Charles River Laboratories International Inc.
02/18/2026 | Press release | Distributed by Public on 02/18/2026 08:22
Annual Report for Fiscal Year Ending December 27, 2025 (Form 10-K)
Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with our consolidated financial statements and related notes appearing in Item 8, "Financial Statements and Supplementary Data" in this Annual Report on Form 10-K. A discussion of our results of operations for the fiscal year ended December 28, 2024 and a comparison of our results for the fiscal years ended December 28, 2024 and December 30, 2023 was included in Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations," of our Annual Report on Form 10-K for the fiscal year ended December 28, 2024, filed with the SEC on February 19, 2025. In addition to historical consolidated financial information, the following discussion contains forward-looking statements. Actual results may differ significantly from those projected in the forward-looking statements. Factors that might cause future results to differ materially from those projected in the forward-looking statements include, but are not limited to, those discussed in Item 1A, "Risk Factors" and elsewhere in this Annual Report on Form 10-K. Certain percentage changes may not recalculate due to rounding.
Overview
We are a leading, full service, non-clinical global drug development partner. For over 75 years, we have been in the business of providing the research models required in the research and development of new drugs, devices, and therapies. Over this time, we have built upon our original core competency of laboratory animal medicine and science (research model technologies) to develop a diverse portfolio of discovery and safety assessment services, both Good Laboratory Practice (GLP) and non-GLP, that supports our clients from target identification through non-clinical development. We also provide a suite of products and services to support our clients' manufacturing activities. Utilizing our broad portfolio of products and services enables our clients to create a more efficient and flexible drug development model, which reduces their costs, enhances their productivity and effectiveness, and increases speed to market.
Our 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. We currently operate in over 120 sites and in over 20 countries worldwide, which numbers exclude certain Insourcing Solutions (IS) sites.
Segment Reporting
Our three reportable segments are Research Models and Services (RMS), Discovery and Safety Assessment (DSA), and Manufacturing Solutions (Manufacturing).
Our RMS reportable segment includes the products and services offered within Research Models, Research Model Services, and Cell Solutions. Research Models includes the commercial production and sale of small research models, as well as the supply of large research models. Research Model Services includes: Insourcing Solutions (IS), which provides colony management of our clients' research operations (including recruitment, training, staffing, and management services) within our clients' facilities as well as our own vivarium space, utilizing our Charles River Accelerator and Development Lab (CRADL™) offerings, Genetically Engineered Models and Services (GEMS), which performs contract breeding and other services associated with genetically engineered models; and Research Animal Diagnostic Services (RADS), which provides health monitoring and diagnostics services related to research models; and Cell Solutions, which provides controlled, consistent, customized primary cells and blood components derived from normal and mobilized peripheral blood and bone marrow as well as cells from disease state donors.
Our DSA segment is comprised of Discovery Services and Safety Assessment services. We provide regulated and non-regulated DSA services to support the discovery, development, and regulatory-required safety testing of potential new drugs, including in vitro(non-animal) and in vivo(in research models) studies, laboratory support services, including bioanalytical and strategic non-clinical consulting and program management to support product development.
Our Manufacturing reportable segment includes Microbial Solutions, which provides in vitrolot-release testing products, microbial detection products, and species identification services and Biologics Solutions (Biologics), which performs specialized testing of biologics (Biologics Testing) as well as contract development and manufacturing products and services (CDMO).
CHARLES RIVER LABORATORIES INTERNATIONAL, INC.
Fiscal Quarters
Our fiscal year is typically based on 52-weeks, with each quarter composed of 13 weeks ending on the last Saturday on, or closest to, March 31, June 30, September 30, and December 31. A 53rd week in the fourth quarter of the fiscal year is occasionally necessary to align with a December 31 calendar year-end, which occurred in fiscal year 2022.
Business Trends
In fiscal year 2025, demand from biopharmaceutical clients stabilized and began to show early signs of improvement as clients continued to navigate a challenging and evolving environment. Demand from larger biopharmaceutical clients began to improve early in the year following the prior year's constrained budgetary spending as a result of restructuring initiatives and reprioritization of their drug development programs. Meanwhile, small and mid-sized biotechnology clients experienced a gradual improvement in funding over the course of fiscal year 2025, particularly in the second half of the year, that led to an improvement in DSA demand trends as we exited the year.
Despite the current, challenging market environment, many of our pharmaceutical and biotechnology clients continued to benefit from the long-term value of strategic outsourcing to improve their operating efficiency and to access capabilities that they do not maintain internally. Many of our large biopharmaceutical clients have continued to rely on relationships with outsourced partners like Charles River to enhance their drug discovery and early-stage development efforts, and biotechnology companies to assist them in bringing new drugs to market. Because of a continued cautious view with regard to early-stage R&D spending, revenue to both large biopharmaceutical clients and small and mid-sized biotechnology clients declined in fiscal year 2025. However, our ability to continue to deliver our leading suite of research, non-clinical development, and clinical bioanalytical solutions has endeavored our clients to continue to choose to partner with us for our flexible and efficient outsourcing solutions, broad scientific capabilities, and global scale.
Revenue for DSA declined in fiscal year 2025 as demand trends resulted in lower study volumes in both discovery and safety assessment services, driven by both large biopharmaceutical and small and mid-sized biotechnology clients. Despite the revenue declines, DSA demand trends, including net bookings, for large biopharmaceutical clients meaningfully improved in fiscal year 2025 as clients worked through a period of restructuring and pipeline reprioritization. Net bookings from small and mid-sized biotechnology clients showed modest improvement, consistent with improving funding levels later in the year. DSA backlog decreased to $1.9 billion as of December 27, 2025 from $2.0 billion as of December 28, 2024.
Revenue for RMS increased in fiscal year 2025 due largely to higher revenue from large research models and increased pricing for small research models. Additionally, revenue from research model services improved modestly driven by the IS and GEMS businesses. Despite pressures from early-stage biotechnology and government funding in North America, as well as a focus on alternative methodologies, we are confident that research models and services will remain essential tools for our clients' drug discovery and early-stage development efforts.
Within the Manufacturing segment, the Microbial Solutions business saw robust growth benefitting from strong demand across the comprehensive manufacturing quality-control testing portfolio, including Accugenix® microbial identification services, led by increased AxxessTMinstrument placements; share gains for our Endosafe® endotoxin testing platform; and higher sales of Celsis® microbial detection products. Biologics Testing was impacted by lower sample volumes from both biopharmaceutical and CDMO clients, particularly several large clients facing project delays or regulatory challenges. The CDMO business was challenged due to lower commercial revenue in fiscal year 2025, including a relationship with one commercial cell therapy client that ended during the year.
In response to recent trends, we continue to implement cost savings initiatives focused on driving greater efficiencies, as well as restructuring actions that have been implemented over the past three years that were focused on workforce right-sizing and site optimization. More recently, additional efficiency initiatives have targeted incremental savings through process improvement, procurement synergies, and implementation of a global business services model. Collectively, these actions are expected to generate approximately $300 million in cumulative, annualized cost savings by the end of 2026, of which more than $175 million benefitted fiscal 2025. Workforce right-sizing actions resulted in severance and transition costs while costs related to the consolidation of facilities to optimize our global footprint and drive greater operating efficiency across the company resulted in asset impairments, accelerated depreciation, and other site consolidation charges. We incurred restructuring charges of $99.8 million and $107.0 million during the fiscal years 2025 and 2024, respectively.
