Charles River Labs Sees Q3 Net Income Dip 22% Amid Revenue Stagnation

TL;DR

CRL's Q3 net income drop and ongoing NHP supply chain legal woes make it a risky bet; steer clear until regulatory clarity emerges.

AI Summary

CHARLES RIVER LABORATORIES INTERNATIONAL, INC. (CRL) reported a mixed financial performance for the three and nine months ended September 27, 2025. Total revenue slightly decreased to $1,004,852 thousand for the three months ended September 27, 2025, from $1,009,763 thousand in the prior year, and to $3,021,155 thousand for the nine months, down from $3,047,440 thousand. Net income attributable to CRL significantly declined, reaching $54,422 thousand for the three-month period, a 21.9% decrease from $69,657 thousand, and $132,217 thousand for the nine-month period, a substantial 44.1% drop from $236,698 thousand. Diluted EPS also fell to $1.10 from $1.33 for the quarter and $2.65 from $4.37 for the nine months. Operating income, however, increased by 14.0% to $133,799 thousand for the quarter, but decreased by 21.9% to $308,602 thousand for the nine months. The company saw a notable increase in cash and cash equivalents to $207,097 thousand as of September 27, 2025, from $194,606 thousand at December 28, 2024, driven by $590,126 thousand in net cash provided by operating activities for the nine months. Key risks include ongoing SEC investigations and lawsuits related to the non-human primate supply chain, which could impact future financial results and operational stability.

Why It Matters

For investors, the significant 44.1% year-over-year decline in nine-month net income and diluted EPS raises concerns about CRL's profitability and growth trajectory, despite a slight quarterly operating income improvement. The ongoing SEC investigation and multiple lawsuits related to the NHP supply chain introduce considerable regulatory and reputational risk, potentially impacting future contracts and operational costs. This competitive landscape, where reliable and ethical sourcing is paramount, could see CRL lose ground to rivals if these issues persist. Employees might face uncertainty if operational adjustments are needed, while customers could experience supply chain disruptions or increased costs if NHP sourcing becomes more challenging or expensive.

Risk Assessment

Risk Level: high — The risk level is high due to the significant decline in net income attributable to CRL, which fell by 44.1% to $132,217 thousand for the nine months ended September 27, 2025, compared to $236,698 thousand in the prior year. Furthermore, the company explicitly mentions ongoing U.S. Securities and Exchange Commission (SEC) investigations and multiple lawsuits related to its non-human primate (NHP) supply chain, including a putative securities class action lawsuit filed on May 19, 2023, and derivative lawsuits filed on November 8, 2023, and August 2, 2024, which pose substantial legal and financial uncertainties.

Analyst Insight

Investors should exercise caution and consider reducing exposure to CRL given the substantial decline in net income and the unresolved legal and regulatory challenges surrounding its NHP supply chain. Monitor developments in the SEC investigation and lawsuits closely, as these could significantly impact future earnings and stock performance. Await clearer guidance on how the company plans to mitigate these risks and restore profitability before considering new investments.

Financial Highlights

revenue

$1,004,852

operating Margin

13.3%

net Income

$54,422

eps

$1.10

cash Position

$207,097

revenue Growth

-0.5%

Revenue Breakdown

Key Numbers

• $1,004,852 — Total revenue (Q3 2025) (Slight decrease from $1,009,763 thousand in Q3 2024)
• $54,422 — Net income attributable to CRL (Q3 2025) (21.9% decrease from $69,657 thousand in Q3 2024)
• $132,217 — Net income attributable to CRL (YTD 2025) (44.1% decrease from $236,698 thousand in YTD 2024)
• $1.10 — Diluted EPS (Q3 2025) (Decreased from $1.33 in Q3 2024)
• $2.65 — Diluted EPS (YTD 2025) (Decreased from $4.37 in YTD 2024)
• $133,799 — Operating income (Q3 2025) (14.0% increase from $117,405 thousand in Q3 2024)
• $308,602 — Operating income (YTD 2025) (21.9% decrease from $395,034 thousand in YTD 2024)
• $207,097 — Cash and cash equivalents (Sept 27, 2025) (Increased from $194,606 thousand at Dec 28, 2024)
• $590,126 — Net cash provided by operating activities (YTD 2025) (Increased from $575,215 thousand in YTD 2024)
• 49,215,471 — Shares outstanding (Oct 25, 2025) (Total common stock outstanding)

