Charles River Laboratories International Inc.

08/05/2026 | Press release | Distributed by Public on 08/05/2026 07:22

Quarterly Report for Quarter Ending June 27, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with our unaudited condensed consolidated financial statements and related notes of this Quarterly Report on Form 10-Q and our audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for fiscal year 2025 as filed with the SEC on February 18, 2026. 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" included elsewhere within this Form 10-Q. 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.
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. In May 2026, we sold the Cell Solutions business, reported in the RMS segment, which provided 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 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), in vivo (in research models) and in silico studies, laboratory support services, including bioanalytical and strategic non-clinical consulting and program management to support product development. In May 2026, we sold certain European Discovery Services businesses.
Our Manufacturing reportable segment includes Microbial Solutions, which provides in vitro lot-release testing products, microbial detection products, and species identification services and Biologics Solutions (Biologics), which performs specialized testing of biologics (Biologics Testing Solutions). In May 2026, we sold the contract development and manufacturing products and services (CDMO) business, reported in the Manufacturing segment.
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.
CHARLES RIVER LABORATORIES INTERNATIONAL, INC.
Global Market Environment
We are continuing to see a cautious, but improving, spending environment from our client base, principally within our DSA segment as the challenging demand environment experienced in the recent prior quarters has persisted. As we continue to navigate these challenges in the current macroeconomic environment, DSA backlog increased slightly to $2.0 billion as of June 27, 2026 from $1.9 billion as of December 27, 2025.
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, efficiency initiatives have targeted incremental savings through process improvements, 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 year 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 $23.1 million and $54.6 million during the three and six months ended June 27, 2026, and $99.8 million and $107.0 million during the fiscal years 2025 and 2024, respectively.
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 April 17, 2026, we completed the acquisition of an additional 79% equity interest in PathoQuest SAS (PathoQuest), for $67.6 million. The acquisition was funded through a combination of available cash and proceeds from the Credit Facility. This business is reported as part of our Manufacturing reportable segment. For more details, please see Note 2 - Acquisitions and Divestitures in Part I, Item 1.
On January 14, 2026, we completed the acquisition of certain assets of K.F. Cambodia Ltd (Cambodian NHP Supplier), a leading supplier of non-human primates (NHPs) located in Cambodia. The preliminary purchase price for the Cambodian NHP Supplier was $507.3 million, consisting of $335.0 million paid at closing and $172.3 million representing the acquisition date fair value of deferred consideration, which is payable upon the satisfaction of certain post-close conditions. As of June 27, 2026, $105.0 million of deferred consideration remains to be paid which is recorded in Accrued liabilities on the unaudited condensed consolidated balance sheets. 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. For more details, please see Note 2 - Acquisitions and Divestitures in Part I, Item 1.
Recent Divestitures
We routinely evaluate the strategic fit and fundamental performance of our global businesses, divesting operations that do not meet key business criteria. As part of this ongoing assessment, we determined that certain capital could be better deployed in other long-term growth opportunities.
On May 22, 2026, we sold certain European Discovery Services businesses (European Discovery Divestiture) to IQVIA Inc. (IQVIA) for a preliminary purchase price of $125.2 million in cash, net of costs to sell and subject to certain customary closing adjustments. We may also earn up to $10.0 million of contingent payments, which are tied to future performance. The contingent payments have been valued at $2.8 million using a discounted probability weighted model. The results of the European Discovery Services businesses were reported in our DSA reportable segment. During the three and six months ended June 27, 2026, we recorded a gain on the divestiture of $0.3 million within Other (expense) income, net on the unaudited condensed consolidated statements of income (loss).
On May 6, 2026, we sold our CDMO and Cell Solutions businesses (CDMO and Cell Solutions Divestiture) to GI Partners (GI) for net cash paid to the buyer of $12.4 million, net of costs to sell and subject to certain customary closing adjustments. Additionally, we may be required to fund up to $45.0 million of future EBITDA losses and capital expenditures of the divested businesses over a four year period, which is expected to be fully used by GI. Conversely, we may also earn up to $50.0 million of contingent payments, which are tied to future performance and achievement of milestones. The contingent payments receivable have been valued at $15.7 million using a discounted probability weighted model. The results of the CDMO and Cell Solutions businesses were reported in our Manufacturing reportable segment and RMS reportable segment, respectively. During the three and six months ended June 27, 2026, we recorded a loss on the divestiture of $63.7 million and $181.7 million, respectively, within Other (expense) income, net on the unaudited condensed consolidated statements of income (loss).