In fiscal 2025, we announced as part of our Board of Directors' comprehensive strategic review of our business and growth prospects, that we will focus on strategic initiatives to strengthen our leading scientific portfolio within our core markets through strategic acquisitions, partnerships, internal investments, and divestments of certain non-core assets, which represent approximately 7% of our 2025 revenue.
Despite the near-term market pressures that led to a modest revenue decline in fiscal year 2025, we believe clients will continue to benefit from the long-term value of strategic outsourcing to improve their operating efficiency and to access capabilities that
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they do not maintain internally. We believe that our comprehensive scientific capabilities and global scale, as well as the breadth and depth of our scientific expertise, quality, and responsiveness remain key criteria when our clients make the decision to outsource to us. As the scientific partner of choice to accelerate biomedical research, we are committed to driving greater efficiency and speed while providing exceptional service to our clients.
Recent Acquisitions
We make strategic acquisitions designed to expand our portfolio of products and services to support the drug discovery and development continuum. We maintain an acquisition strategy that focuses on augmenting internal growth of existing businesses with complementary acquisitions. Our recent transactions are described below.
On January 9, 2026, we announced we have exercised our option to acquire the remaining 79% equity interest in PathoQuest SAS (PathoQuest) for €51.6 million (or approximately $60 million based on current exchange rates), subject to customary closing adjustments. PathoQuest is a provider of next-generation sequencing solutions for manufacturing quality-control testing for biopharmaceutical companies. The proposed transaction is expected to close in the first quarter of 2026. The acquisition is expected to be funded through a combination of available cash and proceeds from our Credit Facility. This business will be reported as part of our Manufacturing reportable segment.
On January 14, 2026, we completed the acquisition of certain assets of K.F. (Cambodia) Ltd (KF)., a leading supplier of non-human primates (NHPs) located in Cambodia. The purchase price of KF was $510.0 million, of which $335.0 million was paid up-front, with the remaining $175.0 million deferred until the completion of certain post-close conditions. The acquisition was funded through a combination of available cash and proceeds from our Credit Facility. This business will be reported as part of our DSA reportable segment for NHPs vertically integrated into the DSA supply chain and the RMS reportable segment for those NHPs sold to third party customers.
On November 30, 2023, we completed our acquisition of an additional 41% equity interest of Noveprim Group (Noveprim), a leading supplier of NHPs located in Mauritius, resulting in a 90% controlling interest. We had previously acquired a 49% equity interest in 2022 for $90.0 million plus additional contingent payments up to $5.0 million based on future performance. The total consideration allocable to the Noveprim acquisition is $392.4 million, which includes $144.6 million additional cash paid for the 41% equity interest, elimination of historical activity and intercompany balances of $209.5 million which includes a remeasurement gain on the 49% equity investment of $113.0 million, contingent consideration of $33.3 million, deferred purchase price of $12.0 million payable from 2024 through 2027, offset by estimated post-closing adjustments for working capital of $7.0 million. The acquisition was funded through a combination of available cash and proceeds from our Credit Facility. This business is reported as part of our DSA reportable segment for NHPs vertically integrated into the DSA supply chain and the RMS reportable segment for those NHPs sold to third party customers.
On January 27, 2023, we acquired SAMDI Tech, Inc., (SAMDI), a leading provider of high-quality, label-free high-throughput screening (HTS) solutions for drug discovery research. The acquisition of SAMDI will provide clients with seamless access to the premier, label-free HTS MS platform and create a comprehensive, library of drug discovery solutions. The purchase price of SAMDI was $62.8 million, net of $0.4 million in cash, inclusive of a 20% strategic equity interest previously owned by us of $12.6 million. The acquisition was funded through a combination of available cash and proceeds from our Credit Facility. This business is reported as part of our DSA reportable segment.
U.S. Government Investigations into Non-Human Primate Supply Chain
On February 17, 2023, we received a grand jury subpoena requesting certain documents related to an investigation by the U.S. Department of Justice (DOJ) and the U.S. Fish and Wildlife Service (USFWS) into our conduct regarding several shipments of non-human primates from Cambodia in late 2022 and early 2023 (the NHP Shipments). The DOJ also undertook a parallel civil investigation related to the NHP Shipments. Due to a number of factors, including the age of these NHP's, during the fourth quarter of fiscal year 2024, we recorded a charge of $27 million to costs of products sold within the accompanying consolidated statements of income (loss) to reflect the reduction in carrying value of this inventory to zero. In July 2025, we were informed that USFWS had determined to clear the NHP Shipments for legal entry into the United States. Furthermore, in August 2025 we were advised by the DOJ that both the grand jury investigation and the parallel civil investigation had been closed.
On May 16, 2023, we received an inquiry from the Enforcement Division of the U.S. Securities and Exchange Commission (SEC) requesting us to voluntarily provide information, subsequently augmented with a document subpoena and additional inquiries, primarily related to the sourcing of non-human primates and related disclosures, and we cooperated with the requests. Our Audit Committee retained counsel to conduct an independent investigation into certain issues raised in the investigations. On November 14, 2025, the SEC's Division of Enforcement (Division) notified us that it concluded its investigation and, based on the information available to the Division, it does not intend to recommend an enforcement action by the SEC against the Company. Similarly, the Company's independent investigation into these matters has also concluded, with no material findings.
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Critical Accounting Policies and Estimates
Our discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements prepared in accordance with generally accepted accounting principles in the United States (U.S.). The preparation of these financial statements requires us to make certain estimates and assumptions that may affect the reported amounts of assets and liabilities, the reported amounts of revenues and expenses during the reported periods and related disclosures. These estimates and assumptions are monitored and analyzed by us for changes in facts and circumstances, and material changes in these estimates could occur in the future. We base our estimates on our historical experience, trends in the industry, and various other factors that are believed to be reasonable under the circumstances. Actual results may differ from our estimates under different assumptions or conditions. Our significant accounting policies are more fully described in Note 1, "Description of Business and Summary of Significant Accounting Policies", to our consolidated financial statements contained in Item 8, "Financial Statements and Supplementary Data" in this Annual Report on Form 10-K.
An accounting policy is deemed to be critical if the nature of the estimates or assumptions is material due to the levels of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change, and the impact of the estimates and assumptions on our consolidated financial statements is or may be material. We believe the following represent our critical accounting policies and estimates used in the preparation of our financial statements:
Revenue Recognition
Revenue is recognized when, or as, obligations under the terms of a contract are satisfied, which occurs when control of the promised products or services is transferred to customers. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring products or services to a customer ("transaction price").
To the extent the transaction price includes variable consideration, we estimate the amount of variable consideration that should be included in the transaction price utilizing the amount to which we expect to be entitled. Variable consideration is included in the transaction price if, in our judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. Estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on an assessment of our anticipated performance and all information (historical, current and forecasted) that is reasonably available. Sales, value add, and other taxes collected on behalf of third parties are excluded from revenue.
