CHARLES RIVER LABORATORIES INTERNATIONAL, INC.

Results of Operations

Consolidated Results of Operations and Liquidity

Revenue for the three months ended June 27, 2026 decreased $28.1 million, or 2.7%, to $1,004.1 million compared to $1,032.1 million in the corresponding period in 2025. Revenue for the six months ended June 27, 2026 decreased $16.4 million, or 0.8%, to $1,999.9 million compared to $2,016.3 million in the corresponding period in 2025. The decrease in revenue for both the three and six months ended June 27, 2026 was primarily due to a decrease in Manufacturing revenue driven by the sale of our CDMO business and DSA revenue driven by the European Discovery Divestiture, and to a lesser extent RMS revenue, due to decreased cell supply revenue, compared to the corresponding period in 2025.

For the three months ended June 27, 2026, our operating income and operating income as a percentage of revenue were $119.9 million and 11.9% respectively, compared to $100.1 million and 9.7% respectively, in the corresponding period of 2025. For the six months ended June 27, 2026, our operating income and operating income as a percentage of revenue were $239.8 million and 12.0% respectively, compared to $174.8 million and 8.7% respectively, in the corresponding period of 2025. The increases in operating income and operating income as a percentage of revenue for the three and six months ended June 27, 2026 were primarily driven by the gain on sale of certain assets at our Wilmington, Massachusetts site in the first quarter of 2026, lower accelerated amortization expense, and certain third-party legal costs incurred in fiscal year 2025; 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 loss attributable to Charles River Laboratories International, Inc., common shareholders was $1.5 million in the three months ended June 27, 2026, compared to Net income attributable to Charles River Laboratories International Inc., common shareholders of $52.3 million in the corresponding period of 2025. Net loss attributable to Charles River Laboratories International, Inc., common shareholders was $16.3 million in the six months ended June 27, 2026, compared to Net income attributable to Charles River Laboratories International Inc., common shareholders of $77.8 million in the corresponding period of 2025. The decrease of $53.8 million for the three months ended June 27, 2026 was due principally to the CDMO and Cell Solutions Divestiture loss of $63.7 million recognized in the second quarter of 2026, partially offset by the increase in operating income described above, compared to the corresponding period in 2025. The decrease of $94.1 million for the six months ended June 27, 2026 was due principally to the CDMO and Cell Solutions Divestiture loss of $181.7 million recognized in the first half of 2026, partially offset by the increase in operating income described above, compared to the corresponding period in 2025.

During the six months ended June 27, 2026, our cash flows from operations were $220.8 million compared with $376.3 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 acquisition, integration and divestiture-related payments.

Three Months Ended June 27, 2026 Compared to the Three Months Ended June 28, 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:

RMS

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

RMS operating income increased $0.5 million compared to the corresponding period in 2025. RMS operating income as a percentage of revenue for the three months ended June 27, 2026 was 17.3%, an increase of 50 bps from 16.8% 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, specifically due to lower sales volume and an unfavorable geographic mix, compared to the corresponding period in 2025.

DSA

DSA revenue decreased $11.5 million due primarily to the sale of certain European Discovery Services businesses; partially offset by higher revenue for regulated safety assessment services and the effect of changes in foreign currency exchange rates compared to the corresponding period in 2025.

DSA operating income increased $1.6 million during the three months ended June 27, 2026 compared to the corresponding period in 2025. DSA operating income as a percentage of revenue for the three months ended June 27, 2026 was 20.5%, an increase of 60 bps from 19.9% for the corresponding period in 2025. Operating income and operating income as a percentage of revenue increased primarily due to 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 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 $12.7 million primarily due to the sale of the CDMO business; partially offset by increased revenue in our Microbial Solutions business driven primarily by higher endotoxin product revenue and the effect of changes in foreign currency exchange rates, compared to the corresponding period in 2025.

Manufacturing operating income increased $53.5 million during the three months ended June 27, 2026 compared to the corresponding period in 2025. Manufacturing operating income as a percentage of revenue for the three months ended June 27, 2026 was 34.9%, an increase of 2,890 bps from 6.0% 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.

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 $35.9 million, or 50.9%, 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. Costs as a percentage of revenue for the three months ended June 27, 2026 was 10.6%, an increase of 380 bps from 6.8% for the corresponding period in 2025.

Other Income (Expense)

Interest income for the three months ended June 27, 2026 was $1.0 million, a decrease of $0.1 million, or 5.9%, driven primarily from lower interest earning asset balances.

