Charles River Laboratories Reports Slight Revenue Increase but Significant Decline in Operating Income for Q2 Fiscal 2025

Charles River Laboratories International, Inc. reported its financial results for the second quarter of fiscal 2025, revealing a slight increase in total revenue to $1.032 billion, up 0.6% from $1.026 billion in the same period last year. However, for the six months ended June 28, 2025, total revenue decreased by 1.0% to $2.016 billion compared to $2.038 billion in the prior year. The company's service revenue for the quarter was $840.8 million, a marginal decline from $842.9 million, while product revenue increased to $191.3 million from $183.2 million. The decline in service revenue was attributed to lower demand in the Discovery and Safety Assessment (DSA) segment, which faced cautious spending from clients.

Operating income for the second quarter fell significantly to $100.1 million, down 34.0% from $151.7 million in the prior year, with operating income as a percentage of revenue dropping to 9.7% from 14.8%. The decrease was primarily driven by increased amortization expenses related to client relationships, restructuring costs, and higher legal expenses. Net income attributable to Charles River Laboratories decreased to $52.3 million, compared to $94.1 million in the same quarter last year. For the six-month period, net income was $77.8 million, down from $167.0 million.

In terms of strategic developments, the company has been actively restructuring its operations to optimize efficiency and reduce costs, incurring restructuring charges of $32.2 million in the second quarter. These actions are expected to yield approximately $225 million in annualized cost savings, with $175 million anticipated to impact fiscal year 2025. The company also reported a decline in its DSA backlog to $1.9 billion, reflecting the cautious spending environment among its biopharmaceutical clients.

Geographically, revenue from the U.S. decreased to $549.9 million from $571.4 million, while revenue from Europe increased to $281.9 million from $271.4 million. The company’s total cash and cash equivalents stood at $182.8 million as of June 28, 2025, down from $194.6 million at the end of the previous fiscal year. The company continues to face challenges from ongoing investigations related to its non-human primate supply chain, which have resulted in increased legal costs and scrutiny.

Looking ahead, Charles River Laboratories anticipates continued cautious spending from clients, particularly in the DSA segment, and is focused on executing its restructuring initiatives to enhance operational efficiency. The company remains committed to navigating the current market conditions while exploring innovative approaches to drug development and regulatory compliance.