manufacturers located in India, Italy, the U.S., Brazil, South Korea, Taiwan, Germany and the Netherlands. In 2025, approximately 22% of products produced and sold worldwide came from its top three third-party manufacturers. A significant interruption at a HIM facility or a top CMO — or any supply-chain disruption — could materially harm the business, with concentration amplified by product mix (Formula 1 shake mix alone is ~25% of net sales). CMOs are not individually named, so a supplier-concentration/sole-source risk.

“During 2025, based on our total products produced and then sold worldwide, we purchased approximately 22% of our products from our top three third-party manufacturers.”

Herbalife's 'seed to feed' supply chain depends on sourcing a significant amount of ingredients and raw materials — including botanicals, teas, herbs, protein and supplement inputs — from the U.S., China, Europe and India. It self-processes some botanical/tea ingredients (e.g., at its Changsha, China facility, which supplies tea/herbal raw materials to its own and third-party manufacturers). Disruptions, quality issues, weather/agricultural shortfalls, or price increases in these globally sourced agricultural/botanical commodities could raise costs or interrupt production. A specific ingredient/raw-material commodity dependence.

“We source a significant amount of our ingredients and raw materials from U.S., China, Europe, and India from well-established, reputable suppliers in their respective field.”