CHARLES RIVER LABORATORIES INTERNATIONAL, INC.

Charles River Laboratories International, Inc. operates as a leading, full-service, non-clinical global drug development partner, serving clients from target identification through non-clinical development and providing products and services to support manufacturing activities. The company operates in over 120 sites and in over 20 countries worldwide, excluding certain Insourcing Solutions sites. The company's client base includes major global pharmaceutical companies, many biotechnology companies, agricultural and industrial chemical, life science, veterinary medicine, medical device, diagnostic and consumer product companies, contract research and contract manufacturing organizations, and other commercial entities, as well as leading hospitals, academic institutions, and government agencies around the world.

The company competes based on therapeutic and scientific expertise in early-stage drug research, quality, reputation, flexibility, responsiveness, pricing, innovation, and global capabilities. For the Research Models and Services (RMS) segment, the company has four main competitors, of which one is a government-funded, not-for-profit entity; one is a division of a public company in the U.S.; one is privately held in the U.S.; and one is a public company in China. For the Discovery and Safety Assessment (DSA) segment, discovery services have hundreds of competitors but two main competitors: one is a public company in China and one is a public company in Europe; safety assessment offerings have dozens of competitors but two main competitors, one that is a division of a large public company in the U.S. and another that is a private company based in Canada. For the Manufacturing segment, Microbial Solutions has four main competitors, of which three are public companies in Europe and one is part of a public company in Japan; Biologics Solutions has five main competitors, of which three are public companies in Europe, one is a public company in the U.S., and one is a public company in China.

The company generates revenue through three reportable segments: Research Models and Services (RMS), Discovery and Safety Assessment (DSA), and Manufacturing Solutions. Revenue is derived from a mix of product sales and service contracts, with services often performed over varying durations from short to extended periods of time, which may be as long as several years. The company's client base includes major global pharmaceutical companies, many biotechnology companies, agricultural and industrial chemical, life science, veterinary medicine, medical device, diagnostic and consumer product companies, contract research and contract manufacturing organizations, and other commercial entities, as well as leading hospitals, academic institutions, and government agencies around the world.

The RMS segment includes Research Models, Research Model Services, and Cell Solutions. Research Models involves the commercial production and sale of small research models, primarily purpose-bred rats and mice, including over 140 different stocks and strains of purpose-bred rodents, as well as large research models. Research Model Services includes Insourcing Solutions, Genetically Engineered Models and Services (GEMS), and Research Animal Diagnostic Services (RADS). Cell Solutions provides consenting human donor-derived cellular materials. In 2025, RMS accounted for 21.1% ¹ of total revenue and approximately 4,140 ² employees, including approximately 190 ³ science professionals with advanced degrees.

The DSA segment provides discovery and safety assessment services, including in vitro and in vivo studies, laboratory support services, bioanalytical and strategic non-clinical consulting and program management. The company is the largest provider of outsourced drug discovery, non-clinical development and regulated safety testing services worldwide. In 2025, the DSA segment represented 59.8% ⁴ of total revenue and employed approximately 11,760 ⁵ employees, including approximately 1,680 ⁶ science professionals with advanced degrees. The Manufacturing segment is comprised of Microbial Solutions and Biologics Solutions, providing in vitro methods for quality control testing, specialized testing of biologics, and contract development and manufacturing services for cell and gene therapies. In 2025, Manufacturing accounted for 19.1% ⁷ of total revenue and approximately 2,600 ⁸ employees, including approximately 350 ⁹ science professionals with advanced degrees.

In fiscal year 2025, the company repurchased 2.1 million ¹⁰ shares of common stock for $350.0 million ¹¹ under the prior stock repurchase program. On October 29, 2025, the Board of Directors approved a new stock repurchase authorization of $1.0 billion ¹², replacing the prior authorization which had $549.3 million ¹³ remaining. The company incurred restructuring charges of $99.8 million ¹⁴ and $107.0 million ¹⁵ during fiscal years 2025 and 2024, respectively. In January 2026, the company completed the acquisition of certain assets of K.F. (Cambodia) Ltd. for a purchase price of $510.0 million ¹⁶, of which $335.0 million ¹⁷ was paid up-front, with the remaining $175.0 million ¹⁸ deferred. On January 9, 2026, the company announced it exercised its option to acquire the remaining 79% ¹⁹ equity interest in PathoQuest SAS for €51.6 million ²⁰ (or approximately $60 million based on current exchange rates). The company also expects to close or consolidate approximately 12 ²¹ additional sites over the next two years, principally focused on the DSA and RMS segments.

In fiscal year 2025, total revenue was $4.0 billion ²². Revenue for the DSA segment declined in fiscal year 2025 as demand trends resulted in lower study volumes. Revenue for RMS increased in fiscal year 2025 due largely to higher revenue from large research models and increased pricing for small research models. Within the Manufacturing segment, the Microbial Solutions business saw robust growth, while Biologics Testing was impacted by lower sample volumes and the CDMO business was challenged due to lower commercial revenue. The company's backlog for RMS, DSA, and Manufacturing reportable segments was approximately $640 million ²³, $1.9 billion ²⁴, and $123 million ²⁵, respectively, as of December 27, 2025, compared to $685 million ²⁶, $2.0 billion ²⁷, and $103 million ²⁸, respectively, as of December 28, 2024.

The company expects to generate approximately $300 million ²⁹ in cumulative, annualized cost savings by the end of 2026 from cost savings initiatives, of which more than $175 million ³⁰ benefitted fiscal 2025. The company also expects to close or consolidate approximately 12 ³¹ additional sites over the next two years, principally focused on the DSA and RMS segments.

