CRL 10-K & 10-Q changes, risk factors and insider trading

In recent years, we have been updating and consolidating platforms and automating processes in many parts of our business with a variety of systems, including in connection with the integration of acquired businesses. Continued expansion and ongoing implementation of operational systems may occur at a future date based on value to the business. In general, the process of planning and preparing for these types of integrated, wide-scale implementations is extremely complex and we are required to address a number of challenges, including information security assessment and remediation, regulatory requirements, data conversion, associated regulatory compliance, network and system cutover, user training, data residency, high availability, disaster recovery, latency, backups, archiving, cloud offerings, and integration with existing processes or systems. As we build out IT infrastructure to support regulatory requirements for applications and data systems, we are doing so utilizing contemporary validation practices. As with all work conducted in our regulatoryregulated sites, these too are subject to government inspections. Incongruities in any of these areas could cause operational problems during implementation including inconsistent practices, delayed report and/or data shipments, missed sales, animal management/welfare issues, data loss issues that require re-doing certain studies, personally identifiable information and data privacy issues, billing errors and accounting errors.

As of the date of this filing, to our knowledge, we have not experienced ana material information security breach or material cybersecurity incident since an event in 2019. While we have implemented additional security safeguards since that event and continue to enhance existing safeguards, such efforts may not be successful, in which case we could suffer significant harm.

Further, weWe are at risk of being targeted, and we have in the past been victim to, business email compromise fraud, which results in payments being made to illegitimate bank accounts. Although these instances have not resulted in our incurring material losses, if similar instances occur in the future, we may incur such losses.

•difficulties in achieving business and financial success (due to unplanned events such as ongoing geopolitical conflicts,conflicts or economic factors such as betweenfluctuations thein Russian Federationinterest and Ukraine,foreign andexchange between Israel and Hamas,rates, as well as thetax US-China relationship which could potentially influence sourcing patterns and tariff costsregulations);

Acquisitions or alliances realizing these risks could increase the likelihood of our results of operations being adversely affected. Some of the same risks exist when we decide to close or sell a business, site, product line or service offering. We continually evaluate the performance and strategic fit of our business and the sites in which they operate to determine whether a site closure or divestiture is appropriate. Such actions could involve additional risks, other than those listed above, including: difficulties in the separation of operations, services, products, and personnel, the need to agree to retain or assume certain current or future liabilities in order to complete the divestitures or site closures, as well as write-offs, including those related to goodwill and other intangible assets and which could have an adverse effect on our results of operations and financial condition. In addition, we may encounter in closing or difficulty in finding buyers or alternative exit strategies at acceptable prices and terms, and in a timely manner. We may not be successful in managing these or any other significant risks that we encounter in divesting a business, site or product line or service offering and, as a result, we may not achieve some or all of the expected benefits of the divestitures.

Our strategy is to deliver a comprehensive and integrated portfolio of drug discovery and non-clinical development products, services and solutions to support our clients’ discoverydiscovery, preclinical, early clinical and early-stageearly drug research, process development,stage scale up and early stage manufacturing efforts, and enable them to bring new and improved therapies to market faster and more cost effectively. As a focus, CRL aims to be the premier provider of products and services that ensure our clients develop, produce and release their products safely. Separately, through our various Manufacturing segment businesses, we aim to be the premier provider of products and services that ensure our clients produce and release their products safely. If we are unable to successfully execute on this strategy, this could negatively impact our future results of operations and market capitalization. Similarly, if we are unable to successfully execute on the Board of Directors’ comprehensive strategic review and evaluation of Charles River’s business and growth prospects, this could negatively impact our future results of operations and market capitalization.

Any decline or lower than expected growth in our served markets could diminish demand for our products and services, which would adversely affect our results of operations and financial condition. In 2024,recent years, we experienced such a lower-than-expected demand growth in a number of businesses, including the businesses that comprise our DSA reporting segment. To address this issue generally, we typically pursue a number of strategies designed to improve our internal growth, including strengthening our presence in selected geographic markets through organic growth and strategic acquisitions and expanding our service offerings. In addition, we have implemented a number of restructuring actions, including to optimize our global operational footprint and reduce staffing levels, and other initiatives to drive operating efficiencies to help offset the lower-than-expected demand growth and protect the operating margin. We may not be able to successfully implement these strategies, and these strategies may not result in the expected growth or improved profitability of our business.

As discussed in the section above entitled “Our Strategy,” we are taking decisive action to manage the Company through the current demand environment, including appropriately right-sizing our infrastructure, driving efficiency, and optimizing operations, including through process improvement, procurement synergies, and drivingimplementation efficiencyof a global business services model, with a goal to protect operating margin. We are committed to initiatives to generate more revenue, contain costs, and protect shareholder value through enhanced commercial initiatives, restructuring and efficiency actions to drive cost savings, as well as a balanced approach to capital deployment; these initiatives include reducing staffing levels to align with the pace of demand and site closures. Similarly, we are working to execute the Board of Directors’ comprehensive strategic review and evaluation of Charles River’s business and growth prospects. While we drive these initiatives to result in significant profit opportunities and savings throughout our organization, our estimated profits and savings are based on assumptions that may prove to be inaccurate, and as a result, there can be no assurance that we will realize these profits and cost savings or that, if realized, these profits and cost savings will be sustained. Failure to achieve or delays in achieving projected levels of efficiencies and cost savings from such measures, or unanticipated inefficiencies resulting from manufacturing and administrative reorganization actions in progress or contemplated, could adversely affect our business, financial condition, results of operations and cash flows and harm our reputation.

