second quarter 2026
Filed Aug 5, 2026Charles River Laboratories Announces Second-Quarter 2026 Results
Organic revenue increased 0.1%, demand trends improved in DSA, and the Company raised 2026 revenue and non-GAAP EPS guidance. However, reported revenue decreased 2.7%, non-GAAP operating margin declined to 20.5%, non-GAAP EPS decreased 3.2%, and the Company reported a GAAP net loss related principally to the CDMO and Cell Solutions divestiture.
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| RevenueGAAP | $1.00 billion | – | decrease of 2.7% |
| Organic revenue growthother | 0.1% | – | – |
| Operating marginGAAP | 11.9% | essentially flat on a sequential basis | – |
| Operating marginnon-GAAP | 20.5% | increased 420 basis points on a sequential basis | – |
| Net loss available to common shareholdersGAAP | $(1.5) million | – | – |
| Diluted loss per shareGAAP | $(0.03) per diluted share | – | – |
| Net incomenon-GAAP | $146.2 million | – | decrease of 5.0% |
| Diluted earnings per sharenon-GAAP | $3.02 | – | decrease of 3.2% |
| Loss related to the CDMO and Cell Solutions divestitureGAAP | $63.7 million, or $1.40 per share | – | – |
| Investment gains associated with the deferred compensation plannon-GAAP | a net benefit of $0.19 per share | – | – |
| RMS segment operating marginGAAP | 17.3% | – | – |
| RMS segment operating marginnon-GAAP | 24.5% | – | – |
| DSA segment operating marginGAAP | 20.5% | – | – |
| DSA segment operating marginnon-GAAP | 25.6% | – | – |
| Manufacturing segment operating marginGAAP | 34.9% | – | – |
| Manufacturing segment operating marginnon-GAAP | 37.8% | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Research Models and Services (RMS)Organic revenue decreased by 1.4%, due primarily to lower revenue for small research models in North America, as well as for research model services. The decline was partially offset by higher revenue for small research models in China. | $209.5 million | – | decrease of 1.8% |
| Discovery and Safety Assessment (DSA)Organic revenue increased by 0.2%, driven primarily by higher study volume for regulated safety assessment services. | $606.5 million | – | decrease of 1.9% |
| Manufacturing Solutions (Manufacturing)The reported decrease was primarily driven by the CDMO divestiture. Organic revenue increased 1.3%, driven primarily by higher revenue in the Microbial Solutions business. | $188.1 million | – | decrease of 6.3% |
2026 outlook
- RevenueRevenue growth/(decrease), reported: (3.5)% - (2.5)%; Revenue growth/(decrease), organic: 0.0% - 1.0%
- NoteContribution from acquisitions: 0.0% - (0.5)%
- NoteImpact from divestitures: ~4.5%
- NoteFavorable impact of foreign exchange: (0.5)% - (1.0)%
- NoteGAAP EPS estimate: $3.05 – $3.35
- NoteAcquisition-related amortization: ~$2.30
- NoteAcquisition- and divestiture-related costs: ~$4.75
- NoteCosts associated with restructuring and efficiency initiatives: ~$1.20
- NoteOther, net: ($0.17)
- NoteNon-GAAP EPS estimate: $11.15 – $11.45
Capital returns
- Repurchased 1.7 million shares for a total of $300.0 million during the year-to-date period ended June 27, 2026.
- Repurchased 0.6 million shares for a total of $100.0 million in the second quarter of 2026.
- Repurchased $100 million of common stock in the second quarter at an average price of $174 per share.
- As of June 27, 2026, the Company had $700.0 million remaining under its $1.0 billion stock repurchase authorization that was approved by the Board of Directors on October 29, 2025.
What drove it
- Organic revenue growth was driven by growth in Manufacturing and DSA, offset by a decline in RMS.
- The Company cited improving demand trends in DSA and better-than-expected performance in Manufacturing as the primary reasons for the guidance increase.
- DSA demand strengthened, and the Company recorded its highest net book-to-bill in nearly four years.
- Manufacturing organic growth was driven primarily by higher revenue in the Microbial Solutions business.
- The Company completed divestitures of certain European Discovery Services sites and the CDMO and Cell Solutions businesses in May 2026.
- The Company joined Eli Lilly's TuneLab AI/ML platform, collaborated with Arovella Therapeutics on in vitro Next Generation Sequencing services, and introduced an enhanced digital pathology solution.
Concerns
- Reported revenue decreased 2.7% from $1.03 billion in the second quarter of 2025.
- RMS organic revenue decreased by 1.4%, primarily due to lower revenue for small research models in North America and research model services.
- Non-GAAP operating margin decreased to 20.5% from 22.1%, primarily due to higher study-related direct costs in DSA and higher unallocated corporate costs.
- DSA non-GAAP operating margin decreased to 25.6% from 27.4%, primarily due to higher study-related direct costs.
