CRL

Healthcare

Charles River Laboratories

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Market Data

Financials

XBRL · SEC EDGAR

2008–2025(18yr)

Revenue

Net Income

Free CF

Metric	FY 2008	FY 2009	FY 2010	FY 2011	FY 2012	FY 2013	FY 2014	FY 2015	FY 2016	FY 2017	FY 2018	FY 2019	FY 2020	FY 2021	FY 2022	FY 2023	FY 2024	FY 2025Latest	YoY
Revenue	$1.3B	$1.2B	$1.1B	$1.1B	$1.1B	$1.2B	$1.3B	$1.4B	$1.7B	$1.9B	$2.3B	$2.6B	$2.9B	$3.5B	$4.0B	$4.1B	$4.0B	$4.0B	-0.9%
Gross Profit	$1.0B	$916.0M	$880.5M	$874.7M	$874.1M	$893.2M	$1.0B	$1.1B	$1.4B	$1.6B	—	—	—	—	—	—	—	—	—
Gross Margin	80.5%	78.2%	77.7%	76.5%	77.4%	76.6%	79.5%	80.6%	83.5%	84.4%	—	—	—	—	—	—	—	—	—
Operating Income	-$451.8M	$169.6M	-$298.5M	$174.3M	$165.8M	$151.4M	$177.7M	$206.4M	$237.4M	$287.5M	$331.4M	$351.2M	$432.7M	$589.9M	$651.0M	$617.3M	$227.3M	$25.2M	-88.9%
Operating Margin	-34.9%	14.5%	-26.3%	15.3%	14.7%	13.0%	13.7%	15.1%	14.1%	15.5%	14.6%	13.4%	14.8%	16.7%	16.4%	14.9%	5.6%	0.6%	-5.0pp
Net Income	-$524.5M	$114.4M	-$336.7M	$110.0M	$97.9M	$102.8M	$126.7M	$149.3M	$154.8M	$123.4M	$226.4M	$252.0M	$364.3M	$391.0M	$486.2M	$474.6M	$22.2M	-$144.3M	-750.1%
Net Margin	-40.5%	9.8%	-29.7%	9.6%	8.7%	8.8%	9.8%	11.0%	9.2%	6.6%	10.0%	9.6%	12.5%	11.0%	12.2%	11.5%	0.5%	-3.6%	-4.1pp
Free Cash Flow	—	—	—	—	—	—	—	—	$261.6M	$235.6M	$301.1M	$340.4M	$380.0M	$532.0M	$294.9M	$365.4M	$501.6M	$518.5M	+3.4%
FCF Margin	—	—	—	—	—	—	—	—	15.6%	12.7%	13.3%	13.0%	13.0%	15.0%	7.4%	8.8%	12.4%	12.9%	+0.5pp
EPS (Diluted)	$-7.80	$1.74	$-5.38	$2.14	$2.01	$2.12	$2.66	$3.13	$3.23	$2.54	$4.62	$5.07	$7.20	$7.60	$9.48	$9.22	$0.20	$-2.91	-1555.0%

Total Debt$2.1B

Cash & Equiv.$213.8M

Net Debt$1.9B

4 min read

1. THE BIG PICTURE

Charles River Laboratories occupies a dominant but difficult position as the "one-stop" shop for drug discovery, yet its massive scale is currently a liability rather than a shield. While it is the largest provider of outsourced safety testing, it is struggling to translate that market share into growth, reporting a 0.8% revenue decline in the most recent quarter (8-K). The business is caught between a "stabilizing" but cautious biopharmaceutical demand environment and structural vulnerabilities in its own supply chain.

2. WHERE THE RISKS HIT HARDEST

The "one-stop" global partner strategy is threatened by contractual termination risks because the very flexibility Charles River Laboratories offers—allowing clients to reduce fixed costs—means those clients can cancel or reduce the scope of major projects with little to no notice (10-K Item 1A). This creates a revenue profile that is far more volatile than its "integrated" portfolio suggests. Furthermore, the competitive advantage of global scale is undermined by supply chain dependencies for critical research models like non-human primates. Geopolitical or regulatory disruptions to these specific international sources can force Charles River Laboratories to use non-preferred vendors at higher costs, directly eroding the operating margins that management seeks to protect through "efficiency and process improvements" (8-K).