We depend on our customers continued demand and solvency at our facilities for the continued operation of our business. While we maintain disaster recovery plans, they might not adequately protect us. Despite any precautions we take for natural disasters or other catastrophic events, these events, including terrorist attack, a pandemic, epidemic or outbreak of a disease, geopolitical conflict, information system disruption, hurricanes, tornadoes, fire, wildfire, floods and ice and snow storms, could result in damage to and closure of our or our customers’ facilitiesfacilities, our suppliers’ facilities, or the infrastructure on which such facilities rely. Such disruptions could include significant delays in the shipments of our products, reduce our capacity to provide services, adversely impact unique manufacturing capabilities, result in our customers’ inability to pay for our products or services and, ultimately, result in the loss of revenue and clients. Although we carry business interruption insurance and typically have provisions in our contracts that protect us in certain events, our coverage might not be adequate to compensate us for all losses that may occur. Any natural disaster or catastrophic event affecting usus, our customers, or our customerssuppliers, could have a significant negative impact on our operations and financial performance.

The products and services that we provide our clients are essential to the drug discovery, development and manufacturing processes, and a significant amount are mandated by law. Notwithstanding, certain special interest groups categorically object to the use of animals for valid research purposes. Historically, our core research model activities with rats, mice and other rodents have not been the subject of significant animal rights media attention. However, research activities involving animal models have been the subject of adverse attention, including shareholder proposals and attempts to disrupt carriers from transporting large research models and actions aimed at preventing expansion of operations .operations. This has included periodic demonstrations near facilities operated by us and at our annual meetings, as well as shareholder proposals we received for some of our past Annual Meetings of Shareholders. In addition, these groups have on occasion petitioned to have certain species of research models (specifically NHPs) declared endangered by governmental and non-governmental organizations and have advocated for the governing bodies to the Convention on International Trade in Endangered Species of Wild Fauna and Flora to restrict the exportation of certain NHP species from specific countries. Furthermore, the habitat of certain animals used for research purposes may be located in or near certain environmentally protected areas or conservation areas. Activities conducted by us or any of our agents within these areas may be legally challenged and result in similar negative attention and action from environmental protection activists, including advocacy for the expansion of environmental restrictions applicable to such areas. Any negative attention, threats, acts of vandalism or legal action directed against our animal research or procurement activities (including species orof research models), or our third-party service providers, such as our airline carriers or suppliers, or that restrict our or their ability to access protected or conservation areas, could impair our ability to operate our business efficiently.

As with other industry participants, certain of our activities rely on a sufficient supply of large research models, which has seen increasing demand as compared to supply in recent years due to a variety of factors. First, the surge of research relating to COVID-19 increased short-term demand. Second, China previously supplied a significant portion of certain critical large research models, which have been subject to geographic export restrictions applicable to many animal species since the beginning of the COVID-19 pandemic. And third, in concert with legal matters affecting the Cambodian supply of non-human primates, the non-human primate supply chain globally has recently experienced constriction. More broadly, legal matters and investigations may have ancillary impacts that impair supply chain access. For example, in November 2022 the U.S. Department of Justice (DOJ) announced that a Cambodia supplier of non-human primates and two Cambodian officials had been criminally charged in connection with illegally importing non-human primates into the United States.States, Whilewhich theled Companyto wasan noteffective named or referenced in the November 2022 proceedings, the Company shortly thereafter announced that Cambodia was the primary countrycessation of origin for non-human primates imports tofrom Charles River, and that it had begun to operate under the expectation that for some time period supply of Cambodia-sourced non-human primates (which according to CDC statistics, at that time accounted for approximately 60% of supplyCambodia to the United States) wouldfor bea difficultperiod toof obtaintime. in the United States. SubsequentSpecific to the Company’s announcement, USFWS denied clearance to certain shipments of non-human primates the Company had received from Cambodia. And as notedCompany, in Item 3. “Legal Proceedings”2023, in thisconnection Annual Report on Form 10-K, in February 2023 the Company receivedwith a grandnow jury subpoena requesting certain documents related to anclosed investigation by the DOJ and the USFWS into the Company’s conduct regarding several shipments of non-human primates from Cambodia, which is occurring in parallel to a civil investigation being undertaken by the DOJ and USFWS. Additionally, in May 2023, the Company received an inquiry from the Enforcement Division of the SEC requestingannounced it towas voluntarily provide information, subsequently augmented with a document subpoena and additional inquiries, primarily related to the sourcing of non-human primates and related disclosures. In connection with the civil investigation, the Company has voluntarily suspendedsuspending planned future shipments of Cambodia non-human primates into the United States until such time that the Company and USFWS cancould agree upon and implement additional procedures to reasonably ensure that non-human primates imported to the United States from Cambodia are purpose-bred. Accordingly,In November 2025, the Company believesreceived thatUSFWS forCITES some undetermined period of time it will not be ableclearance to import Cambodia-sourcedCambodian non-human primatesNHPs into the United States, and overallhas supplyresumed ofsuch non-human primates from Cambodia on a world-wide basis is more limited than it was previously.activity.