CHARLES RIVER LABORATORIES INTERNATIONAL, INC.
In March 2026, we completed the sale of certain assets located at our Wilmington, Massachusetts site. The assets consisted of office, laboratory and mixed-use buildings within our RMS segment and unallocated corporate, and was sold to an unrelated third party for cash consideration of $60.1 million, net of costs to sell. In conjunction with the sale, we entered into a long-term operating lease for certain buildings to support RMS and unallocated corporate operations. Upon meeting the criteria for sale leaseback, we derecognized the book value of $21.6 million and recognized a pre-tax gain of approximately $38.5 million. The gain was recognized within our RMS reportable segment and unallocated corporate for $23.2 million and $15.3 million, respectively, and is included in Selling, general and administrative expenses within the unaudited condensed consolidated statements of income (loss).
CHARLES RIVER LABORATORIES INTERNATIONAL, INC.
Results of Operations
Consolidated Results of Operations and Liquidity
Revenue for the three months ended June 27, 2026 decreased $28.1 million, or 2.7%, to $1,004.1 million compared to $1,032.1 million in the corresponding period in 2025. Revenue for the six months ended June 27, 2026 decreased $16.4 million, or 0.8%, to $1,999.9 million compared to $2,016.3 million in the corresponding period in 2025. The decrease in revenue for both the three and six months ended June 27, 2026 was primarily due to a decrease in Manufacturing revenue driven by the sale of our CDMO business and DSA revenue driven by the European Discovery Divestiture, and to a lesser extent RMS revenue, due to decreased cell supply revenue, compared to the corresponding period in 2025.
For the three months ended June 27, 2026, our operating income and operating income as a percentage of revenue were $119.9 million and 11.9% respectively, compared to $100.1 million and 9.7% respectively, in the corresponding period of 2025. For the six months ended June 27, 2026, our operating income and operating income as a percentage of revenue were $239.8 million and 12.0% respectively, compared to $174.8 million and 8.7% respectively, in the corresponding period of 2025. The increases in operating income and operating income as a percentage of revenue for the three and six months ended June 27, 2026 were primarily driven by the gain on sale of certain assets at our Wilmington, Massachusetts site in the first quarter of 2026, lower accelerated amortization expense, and certain third-party legal costs incurred in fiscal year 2025; partially offset by the decrease in revenue described above and higher acquisition, integration and divestiture costs, when compared to the corresponding period in 2025.
Net loss attributable to Charles River Laboratories International, Inc., common shareholders was $1.5 million in the three months ended June 27, 2026, compared to Net income attributable to Charles River Laboratories International Inc., common shareholders of $52.3 million in the corresponding period of 2025. Net loss attributable to Charles River Laboratories International, Inc., common shareholders was $16.3 million in the six months ended June 27, 2026, compared to Net income attributable to Charles River Laboratories International Inc., common shareholders of $77.8 million in the corresponding period of 2025. The decrease of $53.8 million for the three months ended June 27, 2026 was due principally to the CDMO and Cell Solutions Divestiture loss of $63.7 million recognized in the second quarter of 2026, partially offset by the increase in operating income described above, compared to the corresponding period in 2025. The decrease of $94.1 million for the six months ended June 27, 2026 was due principally to the CDMO and Cell Solutions Divestiture loss of $181.7 million recognized in the first half of 2026, partially offset by the increase in operating income described above, compared to the corresponding period in 2025.
During the six months ended June 27, 2026, our cash flows from operations were $220.8 million compared with $376.3 million for the same period in 2025. The decrease was primarily related to higher payments of variable compensation, specifically annual incentive based bonuses paid during the first quarter, as well as higher acquisition, integration and divestiture-related payments.
CHARLES RIVER LABORATORIES INTERNATIONAL, INC.
