Key Highlights

  • Revenue fell 2.2% year over year to USD 982.7 million but topped the USD 960.4 million estimate.
  • GAAP diluted EPS reached USD 6.86 versus USD 1.10, driven by a USD 201 million tax reserve reversal.
  • Operating income rose 51.4% to USD 202.6 million, lifting the Operating Margin to 20.6% from 13.3%.
  • The company repurchased USD 300 million of stock over nine months, with USD 700 million remaining authorized.

Charles River Laboratories (NYSE:CRL) reported third quarter Revenue of USD 982.7 million, down 2.2% from USD 1,004.9 million yet above the USD 960.4 million estimate. GAAP diluted EPS was USD 6.86, compared with USD 1.10 a year earlier, on Net Income attributable to common shareholders of USD 333.1 million versus USD 54.4 million. The increase came mainly from a tax benefit rather than operations.

Segment Revenue and Divestiture Effects

Service revenue declined 3.4% to USD 780.3 million, while product revenue rose 2.8% to USD 202.4 million. Discovery and Safety Assessment revenue was USD 596.3 million, down 0.7%, as the sale of certain European Discovery Services businesses removed USD 36.4 million, partly offset by USD 33.5 million of higher regulated safety assessment revenue. Manufacturing revenue fell 6.2% to USD 178.9 million, and Research Models and Services revenue fell 2.8% to USD 207.5 million, both reflecting the sale of the CDMO and Cell Solutions businesses.

Segment Operating Income improved across the board. Discovery and Safety Assessment earned USD 172.4 million, a 28.9% margin versus 20.5%, helped by a non-income tax benefit tied to changes in tax law in a foreign jurisdiction. Manufacturing earned USD 63.8 million, up 59.9%, and Research Models and Services earned USD 41.2 million, up 19.4%. Unallocated corporate costs rose to USD 74.8 million from USD 63.8 million.

Operating Income, Tax and Net Income

Operating income rose to USD 202.6 million, a 20.6% margin versus 13.3% a year earlier. Selling, general and administrative expense fell to USD 140.6 million from USD 177.6 million, and amortization of intangible assets dropped to USD 14.6 million from USD 27.4 million. Interest expense rose to USD 28.5 million from USD 25.4 million, and pretax income was USD 170.7 million versus USD 87.2 million.

The company booked an income tax benefit of USD 163.8 million, against a USD 31.6 million expense a year ago, an effective rate of negative 96.0%. A USD 201 million benefit came from reversing an unrecognized tax benefit reserve after tax legislation was enacted and certain tax requirements were completed in a foreign jurisdiction. For nine months, operating income was USD 442.4 million, a 14.8% margin versus 10.2%, though other expense included a USD 181.7 million loss on the CDMO and Cell Solutions divestiture recognized in the first half.

Capital Allocation and Balance Sheet

On May 6 the company sold its CDMO and Cell Solutions businesses to GI Partners, and on May 22 it sold certain European Discovery Services businesses to IQVIA for USD 126.4 million in cash. Operating Cash Flow over nine months was USD 474.9 million versus USD 590.1 million, reflecting higher Bonus payments and professional fees tied to efficiency and divestiture work.

Total Debt and finance leases were USD 2.457 billion, up from USD 2.152 billion at year end, and cash was USD 200.4 million. Under a USD 1.0 billion repurchase program approved in October 2025, the company repurchased 1.7 million shares for USD 300.0 million during the nine months, leaving USD 700.0 million authorized. No guidance accompanied the quarterly results.

Metrics to Track

Third quarter operating margin of 20.6% compares with 14.8% for nine months and 13.3% a year ago. Revenue of USD 982.7 million compares with USD 1,004.9 million in the prior-year quarter and USD 2,982.6 million for nine months, down 1.3%. Cash of USD 200.4 million compares with total debt of USD 2.457 billion, and USD 300.0 million of repurchases compares with USD 700.0 million remaining under the program.