While we continue to take steps to find alternative supply channels (and other global sources) and lock in supply (both for non-human primates and with respect to other limited supply products) with preferred sources through multi-year and/or minimum commitment contracts as well as through acquisitions of suppliers, there are limited sources and such mitigating efforts may not prove successful at ensuring a steady and timely supply or may require (and in the past have required) us to pay significantly higher prices for such products during periods of global shortage or restrictions on the importation or the transportation of models products. Limited global supply or regional restrictions on importation, exportation, and/or transportation for certain products may require us to source products from non-preferred vendors, which may not be successful. In addition, reductions in global air transportation routes may result in sourcing alternative transportation at an increased cost. We also may be unable to obtain supply due to governmental restrictions or limitations, including (as noted above) non-human primates, such as prohibitions on the importation, exportation and/or transportation of non-human primates from certain geographies entirely. For instance, on February 4, 2025, the standing committee of the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) decided to postpone review of proposed restrictions on the exportation of NHPs from Cambodia until a future CITES meeting, which is expected to occur in late 2025. Finally, from time to time, special interest groups may attempt to list certain large research models, including certain categories of NHPs, as “endangered” under the Endangered Species Act in the United States or similar statutes in other countries. In the event that certain NHPs are classified as endangered, our business could be negatively impacted. An inability to obtain a sufficient and timely supply of critical products could adversely affect our business, financial results and results of operations.

Our CDMO services establish us as a premier scientific partner for cell and gene therapy development, testing, and manufacturing; enable us to provide clients with an integrated solution from basic researchanalytical and discoveryprocess development through cGMP production; enable us to drive efficiency and accelerate clients’ speed-to-market by integrating manufacturing and the required testing; and enable our clients to seamlessly conduct analytical testing, process development, and manufacturing for advanced modalities with the same scientific partner. Furthermore, our CDMO operations require various raw materials supplied primarily by third parties. We or our customers specify the raw materials and other items required to manufacture the applicable product and, in some cases, the customers specify the suppliers from whom we must purchase these raw materials. In certain instances, the raw materials and other items may only be supplied by a limited number of suppliers or in limited quantities. If third-party suppliers do not supply raw materials or other items on a timely basis, it may cause a manufacturing run to be delayed or canceled which could materially adversely affect our results of operations and financial condition.

Our clients include researchers at pharmaceutical and biotechnology companies. Our ability to continue to grow and win new business is dependent in large part upon the ability and willingness of the pharmaceutical and biotechnology industries to continue to spendinvest onin moleculesdiscovery in the non-clinical phases of R&D (and in particular discovery and safety assessment) and to outsource the products and services we provide. Furthermore, our clients (particularly larger biopharmaceutical companies) continue to search for ways to maximize the return on their investments with a focus on lowering R&D costs per drug candidate. Fluctuations in the expenditure amounts in each phase of the R&D budgets of these researchers and their organizations could have a significant effect on the demand for our products and services. R&D budgets fluctuate due to changes in available resources, mergers of pharmaceutical and biotechnology companies, spending priorities (including available resources of our biotechnology clients, particularly those that are cash-negative, who may be highly focused on rationing their liquid assets in a challenging funding environment), general economic conditions, institutional budgetary policies and the impact of government regulations, including potential drug pricing legislation. Available funding for biotechnology clients in particular may be affected by the capital markets, investment objectives of venture capital investors and priorities of biopharmaceutical industry sponsors.

A portion of revenue, predominantly in our RMS segment, is derived from clients at academic institutions and basic research laboratories whose funding is partially dependent on both the level and timing of funding from government sources such as the U.S. National Institutes of Health (NIH) and similar domestic and international agencies, which can be difficult to forecast. We also sell directly to the NIH and these other agencies. Government funding of R&D is subject to the political process, which is inherently fluid and unpredictable. For example, the NIH announced on February 7, 2025, a policy significantly reducing research grants by limiting payments for indirect overhead. While,This aspolicy ofwas subject to an injunction at the datedistrict ofcourt thisand filing,appellate court levels. However, in August 2025, the orderUnited hasStates beenSupreme temporarilyCourt stayed,ruled therethat canthe lower courts did not have jurisdiction to reinstate the grant funding, allowing nearly $800 million in federal grants to be no assurance that it will not take effect or that other adverse actions will not be taken.terminated. Our revenue may be adversely affected if our clients delay purchases as a result of uncertainties surrounding the approval of government budget proposals, included reduced allocations to government agencies that fund R&D activities. Government proposals to reduce or eliminate budgetary deficits have sometimes included reduced allocations to the NIH and other government agencies that fund R&D activities, or NIH funding may not be directed towards projects and studies that require the use of our products and services, both of which could adversely affect our business and our financial results.

Governmental agencies throughout the world strictly regulate the drug development process. Our business involves helping our customers navigate these regulatory processes. Accordingly, many regulations, and often new regulations, are expected to result in higher regulatory standards and often additional revenues for companies that service these industries. However, someSome changes in regulations, suchincluding as athe relaxation inof regulatorycertain requirements or the introductionuse of streamlined or expedited drug approval procedures, ormay anreduce the scope of preclinical testing needed. Other changes that increase in regulatory requirements that we have difficulty satisfyingobligations or thataffect makethe competitiveness of our services lessmay competitive, could eliminate or substantially reducelessen the demand for ourcertain services.offerings.