Three Months Ended June 27, 2026 Compared to the Three Months Ended June 28, 2025
Revenue and Operating Income
The following tables present consolidated revenue by type and by reportable segment:
Three Months Ended
June 27, 2026 June 28, 2025 $ change % change
(in thousands, except percentages)
Service revenue $ 808,287 $ 840,836 $ (32,549) (3.9) %
Product revenue 195,791 191,299 4,492 2.3 %
Total revenue $ 1,004,078 $ 1,032,135 $ (28,057) (2.7) %
Three Months Ended
June 27, 2026 June 28, 2025 $ change % change Impact of FX
(in thousands, except percentages)
RMS $ 209,475 $ 213,271 $ (3,796) (1.8) % 1.6 %
DSA 606,507 618,029 (11,522) (1.9) % 0.4 %
Manufacturing 188,096 200,835 (12,739) (6.3) % 1.1 %
Total revenue $ 1,004,078 $ 1,032,135 $ (28,057) (2.7) % 0.8 %
The following table presents operating income by reportable segment:
Three Months Ended
June 27, 2026 June 28, 2025 $ change % change Impact of FX
(in thousands, except percentages)
RMS $ 36,277 $ 35,786 $ 491 1.4 % 4.5 %
DSA 124,399 122,781 1,618 1.3 % (0.3) %
Manufacturing 65,606 12,061 53,545 444.0 % 6.6 %
Unallocated corporate (106,394) (70,494) (35,900) 50.9 % 0.2 %
Total operating income $ 119,888 $ 100,134 $ 19,754 19.7 % 1.8 %
Operating income % of revenue 11.9 % 9.7 % 220 bps
The following presents and discusses our consolidated financial results by each of our reportable segments:
RMS
Three Months Ended
June 27, 2026 June 28, 2025 $ change % change Impact of FX
(in thousands, except percentages)
Revenue $ 209,475 $ 213,271 $ (3,796) (1.8) % 1.6 %
Cost of revenue (excluding amortization of intangible assets) 143,825 143,135 690 0.5 %
Selling, general and administrative 26,498 28,369 (1,871) (6.6) %
Amortization of intangible assets 2,875 5,981 (3,106) (51.9) %
Operating income $ 36,277 $ 35,786 $ 491 1.4 % 4.5 %
Operating income % of revenue 17.3 % 16.8 % 50 bps
RMS revenue decreased $3.8 million primarily driven by the divestiture of the Cell Solutions business, a decrease in service revenue and small research model product revenue in North America; partially offset by increases in small research model product revenue in China, and the effect of changes in foreign currency exchange rates compared to the corresponding period in 2025.
CHARLES RIVER LABORATORIES INTERNATIONAL, INC.
RMS operating income increased $0.5 million compared to the corresponding period in 2025. RMS operating income as a percentage of revenue for the three months ended June 27, 2026 was 17.3%, an increase of 50 bps from 16.8% for the corresponding period in 2025. Operating income and operating income as a percentage of revenue increased primarily due to a decrease in amortization of intangible assets related to the sale of the Cell Solutions business; partially offset with a decrease in revenue described above, specifically due to lower sales volume and an unfavorable geographic mix, compared to the corresponding period in 2025.
DSA
Three Months Ended
June 27, 2026 June 28, 2025 $ change % change Impact of FX
(in thousands, except percentages)
Revenue $ 606,507 $ 618,029 $ (11,522) (1.9) % 0.4 %
Cost of revenue (excluding amortization of intangible assets) 412,340 421,907 (9,567) (2.3) %
Selling, general and administrative 60,115 60,270 (155) (0.3) %
Amortization of intangible assets 9,653 13,071 (3,418) (26.1) %
Operating income $ 124,399 $ 122,781 $ 1,618 1.3 % (0.3) %
Operating income % of revenue 20.5 % 19.9 % 60 bps
DSA revenue decreased $11.5 million due primarily to the sale of certain European Discovery Services businesses; partially offset by higher revenue for regulated safety assessment services and the effect of changes in foreign currency exchange rates compared to the corresponding period in 2025.
