By Puyaan Singh (Reuters) -Contract drug developer Charles River Laboratories on Wednesday announced plans to sell some underperforming or non-core assets in its latest effort to boost profits. The move came after the company raised its annual profit target, and following a review by the board launched in May. However, the company’s shares were down […]
Health
Charles River plans to sell underperforming assets, ramp up cost cutting
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By Puyaan Singh
(Reuters) -Contract drug developer Charles River Laboratories on Wednesday announced plans to sell some underperforming or non-core assets in its latest effort to boost profits.
The move came after the company raised its annual profit target, and following a review by the board launched in May. However, the company’s shares were down 7.4% in afternoon trading.
“While today’s stock reaction is clearly not what we were hoping for, CRL’s 3Q earnings report and strategic review update did not materially change our overarching thesis,” said Evercore ISI analyst Elizabeth Anderson.
“The stock had run into the print on a bit of perhaps overexuberance about the slope of the recovery,” she added.
The divestitures, representing about 7% of estimated 2025 revenue, are expected to add at least 30 cents to the company’s adjusted earnings per share annually.
Charles River also said it would generate an additional $70 million in annual cost savings by 2026 through process improvements, procurement synergies and by implementing a global business services model — on top of $225 million in restructuring benefits already underway.
The company also expects fourth-quarter profit to be flat to 10% lower sequentially due to the timing and costs of sourcing non-human primates and higher staffing.
Charles River also posted strong third-quarter results, helped by stable demand for its drug discovery and development services from biotech clients.
CEO James Foster said on a call with analysts that bookings from biotech clients improved after a slower summer, and that the company is “optimistic that biotech demand will accelerate over the coming quarters.”
He also said in a statement that “sustained improvement in our business will take time.”
The Massachusetts-based company raised the lower end of its 2025 adjusted profit forecast to $10.10 from $9.90, keeping the upper end at $10.30 per share.
Charles River, which also has a contract manufacturing business, reported a quarterly profit of $2.43 per share on an adjusted basis, compared with estimates of $2.34 per share.
(Reporting by Puyaan Singh in Bengaluru; Editing by Shailesh Kuber and Alan Barona)