For example, in December 2022, the FDA Modernization Act 2.0 was passed, which clarifiesclarified the methods manufacturers and sponsors canmay use to investigate the safety and efficacy of a drug. In April 2025, the FDA announced its intention to expand the use of scientifically supported cell-based approaches and other new approach methodologies (NAMs), such as organ-on-chip systems, computational modeling, and advanced in vitro assays, in preclinical safety studies; in October 2025, the FDA announced its intention to streamline the approval process for biosimilar drug development and indicated further announcements related to reducing animal testing requirements may be forthcoming; and in November 2025, the U.K. government announced a roadmap to phasing out animal testing in favor of alternative methods. Eliminating the use of animals in research may have material adverse effects on our business, results of operations, or financial condition. While there have been significant advancements in the development of alternative methods, the complete elimination of animals in research will be a gradual process that may take many years to achieve. While we are committed to working with the industry to support development and to provide the best translational models to supplement or replace traditional models as part of our Replacement, Reduction, and Refinement (3Rs) initiative, the use of animals in research is highly regulated and proposed changes to current regulations will need to be carefully evaluated to ensure that they do not compromise the safety and efficacy of new drugs and medical treatments.

Implementation of healthcare reform legislation, such asincluding certain provisions of the Inflation Reduction Act, may haveoffer certainsome benefits, but may also may containintroduce costs or changes that could limitaffect the profitspotential thatfinancial canreturns beassociated madewith from the development ofdeveloping new drugs. This could adversely affect R&D expenditures by pharmaceutical and biotechnology companies, which could in turn decrease the business opportunities available to us both in the U.S. and abroad. In addition, new laws or regulations may create a risk of liability, increase our costs or limit our service offerings. Furthermore, if health insurers were to change their practices with respect to reimbursements for pharmaceutical products, our clients may spend less or reduce their growth in spending on R&D.

While it is not possible to predict whether and when any such changes will occur, changesupdates at the local, state or federal level, or into laws and regulations in effect in foreign jurisdictions in whichwhere we operate or havemaintain business relationships, may significantlymaterially impactaffect our domestic and foreign businesses and/or thoseinternational of our clients.operations. Furthermore, modifications to international trade policy, public company reporting requirements, environmental regulation and antitrust enforcement may have a materially adverse impact on us, our suppliers or our clients.

The CDMO services we offer can be highly complex, due in part to strict regulatory requirements and the inherent technical complexity of the services provided. A failure of the quality control or related systems and processes in our facilities could cause problems in connection with facility operations for a variety of reasons, including with respect to equipment malfunction, microbial or other contamination, compliance with specific manufacturing instructions, compliance with protocols and standard operating procedures, issues with raw materials, and issues with product testing. Such issues could affect the production of a single manufacturing run, multiple runs, or entire manufacturing campaigns, potentially requiring the destruction of products and cessation of manufacturing operations. In addition, any failure to meet required quality and regulatory standards may result in our failure to timely deliver products to our customers which, in turn, could damage our reputation for quality and service. Similarly, if the FDA or other regulators develop concerns over regulatory compliance in connection with our manufacturing activities of clinical trial products, including with respect to the safety of a product, such authorities can delay or suspend a client’s clinical trial by placing it on a full or partial "clinical hold" pending receipt of additional data to satisfy such concerns. A clinical hold on a client’s trial may require us to spend significant resources to address the underlying causes of the client’s clinical hold. In addition, if we are not able to successfully address such underlying causes or our response is not deemed adequate to lift the client’s clinical hold, the clinical program may have to be terminated. The same or similar regulatory issues can occur in connection with the manufacture of commercial products in the event of compliance concerns, whereby FDA or other regulators may prevent the distribution of products manufactured at our facilities and require corrective actions to address such concerns, which can be substantial and time consuming. In the event of material compliance issues, FDA or other regulators may also refuse to approve our clients’ applications to market products manufactured at our facilities, which may also adversely affect our business. In January 2025, a CDMO client disclosed that, as a result of observations made during pre-license inspections at a Company facility, (1) one biologics license application for a specific therapeutic treatment had received a complete response letter from the FDA, and (2) the FDA had placed clinical holds on that client’s Investigational New Drug applications. In addition, subsequently the FDA conducted an inspection at the same Company facility resulting in the Company receiving a Form FDA 483 Notice of Inspectional ObservationsObservations. whichIn October 2025, a successful pre-license inspection was performed and we are closely partnered with this client through the Companyremaining is in processsteps of respondingtheir to,biologics license resubmission. In addition, we are, from time to time, subject to commercial disputes and whichlegal willactions includefrom commitmentsCDMO customers with respect to mitigatethe identifiedproducts observations.and services we provide. These types of events, including manufacturing disruptions, delays in clients’ clinical programs, commercial disputes, legal actions, and/or failures to obtain marketing approvals may adversely affect our business and/or results of operations.

Over the past decade, pharmaceutical and biotechnology companies have generally increased their outsourcing of non-clinical and clinical research support activities, such as discoverydrug discovery, safety assessment and safetyclinical assessment.trial support. While many industry analysts expect the outsourcing trend to continue to increase for the next several years (although with different growth rates for different phases of drug discovery and development), decreases in such outsourcing may result in a diminished growth rate in the sales of any one or more of our service lines and may adversely affect our financial condition and results of operations. For additional discussion of the factors that we believe have recently influenced outsourcing demand from our clients, please see the section entitled “Our Strategy” above.