The company is focused on strategic initiatives to strengthen its leading scientific portfolio within its core markets through strategic acquisitions, partnerships, and internal investments. The company intends to continue to broaden the scope of products and services across the research and development continuum primarily through internal development and focused acquisitions within core markets and strategic partnerships. The company also partners with a diverse set of leading venture capital firms around the world primarily investing in life sciences, health care and therapeutics with an emphasis on early-stage companies.

The company is pursuing growth through divesting certain non-core assets, which represent approximately 7% ³² of the company's 2025 revenue, to enable the company to focus on more profitable growth opportunities. The company is also working on initiatives to further transform how it operates, including harmonization and centralization of processes, tools and tasks, continuing to better leverage technology, adoption of a global business services model to streamline operations, as well as other projects such as generating greater procurement savings.

The company is committed to initiatives to generate more revenue, contain costs, and protect shareholder value through enhanced commercial initiatives, restructuring and efficiency actions to drive cost savings, as well as a balanced approach to capital deployment. These initiatives include restructuring actions to manage costs and generate efficiency by reducing staffing levels to align with the level of demand, as well as evaluating the global footprint to optimize, consolidate, and simplify operations. The company expects these footprint optimization efforts to enhance the efficiency and economies of scale in its global infrastructure, leading to a more disciplined operating model.

The company continues to take decisive action to manage through the current demand environment, including appropriately right-sizing infrastructure, optimizing operations, and driving efficiency with a goal to protect operating margin. The company has reduced its total headcount by approximately 2% ³³ since the end of 2024. The company is also focused on commercial enhancements to promote a client-centric focus and gain additional market share, including through leveraging technology such as the Apollo cloud-based platform to provide real-time access to scientific data and self-service tools for clients.

The company maintains a disciplined approach to capital deployment through regularly evaluating the optimal balance between strategic acquisitions, stock repurchases, debt repayment, and other uses of capital. On October 29, 2025, the Board of Directors approved a new stock repurchase authorization of $1.0 billion ³⁴. As of December 27, 2025, the company had $1.0 billion ³⁵ remaining on the current authorized stock repurchase program. The company does not expect to pay any cash dividends for the foreseeable future.

The company faces headwinds from a challenging demand environment, with revenue to both large biopharmaceutical clients and small and mid-sized biotechnology clients declining in fiscal year 2025. The company also faces risks related to the limited supply of non-human primates, which has seen increasing demand as compared to supply in recent years due to a variety of factors, including export restrictions from China and legal matters affecting the Cambodian supply. The company also faces risks from changes in government regulation, including the potential for reduced animal testing requirements, as the FDA announced in April 2025 its intention to reduce animal testing in preclinical safety studies with new approach methodologies.

The company faces risks from the evolving regulatory landscape, including the FDA Modernization Act 2.0 passed in December 2022, which clarified methods for investigating drug safety and efficacy, and the FDA's April 2025 announcement of its intention to expand the use of new approach methodologies. The company also faces risks from the U.K. government's November 2025 announcement of a roadmap to phasing out animal testing in favor of alternative methods. Additionally, the company faces risks from tariffs and trade conflicts, including significant tariffs between the U.S. and countries from which it obtains significant supply, such as Vietnam, Mauritius, Cambodia, and China.

The company faces material risks from its dependence on a limited international source of supply for certain products, such as large research models including non-human primates, where disruptions from colony health problems, export/import restrictions, or geopolitical disputes could materially harm the business. The company also faces risks from demand volatility, as revenue to both large biopharmaceutical clients and small and mid-sized biotechnology clients declined in fiscal year 2025, and the company's backlog for DSA decreased to $1.9 billion ³⁶ as of December 27, 2025 from $2.0 billion ³⁷ as of December 28, 2024. The company faces risks from potential impairment of goodwill and intangible assets, as evidenced by the $165.0 million ³⁸ goodwill impairment charge for the Biologics Solutions reporting unit and approximately $211.0 million ³⁹ in intangible asset impairment charges in fiscal 2025. The company also faces risks from changes in government regulation, including the potential for reduced animal testing requirements, as the FDA announced in April 2025 its intention to reduce animal testing in preclinical safety studies with new approach methodologies, and the U.K. government announced a roadmap to phasing out animal testing in favor of alternative methods in November 2025. Additionally, the company faces risks from tariffs and trade conflicts, including significant tariffs between the U.S. and countries from which it obtains significant supply, such as Vietnam, Mauritius, Cambodia, and China, which could adversely impact operating margin and results of operations.

Management's message emphasizes the company's position as a leading, full-service, non-clinical global drug development partner and its commitment to creating healthier lives. The key themes include taking decisive action to manage through the current demand environment, including appropriately right-sizing infrastructure, optimizing operations, and driving efficiency with a goal to protect operating margin. Management has emphasized strategic initiatives to strengthen the leading scientific portfolio within core markets through strategic acquisitions, partnerships, and internal investments; divest certain non-core assets, which represent approximately 7% ⁴⁰ of the company's 2025 revenue; maximize financial performance, including by implementing additional initiatives aimed at driving greater operating efficiency, which are expected to generate incremental net cost savings; and maintain a disciplined approach to capital deployment through regularly evaluating the optimal balance between strategic acquisitions, stock repurchases, debt repayment, and other uses of capital. Management also highlighted the company's commitment to the 3Rs initiative (Replacement, Reduction, and Refinement) and to working with the industry to support development and provide the best translational models to supplement or replace traditional live animal models.