DSA operating income increased $1.6 million during the three months ended June 27, 2026 compared to the corresponding period in 2025. DSA operating income as a percentage of revenue for the three months ended June 27, 2026 was 20.5%, an increase of 60 bps from 19.9% for the corresponding period in 2025. Operating income and operating income as a percentage of revenue increased primarily due to the decrease in amortization of intangible assets related to the European Discovery Divestiture, lower third-party legal costs associated with the investigations by the U.S. government into the NHP supply chain, and lower asset impairments recognized within Cost of revenue; partially offset with the decrease in revenue described above, compared to the corresponding period in 2025.
Manufacturing
Three Months Ended
June 27, 2026 June 28, 2025 $ change % change Impact of FX
(in thousands, except percentages)
Revenue $ 188,096 $ 200,835 $ (12,739) (6.3) % 1.1 %
Cost of revenue (excluding amortization of intangible assets) 84,539 110,026 (25,487) (23.2) %
Selling, general and administrative 35,890 32,416 3,474 10.7 %
Amortization of intangible assets 2,061 46,332 (44,271) (95.6) %
Operating income $ 65,606 $ 12,061 $ 53,545 444.0 % 6.6%
Operating income % of revenue 34.9 % 6.0 % 2,890 bps
Manufacturing revenue decreased $12.7 million primarily due to the sale of the CDMO business; partially offset by increased revenue in our Microbial Solutions business driven primarily by higher endotoxin product revenue and the effect of changes in foreign currency exchange rates, compared to the corresponding period in 2025.
Manufacturing operating income increased $53.5 million during the three months ended June 27, 2026 compared to the corresponding period in 2025. Manufacturing operating income as a percentage of revenue for the three months ended June 27, 2026 was 34.9%, an increase of 2,890 bps from 6.0% for the corresponding period in 2025. Operating income and operating income as a percentage of revenue increased primarily due to the benefit from the divestiture of the CDMO business.
CHARLES RIVER LABORATORIES INTERNATIONAL, INC.
Unallocated Corporate
Three Months Ended
June 27, 2026 June 28, 2025 $ change % change Impact of FX
(in thousands, except percentages)
Unallocated corporate $ 106,394 $ 70,494 $ 35,900 50.9 % 0.2 %
Unallocated corporate % of revenue 10.6 % 6.8 % 380 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 $35.9 million, or 50.9%, compared to the corresponding period in 2025 is primarily due to higher acquisition, integration and divestiture costs primarily associated with our previously discussed activities, and higher professional services fees related to enterprise-wide efficiency initiatives. Costs as a percentage of revenue for the three months ended June 27, 2026 was 10.6%, an increase of 380 bps from 6.8% for the corresponding period in 2025.
Other Income (Expense)
Three Months Ended
June 27, 2026 June 28, 2025 $ change % change
(in thousands, except percentages)
Other income (expense):
Interest income $ 1,032 $ 1,097 $ (65) (5.9) %
Interest expense (30,340) (29,967) (373) 1.2 %
Other (expense) income, net
(37,410) 154 (37,564) (24,392.2) %
Total other expense, net $ (66,718) $ (28,716) $ (38,002) 132.3 %
Interest income for the three months ended June 27, 2026 was $1.0 million, a decrease of $0.1 million, or 5.9%, driven primarily from lower interest earning asset balances.
Interest expense for the three months ended June 27, 2026 was $30.3 million, an increase of $0.4 million, or 1.2%, compared to $30.0 million in the corresponding period in 2025 primarily due to non-cash interest expense recognized from the accretion of deferred purchase consideration associated with the Cambodian NHP Supplier acquisition; partially offset by lower average interest rates on our debt balances within our revolving credit facility.
Other expense, net for the three months ended June 27, 2026 was $37.4 million compared to Other income, net of $0.2 million for the corresponding period in 2025 primarily due to the loss of $63.7 million in connection with the CDMO and Cell Solutions Divestiture recognized in the second quarter of 2026; partially offset by a $18.9 million gain in the fair value of life insurance policies in the second quarter of 2026 compared to a $5.4 million gain in 2025 as well as $9.5 million of venture capital and strategic equity investment gains, net of impairments, in the second quarter of 2026 compared to $0.3 million of venture capital and strategic equity investment losses and impairments in 2025.