When determining the transaction price of a contract, an adjustment is made if payment from a customer occurs either significantly before or significantly after performance, resulting in a significant financing component. Generally, we do not extend payment terms beyond one year. Applying the practical expedient, we do not assess whether a significant financing component exists if the period between when we perform our obligations under the contract and when the customer pays is one year or less. Our contracts do not generally contain significant financing components.
Contracts with customers may contain multiple performance obligations. For such arrangements, the transaction price is allocated to each performance obligation based on the estimated relative standalone selling prices of the promised products or services underlying each performance obligation. We determine standalone selling prices based on the price at which the performance obligation is sold separately. If the standalone selling price is not observable through past transactions, we estimate the standalone selling price taking into account available information such as market conditions and internally approved pricing guidelines related to the performance obligations.
Contracts are often modified to account for changes in contract specifications and requirements. Contract modifications exist when the modification either creates new, or changes existing, enforceable rights and obligations. Generally, when contract modifications create new performance obligations, the modification is considered to be a separate contract and revenue is recognized prospectively. When contract modifications change existing performance obligations, the impact on the existing transaction price and measure of progress for the performance obligation to which it relates is generally recognized as an adjustment to revenue (either as an increase in or a reduction of revenue) on a cumulative catch-up basis.
Product revenue is generally recognized when the customer obtains control of our product, which occurs at a point in time, and may be upon shipment or upon delivery based on the contractual shipping terms of a contract. Service revenue is generally recognized over time as the services are delivered to the customer based on the extent of progress towards completion of the performance obligation. The selection of the method to measure progress towards completion requires judgment and is based on the nature of the products or services to be provided. Depending on which better depicts the transfer of value to the customer, we generally measure our progress using either cost-to-cost (input method) or right-to-invoice (output method). We use the cost-to-cost measure of progress when it best depicts the transfer of value to the customer which occurs as we incur costs on our contract, generally related to fixed fee service contracts. Under the cost-to-cost measure of progress, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. The costs calculation includes variables such as labor hours, allocation of overhead costs, research model costs, and subcontractor costs. Revenue is recorded proportionally as costs are incurred. The right-to-invoice measure of progress is generally related to rate per unit contracts, as the extent of progress towards completion is measured based on
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discrete service or time-based increments, such as samples tested or labor hours incurred. Revenue is recorded in the amount invoiced since that amount corresponds directly to the value of our performance to date. During fiscal year 2025, $2.4 billion, or approximately 60%, of our total revenue recognized is DSA service and product revenue transferred over time.
Business Combinations
We use assumptions and estimates in determining the fair value of assets acquired and liabilities assumed in a business combination. The determination of the fair value of intangible assets (including goodwill) and certain biological assets, which represented a significant portion of the purchase price in prior acquisitions, requires the use of significant judgment with regard to (i) the fair value; and (ii) whether such assets are amortizable or non-amortizable and, if the former, the period and the method by which the asset will be amortized. We utilize commonly accepted valuation techniques, such as the income, cost and market approaches, as appropriate, in establishing the fair value of these assets. Typically, key assumptions include projections of cash flows that arise from these assets of acquired businesses as well as discount rates based on an analysis of the weighted average cost of capital, adjusted for specific risks associated with the assets.
In our prior acquisitions, customer relationship intangible assets (also referred to as client relationships) and certain biological assets have been the most significant identifiable assets acquired. To determine the fair value of the acquired client relationships and biological assets, we utilized the multiple period excess earnings model (a commonly accepted valuation technique), which includes the following key assumptions: projections of cash flows from the acquired entities, which included future revenue, cost of revenue, operating income margins, customer attrition rates, productivity rates; as well as discount rates based on a market participant's weighted average cost of capital. During fiscal years 2025 and 2024, we did not enter into any business combinations.
Goodwill
We evaluate goodwill for impairment annually, during the fourth quarter, and when events occur or circumstances change that may reduce the fair value of the asset below its carrying amount. Events or circumstances that might require an interim evaluation include, but are not limited to, unexpected adverse business conditions, economic factors, unanticipated technological changes or competitive activities, loss of key customers or personnel, and acts by governments and courts. Estimates of future cash flows require assumptions related to revenue and operating income growth, asset-related expenditures, working capital levels and other factors. Different assumptions from those made in our analysis could materially affect projected cash flows and our evaluation of goodwill for impairment.
We perform the quantitative impairment test where we compare the fair value of our reporting units to their carrying values. If the carrying values of the net assets assigned to the reporting units exceed the fair values of the reporting units, then we would record an impairment loss equal to the difference. In fiscal years 2025 and 2024 we performed the quantitative goodwill impairment test for our reporting units. Fair value was determined by using a weighted combination of a market-based approach and an income approach, as this combination was deemed to be the most indicative of our fair value in an orderly transaction between market participants. Under the market-based approach, we utilized information about our company as well as publicly available industry information to determine earnings multiples and sales multiples that are used to value our reporting units. Under the income approach, we determined fair value based on the estimated future cash flows of each reporting unit, discounted by an estimated weighted-average cost of capital, which reflects the overall level of inherent risk of the reporting unit and the rate of return an outside investor would expect to earn.
During the fourth quarter ended December 27, 2025, we performed the quantitative goodwill impairment test for our reporting units and upon completion, it was determined that the fair value of the Biologics Solutions reporting unit did not exceed its carrying value, resulting in a goodwill impairment charge of $165.0 million. This was primarily attributable to a decline in its operating performance, resulting in a reduction to the long-range financial plan of the reporting unit, and evolving market information in the fourth quarter of 2025. The fair value of the Biologics Solutions reporting unit tested for impairment during 2025 was determined using a weighted combination of a discounted cash flow model (an income approach), and sales and earnings multiples based on the guideline public company method, and other market information (a market approach). The discounted cash flow model used to determine the fair value of the Biologics Solutions reporting unit reflected significant assumptions related to future revenue, a long term growth rate, operating income margins, and a discount rate based on a weighted-average cost of capital. Significant assumptions used in the market approach included earnings multiples, sales multiples, and other market information about the value of certain asset groups within the reporting unit. The Biologics Solutions reporting unit fair value measurement is classified as Level 3 in the fair value hierarchy because they involve significant unobservable inputs. We will continue to closely monitor future performance and any potential impacts on the value of the reporting unit. If the estimated future cash flows decrease below our current expectations, specifically as a result of lower
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revenue growth rates or operating income margins, or due to an increase of the weighted-average cost of capital, the fair value may further decrease resulting in an incremental material goodwill impairment.
Excluding the impairment charge associated with the Biologics Solutions reporting unit, our 2025 annual impairment test indicated that goodwill was not impaired for any other reporting units.
