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Usana Health Sciences

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USANA Health Sciences, Inc.
Company typePublic (NYSE: USNA)
IndustryMulti-Level Marketing of Nutrition & Skin Care products
FoundedSalt Lake City, UT (1992)
HeadquartersSalt Lake City, UT
Key people
Myron Wentz, Ph.D., Founder & Chairman

David Wentz, Chief Executive Officer
Fred Cooper Ph.D., President and Chief Operating Officer
Jeff Yates, Vice President and Chief Financial Officer

Tim Wood, Ph.D., Executive Vice President of Research and Development
ProductsNutritional supplements, personal care
Websitewww.usana.com

USANA (Nasdaq: USNA), or USANA Health Sciences, Inc., is a multilevel marketing company that produces various nutritional and skin-care products. Most of these products are manufactured in the United States[1] and sold in thirteen international markets[1]. The company has sponsored and provided products to several athletic organizations[2][3][4]. In 2007, several of its executives were discovered to have made false statements in their resumes.[5][6][7]

Background and organization

USANA was founded by an immunologist and microbiologist Myron Wentz.[8] It is based in Salt Lake City, Utah. The company sells its products through multilevel marketing: associates recruit other associates, who recruit still others.[8] The products are not available through retail channels, but instead can only be obtained by a direct order to the company or through one of its independent associates. [8] The company employs approximately 1,000 people worldwide, and has 176,000 associates and "preferred customers" in its worldwide distribution network. Approximate sales for 2007 was $427 million of which 87% was generated by associates, and 13% by preferred customers.[9] The company states that, as of 2009, their products are marketed in the U.S.A., Canada, Australia, New Zealand, United Kingdom, Netherlands, Japan, Hong Kong, Taiwan, Korea, Singapore, Mexico, Malaysia and The Philippines. From 2004 to 2006, USANA was named on Forbes “200 Best Small Companies” list.[10]

During 2007, USANA faced repeated controversy as several of their executives were discovered to have made false statements regarding their qualifications.[11] These included Denis Waitley, a member of the board of directors[12], Ladd McNamara, who quit the company's medical advisory board after it was discovered his license to practice medicine had been revoked,[13][14][15] the Vice President of Research and Development, Timothy Wood, who was found to have doctorate in forestry, as opposed to biology as he had claimed.[16] and the Executive Vice President and Chief Financial Officer, Gilbert Fuller, who had continued to use the title of CPA,[17] though his license had lapsed.[18][16]

In 2007, USANA was not included on Forbes' 200 Best Small Companies” list, and an article in the magazine quoted industry and government experts who had raised questions about USANA’s business practices and products.[19][20] USANA responded by issuing a press release which denied several of the allegations and claimed that the article contained errors.[21]

Multi-level Marketing

The company uses multilevel marketing: associates sell health and other products, but also seek to recruit other associates, who work under them.[8] USANA uses a binary compensation plan which awards commissionable 'points' for sales volume. When the points reach a pre-determined number, the associate is paid. If the points do not reach the payment threshold, they accumulate towards the next week. USANA requires that associates must generate a certain sales quota every four weeks in order to remain eligible to receive compensation. However, if the quota is not reached, the distributor will lose all the points that have accumulated but not yet been paid on.[22]

USANA's associates are bound by distributor agreements, which include forbidding distributors from making "misleading income claims" to potential associates or from making health claims for the products.[8] However, an investigative report aired by Radio-Canada in February 2009, which included hidden camera filming of recruitment and other sessions, found that one group of associates appeared to violate the company's policies. The program contrasted the information about potential revenues presented at meetings and in written materials with the Canadian legal requirements for multi-level marketing schemes to provide clear, frequent and complete information about the revenue of the typical participant.[8][23] In addition, the same group of associates were filmed making recommendations for using USANA products to treat illnesses including leukemia.[8]

In 2008, two Canadian USANA distributors were awarded c $7 million in compensation for damages related to their wrongful dismissal from the company. USANA had terminated their positions in 2003 because USANA believed the distributor had violated the companies' policies and procedures. [24][25]

Products

The products that USANA manufactures encompass a total of four individual categories. USANA Nutritionals (Essentials and Optimizers nutritional supplements), USANA Macro-Optimizer foods (meal replacement drinks and nutritional bars), Rev3 (nutrient based energy drinks and mixing packets) and Sensé (skin care and hair care products). USANA products are controversially expensive but have been tested by multiple third party sources and proven to be of a higher quality than generic store bought brands, but at the same level as some high quality nutrients manufactured by other quality providers.