3. WHAT THE NUMBERS SAY TOGETHER

A stark disconnect exists between Charles River Laboratories' accounting profitability and its cash generation. Charles River Laboratories reported a significant GAAPGAAPGenerally Accepted Accounting Principles — the standard U.S. accounting rules all public companies must follow net loss of $(276.6) million in the fourth quarter of 2025, yet it maintains a robust Free Cash Flow (FCFFCFFree Cash Flow — cash left after paying for operations and capital investments; what the company can actually spend, save, or return to shareholders) margin of 16.7% (XBRL). This discrepancy is largely explained by $3.1 billion in goodwill and intangibles on the balance sheet; recent multi-hundred-million-dollar impairment charges in the Biologics and CDMO units have crushed net income without immediately draining cash.

While Charles River Laboratories leads its peer group in returning capital to shareholders—ranking first with a 5.5% buyback yield—it is the only firm in the group seeing revenue contract (-0.9% TTMTTMTrailing Twelve Months — the most recent full year of financial data, updated on a rolling basis each quarter) while peers like Quest Diagnostics (+11.8%) and Waters Corp (+7.0%) grow. Short interest of 6.9% of the float suggests a meaningful portion of the market remains skeptical of the "stabilization" narrative (Yahoo Finance).

4. IS IT WORTH IT AT THIS PRICE?

At a forward P/EP/EPrice-to-Earnings ratio — share price divided by annual earnings per share; how much investors pay per dollar of profit. Higher P/E = higher growth expectations of 13.7x, Charles River Laboratories trades at a modest discount to the peer median of 17.5x. According to CAPM analysis, this price implies the market expects 6.3% long-term growth. This expectation appears optimistic when compared to the recent organic revenue declines across all three segments in Q4 2025: RMS (-0.9%), DSA (-3.3%), and Manufacturing (-2.1%).

The 21% valuation discount to peers is justified by Charles River Laboratories's inferior margin profile and growth trajectory; its 8.7% gross margin is the lowest in the peer group by a wide margin (XBRL). If growth fails to recover and instead slows to a 5.0% pace, sensitivity analysis suggests the justified multiple would drop further to 11.6x. Investors are currently paying for a turnaround in "biopharmaceutical demand" that has yet to manifest in the top-line figures.

5. WHAT WOULD CHANGE THIS VIEW?

Constructive if DSA net bookings, which management cited as a highlight in Q4, translate into positive organic revenue growth for two consecutive quarters.
Cautious if further quantitative impairment tests result in additional write-downs of the $3.1 billion in goodwill, signaling that the "stabilization" in the Biologics or CDMO units has failed.
Cautious if the 6.9% short interest continues to rise, indicating deepening market concern over non-human primate supply or legal proceedings.

6. BOTTOM LINE

Structural Advantage: A comprehensive, integrated preclinical portfolio that creates high switching costs for large pharma clients seeking to outsource entire development programs.

Bottom Line: Charles River Laboratories is a high-FCFFCFFree Cash Flow — cash left after paying for operations and capital investments; what the company can actually spend, save, or return to shareholders business currently masked by heavy impairment charges and supply chain fragility, making it a speculative play on a biopharma spending recovery.

