Charles River Laboratories Reports Third-Quarter 2025 Results: Steady Demand Amid Revenue Declines

The company reported third-quarter revenue of $1.00 billion, a slight decrease of 0.5% compared to $1.01 billion in the same quarter last year. This dip was influenced by a 1.3% increase due to foreign currency translation and a 0.2% reduction stemming from the 2024 divestiture of a small Safety Assessment site. Excluding these factors, organic revenue experienced a decline of 1.6%.

James C. Foster, Chair, President, and Chief Executive Officer, emphasized the stability of demand for the company’s extensive portfolio, stating, “Our solid third-quarter financial results demonstrate that the demand for our extensive portfolio of early-stage research and manufacturing products and services remains stable.”

The GAAP operating margin improved significantly, rising to 13.3% from 11.6% in Q3 2024, largely attributed to cost reductions from restructuring initiatives. However, GAAP net income available to common shareholders fell to $54.4 million ($1.10 per diluted share), down from $68.7 million ($1.33 per diluted share) year-over-year. This decline was primarily driven by losses from certain venture capital and strategic investments, which resulted in a $0.33 per share loss, contrasting with a $0.03 gain in the previous year.

On a non-GAAP basis, the operating margin decreased to 19.7%, down from 19.9% in Q3 2024. Non-GAAP net income totaled $120.3 million, reflecting a 10.0% decline from $133.7 million in the prior year, while diluted earnings per share on a non-GAAP basis dropped to $2.43, a 6.2% decrease from $2.59 per share in Q3 2024.

The RMS segment reported revenue of $213.5 million, marking a 7.9% increase from $197.8 million in Q3 2024. This growth can be largely attributed to a 6.5% organic increase driven by higher sales of large research model products. The GAAP operating margin for RMS improved to 16.2% from 13.9% year-over-year, reflecting a favorable revenue mix and cost savings from restructuring.

In contrast, the DSA segment experienced a revenue decline of 2.3%, amounting to $600.7 million, down from $615.1 million in Q3 2024. Organic revenue fell 3.1%, primarily due to decreased sales volumes in both discovery and regulated safety assessment services. The GAAP operating margin remained relatively stable at 20.5%, slightly decreased from 20.6% in the prior year.

The Manufacturing segment also faced a revenue decline, reporting $190.7 million, a 3.1% decrease from $196.9 million in Q3 2024. Organic revenue fell by 5.1%, primarily affected by lower revenues in the CDMO and Biologics Testing businesses. The GAAP operating margin increased to 20.9% from 20.4%, attributed to lower acquisition-related amortization adjustments.

In light of the third-quarter performance, Charles River Laboratories has updated its 2025 financial guidance, narrowing revenue expectations to a decline of 1.5% to 0.5% (previously 2.5% to 0.5%) and adjusting non-GAAP earnings per share estimates to $10.10 to $10.30 (up from $9.90 to $10.30).

As Charles River Laboratories navigates a challenging economic environment, Foster remains optimistic about the future. “We believe that positive signals are beginning to emerge which indicate that the industry may be on a path towards recovery; however, sustained improvement in our business will take time,” he noted. The company’s strategic focus on differentiation through science and innovation is set to position it well amidst ongoing uncertainties in the healthcare sector.

A live webcast discussing these results will be held on November 5th at 9:00 a.m. ET, providing further insights into the company’s performance and strategy moving forward.