10-Q · May 19, 2026
Natural Alternatives International, Inc. (NAII) reported that Q2 2026 revenue was $35.5M, up 23% year-over-year, with a gross margin of 1.1%. However, the company sustained a net loss of $4.3M in the quarter, indicating…
Earnings analysis · 10-K
NAII earnings analysis
Filed September 28, 2026 · Our reading of the company's report
The latest report
NAII grew fiscal 2026 revenue 10% to $142.515 million, led by an 11% increase in private-label contract manufacturing, but profitability deteriorated sharply: gross margin was 6.3%, operating loss was $18.752 million,…
Read full summary
NAII grew fiscal 2026 revenue 10% to $142.515 million, led by an 11% increase in private-label contract manufacturing, but profitability deteriorated sharply: gross margin was 6.3%, operating loss was $18.752 million, net loss was $20.695 million and diluted EPS was negative $3.43. Operating cash flow also reversed from positive $5.932 million in fiscal 2025 to negative $8.916 million, while debt dependence and customer concentration increased the financial risk. Management is launching newer beta-alanine products and plans to consolidate facilities, but the auditor’s substantial-going-concern doubt, anticipated covenant breach and expected fiscal 2027 net loss dominate the outlook.
Gross and operating margin
How much of each revenue dollar the business keeps.
One point per quarterly or annual filing. Both margins are shares of that report's revenue.
From revenue to operating profit
Where each $100 of revenue went in this report.
Cost of sales, operating expenses, and what remained. Figures are rounded to whole dollars.
Where revenue came from
The business segments reported by the company.
Shares of the segments disclosed in this filing, largest first.
How we read each report
Our analysis across the last few reports.
Our model's reading of each filing, not the share price or the market's reaction. Annual and quarterly reports each occupy one position.
Reported figures
- Earnings per share
- $-3.43
What stood out
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Contract Manufacturing Revenue Grew 11%
Consolidated net sales increased 10% to $142.515 million in fiscal 2026 from $129.860 million in fiscal 2025. Private-label contract manufacturing sales rose 11% to $134.615 million, primarily from increased orders by one large customer and several existing customers.
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Expanded Beta-Alanine Product Roadmap
The company launched CarnoSyn 4X on April 20, 2026 and expanded TriBsyn applications on May 4, 2026 into beverage, dairy, medical nutrition, gummies and other categories. SR CarnoSyn patents extend through 2036, supporting a longer-term product roadmap despite the expiration of the final instant-release CarnoSyn patent in July 2026.
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Licensing Segment Remained Profitable
Patent and trademark licensing remained profitable, generating $7.900 million of revenue and $2.692 million of segment operating income in fiscal 2026. Management is targeting Sports Nutrition, Wellness and Healthy Aging, and Medical Food channels with CarnoSyn, SR CarnoSyn, CarnoSyn 4X and TriBsyn.
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Facility Consolidation Could Reduce Costs
Management plans to consolidate production into the Vista facility and sell the Carlsbad manufacturing facility to reduce excess capacity and debt. The company states that production can be consolidated without disruption, while the corporate headquarters was classified as held for sale at a carrying value of $3.977 million.
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Capital Spending and Lease Footprint Adjusted
The company invested $3.701 million in property and equipment during fiscal 2026, including solar-generation equipment and facility-support spending. It also reduced the Vista lease liability and right-of-use asset by $14.1 million after determining that a previously recorded extension option was no longer reasonably certain to be exercised.
What to watch
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Going-Concern and Covenant Failure Risk
The auditor reported substantial doubt about going-concern status. At June 30, 2026, cash, cash equivalents and restricted cash totaled $7.5 million, while management anticipates failing the Legacy fixed-charge coverage covenant for the nine months ending September 30, 2026; the company had $7.7 million drawn on its Legacy line and $10.9 million outstanding under its term loan.
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Customer Concentration and Order Reduction
Two largest customers represented approximately 52% of fiscal 2026 consolidated net sales, and one of the largest customers subsequently made a material downward revision to fiscal 2027 orders because of growing inventory. The largest customer represented 28% of fiscal 2026 sales, versus 33% in fiscal 2025, but the forecast reduction is expected to drive covenant non-compliance and a fiscal 2027 net loss.
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Capacity Underutilization and Asset Sale Risk
The company recorded a $10.4 million non-cash impairment charge on the Carlsbad manufacturing facility after projected undiscounted cash flows failed to support its carrying value. Management is pursuing a sale of the facility, but states it is specialized and may not sell quickly; the impairment was driven in part by the customer forecast reduction and expected negative operating cash flow in fiscal 2027.
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Instant-Release Patent Expiration
The final patent for instant-release CarnoSyn expired in July 2026, and patent and trademark licensing revenue declined from $8.1 million in fiscal 2025 to $7.9 million in fiscal 2026. Although SR CarnoSyn patents extend through 2036, the company cannot assure market acceptance of newer products such as CarnoSyn 4X and TriBsyn.
Management's outlook
No numeric annual guidance was provided. Management said fiscal 2027 sales are expected to increase versus fiscal 2026, but it currently anticipates a net loss for fiscal 2027. The company also expects raw-material and operating-cost pressures to continue throughout fiscal 2027.
Earlier filings 4
10-Q · February 13, 2026
NAI reported fiscal Q2 net sales of $34.795 million (three months ended Dec 31, 2025) — up modestly versus the year-ago quarter but down versus the prior quarter — with gross margin improving year-over-year to ~7.2% but…
10-K · September 23, 2025
NAI reported fiscal 2025 net sales of $129.86 million, up from $113.80 million in fiscal 2024, driven primarily by private-label contract manufacturing. The company is focused on commercializing its beta-alanine patent…
10-Q · May 14, 2025
NAI reported quarterly net sales of $28,766,000 for the three months ended March 31, 2025, up from $25,136,000 in the prior-year quarter, but posted a larger GAAP net loss of $(2,186,000) (EPS $(0.37)) versus…
This is our reading of a public filing, not the filing itself. Analysis can contain errors; check the source document for full context.