Interest expense for the three months ended June 27, 2026 was $30.3 million, an increase of $0.4 million, or 1.2%, compared to $30.0 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; partially offset by lower average interest rates on our debt balances within our revolving credit facility.

Other expense, net for the three months ended June 27, 2026 was $37.4 million compared to Other income, net of $0.2 million for the corresponding period in 2025 primarily due to the loss of $63.7 million in connection with the CDMO and Cell Solutions Divestiture recognized in the second quarter of 2026; partially offset by a $18.9 million gain in the fair value of life insurance policies in the second quarter of 2026 compared to a $5.4 million gain in 2025 as well as $9.5 million of venture capital and strategic equity investment gains, net of impairments, in the second quarter of 2026 compared to $0.3 million of venture capital and strategic equity investment losses and impairments in 2025.

Income Taxes

Income tax expense for the three months ended June 27, 2026 was $53.9 million, an increase of $35.2 million compared to $18.7 million for the corresponding period in 2025. Our effective tax rate was 101.4% for the three months ended June 27, 2026 compared to 26.2% for the corresponding period in 2025. The increase in our effective tax rate in the three months ended June 27, 2026 compared to the corresponding period in 2025 was primarily attributable to the tax effects of the European Discovery and CDMO and Cell Solutions Divestitures, non-deductible transaction costs, and higher accrued interest relating to acquired uncertain tax positions.

Six Months Ended June 27, 2026 Compared to Six Months Ended June 28, 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:

RMS

RMS revenue decreased $8.5 million primarily driven by the divestiture of the Cell Solutions business as well as a decrease in service revenue, large research model product revenue, and small research model product revenue in North America; partially offset by an increase in small research model product revenue in China 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 six months ended June 27, 2026 was 20.6%, an increase of 200 bps from 18.6% 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.

DSA

DSA revenue decreased $7.2 million primarily due to the sale of certain European Discovery Services businesses; partially offset by higher revenue for regulated safety assessment services and the effect of changes in foreign currency exchange rates, compared to the corresponding period in 2025.

DSA operating income increased $11.5 million during the six months ended June 27, 2026 compared to the corresponding period in 2025. DSA operating income as a percentage of revenue for the six months ended June 27, 2026 was 19.0%, an increase of 110 bps from 17.9% for the corresponding period in 2025. Operating income and operating income as a percentage of revenue increased primarily due to 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 $0.7 million primarily due to the sale of the CDMO business; partially offset by increased revenue in our Microbial Solutions business driven primarily by higher endotoxin product revenue and the effect of changes in foreign currency exchange rates, compared to the corresponding period in 2025.

Manufacturing operating income increased $109.0 million during the six months ended June 27, 2026 compared to the corresponding period in 2025. Manufacturing operating income as a percentage of revenue for the six months ended June 27, 2026 was 29.7%, an increase of 2,880 bps from 0.9% 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.

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 $62.2 million, or 49.9%, 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 six months ended June 27, 2026 were 9.3%, an increase of 310 bps from 6.2% for the corresponding period in 2025.

Other Income (Expense)

Interest income for the six months ended June 27, 2026 was $2.1 million, a decrease of $0.4 million, or 17.4%, driven primarily by lower interest earning asset balances.

Interest expense for the six months ended June 27, 2026 was $57.1 million, a decrease of $0.8 million, or 1.3%, compared to $57.9 million in the corresponding period in 2025 primarily due to lower average interest rates on our debt balances within our revolving credit facility; partially offset by non-cash interest expense recognized from the accretion of deferred purchase consideration associated with the Cambodian NHP Supplier acquisition.

Other expense, net for the six months ended June 27, 2026 was $161.5 million compared to $12.1 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 $16.9 million gain in the fair value of life insurance policies in 2026 compared to a $3.3 million gain in 2025, as well as $10.0 million of venture capital and strategic equity investment gains, net of impairments, in 2026 compared to $9.0 million of venture capital and strategic equity investment losses and impairments in 2025.

Income Taxes

Income tax expense for the six months ended June 27, 2026 was $38.8 million, compared to $28.8 million for the corresponding period in 2025. Our effective tax rate was 167.0% for the six months ended June 27, 2026 compared to 26.8% for the corresponding period in 2025. The difference in our effective tax rate in the six months ended June 27, 2026 compared to the corresponding period in 2025 was primarily attributable to the tax effects of the European Discovery and CDMO and Cell Solutions Divestitures, non-deductible transaction costs, and higher accrued interest relating to acquired uncertain tax positions.