WILMINGTON, Mass. — Charles River Laboratories International reported second-quarter revenue of $1 billion, down 2.7 percent from $1.03 billion a year earlier, while raising its full-year revenue and adjusted earnings outlook.
Organic revenue increased 0.1 percent, marking the company’s strongest organic growth since the third quarter of 2023. Growth in the Manufacturing Solutions and Discovery and Safety Assessment segments offset a decline in Research Models and Services.
Charles River reported a net loss attributable to common shareholders of $1.5 million, or 3 cents per diluted share, compared with net income of $52.3 million, or $1.06 per share, in the prior-year quarter.
The loss included a $63.7 million charge, equal to $1.40 per share, related to the divestiture of the company’s contract development and manufacturing and Cell Solutions businesses.
Adjusted net income declined 5 percent to $146.2 million from $154 million. Adjusted earnings fell 3.2 percent to $3.02 per diluted share from $3.12 a year earlier.
The company’s GAAP operating margin increased to 11.9 percent from 9.7 percent. Its adjusted operating margin declined to 20.5 percent from 22.1 percent a year earlier but improved by 420 basis points from the first quarter.
“We made excellent progress in the second quarter on the execution of our Pathway to Purpose strategy,” CEO Birgit Girshick said.
“We are actively evaluating opportunities to modernize the company and drive greater efficiency, to strengthen our leading drug development portfolio centered on regulated testing, and to further enhance our growth profile,” she added.
Girshick said demand improved during the quarter, particularly in the Discovery and Safety Assessment segment, which recorded its highest net book-to-bill ratio in nearly four years.
“This improvement was broad based across our global biopharmaceutical and small and mid-sized biotechnology clients,” she said.
Research Models and Services revenue declined 1.8 percent to $209.5 million. Organic revenue decreased 1.4 percent, primarily because of lower sales of small research models in North America and weaker research model services revenue.
Discovery and Safety Assessment revenue fell 1.9 percent to $606.5 million, but increased 0.2 percent organically as higher study volumes supported regulated safety assessment services.
Manufacturing Solutions revenue declined 6.3 percent to $188.1 million, mainly because of the CDMO divestiture. Organic revenue increased 1.3 percent, driven by growth in the Microbial Solutions business.
Charles River completed the divestiture of certain European Discovery Services sites and its CDMO and Cell Solutions businesses in May as part of an effort to streamline its portfolio.
The company also joined Eli Lilly’s TuneLab artificial intelligence and machine-learning platform, contributing nonclinical testing expertise to drug discovery programs. It separately entered a collaboration with Arovella Therapeutics to provide next-generation sequencing services.
Charles River also introduced an AI-enabled digital pathology workflow intended to reduce study turnaround times and improve pathologist efficiency.
The company repurchased $100 million of its common stock during the quarter at an average price of $174 per share. It has repurchased $300 million of stock during the first half of the year and had $700 million remaining under its authorization as of June 27.
Charles River now expects reported revenue to decline between 2.5 percent and 3.5 percent in 2026, compared with its previous forecast for a decline of 4 percent to 5.5 percent.
Organic revenue is expected to range from flat to 1 percent growth, an improvement from the prior forecast for a decline of 0.5 percent to 1.5 percent.
The company raised its adjusted earnings forecast to between $11.15 and $11.45 per share from its previous range of $10.80 to $11.30.
However, it lowered its GAAP earnings forecast to between $3.05 and $3.35 per share from $5.35 to $5.85, primarily because of losses and costs associated with the divestitures.