  • Nutritionals
    • Essentials – USANA’s core group of products designed to cover the necessary daily range of nutrients from kids to adults.
      • Health Pack 100
      • Essentials Kit
      • Mega Antioxidant
      • Chelated Minerals
      • Body Rox
      • Usanimals
    • Optimizers – USANA’s secondary source of nutrients. Designed to enhance the effect of their primary line of nutrients.
      • Proflavanol
      • Proflavanol 90
      • CoQuinone 30
      • BiOmega
      • OptOmega
      • Poly C
      • Active Calcium
      • Body Rox Active
      • Calcium Chewable
      • Procosa II
      • PhytoEstrin
      • Palmetto Plus
      • Ginko-PS
      • Visionex
      • Tepasil DTX
      • TenX
  • Marco-optimizer Foods
    • Nutrimeal – Designed as meal replacement and high protein shakes.
      • Chocolate Whey
      • Wild Strawberry
      • French Vanilla
      • Dutch Chocolate
    • RESET
    • Soya Max
    • Fibergy Drink
      • Almond Crème
      • Peach Mango
    • Nutrition Bar
      • Chocolate Fusion
      • Butter Crunch
      • Oatmeal Rasin
  • Rev3 – USANA’s energy drink using natural nutrients for energy and attentiveness.
    • Canned Rev3
    • Surge Packs
  • Sense – USANA’s skin and hair care line using all natural ingredients and a completely automated manufacturing process.
    • Basics
      • Gentle Daily Cleanser
      • Hydrating Toner
      • Daytime Protective Emulsion
      • Night Renewal
    • Enhancers
      • Rice Bran Polisher
      • Perfecting Essence
      • Serum Intensive
      • Eye Nourisher
      • Nutritious Crème Masque
    • Splash
      • Energizing Shower Gel
      • Revitalizing Shampoo
      • Nourishing Conditioner
      • Firming Body Nourisher
      • Intensive Hand Therapy

Sponsorships

USANA Health Sciences as a company sponsors multiple international teams and individual players, providing them with free nutritional supplements as well as monetary donations in certain cases, such as the USA Bobsled Team Radcliff [26][27]. In 2006, USANA signed a co-sponsorship agreement as the official health supplement supplier to the Sony Ericsson WTA tour, which has strict guidelines on the supplements that athletes can put in their body and has been certified by the NSF for use by professional baseball players..[28][29][30]Most teams that USANA sponsors are Olympic teams or Olympians themselves (if they do not compete on teams). USANA also has what is known as their ‘athletes guarantee’ which states that USANA as a company personally guarantee’s not only the quality of their products but also that the products have been approved by multiple sports organizations and Olympic committees to not be ‘performance enhancing drugs’ and not test positive for drugs during various types of drug tests. It currently holds the position of being the nutritional sponsor for the Canadian Olympic Ski team, Cross Country Canada and Biathlon Canada; United States, Great Britain and Canadian Speed Skating teams, U.S.A Lunge and United States team Radcliff an Olympic Bobsled team. USANA sponsored athletes-

  1. Jennifer Azzi – Woman’s professional NBA player and 1996 Olympic gold medalist
  2. Derek Parra – 2002 Olympic gold and silver medalist for speed skating also current Olympic record holder for 1500 meter and world record holder for 5000 meter
  3. Ryan Ragan – Professional surfboarder
  4. Jose Antonio Rivera – Three time world boxing champion
  5. Jennifer Heil – 2006 Olympic gold medalist for downhill moguls
  6. Vassiliy Jirov – 1996 Olympic gold medalist and former IFB cruiserweight champion 1999-2003
  7. Bret Hedican – 2006 Olympic team member and professional NHL player
  8. Jared Macleod – Olympic track and field hurdler
  9. Jarred Rome – Olympic track and field discus thrower
  10. Doug LaBelle II – Professional golfer and member PGA tour
  11. Andy Studebaker – Professional football player

Awards

Since its inceptions in 1992 USANA has received different awards both internationally and nationally by many acclaimed institutions. It has also been featured in magazines such as Forbes and Business Week. It has been a featured stock on CNN hot stocks and has been certified by the NSF and by ConsumerLabs.com.

