Charles River Laboratories International Inc. (NYSE:CRL) stock is trading lower on Wednesday after the company released third-quarter 2025 earnings. It also provided an update on the company’s strategic review.
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The life science tools company reported quarterly revenue of $1.01 billion, a 0.5% decrease year-over-year, beating the consensus estimate of $990.77 million.
The impact of foreign currency translation increased reported revenue by 1.3%, and the divestiture of a small Safety Assessment site in 2024 reduced reported revenue by 0.2%. Excluding the effect of these items, revenue declined 1.6% on an organic basis.
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Operating margin increased to 13.3% from 11.6%, primarily driven by lower costs associated with the company’s restructuring initiatives. Adjusted operating margin decreased to 19.7% from 19.9%.
Charles River’s adjusted earnings reached $2.43 per share, beating the consensus of $2.34.
Revenue for the Research Models and Services (RMS) segment was $213.5 million, an increase of 7.9% year over year. Organic revenue increased by 6.5%, due primarily to higher revenue for large research model products.
Revenue for the Discovery and Safety Assessment (DSA) segment was $600.7 million, down 2.3%. Organic revenue decreased by 3.1%, driven primarily by lower sales volume for both discovery and regulated safety assessment services.
Manufacturing segment sales were $190.7 million, down 3.1%. Organic revenue decreased 5.1%, primarily driven by lower revenue in the CDMO and Biologics Testing businesses, partially offset by higher revenue in the Microbial Solutions business.
2025 Outlook
The company expects 2025 revenue to decline between (1.5)% and (0.5)% compared to the prior range of (2.5)%-(0.5)% on a reported basis and organically down by (2.5)%–(1.5)% ((3.0)%–(1.0)% prior).
The company lowered 2025 sales guidance from $3.95 billion-$4.03 billion to $3.85 billion-$3.99 billion, versus the consensus of $3.99 billion.
Charles River raised 2025 adjusted earnings from $9.90-$10.30 per share to $10.10-$10.30 compared to the consensus of $10.19.
Strategic Review Update
Charles River is expected to sell certain underperforming assets to focus on more profitable growth opportunities.
The businesses represent approximately 7% of the company’s estimated 2025 revenue.
The proposed divestitures are expected to result in non-GAAP earnings per share accretion of at least $0.30 on an annualized basis.
Charles River has launched several restructuring and efficiency initiatives to protect margins and revive earnings amid a challenging demand environment.
The company expects these actions to deliver about $225 million in annualized cost savings by 2026.
Additional measures, focusing on process improvements, procurement synergies, and a global business services model, are projected to yield an additional $70 million in yearly savings, with full realization expected by 2026.
In October, the company’s board approved a new $1 billion stock repurchase authorization.
CRL Price Action: Charles River shares were down 8.12% at $163.40 at the time of publication on Wednesday, according to Benzinga Pro data.
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