Key Players & Entities

• CHARLES RIVER LABORATORIES INTERNATIONAL, INC. (company) — Registrant
• SEC (regulator) — investigating NHP supply chain
• New York Stock Exchange (regulator) — exchange where CRL common stock is registered
• Bloomberg (company) — publisher of this analysis
• Board of Directors (person) — subject of derivative lawsuit
• NHP (other) — non-human primate supply chain
• Wilmington, Massachusetts (other) — principal executive offices location
• Noveprim (company) — redeemable noncontrolling interest

FAQ

Risk Factors

• SEC Investigations and Lawsuits [high — legal]: The company faces ongoing SEC investigations and lawsuits concerning its non-human primate supply chain. These legal challenges pose a significant risk to operational stability and could lead to adverse financial outcomes.
• Non-Human Primate Supply Chain Scrutiny [high — regulatory]: The company's reliance on non-human primates for research services is under intense scrutiny. Negative developments or stricter regulations in this area could disrupt supply chains and impact service delivery.
• Cost of Services Provided [medium — operational]: Cost of services provided increased slightly to $572,635 thousand in Q3 2025 from $568,699 thousand in Q3 2024. This rise, despite a slight overall revenue decrease, contributed to margin pressure.
• Declining Net Income and EPS [high — financial]: Net income attributable to CRL decreased by 21.9% to $54,422 thousand for Q3 2025, and diluted EPS fell to $1.10 from $1.33. This trend is more pronounced year-to-date, with a 44.1% drop in net income.
• Decreasing Operating Income (YTD) [medium — financial]: While operating income increased in Q3 2025 by 14.0% to $133,799 thousand, it decreased significantly by 21.9% year-to-date to $308,602 thousand, indicating challenges in profitability over the longer term.
• Amortization of Intangible Assets [medium — financial]: Amortization of intangible assets increased substantially to $158,052 thousand for the nine months ended September 27, 2025, compared to $97,248 thousand in the prior year, impacting net income.
• Interest Expense [medium — market]: Interest expense remains a significant cost, totaling $83,254 thousand for the nine months ended September 27, 2025. While lower than the prior year's $98,054 thousand, it still weighs on profitability.
• Selling, General and Administrative Expenses [medium — operational]: SG&A expenses decreased to $177,589 thousand in Q3 2025 from $199,213 thousand in Q3 2024. However, year-to-date SG&A remains substantial at $546,937 thousand.

Industry Context

Charles River Laboratories operates in the life sciences services sector, providing essential products and services to pharmaceutical, biotechnology, and medical device companies. The industry is characterized by high R&D spending, stringent regulatory oversight, and a growing demand for preclinical and clinical research support. Competition is intense, with companies differentiating on service breadth, quality, and specialized expertise.

Regulatory Implications

The company faces significant regulatory scrutiny, particularly concerning its non-human primate supply chain, which has led to SEC investigations and lawsuits. Compliance with evolving animal welfare regulations and ethical sourcing standards is critical and could impact operational costs and supply chain stability.

What Investors Should Do

1. Monitor SEC investigations and litigation outcomes
2. Analyze drivers of net income decline
3. Evaluate the sustainability of operating income growth
4. Assess the impact of product revenue growth on overall margins

Key Dates

• 2025-09-27: End of Q3 2025 reporting period — Financial results for the third quarter and nine months of 2025 were reported, showing mixed performance with declining net income but increased operating income for the quarter.
• 2025-09-28: End of Q3 2024 reporting period — Comparative financial data for the third quarter and nine months of 2024, used to assess year-over-year performance changes.
• 2024-12-28: End of Fiscal Year 2024 — Balance sheet data as of this date provides a comparison point for cash and cash equivalents as of September 27, 2025.