Income Taxes
Three Months Ended
June 27, 2026 June 28, 2025 $ change % change
(in thousands, except percentages)
Income before income taxes $ 53,170 $ 71,418 $ (18,248) (25.6) %
Provision for income taxes $ 53,930 $ 18,725 $ 35,205 188.0 %
Effective tax rate 101.4 % 26.2 % 7,520 bps
Income tax expense for the three months ended June 27, 2026 was $53.9 million, an increase of $35.2 million compared to $18.7 million for the corresponding period in 2025. Our effective tax rate was 101.4% for the three months ended June 27, 2026 compared to 26.2% for the corresponding period in 2025. The increase in our effective tax rate in the three months ended June 27, 2026 compared to the corresponding period in 2025 was primarily attributable to the tax effects of the European Discovery and CDMO and Cell Solutions Divestitures, non-deductible transaction costs, and higher accrued interest relating to acquired uncertain tax positions.
Six Months Ended June 27, 2026 Compared to Six Months Ended June 28, 2025
CHARLES RIVER LABORATORIES INTERNATIONAL, INC.
Revenue and Operating Income
The following tables present consolidated revenue by type and by reportable segment:
Six Months Ended
June 27, 2026 June 28, 2025 $ change % change
(in thousands, except percentages)
Service revenue $ 1,606,439 $ 1,638,759 $ (32,320) (2.0) %
Product revenue 393,469 377,544 15,925 4.2 %
Total revenue
$ 1,999,908 $ 2,016,303 $ (16,395) (0.8) %
Six Months Ended
June 27, 2026 June 28, 2025 $ change % change Impact of FX
(in thousands, except percentages)
RMS $ 417,842 $ 426,344 $ (8,502) (2.0) % 2.4 %
DSA 1,203,430 1,210,638 (7,208) (0.6) % 1.3 %
Manufacturing 378,636 379,321 (685) (0.2) % 2.4 %
Total revenue $ 1,999,908 $ 2,016,303 $ (16,395) (0.8) % 1.8 %
The following table presents operating income by reportable segment:
Six Months Ended
June 27, 2026 June 28, 2025 $ change
% change(1)
Impact of FX(1)
(in thousands, except percentages)
RMS $ 86,050 $ 79,391 $ 6,659 8.4 % 6.1 %
DSA 228,274 216,733 11,541 5.3 % (1.2) %
Manufacturing 112,445 3,441 109,004 NM NM
Unallocated corporate (186,984) (124,762) (62,222) 49.9 % 0.8 %
Total operating income $ 239,785 $ 174,803 $ 64,982 37.2 % 2.6 %
Operating income % of revenue 12.0 % 8.7 % 330 bps
(1) "NM" indicates that the percentage change is not meaningful due to the magnitude of the increase or (decrease).
The following presents and discusses our consolidated financial results by each of our reportable segments:
RMS
Six Months Ended
June 27, 2026 June 28, 2025 $ change % change Impact of FX
(in thousands, except percentages)
Revenue $ 417,842 $ 426,344 $ (8,502) (2.0) % 2.4 %
Cost of revenue (excluding amortization of intangible assets) 297,788 282,431 15,357 5.4 %
Selling, general and administrative 28,093 52,575 (24,482) (46.6) %
Amortization of intangible assets 5,911 11,947 (6,036) (50.5) %
Operating income $ 86,050 $ 79,391 $ 6,659 8.4 % 6.1 %
Operating income % of revenue 20.6 % 18.6 % 200 bps
RMS revenue decreased $8.5 million primarily driven by the divestiture of the Cell Solutions business as well as a decrease in service revenue, large research model product revenue, and small research model product revenue in North America; partially offset by an increase in small research model product revenue in China and the effect of changes in foreign currency exchange rates compared to the corresponding period in 2025.
CHARLES RIVER LABORATORIES INTERNATIONAL, INC.
RMS operating income increased $6.7 million compared to the corresponding period in 2025. RMS operating income as a percentage of revenue for the six months ended June 27, 2026 was 20.6%, an increase of 200 bps from 18.6% for the corresponding period in 2025. Operating income and operating income as a percentage of revenue increased primarily due to lower site consolidation charges and the gain on sale of certain assets at our Wilmington, Massachusetts site recognized within Selling, general and administrative expenses and a decrease in amortization of intangible assets related to the sale of the Cell Solutions business; partially offset by an increase in asset impairments recognized within Cost of revenue and the lower revenue described above, compared to the corresponding period in 2025.