Source: Synthesis · LLM Analysis

4 min read

1. Top 5 Material Risks

Contractual Termination: Charles River Laboratories faces significant revenue risk because many client agreements, including those with major strategic partners, permit termination or scope reduction with little or no notice. In many instances, Charles River Laboratories is not entitled to termination fees, meaning the loss of a large contract or the simultaneous conclusion of multiple contracts can materially harm operating results.
Supply Chain Constraints: The business relies on limited international sources for critical research models, such as non-human primates. Disruptions—caused by colony health issues, export/import restrictions, or geopolitical disputes—can force Charles River Laboratories to source from non-preferred vendors at higher costs or fail to meet client demand, directly impacting profitability.
Asset Impairment: Charles River Laboratories carries $3.1 billion in goodwill and other intangibles. Declines in operating performance, such as those experienced by the Biologics Solutions reporting unit, necessitate quantitative impairment tests. If future cash flows or operating margins fall below expectations, Charles River Laboratories must write down these assets, resulting in charges that reduce net income.
Regulatory Compliance and Data Integrity: Failure to comply with GLP or cGMP requirements, or findings of material violations regarding data integrity, can lead to FDA warning letters, disqualification of client data, or facility closures. Such events damage Charles River Laboratories's reputation and result in significant legal expenses and diverted management attention.
Integration and Restructuring Execution: Charles River Laboratories’ strategy relies on successfully integrating acquisitions and realizing cost savings from restructuring initiatives. If Charles River Laboratories fails to achieve projected efficiencies or encounters implementation issues with its business systems, it risks higher-than-anticipated costs and a failure to protect operating margins.

2. Company-Specific Risks

Animal Research Opposition: Negative attention from special interest groups, including demonstrations and attempts to disrupt the transportation of research models, can impair the efficiency of operations and increase security costs.
CDMO Quality Control: The complexity of CDMO services creates a risk that manufacturing runs may be delayed or destroyed due to contamination or equipment malfunction, potentially leading to breach of contract claims and loss of customers.
Information Security: As a collector of substantial client data, Charles River Laboratories is a target for cyber-attacks. A material breach could lead to the termination of customer contracts, government investigations, and significant reputational harm.
Artificial Intelligence Uncertainties: The adoption of AI in research introduces risks of flawed algorithms or biased data sets, which could lead to inaccurate study results, competitive harm, and potential legal liability.

3. Regulatory/Legal Risks

Data Privacy: Charles River Laboratories must comply with evolving global frameworks, including the EU GDPR, UK GDPR, and China’s PIPL/DSL. Non-compliance can result in significant fines, suspension of data transfers, and cancellation of business authorizations.
Environmental and Safety Laws: Charles River Laboratories is subject to stringent regulations regarding the handling of hazardous waste and radioactive materials. Failure to comply with OSHA, EPA, or NRC standards can result in loss of licensure and civil or criminal penalties.
Tax Audits: As a global entity, Charles River Laboratories is subject to regular tax audits. Adverse outcomes from these reviews, or changes in tax laws (such as the U.S. OBBBA enacted in 2025), can negatively impact the effective tax rate and cash flows.
Exclusive Forum Provision: Charles River Laboratories’s by-laws designate Delaware state courts as the exclusive forum for certain legal actions, which may limit a stockholder’s ability to bring claims in other jurisdictions and potentially discourage litigation.

4. Financial Impact Map

Contractual Termination → Revenue → The loss of large contracts or multiple concurrent cancellations can materially reduce total revenue and cash flow. Supply Chain Constraints → Operating Margin → Sourcing from non-preferred vendors or paying higher prices during shortages directly increases costs and compresses margins. Asset Impairment → Net Income → Impairment charges (e.g., the $165.0 million charge for Biologics Solutions and $211.0 million for CDMO Cell Therapy in 2025) result in a direct reduction of net income. Regulatory Compliance → Operating Expenses → Legal expenses, fines, and the costs of remediation following a notice of objectionable observations or clinical holds increase operating costs. Restructuring Initiatives → Operating Margin → Failure to realize projected cost savings from workforce reductions and site closures prevents Charles River Laboratories from protecting its operating margin as intended.

Source: 10-K Item 1A · LLM Analysis

Recent Filings

Form	Filed	Period
8-K	Feb 2026	—
10-K	Feb 2026	Dec 2025
10-Q	Nov 2025	Sep 2025