Glossary

Noncontrolling interests

Represents the portion of equity in a subsidiary that is not owned by the parent company. It is reported separately on the consolidated financial statements. (The net income attributable to noncontrolling interests impacts the net income available to Charles River Laboratories International, Inc. common shareholders.)

Amortization of intangible assets

The systematic allocation of the cost of an intangible asset over its useful life. This is an expense recognized on the income statement. (A significant expense for CRL, its increase in the current period negatively impacted net income.)

Diluted EPS

Earnings per share calculated by dividing net income available to common shareholders by the diluted weighted-average number of common shares outstanding. It accounts for all potential dilutive securities. (A key profitability metric for investors, showing a decline in the current reporting periods.)

Operating income

A measure of a company's profit after deducting operating expenses from total revenue. It excludes interest and taxes. (Indicates the profitability of the core business operations, showing a mixed trend with a quarterly increase but a year-to-date decrease.)

Foreign currency translation adjustment

Gains or losses resulting from translating the financial statements of foreign subsidiaries into the parent company's reporting currency. It is reported as part of Other Comprehensive Income (Loss). (A significant factor in Other Comprehensive Income, showing a large negative adjustment in Q3 2025 compared to a positive one in Q3 2024.)

Year-Over-Year Comparison

Compared to the prior year, Charles River Laboratories International, Inc. (CRL) reported a slight decrease in total revenue for both the three months ended September 27, 2025 ($1,004,852k vs $1,009,763k) and the nine months ended September 27, 2025 ($3,021,155k vs $3,047,440k). Net income attributable to CRL saw a significant decline, down 21.9% for the quarter and 44.1% year-to-date, with diluted EPS also falling. Operating income showed a mixed trend, increasing 14.0% for the quarter but decreasing 21.9% year-to-date. New risks related to SEC investigations and lawsuits have emerged, adding to existing operational and financial concerns.

Key Financial Figures

• $0.01 — ange on which registered Common stock, $0.01 par value CRL New York Stock Exchange

Filing Documents

• crl-20250927.htm (10-Q) — 1914KB
• crl9272025ex311.htm (EX-31.1) — 9KB
• crl9272025ex312.htm (EX-31.2) — 9KB
• crl9272025ex321.htm (EX-32.1) — 7KB
• crl-20250927_g1.jpg (GRAPHIC) — 9KB
• 0001100682-25-000043.txt ( ) — 9373KB
• crl-20250927.xsd (EX-101.SCH) — 52KB
• crl-20250927_cal.xml (EX-101.CAL) — 83KB
• crl-20250927_def.xml (EX-101.DEF) — 257KB
• crl-20250927_lab.xml (EX-101.LAB) — 667KB
• crl-20250927_pre.xml (EX-101.PRE) — 480KB
• crl-20250927_htm.xml (XML) — 1602KB

- FINANCIAL INFORMATION

PART I - FINANCIAL INFORMATION 1 Financial Statements Condensed Consolidated Statements of Income (Unaudited) for the three and nine months ended September 27, 2025 and September 28, 2024 3 Condensed Consolidated Statements of Comprehensive Income (Unaudited) for the three and nine months ended September 27, 2025 and September 28, 2024 4 Condensed Consolidated Balance Sheets (Unaudited) as of September 27, 2025 and December 28, 2024 5 Condensed Consolidated Statements of Cash Flows (Unaudited) for the nine months ended September 27, 2025 and September 28, 2024 6 Condensed Consolidated Statements of Changes in Equity and Redeemable Noncontrolling Interests (Unaudited) for the three and nine months ended September 27, 2025 and September 28, 2024 7 Notes to Unaudited Condensed Consolidated Financial Statements 9 2 Management's Discussion and Analysis of Financial Condition and Results of Operations 26 Overview 26 Results of Operations 28 Liquidity and Capital Resources 35 Critical Accounting Policies and Estimates 37 Recent Accounting Pronouncements 38 3 Quantitative and Qualitative Disclosure About Market Risk 38 4 Controls and Procedures 38

