0001100682-26-000022
SEC filingRevenue declined 0.9% to $4.02B, with a net loss driven by $259M in intangible impairments and $165M goodwill charge.
Charles River Laboratories International, Inc. describes itself as a leading, full-service, non-clinical global drug development partner with a mission to create healthier lives. The company has built upon its original core competency in laboratory animal medicine to develop a diverse portfolio of discovery and safety assessment services, both GLP and non-GLP, supporting clients from target identification through non-clinical development. It also provides products and services to support manufacturing activities. The company's stock trades on the NYSE under the symbol CRL, and it is headquartered in Wilmington, Massachusetts.
The company operates three reportable segments. Research Models and Services (RMS) accounted for 21.1% of total revenue in 2025. It provides foundational tools for drug discovery, including the production and sale of research models (primarily purpose-bred rodents and non-human primates), along with services such as insourcing solutions (including CRADL facilities), genetically engineered models and services (GEMS), research animal diagnostic services (RADS), and cell solutions. Discovery and Safety Assessment (DSA) represented 59.8% of revenue and is described as the largest provider of outsourced drug discovery and regulated safety testing worldwide. It offers integrated discovery services and safety assessment studies (toxicology, pathology, safety pharmacology, bioanalysis) across multiple therapeutic modalities. Manufacturing Solutions (Manufacturing) contributed 19.1% of revenue and comprises Microbial Solutions (Endosafe endotoxin testing, Celsis rapid microbial detection, Accugenix microbial identification) and Biologics Solutions (biologics testing services and CDMO for cell and gene therapies).
Key named products and platforms include Endosafe (endotoxin testing products with PTS, MCS, Nexus, and Trillium recombinant test), Celsis (rapid microbial detection systems such as Advance II, Accel, Adapt), Accugenix (microbial identification services with Axcess instrument), CRADL (accelerator and development lab), ICM (Internet Colony Management system), GEMS, RADS, and Cell Solutions. Within DSA, the company highlights its full suite of discovery services and safety assessment capabilities across all major therapeutic areas and modalities.
The company employs dedicated sales teams for each major line of business, global and key account managers, alliance managers, and technical specialists. Marketing efforts include demand generation, scientific symposia, publications, webinars, and trade shows. Digital marketing and eCommerce are also emphasized. In 2025, no single client accounted for more than 4% of total revenue, and no single client accounted for more than 8% of any segment's revenue. The client base includes major global pharmaceutical companies, biotechnology companies, agricultural and industrial chemical firms, contract research and manufacturing organizations, hospitals, academic institutions, and government agencies.
Competition varies by segment. For RMS, the company lists four main competitors: a government-funded not-for-profit, a division of a U.S. public company, a U.S. private company, and a public company in China. For DSA, discovery services face hundreds of competitors with two main rivals (a public company in China and a public company in Europe); safety assessment has dozens of competitors with two main ones (a division of a large U.S. public company and a private Canadian company). Manufacturing: Microbial Solutions has four main competitors (three European public companies and one Japanese public company), while Biologics Solutions has five main competitors (three European public, one U.S. public, and one Chinese public). The company also faces competition from clients' internal resources.
The company's strategy focuses on being the scientific partner of choice by delivering a comprehensive portfolio. Key pillars include: broad scientifically differentiated portfolio, deep scientific expertise, commitment to animal welfare (3Rs initiative), superior quality and client support, flexible customized solutions, large global partner capabilities, digital enhancements (e.g., Apollo platform), strategic outsourcing, decisive actions to optimize footprint and costs, and a disciplined acquisition strategy. Recent actions include a comprehensive global footprint review, restructuring, and divestiture of non-core assets representing ~7% of 2025 revenue.
As of December 27, 2025, Charles River employed approximately 19,700 people, including about 2,400 science professionals with advanced degrees (Ph.D., D.V.M., M.D.). The workforce is distributed geographically: 59% in North America, 32% in Europe, 7% in Asia, and 3% in other regions. The company has undertaken selective hiring and restructuring, reducing headcount by ~2% from end of 2024. Voluntary turnover was approximately 10.1% in fiscal 2025.
