Natural Alternatives International Reports 14% Sales Increase but Net Loss of $13.6 Million for Fiscal Year 2025

Natural Alternatives International, Inc. (NAI) reported a consolidated net sales increase of 14% for the fiscal year ending June 30, 2025, reaching $129.9 million compared to $113.8 million in the previous year. The growth was primarily driven by a 16% rise in private-label contract manufacturing sales, which amounted to $121.8 million, attributed to increased orders from two larger customers and new customer acquisitions. However, sales from the company's largest customer decreased, contributing to a shift in revenue concentration from 42% in fiscal 2024 to 33% in fiscal 2025. Patent and trademark licensing revenue saw a slight decline of 4%, totaling $8.1 million, down from $8.4 million, mainly due to reduced material sales from existing customers.

Despite the increase in sales, NAI reported a net loss of $13.6 million for fiscal 2025, compared to a loss of $7.2 million in fiscal 2024. The loss was attributed to several factors, including underutilization of manufacturing capacity, a valuation allowance against deferred tax assets, and a $1.4 million expense related to a legal settlement. The company's total operating expenses rose to $16.5 million, reflecting increased compensation, legal costs, and other operational expenses. The gross profit margin improved to 7.1%, up from 6.0% in the prior year, indicating better cost management despite the overall loss.

In terms of strategic developments, NAI has focused on expanding its product offerings, particularly in the Wellness and Healthy Aging markets. The company launched a new product, TriBsyn™, which is designed to enhance the bioavailability of beta-alanine while minimizing side effects. This product is expected to open new market segments, including older adults and those following vegetarian or vegan diets. Additionally, NAI has continued to invest in research and development, with expenses totaling $1.8 million for the fiscal year, slightly down from $1.9 million in the previous year.

Operationally, NAI employed 215 full-time employees in the U.S. as of June 30, 2025, with an additional 78 employees in its Swiss subsidiary. The company has also expanded its manufacturing capabilities, including a new high-volume powder blending and packaging facility that became operational in April 2023. However, the facility was temporarily closed in October 2023 due to excess inventory from a major customer, highlighting the company's reliance on a limited number of clients for a significant portion of its revenue.

Looking ahead, NAI anticipates a challenging fiscal 2026, projecting a net loss in the first half but expecting to return to profitability in the second half of the year. The company plans to leverage its certified facilities to enhance service offerings and expand its customer base while continuing to navigate the impacts of inflation and supply chain challenges. NAI's management remains focused on diversifying its sales channels and improving operational efficiencies to drive future growth.