  1. Utah best of state medal for best dietary supplements (2003, 2004, 2006)
  2. Utah best of state medal for best dietary supplements and personal care products (2007, 2008)
  3. Best places to work by Outside Magazine (2009)
  4. Forbes 200 best small companies (2004, 2005, 2006)
  5. Business Weeks Top 10 Hot Growth Companies (2005)

Law suit

In March 2007, USANA was accused by Barry Minkow, an executive of the Fraud Discovery Institute of operating an illegal pyramid scheme.[31] An informal investigation was undertaken by the U.S. Securities and Exchange Commission concluded in January 2008 with the SEC recommending that no action be taken against the company.[32] USANA lodged suits against Minkow and his company claiming defamation and stock manipulation. USANA dropped the defamation suit and in March 2008 four of the five claims brought by USANA against Minkow were thrown out by a judge.[33][34] The remaining charge of stock manipulation was settled in July 2008 when USANA and Minkow reached an undisclosed settlement, which included the removal of all USANA-related materials from the Fraud Discovery Institute website, a related Chinese website, and from YouTube. Minkow also agreed to never trade in USANA's stock again.[35][36]

Controversy

Executive Controversy

In 2007 USANA investigated many personal workers from the company based on allegations of false résumés. After the internal investigation was completed multiple USANA executives were discovered to have made these false statements on their qualifications. Some of those included were Denis Waitley, one of the members of the board of directors for the company. Ladd McNamara, a member of the company’s medical advisory board, quit after it was discovered that his license to practice medicine had been revoked. The executive Vice President and Chief Financial Officer, Gilbert Fuller who had continued to use his title of CPA even though his license had lapsed and also the Vice President of Research and Development, Timothy Wood who had made false statements on his résumé of having a degree in biology but rather having received a degree in forestry.

SEC Controversy

In 2007 USANA Health Sciences was informally investigated by the Securities and Exchange Commission (SEC) after being accused by Barry Minkow (executive of the Fraud Discovery Institute) of running an illegal pyramid scheme. The investigation concluded in January of 2008 with the recommendation that no action be taken against USANA Health Sciences by the SEC. After the investigation USANA filed suit against Minkow under the claims of defamation and stock manipulation. The defamation suit was dropped in March of 2008 along with four of the five claims that were dropped by a judge. However the only remaining charge of stock manipulation was settled in July of 2008 when Minkow and USANA came to an undisclosed settlement; which required that Minkow agree not to trade in USANA stock again and all related material to the case be removed from youtube and the Fraud Discovery Institute website and a similar Chinese website.

USANA Amphitheater

Opened in late June of 2003 the USANA amphitheater is a 20,000 person open air amphitheater. Located in West Valley City, Utah the naming rights of the amphitheater were purchased by USANA in March of 2003. Used year round for various events including concerts, formal gatherings and business events, Etc. the USANA amphitheater has seen the likes of Dave Matthews Band, the Red Hot Fourth of July celebration and Lollapalooza. The amphitheater offers scenic views of the Wasatch Mountain Range.

Research Partnerships

USANA Health Sciences has forged many strong research partnerships with renowned institutions all over the world. Including the Linus Pauling Institute for research on micronutrients and their necessity in the human body, which researches the affect of current grown plants and supplements on the market and how they currently affect the regular body on a day to day basis. Also other esteemed institutions like Boston University, University of Utah and the University of Oregon. All of which have research departments focused on the effect of nutrients in current market society.