- OTHER INFORMATION

PART II - OTHER INFORMATION 1 Legal Proceedings 39 1A Risk Factors 39 2 Unregistered Sales of Equity Securities and Use of Proceeds 43 5 Other Information 43 6 Exhibits 44 Signatures 45 1 Special Note on Factors Affecting Future Results This Quarterly Report on Form 10-Q contains forward-looking statements regarding future events and the future results of Charles River Laboratories International, Inc. that are based on our current expectations, estimates, forecasts and projections about the industries in which we operate and the beliefs and assumptions of our management. Words such as "expect," "anticipate," "target," "goal," "project," "intend," "plan," "believe," "seek," "estimate," "will," "likely," "may," "designed," "would," "future," "can," "could," and other similar expressions which are predictions of, indicate future events and trends or which do not relate to historical matters, are intended to identify such forward-looking statements. These statements are based on our current expectations and beliefs and involve a number of risks, uncertainties and assumptions that are difficult to predict. For example, we may use forward-looking statements when addressing topics such as: our expectations regarding the availability of NHPs and our ability to diversify our non-human primate (NHP) supply chain; the outcome of (1) the U.S. Securities and Exchange Commission (SEC)'s investigation and inquiry related to the NHP supply chain (including shipments of non-human primates from Cambodia received by the Company), (2) the putative securities class action lawsuit filed against us and certain current/former officers on May 19, 2023, (3) the derivative lawsuit filed against members of the Board of Directors and certain current/former officers on November 8, 2023, and (4) the derivative lawsuit filed against certain current/former members of the Board of Directors and certain current/former officers on August 2, 2024; the timing and impact of the developme

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements CHARLES RIVER LABORATORIES INTERNATIONAL, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (in thousands, except per share amounts) Three Months Ended Nine Months Ended September 27, 2025 September 28, 2024 September 27, 2025 September 28, 2024 Service revenue $ 808,042 $ 832,463 $ 2,446,801 $ 2,492,225 Product revenue 196,810 177,300 574,354 555,215 Total revenue 1,004,852 1,009,763 3,021,155 3,047,440 Costs and expenses Cost of services provided (excluding amortization of intangible assets) 572,635 568,699 1,734,939 1,724,246 Cost of products sold (excluding amortization of intangible assets) 93,425 92,043 272,625 275,617 Selling, general and administrative 177,589 199,213 546,937 555,295 Amortization of intangible assets 27,404 32,403 158,052 97,248 Operating income 133,799 117,405 308,602 395,034 Other income (expense) Interest income 1,422 1,528 3,923 6,740 Interest expense ( 25,403 ) ( 30,284 ) ( 83,254 ) ( 98,054 ) Other income (expense), net ( 22,618 ) 2,592 ( 34,675 ) 6,185 Income before income taxes 87,200 91,241 194,596 309,905 Provision for income taxes 31,644 20,946 60,469 70,867 Net income 55,556 70,295 134,127 239,038 Less: Net income attributable to noncontrolling interests 1,134 638 1,910 2,340 Net income attributable to Charles River Laboratories International, Inc. $ 54,422 $ 69,657 $ 132,217 $ 236,698 Calculation of net income per share attributable to Charles River Laboratories International, Inc. common shareholders Net income attributable to Charles River Laboratories International, Inc. $ 54,422 $ 69,657 $ 132,217 $ 236,698 Less: Adjustment of redeemable noncontrolling interests — 379 — 1,081 Less: Incremental dividends attributed to noncontrolling interest holders — 599 — 9,621 Net income available to Charles River Laboratories International, Inc. common shareholders $ 54,422 $ 68,679 $ 132,217 $ 225,996 Earnings per common share Basic $ 1.11 $ 1.34 $ 2.66 $ 4.39 Dilu

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