DSA
Six Months Ended
June 27, 2026 June 28, 2025 $ change % change Impact of FX
(in thousands, except percentages)
Revenue $ 1,203,430 $ 1,210,638 $ (7,208) (0.6) % 1.3 %
Cost of revenue (excluding amortization of intangible assets) 847,500 842,050 5,450 0.6 %
Selling, general and administrative 107,639 125,563 (17,924) (14.3) %
Amortization of intangible assets 20,017 26,292 (6,275) (23.9) %
Operating income $ 228,274 $ 216,733 $ 11,541 5.3 % (1.2) %
Operating income % of revenue 19.0 % 17.9 % 110 bps
DSA revenue decreased $7.2 million primarily due to the sale of certain European Discovery Services businesses; partially offset by higher revenue for regulated safety assessment services and the effect of changes in foreign currency exchange rates, compared to the corresponding period in 2025.
DSA operating income increased $11.5 million during the six months ended June 27, 2026 compared to the corresponding period in 2025. DSA operating income as a percentage of revenue for the six months ended June 27, 2026 was 19.0%, an increase of 110 bps from 17.9% for the corresponding period in 2025. Operating income and operating income as a percentage of revenue increased primarily due to lower third-party legal costs associated with the investigations by the U.S. government into the NHP supply chain, and lower restructuring activities, including asset impairments recognized within Cost of revenue; partially offset with the decrease in revenue described above, compared to the corresponding period in 2025.
Manufacturing
Six Months Ended
June 27, 2026 June 28, 2025 $ change
% change(1)
Impact of FX(1)
(in thousands, except percentages)
Revenue $ 378,636 $ 379,321 $ (685) (0.2) % 2.4 %
Cost of revenue (excluding amortization of intangible assets) 196,582 217,023 (20,441) (9.4) %
Selling, general and administrative 65,603 66,448 (845) (1.3) %
Amortization of intangible assets 4,006 92,409 (88,403) (95.7) %
Operating income (loss)
$ 112,445 $ 3,441 $ 109,004 NM NM
Operating income (loss) % of revenue
29.7 % 0.9 % 2,880 bps
(1) "NM" indicates that the percentage change is not meaningful due to the magnitude of the increase or (decrease).
Manufacturing revenue decreased $0.7 million primarily due to the sale of the CDMO business; partially offset by increased revenue in our Microbial Solutions business driven primarily by higher endotoxin product revenue and the effect of changes in foreign currency exchange rates, compared to the corresponding period in 2025.
Manufacturing operating income increased $109.0 million during the six months ended June 27, 2026 compared to the corresponding period in 2025. Manufacturing operating income as a percentage of revenue for the six months ended June 27, 2026 was 29.7%, an increase of 2,880 bps from 0.9% for the corresponding period in 2025. Operating income and operating income as a percentage of revenue increased primarily due to the benefit from the divestiture of the CDMO business.
CHARLES RIVER LABORATORIES INTERNATIONAL, INC.
Unallocated Corporate
Six Months Ended
June 27, 2026 June 28, 2025 $ change % change Impact of FX
(in thousands, except percentages)
Unallocated corporate $ 186,984 $ 124,762 $ 62,222 49.9 % 0.8 %
Unallocated corporate % of revenue 9.3 % 6.2 % 310 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 $62.2 million, or 49.9%, compared to the corresponding period in 2025 is primarily due to higher acquisition, integration and divestiture costs primarily associated with our previously discussed activities and higher professional services fees related to enterprise-wide efficiency initiatives; partially offset by the $15.3 million gain on sale of certain assets at our Wilmington, Massachusetts site. Costs as a percentage of revenue for the six months ended June 27, 2026 were 9.3%, an increase of 310 bps from 6.2% for the corresponding period in 2025.
Other Income (Expense)
Six Months Ended
June 27, 2026 June 28, 2025 $ change % change
(in thousands, except percentages)
Other income (expense):
Interest income $ 2,065 $ 2,501 $ (436) (17.4) %
Interest expense (57,082) (57,851) 769 (1.3) %
Other (expense) income, net
(161,540) (12,057) (149,483) 1,239.8 %
Total other expense, net $ (216,557) $ (67,407) $ (149,150) 221.3 %
Interest income for the six months ended June 27, 2026 was $2.1 million, a decrease of $0.4 million, or 17.4%, driven primarily by lower interest earning asset balances.