The scientific community continues to develop cell-based and new alternative model methodologies (NAMs),NAMs, which do not involve working with animal models and are designed to increase the translation from findings in early-stage discovery and pre-clinical studies to human studies, and vice-versa. As these methods continue to advance, they may supplement, and in some cases possibly replace or supplant methodologies that are currently in use, such as the use of traditional living animals in biomedical research. For example, in April 2025, the FDA announced its intention to reduce animal testing in preclinical safety studies with NAMs, such as organ-on-a-chip systems, computational modeling, and advanced in vitro assays; in October 2025, the FDA announced its intention to streamline the approval process for biosimilar drug development and indicated further announcements related to reducing animal testing requirements may be forthcoming; and in November 2025, the U.K. government announced a roadmap to phasing out animal testing in favor of alternative methods. In addition, technological improvements, such as imaging and other translational biomarker technologies, could impact demand for animal research models. Further, manufacturers, including Charles River, have recently introduced recombinant versions of LAL, which has been historically derived from live animals. It is our strategy to explore new technologies to refine and potentially reduce the use of animal models and animal derived products as new in vitro and in silico methods become available and synthetically-manufactured products become validated with sufficient data to ensure public safety. For information regarding our efforts to support development and to provide the best translational models to supplement or replace traditional models, see “Our Strategy” included elsewhere in this Form 10-K. However, we may not be able to develop new products, inputs or processes effectively or in a timely manner to replace any lost sales. Lastly, other companies or entities may develop research models, inputs or processes with characteristics different from those that we produce, and that may be viewed as more desirable by some of our clients.

Our donor collection centerscenter areis registered with the FDA and the FDA periodically conducts inspections of those facilities and operations. At the conclusion of each inspection, the FDA provides us with a list of objectionable conditions and practices observed during the inspection that could result in additional enforcement actions. Failure to comply with the regulations enforced by the FDA could result in sanctions and/or remedies and have a material adverse effect on us.

The EU GDPR also imposes specific restrictions on the transfer of personal data to countries outside of the EU and EEA, including the use of appropriate safeguards to enable such transfers, such as Standard Contractual Clauses (SCCs) and the EU-USEU- US Data Privacy Framework (DPF). Although these mechanisms are currently valid for purposes of transferring personal data, they could be subject to legal challenges and there is no assurance that we could satisfy or rely on these measures to lawfully transfer personal data. If we are otherwise unable to transfer personal data between and among countries and regions in which we operate, it could affect the manner in which we provide our services, the geographical location or segregation of our relevant systems and operations, and could adversely affect our financial results. While we have implemented controls and procedures to comply with the requirements of the EU GDPR, such procedures and controls may not be effective in ensuring compliance or preventing unauthorized transfers of personal data.

Moreover,Similarly, we are subject to the privacy and data protection laws of China, including the Personal Information Protection Law (PIPL) and Data Security Law (DSL), which promulgated requirements relating to the collection, processing, transfer and security of personal information in or from China. Violations of the PIPL or DSL could result in fines and penalties, suspension of data transfers, cancellation of business authorizations, personal liability for responsible company officers, as well as criminal and civil liability. In the event that the PIPL requires us to store data in China, or limits our ability to transfer data across borders, we may experience increased costs and business inefficiencies. Fines, corrective actions, or other penalties asserted due to alleged noncompliance may impose additional financial or operational costs, limit our ability to attract and retain local talent, or limit our ability to do business in China.

As a global company, we are subject to taxation in numerous countries, states, and other jurisdictions. Changes to governmental laws and regulations, or their interpretations, including the adoption of global minimum taxation requirements and potential changes to existing tax law by the current U.S. Presidential administration and Congress, could impact our profits, effective tax rate and cash flows. For example, in July 2025, the U.S. enacted the One Big Beautiful Bill Act ("OBBBA"), which includes several changes to U.S. federal income tax law, including accelerated tax depreciation, expensing of research and development, and the U.S. international inclusions.

Many of our services, products and processes rely on intellectual property. In some cases, that intellectual property is owned by another party and licensed to us, sometimes exclusively. To protect our intellectual property rights, we primarily rely upon trade secret, patent, trademark, and copyright law, as well as contractual provisions relating to intellectual property ownership and control and confidentiality. Laws relating to intellectual property rights and contracts vary from country to country and are subject to change at any time. In addition, the agreements upon which we rely to protect our intellectual property might be breached, or might not be fully enforceable. Our intellectual property rights might not prevent our competitors from independently developing intellectual property that is similar to or duplicative of ours. Also, enforcement of our intellectual property rights may also require substantial investments of time, money, and oversight, and may not result in success. If we are unable to secure and maintain our intellectual property rights, or if we are unable to prevent misappropriation or infringement, our business could be adversely affected.

We are involved in legal proceedings related to various matters, including securities litigation, and may become involved in other legal proceedings that arise from time to time in the future. For example, as discussed further in Part I, Item 3, Legal Proceedings, a putative securities class action and two derivative securities lawsuits have been filed against the Company, and certain officers and directors, alleging that disclosures about the Company’s practices with respect to the importation of non-human primates were materially false or misleading. We also are or have been subject to government investigations and civil investigative demands seeking information with respect to alleged violations of law, including as discussed in Part I, Item 3, Legal Proceedings, investigationspertaining to an investigation by the DOJ, USFWS, and SEC.

