Charles River Raises 2026 Profit Outlook To $11.35-$11.55 A Share As Organic Growth Hits 4.7%
The drug-testing company lifted its adjusted EPS and organic revenue guidance; a foreign tax reversal inflated reported earnings to $6.86 a share.
Charles River Laboratories, which supplies research animals, testing services and quality-control products to drug developers, raised its 2026 guidance after third-quarter organic revenue rose 4.7%, ahead of the company's own prior outlook. Adjusted earnings per share now are guided to $11.35 to $11.55, from $11.15 to $11.45, the company said Wednesday.
Growth returns, margins widen
Third-quarter revenue was $982.7 million, down 2.2% from $1,004.9 million a year earlier, mostly because of the May 2026 divestitures. Stripping out acquisitions, divestitures and currency, organic revenue grew 4.7%, the company's second straight quarter of organic growth.
Adjusted earnings were $3.09 per share, up 27.2% from $2.43. The adjusted operating margin rose 330 basis points (3.3 percentage points) to 23.0%, which the company attributed to the sale of its CDMO (contract manufacturing) business and higher volume in safety assessment services. A lower tax rate also helped.
CEO Birgit Girshick said revenue and earnings outperformed prior expectations and that DSA net bookings and proposals "continued to show robust, year-over-year increases."
A $5.06 tax benefit inflates reported EPS
Standard accounting earnings were $6.86 per diluted share, against $1.10 a year earlier. That figure includes a $245.6 million benefit, or $5.06 per share, from reversing acquired tax reserves after newly enacted tax legislation and completion of certain tax requirements in a foreign jurisdiction.
The reversal also lifted the reported operating margin 730 basis points to 20.6%, via a $44.6 million benefit in the Discovery and Safety Assessment segment.
Segments and the new guidance
Discovery and Safety Assessment, the outsourced drug discovery and regulatory safety testing unit, had revenue of $596.3 million, down 0.7%, with organic growth of 5.9% on higher regulated safety study volume. Manufacturing Solutions, which supplies microbial and biologics testing, grew organically 7.4%, the fastest of the three, though reported revenue fell 6.2% to $178.9 million on the CDMO sale. Research Models and Services, the rodent-breeding unit, saw organic revenue slip 0.6% to $207.5 million reported, down 2.8%.
For the full year, organic revenue growth is now guided to at least 1.5%, from 0.0% to 1.0%. Reported revenue is guided to fall 2.0% to 1.5%, from a 3.5% to 2.5% decline. Standard-accounting EPS guidance is $8.15 to $8.35, from $3.05 to $3.35. The company said the increase mainly reflects the third-quarter outperformance in DSA and the lower tax rate.
Management hosted a webcast at 9:00 a.m. ET on Wednesday to discuss the quarter.