During the fourth quarter ended December 28, 2024, a triggering event was identified for the Biologics Solutions reporting unit after the annual impairment assessment. This resulted from a loss of key customers, ultimately resulting in a reduction in Biologics Solutions' long range financial outlook. In response, we conducted a quantitative impairment test for goodwill to determine if the goodwill in the Biologics Solutions reporting unit was impaired. The fair value of the Biologics Solutions reporting unit tested for impairment during 2024 was determined based on a discounted cash flow model (an income approach) and earnings multiples (a market approach) based on the guideline public company method. Significant assumptions used in the determination of fair value of the Biologics Solutions reporting unit generally include forecasted cash flows, discount rates, terminal growth rates and earnings multiples. The discounted cash flow model used to determine the fair value of the Biologics Solutions reporting unit as of the impairment triggering date reflected assumptions related to revenue growth rates, operating income margins, discount rate and terminal growth rate. The Biologics Solutions reporting unit fair value measurement is classified as Level 3 in the fair value hierarchy because they involve significant unobservable inputs. Upon completion of a quantitative impairment test, it was determined that the fair value of the reporting unit was below its carrying value, resulting in a goodwill impairment of approximately $215.0 million.
During the third quarter ended September 28, 2024, a triggering event was identified for the Discovery Services reporting unit (part of the DSA reportable segment). This resulted from a continuous decline in market conditions and operational challenges, ultimately resulting in a reduction of Discovery Services' long range financial outlook. In response, we conducted a quantitative impairment test for goodwill to determine if the goodwill in the Discovery Services reporting unit was impaired. Upon completion of a quantitative impairment test, it was determined that the fair value of the reporting unit exceeded its carrying value by approximately 22%, and no impairment was recognized as of September 28, 2024. As of the annual impairment test date, the fair value of the reporting unit exceeded its carrying value by approximately 16% and no impairment was recognized as of December 28, 2024. As of the beginning of fiscal year 2025, the Discovery Services and Safety Assessment reporting units have been combined into a single reporting unit consistent with recent changes to the DSA integrated operating structure.
Our 2024 annual impairment test indicated that goodwill was not impaired for any other reporting units.
Valuation and Impairment of Long-Lived Assets
Long-lived assets to be held and used, principally definite-lived intangible assets, biological assets, right-of-use lease assets, and property, plant, and equipment, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets or asset group may not be recoverable. Factors we consider important that could trigger an impairment review include, but are not limited to, the following:
•significant underperformance relative to expected historical or projected future operating results;
•loss of key customers;
•significant negative industry or economic trends; or
•significant changes or developments in strategy or operations that negatively affect the utilization of our long-lived assets.
Determination of recoverability is based on an estimate of undiscounted future cash flows resulting from the use or sale of the asset or asset group, net of any sublease income, if applicable, and its eventual disposition. In the event that such cash flows are not expected to be sufficient to recover the carrying amount of the assets, the assets are written-down to their fair values. We measure any impairment based on a projected discounted cash flow method using a discount rate determined by management to be commensurate with the risk inherent in our current business model. Significant judgments are required to estimate future cash flows, including the selection of appropriate discount rates and other assumptions. We may also estimate fair value based on market prices for similar assets, as appropriate. Changes in these estimates and assumptions could materially affect the determination of fair value for these assets. Actual cash flows arising from a particular long-lived asset could vary from projected cash flows which could imply different carrying values from those established at the dates of acquisition and which could result in impairment of such asset.
During the fourth quarter ended December 27, 2025, prior to the annual Goodwill Impairment Assessment, a triggering event was identified for the Cell Solutions, CDMO Cell Therapy, and CDMO Gene Therapy asset groups due to a decline in operating performance in fiscal 2025, ultimately resulting in a reduction in the asset groups' long range financial outlook, and evolving market information about these asset groups identified in the fourth quarter of 2025. Cell Solutions is presented within the RMS reportable segment, while CDMO Cell Therapy and CDMO Gene Therapy are presented within the Manufacturing
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reportable segment. In response, we conducted a recoverability test for each asset group, based on an estimate of undiscounted future cash flows for various recoverability scenarios, to determine if the asset groups were impaired. Upon completion of the recoverability test, it was determined that the probability-weighted undiscounted cash flow of the CDMO Cell Therapy asset group exceeded its carrying value. The Cell Solutions and CDMO Gene Therapy asset groups probability-weighted undiscounted cash flows did not exceed their carrying values, resulting in an intangible asset impairment charge of approximately $211.0 million. Additionally, we recorded impairment charges of approximately $8.0 million to Property, plant, and equipment, net and Operating lease right-of-use assets, net, recognized in our consolidated statements of income (loss) as a component of selling, general and administrative expenses. The fair value of the Cell Solutions and CDMO Gene Therapy asset groups was determined using a market approach by using other market information about the value of these asset groups.
In fiscal 2024, a triggering event was identified for the CDMO Cell Therapy asset group within the Biologics Solutions business, part of the Manufacturing reportable segment, as there was a loss of key customers, resulting in a significant reduction in cash flows. We concluded there were no impairments for the asset group related to this triggering event, however the remaining useful life of the intangible asset within the asset group was reduced to less than 1 year. As a result of the decrease in the remaining useful life, $9.4 million of accelerated amortization was recognized within the accompanying consolidated statements of income (loss) for fiscal year 2024. The remaining value of these client relationships was $75.9 million and was amortized over the remaining useful life of approximately 6 months in fiscal year 2025.
Long-lived asset impairments, inclusive of the intangible assets charge described above, recognized during fiscal years 2025 and 2024 were $259.1 million and $51.8 million, respectively.
Income Taxes
We prepare and file income tax returns based on our interpretation of each jurisdiction's tax laws and regulations. In preparing our consolidated financial statements, we estimate our income tax liability in each of the jurisdictions in which we operate by estimating our actual current tax expense together with assessing temporary differences resulting from differing treatment of items for tax and financial reporting purposes. These differences result in deferred tax assets and liabilities, which are included in our consolidated balance sheets. Significant management judgment is required in assessing the realizability of our deferred tax assets. In performing this assessment, we consider whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. In making this determination, under the applicable financial accounting standards, we are allowed to consider the scheduled reversal of deferred tax liabilities, projected future taxable income, and the effects of tax planning strategies. Our valuation allowance was $323.3 million as of December 27, 2025. In the event actual results differ from our estimates, we will adjust our estimates in future periods and may establish additional allowances or reversals as necessary.
We account for uncertain tax positions using a "more-likely-than-not" threshold for recognizing and resolving uncertain tax positions. We evaluate uncertain tax positions on a quarterly basis and consider various factors, that include, but are not limited to, changes in tax law, the measurement of tax positions taken or expected to be taken in tax returns, the effective settlement of matters subject to audit, information obtained during in process audit activities and changes in facts or circumstances related to a tax position. We adjust the level of the liability to reflect any subsequent changes in the relevant facts surrounding the uncertain positions. Our liabilities for uncertain tax positions can be relieved only if the contingency becomes legally extinguished through either payment to the taxing authority or the expiration of the statute of limitations, the recognition of the benefits associated with the position meet the "more-likely-than-not" threshold or the liability becomes effectively settled through the controversy process. We consider matters to be effectively settled once the taxing authority has completed all of its required or expected examination procedures, including all appeals and administrative reviews; we have no plans to appeal or litigate any aspect of the tax position; and we believe that it is highly unlikely that the taxing authority would re-examine the related tax position. We also accrue for potential interest and penalties related to unrecognized tax benefits in income tax expense.