Our success depends to a significant extent on the continued services of our senior management and other members of management who have skills and industry experience aligned with our strategic objectives. JamesBirgit C. Foster,Girshick, our Chiefcurrent ExecutiveCOO Officerwho andwill Presidentserve sinceas 1992our andCEO Chairmaneffective sinceMay 2000,5, 2026, has held various positions with us for fourmore decades.than While35 weyears. enteredFor intofurther detail on Ms. Girshick’s employment with the Company, see the Letter Agreement by and between Charles River Laboratories International, Inc. and Birgit Girshick, dated as of January 6, 2026, attached as an amendedexhibit employmentto agreementthis withForm Mr.10-K. Foster in 2021, mostMost members of our senior management do not have employment agreements, except in jurisdictions outside of the United States where employment contracts are common for most employees. If Mr. Foster or other members of senior management do not continue in their present positions, particularly if they do not give reasonable advance notice should they choose to depart from the Company with little to no notice,Company, our business may be adversely impacted.

As of December 28,27, 2024,2025, we had $2.2$2.1 billion of debt and finance leases (debt). Our debt could have significant adverse effects on our business, including making it more difficult for us to obtain additional financing on favorable terms; requiring us to dedicate a substantial portion of our cash flows from operations to the repayment of debt and the interest on this debt; limiting our ability to capitalize on significant business opportunities; making us more vulnerable to rising interest rates, and reducing our flexibility to respond to changing business and economic conditions. Disruption in the financial marketmarkets could also have a material adverse effect on our financial position, results of operations and liquidity. For additional information regarding our debt, please see Note 11. Debt and Other Financing Arrangements, included in the notes to our consolidated financial statements included elsewhere in this Form 10-K.

If the future growth and operating results of our business are not as strong as anticipated, overall macroeconomic or industry conditions deteriorate and/or our market capitalization declines, this could impact the assumptions used in establishing the carrying value of goodwill or other intangible assets, as well as long-lived tangible assets, such as property, plant and equipment and operating lease right-of-use assets. Should disruption in the global financial markets and deterioration of economic conditions have a prolonged impact on our industry, triggering events may arise resulting in long-lived tangible asset, intangible asset, or goodwill impairments. To the extent long-lived tangible assets, intangible assets, or goodwill are impaired, their carrying value will be written down to their implied fair values and a charge will be made to our net income.income (loss). Such an impairment charge could materially and adversely affect our operating results. As of December 28,27, 2024,2025, the carrying amount of goodwill and other intangibles on our consolidated balance sheet was $3.6$3.1 billion, property, plant and equipment was $1.6$1.7 billion, and operating lease right-of-use assets was $412.5$361.4 million. During the fourth quarter ended December 28, 2024, a triggering event was identified for the Biologics Solutions reporting unit. This resulted from a loss of key customers, ultimately resulting in a reduction in Biologics Solutions’ long range financial outlook. In response, we conducted a quantitative impairment test for goodwill to determine if the goodwill in the Biologics Solutions reporting unit was impaired. Upon completion of a quantitative impairment test, it was determined that the fair value of the reporting unit was below its carrying value, resulting in a goodwill impairment of approximately $215.0 million. We will continue to closely monitor future performance and any potential impacts on the value of the reporting unit. For additional discussion on this topic, see section herein titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Goodwill and Intangible Assets.”

Our results of operations in any quarter may vary from quarter to quarter and are influenced by the risks discussed above, as well as: changes in the general global economy; changes in the mix of our products and services; changes in government regulation or in practices related to the pharmaceutical or biotechnology industries, including with respect to the use of NAMs; cyclical buying patterns of our clients; the financial performance of our strategic and venture capital investments; certain acquisition-related adjustments, including change in fair value of contingent payments both receivable from or payable to counterparties; and the occasional extra week (“53rd week”) that we recognize in a fiscal year (and fourth fiscal quarter thereof), including 2022, due to our fiscal year ending on the last Saturday in December. The next fiscal year with a 53rd week is scheduled to occur in 2028. We believe that operating results for any particular quarter are not necessarily a meaningful indication of future results. Nonetheless, fluctuations in our quarterly operating results could negatively affect the market price of our common stock.

Our RMS reportable segment includes the products and services offered within Research Models, Research Model Services, and Cell Solutions. Research Models includes the commercial production and sale of small research models, as well as the supply of large research models. Research Model Services includes: Insourcing Solutions (IS), which provides colony management of our clients’ research operations (including recruitment, training, staffing, and management services) within our clients’ facilities as well as our own vivarium space, utilizing our Charles River Accelerator and Development Lab (CRADL™) offerings, Genetically Engineered Models and Services (GEMS), which performs contract breeding and other services associated with genetically engineered models; and Research Animal Diagnostic Services (RADS), which provides health monitoring and diagnostics services related to research models; and Cell SolutionsSolutions, which provides controlled, consistent, customized primary cells and blood components derived from normal and mobilized peripheral blood and bone marrow as well as cells from disease state donors.

Our Manufacturing reportable segment includes Microbial Solutions, which provides in vitro lot-release testing products, microbial detection products, and species identification services and Biologics Solutions (Biologics), which performs specialized testing of biologics (Biologics Testing Solutions) as well as contract development and manufacturing products and services (CDMO). In December of 2022, we sold the Avian Vaccine Services (Avian) business, reported in the Manufacturing segment, which supplied specific-pathogen-free chicken eggs and chickens.

Despite the current, challenging market environment, many of our pharmaceutical and biotechnology clients continued to benefit from the long-term value of strategic outsourcing to improve their operating efficiency and to access capabilities that they do not maintain internally. Many of our large biopharmaceutical clients have continued to rely on relationships with outsourced partners like Charles River to enhance their drug discovery and early-stage development efforts, and biotechnology companies to assist them in bringing new drugs to market. However, becauseBecause of theira morecontinued cautious view with regard to early-stage R&D spending, revenue due to both large biopharmaceutical clients and small and mid-sized biotechnology clientclients declined in fiscal year 2024.2025. However, our ability to continue to deliver our leading suite of research, non-clinical development, and clinical bioanalytical solutions has endeavored our clients to continue to choose to partner with us for our flexible and efficient outsourcing solutions, broad scientific capabilities, and global scale.