Charles River Laboratories reported fiscal 2025 revenue of $4.02 billion, a 0.9% decline from $4.05 billion in 2024, with the DSA segment experiencing a 2.0% drop due to continued cautious client spending in a challenging biopharmaceutical demand environment. Operating income plummeted 88.9% to $25.2 million, and operating margin contracted 500 basis points to 0.6%, primarily due to $259.1 million in long-lived asset impairments (including $211 million in intangible assets) and a $165.0 million goodwill impairment in the Biologics Solutions reporting unit. Consequently, the company swung from a net income of $10.3 million in 2024 to a net loss of $144.3 million in 2025. The effective tax rate was negative 42.9% versus 72.8% in the prior year, largely due to the non-deductible goodwill impairment. Cash flow from operations remained resilient at $737.6 million versus $734.6 million, aided by lower variable compensation payments.
The RMS segment grew 2.0% to $846.1 million, driven by large research model revenue and pricing, but operating income fell 61.0% to $44.6 million (margin 5.3% vs 13.8%) due to a $102.0 million intangible impairment in Cell Solutions. DSA revenue declined 2.0% to $2.4 billion, with operating income down 4.1% to $424.6 million (margin 17.7% vs 18.1%), reflecting lower volumes partially offset by the absence of a prior-year $27 million NHP inventory charge and lower severance. Manufacturing Solutions revenue slipped 0.4% to $766.4 million, but the segment posted an operating loss of $184.3 million compared to a $71.5 million loss in 2024, driven by a $109.0 million intangible impairment in CDMO Gene Therapy, accelerated amortization from lost CDMO customers, and a $165.0 million goodwill impairment (lower than the $215.0 million in 2024). Unallocated corporate costs were relatively flat at $259.7 million.
Management noted that while demand from large biopharma clients began to improve in early 2025 and small/mid-biotech funding improved in the second half, overall revenue still declined. The company continues to execute cost-saving initiatives, expecting $300 million in cumulative annualized savings by end of 2026, with over $175 million realized in 2025. Restructuring charges of $99.8 million were incurred in 2025 (vs $107.0 million in 2024). Recent acquisitions—PathoQuest (option exercised) and K.F. (Cambodia) for NHPs—will be integrated into the Manufacturing and DSA/RMS segments, respectively. No specific forward revenue or earnings guidance was provided in the MD&A. The company's strategic review aims to focus on core markets through acquisitions and divestitures of non-core assets (about 7% of 2025 revenue). Key risks include further impairments if performance at Biologics Solutions or other asset groups deteriorates.
As of December 27, 2025, Charles River Laboratories held $213.8M in cash and cash equivalents, with total debt (net of issuance costs) of $2,136.4M. Shareholders' equity stood at $3,164.6M, down from $3,461.5M a year earlier, driven by net losses and share repurchases. The company's revolving credit facility had $616.5M drawn, with $1.38B available under the $2.0B facility. The weighted average interest rate on total debt was 4.05%, down from 4.48% in 2024. Inventory increased to $299.1M from $278.5M, while deferred revenue (current) decreased to $210.4M from $248.3M.
The company disclosed $667.1M in transaction price allocated to remaining performance obligations (RPO) as of December 27, 2025, with approximately 50% expected to be recognized within the next twelve months. This excludes contracts with an original expected length of one year or less and contracts where revenue is recognized at the right-to-invoice amount. Additionally, the company has $30.0M in contingent consideration liabilities (Level 3) related to acquisitions, with a weighted average probability of achieving the maximum target of approximately 100%. The company also has $22.0M in outstanding letters of credit.
In fiscal 2025, the company repurchased 2.1 million shares for $360.7M under the prior $1.0B authorization. On October 29, 2025, the Board approved a new $1.0B stock repurchase authorization, replacing the prior plan which had $549.3M remaining. As of year-end, the full $1.0B remained available. No dividends were declared or paid to common shareholders. Capital expenditures totaled $219.2M (5.5% of revenue), down from $233.0M in 2024. Net debt decreased by $103.8M, with $1,227.5M in proceeds from debt and $1,349.3M in repayments. The company also paid $19.1M to acquire the remaining redeemable noncontrolling interest in Vital River.
