CHARLES RIVER LABORATORIES INTERNATIONAL, INC.

Results of Operations

Consolidated Results of Operations and Liquidity

Revenue for the three months ended September 26, 2026 decreased $22.1 million, or 2.2%, to $982.7 million compared to $1,004.9 million in the corresponding period in 2025. Revenue for the nine months ended September 26, 2026 decreased $38.5 million, or 1.3%, to $2,982.6 million compared to $3,021.2 million in the corresponding period in 2025. The decrease in revenue for both the three and nine months ended September 26, 2026 was primarily due to a decrease in Manufacturing and RMS revenue due to the CDMO and Cell Solutions Divestiture and DSA revenue driven by the European Discovery Divestiture, compared to the corresponding period in 2025.

For the three months ended September 26, 2026, our operating income and operating income as a percentage of revenue were $202.6 million and 20.6% respectively, compared to $133.8 million and 13.3% respectively, in the corresponding period of 2025. For the nine months ended September 26, 2026, our operating income and operating income as a percentage of revenue were $442.4 million and 14.8% respectively, compared to $308.6 million and 10.2% respectively, in the corresponding period of 2025. The increases in operating income and operating income as a percentage of revenue for the three and nine months ended September 26, 2026 were primarily driven by the benefit from the divestiture of the CDMO business, the gain on sale of certain assets at our Wilmington, Massachusetts site in the first quarter of 2026, lower accelerated amortization expense, certain third-party legal costs incurred in fiscal year 2025, and a non-income tax benefit resulting from changes in tax law enacted and completion of certain tax requirements in a foreign jurisdiction; partially offset by the decrease in revenue described above and higher acquisition, integration and divestiture costs, when compared to the corresponding period in 2025.

Net income attributable to Charles River Laboratories International, Inc., common shareholders increased to $333.1 million in the three months ended September 26, 2026, from $54.4 million in the corresponding period of 2025. Net income to Charles River Laboratories International, Inc., common shareholders increased to $316.7 million in the nine months ended September 26, 2026, from $132.2 million in the corresponding period of 2025. The increase of $278.6 million for the three months ended September 26, 2026 was due principally to the enactment of tax legislation and completion of certain tax requirements in a foreign jurisdiction resulting in a benefit due to the reversal of an unrecognized tax benefit reserve and the increase in operating income described above, compared to the corresponding period in 2025. The increase of $184.5 million for the nine months ended September 26, 2026 was due principally to the tax benefit and the increase in operating income described above; partially offset by the CDMO and Cell Solutions Divestiture loss of $181.7 million recognized in the first half of 2026, compared to the corresponding period in 2025.

During the nine months ended September 26, 2026, our cash flows from operations were $474.9 million compared with $590.1 million for the same period in 2025. The decrease was primarily related to higher payments of variable compensation, specifically annual incentive based bonuses paid during the first quarter, as well as higher professional services fees for enterprise-wide efficiency initiatives and acquisition, integration and divestiture-related activities.

Three Months Ended September 26, 2026 Compared to the Three Months Ended September 27, 2025

Revenue and Operating Income

The following tables present consolidated revenue by type and by reportable segment:

The following table presents operating income by reportable segment:

The following presents and discusses our consolidated financial results by each of our reportable segments:

DSA

DSA revenue decreased $4.4 million due primarily to the sale of certain European Discovery Services businesses of $36.4 million and the effect of changes in foreign currency exchange rates of $1.5 million; partially offset by higher revenue for regulated safety assessment services of $33.5 million compared to the corresponding period in 2025.

DSA operating income increased $49.2 million during the three months ended September 26, 2026 compared to the corresponding period in 2025. DSA operating income as a percentage of revenue for the three months ended September 26, 2026 was 28.9%, an increase of 840 bps from 20.5% for the corresponding period in 2025. Operating income and operating income as a percentage of revenue increased primarily due to a non-income tax benefit resulting from changes in tax law enacted and completion of certain tax requirements in a foreign jurisdiction and the decrease in amortization of intangible assets related to the European Discovery Divestiture.