Revenue for RMS increased in fiscal year 20242025 due largely to higher revenue contributions from thelarge acquisitionresearch ofmodels a controlling interest in Noveprim, as well asand increased pricing for small research models. Offsetting this growth, the challenging biopharmaceutical demand environment led to lowerAdditionally, revenue forfrom research model services,services includingimproved Insourcingmodestly Solution’sdriven CRADLTMby operations.the However,IS CRADLTMand continuesGEMS tobusinesses. beDespite anpressures attractivefrom businessearly-stage modelbiotechnology and government funding in North America, as well as a cost-effectivefocus andon flexiblealternative solutionmethodologies, for clients allowing access to vivarium space without having to invest in internal infrastructure. This flexibility is particularly valuable in the current environment, where organizations are seeking to optimize their research budgets and minimize operational costs. Wewe are confident that research models and services will remain essential tools for our clients’ drug discovery and early-stage development efforts.

Despite the near-term market pressures,pressures that led to a modest revenue decline in fiscal year 2025, we believe clients will continue to benefit from the long-term value of strategic outsourcing to improve their operating efficiency and to access capabilities that they do not maintain internally. We believe that our comprehensive scientific capabilities and global scale, as well as the breadth and depth of our scientific expertise, quality, and responsiveness remain key criteria when our clients make the decision to outsource to us. As the scientific partner of choice to accelerate biomedical research, we are committed to driving greater efficiency and speed while providing exceptional service to our clients.

On November 30, 2023, we completed our acquisition of an additional 41% equity interest of Noveprim Group (Noveprim), a leading supplier of non-human primates (NHPs) located in Mauritius, resulting in a 90% controlling interest. We had previously acquired a 49% equity interest in 2022 for $90.0 million plus additional contingent payments up to $5.0 million based on future performance. The total consideration allocable to the Noveprim acquisition is $392.4 million, which includes $144.6 million additional cash paid for the 41% equity interest, elimination of historical activity and intercompany balances of $209.5 million which includes a remeasurement gain on the 49% equity investment of $113.0 million, contingent consideration of $33.3 million, deferred purchase price of $12.0 million payable from 2024 through 2027, offset by estimated post-closing adjustments for working capital of $7.0 million. The purchase price reflected an agreement with the seller on working capital and debt, which was adjusted from $13.8 million to $7.0 million during fiscal year 2024. As a result of measurement period adjustments to the purchase price, goodwill and remeasurement gains on the previous 49% equity investment during fiscal year 2024, were increased by $17.6 million and $9.8 million, respectively. Remeasurement gains are recorded in Other income (expense), net, within the consolidated statements of income. The contingent consideration fair value is estimated using a Monte Carlo Simulation model and the maximum contingent contractual payments are up to $55.0 million based on future performance and milestone achievements from fiscal years 2023 through 2025. The Company has the call option right to purchase the remaining 10% equity interest up until one month after the sixth anniversary of closing the 41% equity interest. On the first anniversary of the expiration of the call option, a 12-month put option will be triggered giving the seller the right to require us to acquire the remaining shares of the seller. The redemption price for the call/put is fixed and ranges from $47.0 million to $54.0 million depending on when exercised. The noncontrolling interest is classified as a redeemable noncontrolling interest in the mezzanine section of the consolidated balance sheets. The acquisition was funded through a combination of available cash and proceeds from our Credit Facility. This business is reported as part of our DSA reportable segment for NHPs vertically integrated into the DSA supply chain and the RMS reportable segment for those NHPs sold to third party customers.

Product revenue is generally recognized when the customer obtains control of our product, which occurs at a point in time, and may be upon shipment or upon delivery based on the contractual shipping terms of a contract. Service revenue is generally recognized over time as the services are delivered to the customer based on the extent of progress towards completion of the performance obligation. The selection of the method to measure progress towards completion requires judgment and is based on the nature of the products or services to be provided. Depending on which better depicts the transfer of value to the customer, we generally measure our progress using either cost-to-cost (input method) or right-to-invoice (output method). We use the cost-to-cost measure of progress when it best depicts the transfer of value to the customer which occurs as we incur costs on our contract, generally related to fixed fee service contracts. Under the cost-to-cost measure of progress, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. The costs calculation includes variables such as labor hours, allocation of overhead costs, research model costs, and subcontractor costs. Revenue is recorded proportionally as costs are incurred. The right-to-invoice measure of progress is generally related to rate per unit contracts, as the extent of progress towards completion is measured based on discrete service or time-based increments, such as samples tested or labor hours incurred. Revenue is recorded in the amount invoiced since that amount corresponds directly to the value of our performance to date. During fiscal year 2024,2025, $2.4 billion, or approximately 60%, of our total revenue recognized ($4.0 billion) is DSA service and product revenue transferred over time.