Interest expense for the six months ended June 27, 2026 was $57.1 million, a decrease of $0.8 million, or 1.3%, compared to $57.9 million in the corresponding period in 2025 primarily due to lower average interest rates on our debt balances within our revolving credit facility; partially offset by non-cash interest expense recognized from the accretion of deferred purchase consideration associated with the Cambodian NHP Supplier acquisition.
Other expense, net for the six months ended June 27, 2026 was $161.5 million compared to $12.1 million for the corresponding period in 2025 due principally to the loss of $181.7 million in connection with the CDMO and Cell Solutions Divestiture; partially offset by a $16.9 million gain in the fair value of life insurance policies in 2026 compared to a $3.3 million gain in 2025, as well as $10.0 million of venture capital and strategic equity investment gains, net of impairments, in 2026 compared to $9.0 million of venture capital and strategic equity investment losses and impairments in 2025.
Income Taxes
Six Months Ended
June 27, 2026 June 28, 2025 $ change % change
(in thousands, except percentages)
Income before income taxes $ 23,228 $ 107,396 $ (84,168) (78.4) %
Provision for income taxes
38,790 28,825 9,965 34.6 %
Effective tax rate 167.0 % 26.8 % 14,020 bps
Income tax expense for the six months ended June 27, 2026 was $38.8 million, compared to $28.8 million for the corresponding period in 2025. Our effective tax rate was 167.0% for the six months ended June 27, 2026 compared to 26.8% for the corresponding period in 2025. The difference in our effective tax rate in the six months ended June 27, 2026 compared to the corresponding period in 2025 was primarily attributable to the tax effects of the European Discovery and CDMO and Cell Solutions Divestitures, non-deductible transaction costs, and higher accrued interest relating to acquired uncertain tax positions.
CHARLES RIVER LABORATORIES INTERNATIONAL, INC.
Liquidity and Capital Resources
Liquidity and Cash Flows
In general, we require cash to fund our working capital needs, capital expansion, acquisitions, debt payments, lease payments, venture capital and strategic equity investments, restructuring initiatives, and pension obligations. Our principal sources of liquidity have been our cash flows from operations 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, cash equivalents and short-term investments:
June 27, 2026 December 27, 2025
(in thousands)
Cash and cash equivalents:
Held in U.S. entities $ 14,460 $ 4,514
Held in non-U.S. entities 177,565 209,256
Total cash and cash equivalents $ 192,025 $ 213,770
The following table presents our net cash provided by operating activities:
Six Months Ended
June 27, 2026 June 28, 2025
(in thousands)
Net income (loss) $ (15,562) $ 78,571
Adjustments to reconcile net income to net cash provided by operating activities 342,619 285,275
Changes in assets and liabilities (106,255) 12,454
Net cash provided by operating activities $ 220,802 $ 376,300
Net cash provided by 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 for (1) non-cash operating items such as depreciation and amortization, stock-based compensation, goodwill impairment, debt financing costs, deferred income taxes, write downs of inventories, provisions of credit losses, long-lived asset impairment changes, gains and/or losses on venture capital and strategic equity investments, gains and/or losses on divestitures, and 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.
During the six months ended June 27, 2026, our cash flows from operations were $220.8 million compared with $376.3 million for the same period in 2025. The decrease was primarily related to higher payments of variable compensation, specifically annual incentive based bonuses paid during the first quarter, as well as higher acquisition, integration and divestiture-related payments.
The following table presents our net cash used in investing activities:
Six Months Ended
June 27, 2026 June 28, 2025
(in thousands)
Acquisition of businesses and assets, net of cash acquired $ (467,254) $ -
Capital expenditures (87,013) (94,622)
Investments, net (746) (5,984)
Proceeds from sale of businesses and assets, net 176,563 17,441
Other, net (1,298) 347
Net cash used in investing activities $ (379,748) $ (82,818)
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, periodically offset by cash from divestitures.
