Hain Celestial Group (HAIN) reported a 7% decline in second-quarter revenue on Monday and announced a definitive agreement to sell its North American snacks business for $115 million as part of an urgent turnaround strategy to sharpen its portfolio and reduce debt.
The health and wellness company, known for brands like Celestial Seasonings tea and Earth’s Best baby food, saw net sales drop to $384 million for the quarter ended Dec. 31, 2025. Organic net sales also decreased 7% year-over-year, driven by a 9-point decline in volume and mix that was only partially offset by a 2-point increase in pricing.
The company posted a net loss of $116 million, or $1.28 per diluted share, compared to a loss of $104 million in the prior-year period. Results were heavily impacted by pre-tax non-cash impairment charges of $132 million related to goodwill and certain intangible assets. On an adjusted basis, Hain reported a loss of $0.03 per share.
Strategic Divestiture and Debt Reduction
The $115 million cash sale of the North American snacks business, which includes brands such as TERRA, Garden Veggie Snacks, and Garden of Eatin’, marks a major step in the company’s “Reimagine Hain” strategy. Management intends to use the proceeds to reduce net debt, which stood at $637 million at the end of the quarter.
We took bold steps to sharpen our portfolio and strengthen our balance sheet, the divestiture provides greater financial flexibility and a clearer focus on core categories like tea, yogurt, and baby/kids.
Segment Performance
- North America: Organic net sales plummeted 10%, primarily due to distribution losses in snacks and softness in baby formula, though beverages provided a partial offset. Adjusted EBITDA for the segment fell 57% to $11 million.
- International: Organic net sales decreased 3%, showing what the company called “sequential improvement” from the first quarter. The segment’s adjusted EBITDA dropped 16% to $19 million.
In terms of category performance, Beverages was a bright spot with a 3% organic sales increase, fueled by tea growth in North America. Conversely, Snacks saw a 20% organic decline, while Baby & Kids fell 14% due to industry-wide softness in UK purees and lapping supply recovery in North American formula.
Cash Flow and Outlook
Despite the revenue contraction, Hain highlighted improved operational efficiency, with free cash flow rising 22% to $30 million. The company also reported its best service levels in recent history in North America and a significant reduction in inventory days.
Hain Celestial declined to provide numeric guidance for fiscal 2026, citing uncertainties surrounding its ongoing strategic review. However, the company expects stronger organic net sales and EBITDA trends in the second half of the fiscal year compared to the first, driven by productivity savings and cost management.