See Also

References

  1. ^ [www.sec.gov/Archives/edgar/data/896264/0001104659-09-02 "Usana Health Sciences Securities and Exchange Comission"]. USANA Health Sciences. Retrieved 2009-4-15. {{cite web}}: Check |url= value (help); Check date values in: |accessdate= (help)
  2. ^ Usana Health Sciences. "Sponsored Usana Athletes". Usana Health Sciences. Retrieved 2009-4-15. {{cite web}}: Check date values in: |accessdate= (help)
  3. ^ Usana Health Sciences. >. "Usana Fast Facts". Usana Health Sciences. Retrieved 2009-4-17. {{cite web}}: Check date values in: |accessdate= (help)
  4. ^ >. "Nutritional Supplements approved for use in Major League Baseball". NSF. Retrieved 2009-4-15. {{cite web}}: Check date values in: |accessdate= (help)
  5. ^ Paul Foy (2007-06-12). "Another Usana official forced to revise resume". Daily Herald. {{cite news}}: Italic or bold markup not allowed in: |publisher= (help)
  6. ^ [www.sec.gov/Archives/edgar/data/896264/0001104659-09-02 "Usana Health Sciences Securities and Exchange Comission"]. USANA Health Sciences. Retrieved 2009-4-15. {{cite web}}: Check |url= value (help); Check date values in: |accessdate= (help)
  7. ^ "United States of America. Securities and Exchange Comission". USANA Health Sciences Securities and Exchange comission reprt. 2007.
  8. ^ a b c d e f g "Vente à paliers multiples: légale, à de strictes conditions!". La Facture. February 24 2009. {{cite episode}}: Check date values in: |airdate= (help); Cite has empty unknown parameters: |episodelink= and |serieslink= (help)
  9. ^ "USANA Annual Report 2007". United States Securities and Exchange Commission. 2007-12-29. {{cite news}}: Italic or bold markup not allowed in: |publisher= (help)
  10. ^ "200 Best Small Companies". Forbes. 2006. Retrieved 2008-10-14.
  11. ^ Paul Foy (2007-06-12). "Another USANA official forced to revise resume". Daily Herald. {{cite news}}: Italic or bold markup not allowed in: |publisher= (help)
  12. ^ Don Bauder (2007-09-13). "Pyramid, Phony Bios". "San Diego Reader. {{cite news}}: Italic or bold markup not allowed in: |publisher= (help)
  13. ^ http://web.archive.org/web/20070927213929/http://www.nbr.co.nz/docs/35081069_ohio.pdf
  14. ^ http://web.archive.org/web/20070927213808/http://www.nbr.co.nz/docs/04-036573_georgia.pdf
  15. ^ Helen Malmgren (2007-08-16). "Troubled USANA faces new stock woes". The National Business Review. {{cite news}}: Italic or bold markup not allowed in: |publisher= (help)
  16. ^ a b Roddy Boyd (2007-06-12). "CFO's no CPA - USANA under fire on executive bios". New York Post. {{cite news}}: Italic or bold markup not allowed in: |publisher= (help)
  17. ^ http://www.sec.gov/Archives/edgar/data/896264/000110465907018746/a07-6205_1def14a.htm
  18. ^ License 120645-2601 Detail
  19. ^ Evelyn M. Rusli (August 8, 2007). "Hard to Swallow". Forbes. Retrieved 2008-10-14. {{cite web}}: Cite has empty unknown parameter: |1= (help)
  20. ^ Helen Malmgren (August 11, 2007). "Forbes is Usana's latest critic". The National Business Review. Retrieved 2008-10-14.
  21. ^ Robert MacMillan (August 9, 2007). "Update 1--USANA says Forbes article makes false statements". Reuters. Retrieved 2008-10-14.
  22. ^ "USANA pay plan".
  23. ^ "Competition Bureau - Multi-level Marketing and Pyramid Selling". www.competitionbureau.gc.ca. Retrieved 2009-03-11.
  24. ^ name="USANA Form 8-K">"USANA Form 8-K". United States Securities and Exchange Commission. 2008-12-22. {{cite news}}: Italic or bold markup not allowed in: |publisher= (help)
  25. ^ name="Judgement will cost Usana $7 million">"Judgement will cost Usana $7 million". The Salt Lake Tribune. 2009-02-13. {{cite news}}: Italic or bold markup not allowed in: |publisher= (help)
  26. ^ Cite error: The named reference ”facture” was invoked but never defined (see the help page).
  27. ^ "USANA Becomes Official Supplement Supplier of USA Bobsled Team Radcliff". REUTERS. 2008-04-23. {{cite news}}: Italic or bold markup not allowed in: |publisher= (help)
  28. ^ Liz Robbins (2006-08-23). "WTA Tour Signs On With Vitamin Supplier". New York Times. {{cite news}}: Italic or bold markup not allowed in: |publisher= (help)
  29. ^ "USANA, women's tennis tour ink deal on 'clean' supplements". Salt Lake Tribune. 2006-08-23. {{cite news}}: Italic or bold markup not allowed in: |publisher= (help)
  30. ^ "Company Press Release: Usana Health Sciences and Sony Ericsson WTA tour announce landmark agreement" (PDF). Usana. 2006-Sept. {{cite news}}: Check date values in: |date= (help)
  31. ^ Dave Anderson. "As stocks plunge, Usana sues Minkow over report". Deseret Morning News. {{cite news}}: Italic or bold markup not allowed in: |publisher= (help)
  32. ^ Pratish Narayanan (2008-01-11). "UPDATE 1-SEC ends Usana probe with no action; shares up". Reuters.
  33. ^ The Associated Press (2008-05-07). "USANA ordered to pay for SLAPP violation". Salt Lake Tribune. {{cite news}}: Italic or bold markup not allowed in: |publisher= (help)
  34. ^ Tom Harvey (2008-03-05). "USANA claims tossed". Salt Lake Tribune. {{cite news}}: Italic or bold markup not allowed in: |publisher= (help)
  35. ^ Tom Harvey (2008-03-05). "USANA claims tossed". Salt Lake Tribune. {{cite news}}: Italic or bold markup not allowed in: |publisher= (help)
  36. ^ Paul Foy (July 29, 2008). "Supplement-maker USANA settles suit with critic". Associated Press. {{cite news}}: Italic or bold markup not allowed in: |publisher= (help)
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