Manufacturing

Manufacturing revenue decreased $11.8 million primarily due to the sale of the CDMO business of $25.3 million; partially offset by increased revenue in our Microbial Solutions business of $7.2 million, driven primarily by higher demand for endotoxin testing reagents, and higher revenue in the Biologics Testing business of $6.6 million, compared to the corresponding period in 2025.

Manufacturing operating income increased $23.9 million during the three months ended September 26, 2026 compared to the corresponding period in 2025. Manufacturing operating income as a percentage of revenue for the three months ended September 26, 2026 was 35.7%, an increase of 1,480 bps from 20.9% for the corresponding period in 2025. Operating income and operating income as a percentage of revenue increased primarily due to the benefit from the divestiture of the CDMO business.

RMS

RMS revenue decreased $5.9 million primarily driven by the divestiture of the Cell Solutions business of $6.0 million, a decrease in large research model revenue of $4.4 million, and small research model product revenue in North America of $3.8 million; partially offset by increases in small research model product revenue in China of $4.9 million, IS service revenue of $2.8 million, and the effect of changes in foreign currency exchange rates compared to the corresponding period in 2025.

RMS operating income increased $6.7 million compared to the corresponding period in 2025. RMS operating income as a percentage of revenue for the three months ended September 26, 2026 was 19.9%, an increase of 370 bps from 16.2% for the corresponding period in 2025. Operating income and operating income as a percentage of revenue increased primarily due to a decrease in amortization of intangible assets related to the sale of the Cell Solutions business; partially offset with a decrease in revenue described above, compared to the corresponding period in 2025.

Unallocated Corporate

Unallocated corporate costs consist of selling, general and administrative expenses that are not directly related or allocated to the reportable segments. The increase in unallocated corporate costs of $11.0 million, or 17.2%, compared to the corresponding period in 2025 is primarily due to higher professional services fees related to enterprise-wide efficiency initiatives and higher legal costs. Costs as a percentage of revenue for the three months ended September 26, 2026 was 7.6%, an increase of 120 bps from 6.4% for the corresponding period in 2025.

Other Income (Expense)

Interest expense for the three months ended September 26, 2026 was $28.5 million, an increase of $3.1 million, or 12.3%, compared to $25.4 million in the corresponding period in 2025 primarily due to higher average debt balances and non-cash interest expense recognized from the accretion of deferred purchase consideration associated with the Cambodian NHP Supplier acquisition.

Other expense, net for the three months ended September 26, 2026 was $4.4 million compared to $22.6 million for the corresponding period in 2025 primarily due to $2.2 million of venture capital and strategic equity investment net losses in 2026 compared to $20.2 million of net losses in 2025.

Income Taxes

Income tax benefit for the three months ended September 26, 2026 was $163.8 million, compared to income tax expense of $31.6 million for the corresponding period in 2025. Our effective tax rate was (96.0)% for the three months ended September 26, 2026 compared to 36.3% for the corresponding period in 2025. The difference in our effective tax rate in the three months ended September 26, 2026 compared to the corresponding period in 2025 was primarily attributable to a $201 million tax benefit resulting from the reversal of an unrecognized tax benefit reserve due to tax legislation and completion of certain tax requirements in a foreign jurisdiction which was enacted in the third quarter of 2026, subsequent to the related acquisition.

Nine Months Ended September 26, 2026 Compared to Nine Months Ended September 27, 2025

Revenue and Operating Income

The following tables present consolidated revenue by type and by reportable segment:

The following table presents operating income by reportable segment:

The following presents and discusses our consolidated financial results by each of our reportable segments:

DSA

DSA revenue decreased $11.6 million primarily due to the sale of certain European Discovery Services businesses of $58.8 million; partially offset by higher revenue for regulated safety assessment services of $33.0 million and the effect of changes in foreign currency exchange rates of $14.3 million, compared to the corresponding period in 2025.

DSA operating income increased $60.8 million during the nine months ended September 26, 2026 compared to the corresponding period in 2025. DSA operating income as a percentage of revenue for the nine months ended September 26, 2026 was 22.3%, an increase of 350 bps from 18.8% for the corresponding period in 2025. Operating income and operating income as a percentage of revenue increased primarily due to a non-income tax benefit resulting from changes in tax law enacted and completion of certain tax requirements in a foreign jurisdiction, the decrease in amortization of intangible assets related to the European Discovery Divestiture, lower third-party legal costs associated with the investigations by the U.S. government into the NHP supply chain, and lower restructuring activities, including asset impairments recognized within Cost of revenue; partially offset with the decrease in revenue described above, compared to the corresponding period in 2025.