CHARLES RIVER LABORATORIES INTERNATIONAL, INC.
For the six months ended June 27, 2026, cash used in investing activities was primarily driven by the acquisition of the Cambodian NHP Supplier and PathoQuest coupled with capital expenditures; partially offset by proceeds from the sale of the European Discovery Services businesses and the sale of certain assets at our Wilmington, Massachusetts site.
For the six months ended June 28, 2025, cash used in investing activities was primarily driven by capital expenditures; partially offset by proceeds from divestitures of certain site and business assets.
The following table presents our net cash provided by (used in) financing activities:
Six Months Ended
June 27, 2026 June 28, 2025
(in thousands)
Proceeds from long-term debt and revolving credit facility $ 1,265,258 $ 963,363
Payments on long-term debt, revolving credit facility, and finance lease obligations
(745,927) (887,706)
Proceeds from exercises of stock options 1,620 1
Purchase of treasury stock (323,881) (360,484)
Payment of contingent consideration (11,400) (21,822)
Purchase of remaining equity interest of other redeemable noncontrolling interest - (19,140)
Other, net (2,607) (6,458)
Net cash provided by (used in) financing activities $ 183,063 $ (332,246)
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 the six months ended June 27, 2026, net cash provided by financing activities was primarily driven by the following activity:
•Net proceeds of $519.3 million, primarily from our Credit Facility
•Treasury stock purchases of $300.0 million associated with our stock repurchase program and $20.7 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 $11.4 million associated with contingent consideration related to the acquisition of Noveprim
For the six months ended June 28, 2025, net cash used in financing activities was primarily driven by the following activity:
•Net proceeds of $75.7 million, of which $85.7 million was from our Credit Facility
•Treasury stock purchases of $350.0 million associated with our stock repurchase program and $9.9 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 another 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 Credit Facility and our Senior Notes were as follows:
June 27, 2026 December 27, 2025
(in thousands)
Revolving facility $ 1,120,293 $ 616,503
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 $ 2,620,293 $ 2,116,503
CHARLES RIVER LABORATORIES INTERNATIONAL, INC.
The Credit Facility provides for up to $2.0 billion of multi-currency revolving credit and has a maturity date of December 2029, with no required scheduled payment before that date. The interest rates applicable to the revolving facility are 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 off-balance sheet commitments related to our outstanding letters of credit as of June 27, 2026 and December 27, 2025 were $21.7 million and $22.0 million, respectively.
Foreign Currency Exchange Rate Risk
We operate on a global basis and have exposure to 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, Canadian Dollar, and British Pound. During the six months ended June 27, 2026, the most significant drivers of foreign currency translation adjustment we recorded as part of Other comprehensive income (loss) were the British Pound, Canadian Dollar, Mauritian Rupee, Euro, Chinese Yuan, and Hungarian Forint.
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 the six months ended June 27, 2026, our revenue would have decreased by $91.6 million, and our operating income would have decreased by $21.6 million, if the U.S. dollar exchange rate had strengthened by 10%, with all other variables held constant.
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
On October 29, 2025, our Board of Directors approved a stock repurchase program of $1.0 billion. During the six months ended June 27, 2026, we repurchased 1.7 million shares of common stock for $300.0 million under the stock repurchase program. As of June 27, 2026, we had $700.0 million remaining on the authorized $1.0 billion 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 the six months ended June 27, 2026, we acquired 0.1 million shares for $20.7 million through such netting.
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 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 the 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.
We believe that the application of our accounting policies, each of which require significant judgments and estimates on the part of management, are the most critical to aid in fully understanding and evaluating our reported financial results. Our significant accounting policies are more fully described in Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" of our Annual Report on Form 10-K for fiscal year 2025 as filed with the SEC on February 18, 2026. There have been no changes in our critical accounting policies during the six months ended June 27, 2026.
Recent Accounting Pronouncements
For a discussion of recent accounting pronouncements please refer to Note 1, "Basis of Presentation," in this Quarterly Report on Form 10-Q. Other than as discussed in Note 1, "Basis of Presentation," we did not adopt any other new accounting pronouncements during the six months ended June 27, 2026 that had a significant effect on our unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.
CHARLES RIVER LABORATORIES INTERNATIONAL, INC.
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