We generally receive a tax deduction upon the exercise of non-qualified stock options by employees, or the vesting of restricted stock and performance share units held by employees. The stock price, timing, and amount of vesting and exercising of stock-based compensation could materially impact our current tax expense.
Our global operations make the effective tax rate sensitive to significant tax law changes. Several countries have begun to enact legislation to implement the Organization for Economic Cooperation and Development's (OECD) international tax framework, including the Pillar II global minimum tax regime with effect from January 1, 2024 or later. In addition, the U.S. enacted the One Big Beautiful Bill on July 4, 2025 with effect from January 1, 2025, for which much guidance is still expected. We are currently monitoring these developments and believe we have appropriately reflected any current or deferred financial statement impact, which we do not believe to be material.
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New Accounting Pronouncements
For a discussion of new accounting pronouncements, refer to Note 1, "Description of Business and Summary of Significant Accounting Policies" to our consolidated financial statements contained in Item 8, "Financial Statements and Supplementary Data," in this Annual Report on Form 10-K.
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Results of Operations
Consolidated Results of Operations and Liquidity
Revenue for fiscal year 2025 was $4.02 billion compared to $4.05 billion in fiscal year 2024. The decrease of $34.6 million, or 0.9% as compared to fiscal year 2024 was primarily due to our DSA business, which continued to experience lower volume driven by more cautious client spending as a result of the biopharmaceutical demand environment; partially offset by higher revenue in our RMS business, primarily driven by the increase in large research model product revenue when compared to fiscal year 2024.
In fiscal year 2025, our operating income and operating income margin were $25.2 million and 0.6%, respectively, compared with $227.3 million and 5.6%, respectively, in fiscal year 2024. The decrease in operating income and operating income margin for fiscal year 2025 was primarily due to the intangible asset impairment charges within our Manufacturing and RMS businesses, the acceleration of amortization expense recognized as a result of a decrease in the remaining useful life of certain CDMO client relationships due to a loss of key customers, and the revenue impacts described above; partially offset by a decrease in charges related to goodwill impairments within our Manufacturing business, lower severance costs and the absence of an inventory charge incurred in connection with the investigations by the U.S. government into the non-human primate supply chain in fiscal year 2024.
Net loss available to Charles River Laboratories International Inc, common shareholders was $144.3 million in fiscal year 2025, compared to Net income available to Charles River Laboratories International Inc, common shareholders of $10.3 million in the corresponding period of fiscal year 2024. The decrease of $154.6 million was due principally to the decrease in operating income described above; partially offset by a decline in income tax and interest expenses.
During fiscal year 2025, our cash flows from operations was $737.6 million compared with $734.6 million for fiscal year 2024. The increase in net cash provided by operating activities was primarily due to lower payments of variable compensation, benefiting cash provided by operations by approximately $79 million, our revenue related accounts, including collections on trade receivables, deferred revenue, and customer deposits; benefiting cash provided by operations by approximately $12 million; partially offset by higher purchases of inventory of $49 million.
Revenue and Operating Income (Loss)
The following tables present consolidated revenue by type and by reportable segment:
| Fiscal Year | |||||||||||||||||||||||
| 2025 | 2024 | $ change | % change | ||||||||||||||||||||
| (in thousands, except percentages) | |||||||||||||||||||||||
| Service revenue | $ | 3,250,099 | $ | 3,304,138 | $ | (54,039) | (1.6) | % | |||||||||||||||
| Product revenue | 765,283 | 745,851 | 19,432 | 2.6 | % | ||||||||||||||||||
| $ | 4,015,382 | $ | 4,049,989 | $ | (34,607) | (0.9) | % | ||||||||||||||||
| Fiscal Year | |||||||||||||||||||||||||||||
| 2025 | 2024 | $ change | % change | Impact of FX | |||||||||||||||||||||||||
| (in thousands, except percentages) | |||||||||||||||||||||||||||||
| RMS | $ | 846,082 | $ | 829,377 | $ | 16,705 | 2.0 | % | 0.8 | % | |||||||||||||||||||
| DSA | 2,402,891 | 2,451,280 | (48,389) | (2.0) | % | 0.8 | % | ||||||||||||||||||||||
| Manufacturing | 766,409 | 769,332 | (2,923) | (0.4) | % | 1.2 | % | ||||||||||||||||||||||
| Total revenue | $ | 4,015,382 | $ | 4,049,989 | $ | (34,607) | (0.9) | % | 0.8 | % | |||||||||||||||||||
CHARLES RIVER LABORATORIES INTERNATIONAL, INC.
Analysis of Segment Results
The following table presents operating income (loss) by reportable segment:
| Fiscal Year | |||||||||||||||||||||||||||||
| 2025 | 2024 | $ change | % change | Impact of FX | |||||||||||||||||||||||||
| (in thousands, except percentages) | |||||||||||||||||||||||||||||
| RMS | $ | 44,567 | $ | 114,411 | $ | (69,844) | (61.0) | % | 1.9 | % | |||||||||||||||||||
| DSA | 424,555 | 442,510 | (17,955) | (4.1) | % | 1.5 | % | ||||||||||||||||||||||
| Manufacturing | (184,284) | (71,453) | (112,831) | 157.9 | % | 8.2 | % | ||||||||||||||||||||||
| Unallocated corporate | (259,676) | (258,121) | (1,555) | 0.6 | % | 0.4 | % | ||||||||||||||||||||||
| Total operating income | $ | 25,162 | $ | 227,347 | $ | (202,185) | (88.9) | % | 0.9 | % | |||||||||||||||||||
| Operating income % of revenue | 0.6 | % | 5.6 | % | (500) bps | ||||||||||||||||||||||||
The following presents and discusses our consolidated financial results by each of our reportable segments:
RMS
| Fiscal Year | |||||||||||||||||||||||||||||
| 2025 | 2024 | $ change | % change | Impact of FX | |||||||||||||||||||||||||
| (in thousands, except percentages) | |||||||||||||||||||||||||||||
| Revenue | $ | 846,082 | $ | 829,377 | $ | 16,705 | 2.0 | % | 0.8 | % | |||||||||||||||||||
| Cost of revenue (excluding amortization of intangible assets) | 576,250 | 580,491 | (4,241) | (0.7) | % | ||||||||||||||||||||||||
| Selling, general and administrative | 101,529 | 110,982 | (9,453) | (8.5) | % | ||||||||||||||||||||||||
| Amortization of intangible assets | 21,736 | 23,493 | (1,757) | (7.5) | % | ||||||||||||||||||||||||
|
Intangible asset impairment
|
102,000 | - | 102,000 | 100.0 | % | ||||||||||||||||||||||||
| Operating income | $ | 44,567 | $ | 114,411 | $ | (69,844) | (61.0) | % | 1.9 | % | |||||||||||||||||||
| Operating income % of revenue | 5.3 | % | 13.8 | % | (850) bps | ||||||||||||||||||||||||
RMS revenue increased $16.7 million primarily driven by an increase in large research model product revenue, an increase in small research model revenue in China and Europe, an increase in Insourcing Solutions services revenue, and the effect of changes in foreign currency exchange rates; partially offset by lower Cell Solutions product revenue.
