On February 19, 2025, Charles River Laboratories International Inc (CRL, Financial) released its 8-K filing detailing the financial results for the fourth quarter and full-year 2024. The company, a leading provider of drug discovery and development services, reported a fourth-quarter revenue of $1.00 billion, above the analyst estimate of $983.63 million. However, the company faced a GAAP loss per share of $(4.22), significantly missing the estimated earnings per share of $1.32. On a non-GAAP basis, earnings per share were $2.66, surpassing the estimate.

Company Overview

Founded in 1947, Charles River Laboratories International Inc (CRL, Financial) is a prominent player in the medical diagnostics and research industry. The company operates through three main segments: Research Models and Services (RMS), Discovery and Safety Assessment (DSA), and Manufacturing Solutions. These segments provide essential services and products for drug discovery and development, including animal models for laboratory testing, early-stage drug development services, and biologics testing.

Performance and Challenges

The fourth-quarter revenue of $1.00 billion represented a 1.1% decrease from the same period in 2023. The decline was primarily due to lower revenue in the DSA and RMS segments, which offset the growth in the Manufacturing Solutions segment. A significant challenge for the company was a non-cash goodwill impairment of $215.0 million related to the Biologics Solutions reporting unit, which heavily impacted the GAAP operating margin, reducing it to (16.7)% from 13.1% in the previous year.

Financial Achievements

Despite the challenges, Charles River Laboratories International Inc (CRL, Financial) achieved a non-GAAP operating margin increase to 19.9% from 19.1% in the fourth quarter of 2023. This improvement was driven by higher revenue and operating income in the Manufacturing segment and lower unallocated corporate costs. The company's ability to maintain a strong non-GAAP performance highlights its operational efficiency and cost management strategies, which are crucial in the competitive medical diagnostics and research industry.

Key Financial Metrics

The company's full-year 2024 revenue was $4.05 billion, a 1.9% decrease from 2023. The GAAP net income available to common shareholders was $10.3 million, a sharp decline of 97.8% from the previous year, primarily due to the goodwill impairment and losses on strategic investments. On a non-GAAP basis, net income was $532.9 million, a slight decrease of 2.9% from 2023. The non-GAAP diluted earnings per share were $10.32, significantly above the annual estimate of $5.89.

Analysis and Outlook

The company's performance in 2024 was marked by significant challenges, including a goodwill impairment and lower revenue in key segments. However, the increase in non-GAAP operating margin and earnings per share indicates resilience and effective cost management. Looking ahead, Charles River Laboratories International Inc (CRL, Financial) plans to repurchase approximately $350 million in common stock in 2025, signaling confidence in its long-term growth prospects. The company expects stable to slightly improved demand from biotechnology clients, although budgetary constraints from global biopharmaceutical clients may continue to impact revenue growth.

James C. Foster, Chair, President, and CEO, stated, “During this period of softer demand, we remain committed to executing on our revenue and cost-savings initiatives and protecting shareholder value. We are taking decisive actions to emerge from this period as a stronger, leaner, and more profitable company, and an even more responsive partner for our clients.”

Explore the complete 8-K earnings release (here) from Charles River Laboratories International Inc for further details.