Charles River Laboratories reported third‑quarter 2025 revenue of $1.00 billion, a 0.5% decline from the $1.01 billion earned in the same period last year. Non‑GAAP earnings per share reached $2.43, beating the consensus estimate of $2.32 by $0.11, or 4.7%. The beat was driven by disciplined cost management and a favorable mix shift toward higher‑margin Research Models and Services (RMS) revenue, which grew 7.9% YoY to $213.5 million, offsetting declines in Discovery and Safety Assessment (DSA) and Manufacturing Solutions.
The DSA segment posted $600.7 million in revenue, down 2.3% YoY, while Manufacturing Solutions fell 3.1% YoY to $190.7 million. The decline in these two segments was largely due to reduced demand for legacy animal‑testing services and lower contract volumes in the manufacturing space. In contrast, RMS revenue growth helped lift overall revenue, demonstrating the company’s ability to capitalize on its core scientific portfolio.
GAAP operating margin expanded to 13.3% from 11.6% in Q3 2024, largely because of lower restructuring costs and improved operating leverage. Non‑GAAP operating margin contracted slightly to 19.7% from 19.9% YoY, reflecting the impact of lower revenue in the DSA and Manufacturing segments. The margin shift underscores the company’s focus on cost discipline while navigating a mixed‑segment performance environment.
Management updated its full‑year 2025 outlook, narrowing revenue guidance to a decline of 1.5% to 0.5% from the previous range of 2.5% to 0.5%. Organic revenue guidance was also tightened to a decline of 2.5% to 1.5% from 3.0% to 1.0%. Full‑year non‑GAAP EPS guidance was set at $10.10 to $10.30, slightly below the consensus of $10.19. The adjustments signal management’s caution regarding ongoing organic revenue contraction while maintaining confidence in cost‑control initiatives and the strategic review’s potential to improve long‑term profitability.
The company’s board has convened a Strategic Planning and Capital Allocation Committee (SPCAC) with third‑party advisors to conduct a comprehensive review of its portfolio. CEO James Foster emphasized that the review will focus on strengthening the scientific portfolio, divesting under‑performing or non‑core assets, maximizing financial performance, and maintaining disciplined capital deployment. Foster noted that the actions outlined will position the company for meaningful earnings growth and reinforce its competitive position. Investors have expressed concern about the execution risk associated with the planned divestitures and the continued organic revenue decline, which has tempered enthusiasm despite the earnings beat.
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