RMS operating income decreased $69.8 million compared to fiscal year 2024. RMS operating income as a percentage of revenue for fiscal year 2025 was 5.3%, a decrease of 850 bps from 13.8% for fiscal year 2024. Operating income and operating income as a percentage of revenue decreased primarily due to a $102.0 million intangible asset impairment charge within the Cell Solutions asset group; partially offset by a decrease in restructuring activities, primarily related to asset impairment charges, and the increase from the revenue drivers described above.
DSA
| Fiscal Year | |||||||||||||||||||||||||||||
| 2025 | 2024 | $ change | % change | Impact of FX | |||||||||||||||||||||||||
| (in thousands, except percentages) | |||||||||||||||||||||||||||||
| Revenue | $ | 2,402,891 | $ | 2,451,280 | $ | (48,389) | (2.0) | % | 0.8 | % | |||||||||||||||||||
| Cost of revenue (excluding amortization of intangible assets) | 1,686,017 | 1,697,166 | (11,149) | (0.7) | % | ||||||||||||||||||||||||
| Selling, general and administrative | 239,767 | 249,097 | (9,330) | (3.7) | % | ||||||||||||||||||||||||
| Amortization of intangible assets | 52,552 | 62,507 | (9,955) | (15.9) | % | ||||||||||||||||||||||||
| Operating income | $ | 424,555 | $ | 442,510 | $ | (17,955) | (4.1) | % | 1.5 | % | |||||||||||||||||||
| Operating income % of revenue | 17.7 | % | 18.1 | % | (40) bps | ||||||||||||||||||||||||
DSA revenue decreased $48.4 million primarily due to lower volume driven by continued cautious client spending as a result of the current demand environment, partially offset by the effect of changes in foreign currency exchange rates.
DSA operating income decreased $18.0 million compared to fiscal year 2024. DSA operating income as a percentage of revenue for fiscal year 2025 was 17.7%, a decrease of 40 bps from 18.1% for fiscal year 2024. Operating income and operating income as a percentage of revenue decreased primarily due to the lower revenue described above, increased restructuring activities, including asset impairments and site consolidation charges; partially offset by the absence of the inventory charge
CHARLES RIVER LABORATORIES INTERNATIONAL, INC.
incurred in connection with the investigations by the U.S. government into the NHP supply chain and lower severance costs as compared to the corresponding period in fiscal year 2024.
Manufacturing
| Fiscal Year | |||||||||||||||||||||||||||||
| 2025 | 2024 | $ change | % change | Impact of FX | |||||||||||||||||||||||||
| (in thousands, except percentages) | |||||||||||||||||||||||||||||
| Revenue | $ | 766,409 | $ | 769,332 | $ | (2,923) | (0.4) | % | 1.2 | % | |||||||||||||||||||
| Cost of revenue (excluding amortization of intangible assets) | 429,840 | 440,511 | (10,671) | (2.4) | % | ||||||||||||||||||||||||
| Selling, general and administrative | 142,101 | 132,803 | 9,298 | 7.0 | % | ||||||||||||||||||||||||
| Amortization of intangible assets | 104,778 | 52,471 | 52,307 | 99.7 | % | ||||||||||||||||||||||||
|
Intangible asset impairment
|
108,974 | - | 108,974 | 100.0 | % | ||||||||||||||||||||||||
| Goodwill impairment | 165,000 | 215,000 | (50,000) | (23.3) | % | ||||||||||||||||||||||||
| Operating loss | $ | (184,284) | $ | (71,453) | $ | (112,831) | 157.9 | % | 8.2 | % | |||||||||||||||||||
| Operating loss % of revenue | (24.0) | % | (9.3) | % | (1,470) bps | ||||||||||||||||||||||||
Manufacturing revenue decreased $2.9 million primarily due to decreased revenue in our Biologics Solutions business, driven by decreased demand for CDMO and Biologics Testing services coupled with the loss of key customers within our CDMO business; partially offset by an increase in our Microbial Solutions business driven by higher product revenue associated with endotoxin product revenue and identification services revenue and the effect of changes in foreign currency exchange rates.
Manufacturing operating loss increased $112.8 million compared to fiscal year 2024. Manufacturing operating loss as a percentage of revenue for fiscal year 2025 was (24.0)%, an increase of 1,470 bps from (9.3)% for fiscal year 2024. Operating loss and operating loss as a percentage of revenue increased primarily due to the $109.0 million intangible asset impairment charge within the CDMO Gene Therapy asset group, accelerated amortization expense as a result of a decrease in the remaining useful life of certain client relationships due to a loss of key customers within the CDMO business, higher charges related to restructuring activities, including asset impairments and site consolidation charges; partially offset by lower goodwill impairment charges within the Biologics Solutions reporting unit of $165.0 million compared to $215.0 million in the corresponding period for fiscal year 2024.
Unallocated Corporate
| Fiscal Year | |||||||||||||||||||||||||||||
| 2025 | 2024 | $ change | % change | Impact of FX | |||||||||||||||||||||||||
| (in thousands, except percentages) | |||||||||||||||||||||||||||||
| Unallocated corporate | $ | 259,676 | $ | 258,121 | $ | 1,555 | 0.6 | % | 0.4 | % | |||||||||||||||||||
| Unallocated corporate % of revenue | 6.5 | % | 6.4 | % | 10 bps | ||||||||||||||||||||||||
Unallocated corporate costs consist of selling, general and administrative expenses that are not directly related or allocated to the reportable segments. The increase in unallocated corporate costs of $1.6 million, or 0.6%, compared to fiscal year 2024 is due to higher third-party legal and advisory costs for the execution of a Cooperation Agreement entered into with a shareholder earlier this year and other transaction costs partially offset by a decline in employee compensation and benefits related costs. Costs as a percentage of revenue for fiscal year 2025 was 6.5%, an increase of 10 bps from 6.4% for fiscal year 2024.
Other Income (Expense)
| Fiscal Year | |||||||||||||||||||||||
| 2025 | 2024 | $ change | % change | ||||||||||||||||||||
| (in thousands, except percentages) | |||||||||||||||||||||||
| Other income (expense): | |||||||||||||||||||||||
| Interest income | $ | 4,940 | $ | 8,575 | $ | (3,635) | (42.4) | % | |||||||||||||||
| Interest expense | (107,029) | (126,288) | 19,259 | (15.3) | % | ||||||||||||||||||
| Other expense, net | (22,576) | (16,520) | (6,056) | 36.7 | % | ||||||||||||||||||
| Total other expense, net | $ | (124,665) | $ | (134,233) | $ | 9,568 | (7.1) | % | |||||||||||||||
Interest income for fiscal year 2025 was $4.9 million, a decrease of $3.6 million, or 42.4%, driven primarily from lower interest rates and interest earning asset balances.