Manufacturing

Manufacturing revenue decreased $12.5 million primarily due to the sale of the CDMO business of $55.1 million; partially offset by increased revenue in our Microbial Solutions business of $24.7 million driven primarily by higher demand for endotoxin testing reagents, and higher revenue in the Biologics Testings business of $9.1 million, and the effect of changes in foreign currency exchange rates of $8.8 million, compared to the corresponding period in 2025.

Manufacturing operating income increased $132.9 million during the nine months ended September 26, 2026 compared to the corresponding period in 2025. Manufacturing operating income as a percentage of revenue for the nine months ended September 26, 2026 was 31.6%, an increase of 2,400 bps from 7.6% for the corresponding period in 2025. Operating income and operating income as a percentage of revenue increased primarily due to the benefit from the divestiture of the CDMO business.

RMS

RMS revenue decreased $14.4 million primarily driven by the divestiture of the Cell Solutions business of $12.2 million as well as a decrease in GEMS and RADS service revenue of $6.0 million, large research model product revenue of $8.7 million, and small research model product revenue in North America of $13.7 million; partially offset by an increase in small research model product revenue in China of $11.3 million, IS service revenue of $3.7 million, and the effect of changes in foreign currency exchange rates of $12 million compared to the corresponding period in 2025.

RMS operating income increased $13.3 million compared to the corresponding period in 2025. RMS operating income as a percentage of revenue for the nine months ended September 26, 2026 was 20.4%, an increase of 260 bps from 17.8% for the corresponding period in 2025. Operating income and operating income as a percentage of revenue increased primarily due to lower site consolidation charges and the gain on sale of certain assets at our Wilmington, Massachusetts site recognized within Selling, general and administrative expenses and a decrease in amortization of intangible assets related to the sale of the Cell Solutions business; partially offset by an increase in asset impairments recognized within Cost of revenue and the lower revenue described above, compared to the corresponding period in 2025.

Unallocated Corporate

Unallocated corporate costs consist of selling, general and administrative expenses that are not directly related or allocated to the reportable segments. The increase in unallocated corporate costs of $73.2 million, or 38.8%, compared to the corresponding period in 2025 is primarily due to higher acquisition, integration and divestiture costs primarily associated with our previously discussed activities and higher professional services fees related to enterprise-wide efficiency initiatives; partially offset by the $15.3 million gain on sale of certain assets at our Wilmington, Massachusetts site. Costs as a percentage of revenue for the nine months ended September 26, 2026 were 8.8%, an increase of 260 bps from 6.2% for the corresponding period in 2025.

Other Income (Expense)

Interest expense for the nine months ended September 26, 2026 was $85.6 million, an increase of $2.4 million, or 2.8%, compared to $83.3 million in the corresponding period in 2025 primarily due to non-cash interest expense recognized from the accretion of deferred purchase consideration associated with the Cambodian NHP Supplier acquisition.

Other expense, net for the nine months ended September 26, 2026 was $166.0 million compared to $34.7 million for the corresponding period in 2025 due principally to the loss of $181.7 million in connection with the CDMO and Cell Solutions Divestiture; partially offset by a $15.5 million gain in the fair value of life insurance policies in 2026 compared to a $6.6 million gain in 2025, as well as $4.6 million of venture capital and strategic equity investment net gains in 2026 compared to $31.6 million of venture capital and strategic equity investment net losses in 2025.

Income Taxes

Income tax benefit for the nine months ended September 26, 2026 was $125.0 million, compared to income tax expense of $60.5 million for the corresponding period in 2025. Our effective tax rate was (64.5)% for the nine months ended September 26, 2026 compared to 31.1% for the corresponding period in 2025. The difference in our effective tax rate in the nine months ended September 26, 2026 compared to the corresponding period in 2025 was primarily attributable to a $201 million tax benefit resulting from the reversal of an unrecognized tax benefit reserve following the enactment of tax legislation and completion of certain tax requirements in a foreign jurisdiction.