Charles River Laboratories reported third‑quarter 2025 revenue of $1.00 billion, a 0.5% year‑over‑year decline that still surpassed consensus estimates of $984.58 million and $990.79 million. The beat was driven by a 7.9% increase in the Research Models and Services (RMS) segment, which grew to $213.5 million, offsetting a 2.3% drop in the Discovery and Safety Assessment (DSA) unit and a 3.1% decline in Manufacturing Solutions.
GAAP earnings per share fell to $1.10, missing the consensus estimate of $1.45 and the prior‑quarter figure of $1.18. The miss reflects a combination of lower revenue in DSA and Manufacturing Solutions and a one‑time restructuring charge that increased operating expenses. In contrast, non‑GAAP EPS rose to $2.43, beating the consensus estimate of $2.32 by $0.11 and the prior‑quarter figure of $2.58. The non‑GAAP beat was largely due to disciplined cost control and a favorable mix shift toward higher‑margin RMS contracts.
Segment performance highlights a shift in demand. RMS revenue grew 7.9% to $213.5 million, driven by strong demand for large research model products and increased pricing power in that line. DSA revenue fell 2.3% to $600.7 million, reflecting softer demand for certain early‑stage research services. Manufacturing Solutions revenue declined 3.1% to $190.7 million, as the company reduced capacity in legacy manufacturing lines to focus on higher‑margin services.
Operating margin expanded to 13.3% from 11.6% in Q3 2024, a 1.7‑percentage‑point lift attributable to lower restructuring costs and improved operational leverage. Non‑GAAP operating margin slipped slightly to 19.7% from 19.9% in the prior year, reflecting modest cost inflation in raw materials and a higher mix of lower‑margin services.
Management revised its 2025 revenue outlook to a range of –1.5% to –0.5%, narrowing the prior range of –2.5% to –0.5%. The GAAP EPS guidance was lowered to $4.15–$4.35, a decrease from the previous $4.25–$4.65 range, signaling caution about near‑term earnings growth. The non‑GAAP EPS forecast was raised to $10.10–$10.30, up from $9.90–$10.30, reflecting confidence in continued cost discipline and a rebound in high‑margin RMS contracts.
CEO James C. Foster emphasized that “the solid third‑quarter results demonstrate that demand for our early‑stage research and manufacturing services remains stable, and that a path toward recovery is emerging, though uncertainty remains.” The mixed results and downward revision of GAAP EPS guidance tempered enthusiasm, but the company’s focus on cost savings, divestitures, and a $1 billion share‑repurchase program signal a commitment to shareholder value and operational efficiency.
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