CHARLES RIVER LABORATORIES INTERNATIONAL, INC.
Interest expense for fiscal year 2025 was $107.0 million, a decrease of $19.3 million, or 15.3%, compared to $126.3 million in fiscal year 2024 due primarily to lower average debt balances.
Other expense, net for fiscal year 2025 was $22.6 million, an increase of $6.1 million, or 36.7%, compared to $16.5 million for fiscal year 2024. The increase was due primarily to strategic equity and venture capital investment losses and impairments of $24.9 million as compared to $12.9 million in the corresponding period in fiscal year 2024; partially offset by a gain on the sale of a site within DSA of $3.4 million as compared to a loss of $0.7 million on the sale of a site within DSA in fiscal year 2024, and a gain on our life insurance contracts of $3.2 million as compared to a gain of $1.1 million in fiscal year 2024.
Income Taxes
| Fiscal Year | |||||||||||||||||||||||
| 2025 | 2024 | $ change | % change | ||||||||||||||||||||
| (in thousands, except percentages) | |||||||||||||||||||||||
| Provision for income taxes | $ | 42,660 | $ | 67,823 | $ | (25,163) | (37.1) | % | |||||||||||||||
| Effective tax rate | (42.9) | % | 72.8 | % | (11,570) bps | ||||||||||||||||||
Income tax expense for fiscal year 2025 was $42.7 million, a decrease of $25.2 million compared to $67.8 million for fiscal year 2024. Our effective tax rate was (42.9)% for fiscal year 2025 compared to 72.8% for fiscal year 2024. The change in our effective tax rate in fiscal year 2025 compared to fiscal year 2024 was primarily attributable to the impact of the non-deductible goodwill impairment of the Biologic Solutions reporting unit.
Liquidity and Capital Resources
Liquidity and Cash Flows
We currently require cash to fund our working capital needs, capital expansion, acquisitions, debt payments, lease, venture capital and strategic equity investments, and pension obligations. Our principal sources of liquidity have been our cash flows from operations and recent divestitures, supplemented by long-term borrowings. Based on our current business plan, we believe that our existing funds, when combined with cash generated from operations and our access to financing resources, are sufficient to fund our operations for the foreseeable future.
The following table presents our cash and cash equivalents and short-term investments:
| December 27, 2025 | December 28, 2024 | ||||||||||
| (in thousands) | |||||||||||
| Cash and cash equivalents: | |||||||||||
| Held in U.S. entities | $ | 4,514 | $ | 4,219 | |||||||
| Held in non-U.S. entities | 209,256 | 190,387 | |||||||||
| Total cash and cash equivalents | $ | 213,770 | $ | 194,606 | |||||||
The following table presents our net cash provided by operating activities:
| Fiscal Year | |||||||||||
| 2025 | 2024 | ||||||||||
| (in thousands) | |||||||||||
| Net income (loss) | $ | (142,163) | $ | 25,291 | |||||||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities | 865,728 | 739,615 | |||||||||
| Changes in assets and liabilities | 14,081 | (30,329) | |||||||||
| Net cash provided by operating activities | $ | 737,646 | $ | 734,577 | |||||||
Net cash provided by cash flows from operating activities represents the cash receipts and disbursements related to all of our activities other than investing and financing activities. Operating cash flow is derived by adjusting our net income (loss) for items including, but not limited to (1) non-cash operating items such as depreciation and amortization, stock-based compensation, goodwill impairments, debt financing costs, deferred income taxes,write downs of inventories, provisions of credit losses, long-lived asset impairment charges, gains and/or losses and impairments on venture capital and strategic equity investments, gains and/or losses on divestitures,changes in fair value of contingent consideration, as well as (2) changes in operating assets and liabilities, which reflect timing differences between the receipt and payment of cash associated with transactions and when they are recognized in our results of operations.
CHARLES RIVER LABORATORIES INTERNATIONAL, INC.
During fiscal year 2025, our cash flows from operations was $737.6 million compared with $734.6 million for fiscal year 2024. The increase in net cash provided by operating activities was primarily due to lower payments of variable compensation, benefiting cash provided by operations by approximately $79 million, our revenue related accounts, including collections on trade receivables, deferred revenue, and customer deposits; benefiting cash provided by operations by approximately $12 million; partially offset by higher purchases of inventory of $49 million.
The following table presents our net cash used in investing activities:
| Fiscal Year | |||||||||||
| 2025 | 2024 | ||||||||||
| (in thousands) | |||||||||||
| Capital expenditures | $ | (219,152) | $ | (232,967) | |||||||
| Investments, net | (10,974) | (11,189) | |||||||||
| Proceeds from sale of businesses, net | 17,441 | - | |||||||||
| Acquisitions of businesses and assets, net of cash acquired | - | (5,479) | |||||||||
| Other, net | 3,364 | 4,549 | |||||||||
| Net cash used in investing activities | $ | (209,321) | $ | (245,086) | |||||||
Investing activities primarily consist of cash used to fund capital expenditures to support the growth of our business, purchases and sales of investments related to our venture capital and strategic equity investment portfolios, and asset and business acquisitions and divestitures.
During fiscal year 2025, cash used in investing activities was primarily driven by capital expenditures and net purchases and sales in investments related to certain venture capital and strategic equity investments; partially offset by proceeds from divestitures of certain site and business assets. Capital expenditures declined for fiscal year 2025 compared to fiscal year 2024, primarily as a result of disciplined spend management in light of the global economic and demand environment. Cash used in investing activities in fiscal year 2024 was primarily driven by capital expenditures, an immaterial asset acquisition, and net purchases and sales in investments related to certain venture capital and strategic equity investments.
The following table presents our net cash used infinancing activities:
| Fiscal Year | |||||||||||
| 2025 | 2024 | ||||||||||
| (in thousands) | |||||||||||
| Proceeds from long-term debt and revolving credit facility | $ | 1,227,534 | $ | 1,081,581 | |||||||
| Payments on long-term debt, revolving credit facility, and finance lease obligations | (1,349,317) | (1,493,769) | |||||||||
| Proceeds from exercises of stock options | 714 | 23,878 | |||||||||
| Purchase of treasury stock | (360,673) | (119,175) | |||||||||
| Payment of contingent considerations | (21,822) | - | |||||||||
| Purchase of remaining equity interest of other redeemable noncontrolling interest | (19,140) | (12,000) | |||||||||
| Other, net | (14,022) | (31,442) | |||||||||
|
Net cash used in financing activities
|
$ | (536,726) | $ | (550,927) | |||||||
Financing activities primarily consist of the proceeds and repayments of debt and certain equity related transactions including treasury stock purchases and employee stock option exercises. For fiscal year 2025, net cash used in financing activities was primarily driven by the following activity:
•Net repayments of $111.2 million towards our Credit Facility
•Treasury stock purchases of $350.0 million associated with our stock repurchase program and $10.1 million due to the netting of common stock upon vesting of stock-based awards in order to satisfy individual statutory tax withholding requirements
•Payment of $21.8 million associated with contingent consideration related to the acquisition of Noveprim
•Payment of $19.1 million for the remaining 8% equity interest in Vital River
CHARLES RIVER LABORATORIES INTERNATIONAL, INC.
