Charles River Laboratories International, Inc. (CRL, Financial) recently shared its preliminary financial outlook for 2025 and provided updates on its business segments during the 43rd Annual J.P. Morgan Healthcare Conference. The company anticipates a decline in organic revenue similar to 2024, influenced by various factors including client demand and restructuring impacts.
The Discovery and Safety Assessment (DSA) segment is expected to see consistent client demand, mirroring trends from the latter half of 2024. However, global biopharma clients are anticipated to maintain constrained spending due to restructuring programs and pipeline reprioritization efforts. While biotech client demand is projected to stabilize or slightly improve, DSA pricing is expected to pose a challenge to revenue growth in 2025.
Charles River also forecasts a reduction in commercial Contract Development and Manufacturing Organization (CDMO) revenue, which could decrease consolidated revenue growth by approximately 1% in 2025. Additionally, ongoing site consolidation actions and foreign exchange rates are expected to contribute to revenue headwinds.
The company plans to issue full 2025 guidance with its fourth-quarter 2024 financial results in mid-February 2025. Despite cost-saving initiatives, the non-GAAP operating margin for 2025 is projected to be modestly below the estimated 2024 level.
In the CDMO business, Charles River has made significant strides since its acquisition in 2021, including establishing Centers of Excellence and enhancing compliance activities. However, the business faces challenges with lower commercial revenue expected in 2025 due to a cell therapy client terminating its agreement and another client reducing commercial revenue. Despite these challenges, the company sees long-term growth opportunities in the cell and gene therapy sector, supported by a robust pipeline of biotech clients.
Charles River is currently assessing the recoverability of goodwill and long-lived assets for potential impairment due to these CDMO business challenges. The company remains focused on strategic developments to navigate the evolving market landscape and enhance its operational efficiency.
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