- RMS non-GAAP operating margin decreased to 24.5% from 25.3%, driven by lower sales volume and an unfavorable geographic revenue mix.
- The GAAP net loss was principally due to a loss related to the CDMO and Cell Solutions divestiture totaling $63.7 million, or $1.40 per share.
- The Company expects second-quarter investment gains associated with the deferred compensation plan to be largely offset by a higher tax rate for the year.
What to watch
- Whether improving demand trends in the DSA segment continue.
- DSA study-related direct costs and their effect on non-GAAP operating margin.
- RMS small research model revenue in North America and research model services revenue.
- Manufacturing performance, including Microbial Solutions revenue.
- Execution of modernization, efficiency, restructuring, and portfolio-refinement initiatives.
- The expected effect of divestitures, acquisitions, foreign exchange, and the higher tax rate on 2026 results.
Analysis
Charles River reported second-quarter revenue of $1.00 billion, down 2.7% from $1.03 billion in the second quarter of 2025. Organic revenue increased 0.1%, which the Company described as its highest level since the third quarter of 2023. The organic result reflected growth in Manufacturing and DSA that offset a decline in RMS, while reported revenue comparisons were affected by divestitures and other items excluded from organic growth.
DSA showed an organic revenue increase of 0.2%, driven by higher study volume for regulated safety assessment services. Management said demand strengthened in the segment and that net book-to-bill reached its highest level in nearly four years. Manufacturing organic revenue increased 1.3%, led by Microbial Solutions, although reported segment revenue decreased 6.3% primarily because of the CDMO divestiture. RMS remained the principal operational weak point, with organic revenue down 1.4% due primarily to lower North American small research model revenue and research model services.
Profitability was mixed. GAAP operating margin increased to 11.9% from 9.7%, primarily driven by the CDMO business, including lower accelerated amortization expense related to certain client relationships. Non-GAAP operating margin declined to 20.5% from 22.1%, with higher DSA study-related direct costs and higher unallocated corporate costs. Segment non-GAAP margins declined in RMS and DSA, while Manufacturing non-GAAP margin increased to 37.8% from 32.8%, driven primarily by the CDMO business and the benefit from the divestiture.
The Company reported a GAAP net loss available to common shareholders of $(1.5) million, or $(0.03) per diluted share, versus GAAP net income of $52.3 million, or $1.06 per diluted share, in the prior-year period. The decrease was principally due to a $63.7 million, or $1.40 per share, loss related to the CDMO and Cell Solutions divestiture. Non-GAAP net income decreased 5.0% to $146.2 million and non-GAAP diluted EPS decreased 3.2% to $3.02. Investment gains associated with the deferred compensation plan provided a net benefit of $0.19 per share during the quarter.
Capital allocation included $100.0 million of second-quarter repurchases, part of $300.0 million repurchased year to date. The Company increased its 2026 reported revenue growth/(decrease) outlook to (3.5)% - (2.5)% and organic revenue growth outlook to 0.0% - 1.0%. It also raised non-GAAP EPS guidance to $11.15 – $11.45. The Company reduced GAAP EPS guidance to $3.05 – $3.35, primarily due to the net loss related to the divestitures, and said deferred-compensation investment gains are expected to be largely offset by a higher tax rate for the year.
Management, verbatim
We made excellent progress in the second quarter on the execution of our Pathway to Purpose strategy. We are actively evaluating opportunities to modernize the Company and drive greater efficiency, to strengthen our leading drug development portfolio centered on regulated testing, and to further enhance our growth profile. We are focused on continuing to move forward on achieving our strategic initiatives and financial goals, which will strengthen our foundation and underpin our future success.
Birgit Girshick, Chief Executive Officer
We were encouraged that the demand environment continued to strengthen in the second quarter, particularly for our DSA segment, as evidenced by the fact that we recorded the highest net book-to-bill in nearly four years. This improvement was broad based across our global biopharmaceutical and small and mid-sized biotechnology clients, and it is our goal to continue to capture additional share of our clients’ R&D spending by providing client-centric solutions and by leveraging our global scale and deep scientific expertise. As a result of our collective efforts, we delivered on our second-quarter financial targets – exceeding our prior outlook – and are raising our revenue and non-GAAP earnings per share guidance for the year,
Birgit Girshick, Chief Executive Officer
Not in the filing
stated, not guessed- Gross profit and gross margin
- GAAP operating income amount
- Non-GAAP operating income amount
- Operating cash flow
- Free cash flow
- Cash and cash equivalents
- Debt
- Dividend information
- Tax rate
- Prior-quarter revenue, net income, EPS, and segment revenue
- Prior-quarter operating-margin values
- Guidance for gross margin
- Guidance for operating expenses
- Prior-release outlook section for comparison with actual second-quarter results
AlphaAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.