For fiscal year 2024, net cash used in financing activities was primarily driven by the following activity:
•Net repayments of $417.1 million towards our Credit Facility.
•Treasury stock purchases of $100.7 million associated with our stock repurchase program and $18.5 million due to the netting of common stock upon vesting of stock-based awards in order to satisfy individual statutory tax withholding requirements
•Net proceeds from exercises of employee stock options of $23.9 million
•Dividend payments to noncontrolling interest holders of $14.5 million
•Payment of $12.0 million for the remaining 10% equity interest in an other redeemable noncontrolling interest
Financing and Market Risk
We are exposed to market risk from changes in interest rates and currency exchange rates, which could affect our future results of operations and financial condition. We manage our exposure to these risks through our regular operating and financing activities.
Amounts outstanding under our revolving credit facility and our Senior Notes were as follows:
| December 27, 2025 | December 28, 2024 | ||||||||||
| (in thousands) | |||||||||||
| Revolving credit facility | $ | 616,503 | $ | 714,948 | |||||||
| 4.25% Senior Notes due 2028 | 500,000 | 500,000 | |||||||||
| 3.75% Senior Notes due 2029 | 500,000 | 500,000 | |||||||||
| 4.00% Senior Notes due 2031 | 500,000 | 500,000 | |||||||||
| Total | $ | 2,116,503 | $ | 2,214,948 | |||||||
The Revolving credit facility, "Credit Facility" provides for up to $2.0 billion in multi-currency revolving credit and has a maturity date of December 2029, with no required scheduled payment before that date. The Credit Facility maintains interest rates equal to (A) for revolving loans denominated in U.S. dollars, at our option, either the base rate (which is the higher of (1) the prime rate, (2) the federal funds rate plus 0.50%, or (3) the one-month adjusted SOFR rate plus 1.0%) or the adjusted SOFR rate, (B) for revolving loans denominated in euros, the adjusted EURIBOR rate and (C) for revolving loans denominated in sterling, the daily simple SONIA rate, in each case, plus an interest rate margin based upon our leverage ratio.
Our 2028 Senior Notes have semi-annual interest payments due May 1 and November 1. Our 2029 and 2031 Senior Notes have semi-annual interest payments due March 15 and September 15.
We had an interest rate swap with a notional amount of $500 millionto manage interest rate fluctuation related to our floating rate borrowings under the revolving credit facility, at a fixed rate of 4.65%. Our swap matured in fiscal year 2024 and we have not entered into any additional interest rate swap contracts.
Our off-balance sheet commitments related to our outstanding letters of credit as of December 27, 2025 were $22.0 million.
Foreign Currency Exchange Rate Risk
We operate on a global basis and have exposure to some foreign currency exchange rate fluctuations for our financial position, results of operations, and cash flows.
While the financial results of our global activities are reported in U.S. dollars, our foreign subsidiaries typically conduct their operations in their respective local currency. The principal functional currencies of our foreign subsidiaries are the Euro, British Pound, Canadian Dollar, and Mauritian Rupee. During fiscal year 2025, the most significant drivers of foreign currency translation adjustment we recorded as part of other comprehensive income (loss) were the Euro, Great British Pound, Canadian Dollar, Hungarian Forint, Mauritian Rupee and Chinese Yuan.
Fluctuations in the foreign currency exchange rates of the countries in which we do business will affect our financial position, results of operations, and cash flows. As the U.S. dollar strengthens against other currencies, the value of our non-U.S. revenue, expenses, assets, liabilities, and cash flows will generally decline when reported in U.S. dollars. The impact to net income (loss) as a result of a U.S. dollar strengthening will be partially mitigated by the value of non-U.S. expenses, which will decline when reported in U.S. dollars. As the U.S. dollar weakens versus other currencies, the value of the non-U.S. revenue, expenses, assets, liabilities, and cash flows will generally increase when reported in U.S. dollars. For fiscal year 2025, our revenue would have decreased by $135.6 million, and our operating income would have increased by $9.6 million, if the U.S. dollar exchange rate had strengthened by 10%, with all other variables held constant.
CHARLES RIVER LABORATORIES INTERNATIONAL, INC.
We attempt to minimize this exposure by using certain financial instruments in accordance with our overall risk management and our hedge policy. We do not enter into speculative derivative agreements.
Repurchases of Common Stock
In fiscal year 2025, we repurchased 2.1 million shares of common stock for $350.0 million under the prior stock repurchase program. On October 29, 2025, our Board of Directors approved a new stock repurchase authorization of $1.0 billion. This new authorization replaces the prior stock repurchase authorization of $1.0 billion that had $549.3 million remaining on the plan when it was terminated. As of December 27, 2025, we had $1.0 billion remaining on the current authorized stock repurchase program.
Additionally, our stock-based compensation plans permit the netting of common stock upon vesting of restricted stock, restricted stock units, and performance share units in order to satisfy individual statutory tax withholding requirements. During fiscal year 2025 and 2024, we acquired 0.1 million shares for $10.1 million and $18.5 million, respectively, through such netting.
Commitments and Other Purchasing Arrangements
We lease properties and equipment for use in our operations. In addition to rent, the leases may require us to pay additional amounts for taxes, insurance, maintenance, and other operating expenses. As of December 27, 2025, we had $626.6 million of operating leases inclusive of future minimum rental commitments under non-cancellable operating leases, net of income from subleases as well as $37.0 million of financing leases. The expected payments of our operating and finance lease liabilities over the next twelve months are $80.7 million and $4.6 million, respectively as of December 27, 2025.
In addition to the obligations on the balance sheet at December 27, 2025, we entered into unconditional purchase obligations in the ordinary course of business. Unconditional purchase obligations include agreements to purchase goods or services that are enforceable and legally binding and that specify all significant terms, including fixed or minimum quantities to be purchased, fixed, minimum or variable price provisions, and the approximate timing of the transaction. Purchase obligations exclude agreements that are cancellable at any time without penalty. As of December 27, 2025, we had approximately $340 million of unconditional purchase obligations, the majority of which are expected to be settled during 2026.
We invest in several venture capital funds that invest in start-up companies, primarily in the life sciences industry. Our total commitment to the funds as of December 27, 2025 was $234.3 million, of which we funded $184.9 million through December 27, 2025. Refer to Note 8. Venture Capital and Strategic Equity Investments to our consolidated financial statements contained in Item 8, "Financial Statements and Supplementary Data," in this Annual Report on Form 10-K for further details.
In connection with certain business and asset acquisitions, we agreed to make additional payments based upon the achievement of certain financial targets and other milestones in connection with the respective acquisition. As of December 27, 2025, we had approximately $30 million of gross contingent payments, of which $30 million is the current fair value.
We had certain federal and state income tax liabilities of $17.9 million relating to the one-time Transition Tax on unrepatriated earnings under the 2017 Tax Act. The Transition Tax was paid, interest free, with a final payment in fiscal 2025.
Charles River Laboratories International Inc. published this content on February 18, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on February 18, 2026 at 14:22 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]