Revenue by segment: RMS $846.1M (+2.0% YoY), DSA $2,402.9M (-2.0% YoY), Manufacturing $766.4M (-0.4% YoY). Segment operating income: RMS $44.6M (5.3% margin), DSA $424.6M (17.7% margin), Manufacturing -$184.3M (-24.0% margin). The Manufacturing segment was impacted by $165.0M goodwill impairment and $109.0M intangible asset impairment. Geographically, U.S. revenue was $2,141.8M (53.3% of total), Europe $1,102.7M (27.5%), Canada $501.0M (12.5%), Asia Pacific $205.0M (5.1%), and Other $64.9M (1.6%). Long-lived assets (PP&E) were concentrated in the U.S. ($919.2M) and Europe ($468.6M).
The most critical supply chain risk centers on non-human primate (NHP) availability. The filing details a constricted global supply due to COVID-era Chinese export restrictions, legal actions against Cambodian suppliers, and activist campaigns. The Company voluntarily suspended Cambodian imports in 2023 but received USFWS CITES clearance in November 2025, resuming that supply channel. However, this dynamic environment continues to create price volatility, volume unpredictability, and the need to source from non-preferred vendors at higher cost.
In the CDMO segment, the January 2025 disclosure of an FDA complete response letter for a client’s BLA and subsequent Form FDA 483 at a Company facility underscores manufacturing and regulatory liability risks. The successful pre-license inspection in October 2025 mitigates near-term closure risk, but the event illustrates ongoing exposure to client product failures and regulatory compliance costs.
A $165.0 million goodwill impairment in the Biologics Solutions reporting unit was recognized in Q4 2025, driven by lower operating performance and reduced long-range financial projections. Additionally, the Cell Solutions and CDMO Gene Therapy asset groups recorded ~$211.0 million in intangible asset impairments and ~$8.0 million in property/equipment/lease impairments. The filing warns that further impairment charges are possible if revenue growth or margins decline, or if the weighted-average cost of capital increases.
The FDA Modernization Act 2.0, FDA’s April 2025 announcement to expand use of new approach methodologies (NAMs), and the UK government’s November 2025 roadmap to phase out animal testing collectively represent a multi-year demand risk for the core research models and safety assessment businesses. The Company acknowledges these changes could be material and notes its commitment to the 3Rs initiative but cautions that complete elimination of animal testing, if pursued, would adversely affect results.
Tariffs and trade policy uncertainty (especially with Vietnam, Mauritius, Cambodia, and China) continue to impact costs and supply chain operations. The filing highlights that these factors have already adversely affected parts of the business and remain highly uncertain.
The adoption of artificial intelligence introduces new vectors for data breaches, algorithmic bias, intellectual property infringement, and regulatory noncompliance. The Company notes that the legal and regulatory landscape for AI is rapidly evolving, potentially imposing compliance costs and limiting the scope of AI use. Historical cybersecurity incidents (2019 breach) and ongoing threats (phishing, ransomware, business email compromise) are acknowledged, with reliance on third-party cloud/SaaS providers adding additional risk.
The May 2025 announcement of a comprehensive strategic review—including potential acquisitions, divestitures of non-core assets, and a focus on operating efficiency—creates uncertainty around future direction and capital allocation. The filing notes that the review may not result in any transaction and could disrupt business operations, distract management, and lead to stock price volatility.
Competitive risks include consolidation among biopharma clients, emergence of lower-cost competitors in India and China, and the development of new technologies that could reduce demand for traditional animal models. The Company also identifies risks from client demand volatility tied to biotech funding conditions and NIH grant uncertainty (following the Supreme Court ruling allowing termination of ~$800M in grants).
The provided excerpt only includes the index and auditor's report, not the actual cash flow statement. Therefore, no analysis can be performed.