We use assumptions and estimates in determining the fair value of assets acquired and liabilities assumed in a business combination. The determination of the fair value of intangible assets (including goodwill) and certain biological assets, which representrepresented a significant portion of the purchase price in certain recentprior acquisitions, requires the use of significant judgment with regard to (i) the fair value; and (ii) whether such assets are amortizable or non-amortizable and, if the former, the period and the method by which the asset will be amortized. We utilize commonly accepted valuation techniques, such as the income, cost and market approaches, as appropriate, in establishing the fair value of these assets. Typically, key assumptions include projections of cash flows that arise from these assets of acquired businesses as well as discount rates based on an analysis of the weighted average cost of capital, adjusted for specific risks associated with the assets.

In our recentprior acquisitions, customer relationship intangible assets (also referred to as client relationships) and certain biological assets have been the most significant identifiable assets acquired. To determine the fair value of the acquired client relationships and biological assets, we utilized the multiple period excess earnings model (a commonly accepted valuation technique), which includes the following key assumptions: projections of cash flows from the acquired entities, which included future revenue, cost of revenue, operating income margins, customer attrition rates, productivity rates; as well as discount rates based on a market participant’s weighted average cost of capital. During fiscal yearyears 2025 and 2024, we did not enter into any acquisitions.business The value of the client relationship acquired was $23 million and the value of the biological assets acquired was $168 million for fiscal year 2023.combinations.

During the fourth quarter ended December 28,27, 2024,2025, awe triggeringperformed eventthe quantitative goodwill impairment test for our reporting units and upon completion, it was identifieddetermined forthat the fair value of the Biologics Solutions reporting unit afterdid thenot annualexceed its carrying value, resulting in a goodwill impairment assessment.charge of $165.0 million. This resultedwas fromprimarily attributable to a lossdecline ofin keyits customers,operating ultimatelyperformance, resulting in a reduction into Biologicsthe Solutions’ long rangelong-range financial outlook.plan In response, we conducted a quantitative impairment test for goodwill to determine ifof the goodwillreporting unit, and evolving market information in the Biologicsfourth Solutionsquarter reportingof unit was impaired.2025. The fair value of the Biologics Solutions reporting unit tested for impairment during 20242025 was determined basedusing ona weighted combination of a discounted cash flow model (an income approach), and sales and earnings multiples (a market approach) based on the guideline public company method. Significant assumptions used in the determination of fair value of the Biologics Solutions reporting unit generally include forecasted cash flows, discount rates, terminal growth ratesmethod, and earningsother multiples.market information (a market approach). The discounted cash flow model used to determine the fair value of the Biologics Solutions reporting unit asreflected of the impairment triggering date reflectedsignificant assumptions related to revenuefuture revenue, a long term growth rates,rate, operating income margins, and a discount rate based on a weighted-average cost of capital. Significant assumptions used in the market approach included earnings multiples, sales multiples, and terminalother growthmarket rate.information about the value of certain asset groups within the reporting unit. The Biologics Solutions reporting unit fair value measurement is classified as Level 3 in the fair value hierarchy because they involve significant unobservable inputs. We will continue to closely monitor future performance and any potential impacts on the value of the reporting unit. If the estimated future cash flows decrease below our current expectations, specifically as a result of lower revenue growth rates or operating income margins, or due to an increase of the weighted-average cost of capital, the fair value may further decrease resulting in an incremental material goodwill impairment.

OurExcluding 2024 and 2023the impairment testscharge associated with the Biologics Solutions reporting unit, our 2025 annual impairment test indicated that goodwill was not impaired for any other reporting units.

Determination of recoverability is based on an estimate of undiscounted future cash flows resulting from the use or sale of the asset or asset group, net of any sublease income, if applicable, and its eventual disposition. In the event that such cash flows are not expected to be sufficient to recover the carrying amount of the assets, the assets are written-down to their fair values. We measure any impairment based on a projected discounted cash flow method using a discount rate determined by management to be commensurate with the risk inherent in our current business model. Significant judgments are required to estimate future cash flows, including the selection of appropriate discount rates and other assumptions. We may also estimate fair value based on market prices for similar assets, as appropriate. Changes in these estimates and assumptions could materially affect the determination of fair value for these assets. Actual cash flows arising from a particular intangiblelong-lived asset could vary from projected cash flows which could imply different carrying values from those established at the dates of acquisition and which could result in impairment of such asset.

DuringIn the fourth quarter ended December 28,fiscal 2024, a triggering event was identified for the CDMO Cell Therapy asset group within the Biologics Solutions businessbusiness, part of the Manufacturing reportable segment, as there was a loss of key customers, resulting in a significant reduction in cash flows. We concluded there were no impairments for the asset group related to this triggering event, however the remaining useful life of the intangible asset within the asset group was reduced to less than 1 year. As a result of the decrease in the remaining useful life, $9.4 million of accelerated amortization was recognized within the accompanying consolidated statements of income (loss) for fiscal year 2024. The remaining value of these client relationships was $75.9 million and was amortized over the remaining useful life of approximately 6 months in fiscal year 2025.

Long-lived asset impairmentsimpairments, associatedinclusive withof ourthe right-of-use leaseintangible assets andcharge property,described plant, and equipment,above, recognized during fiscal years 20242025 and 20232024 were $51.8$259.1 million and $41.9$51.8 million, respectively.

Our global operations make the effective tax rate sensitive to significant tax law changes. Several countries have begun to enact legislation to implement the Organization for Economic Cooperation and Development’s (OECD) international tax framework, including the Pillar II global minimum tax regime with effect from January 1, 2024 or later. In addition, the U.S. enacted the One Big Beautiful Bill on July 4, 2025 with effect from January 1, 2025, for which much guidance is still expected. We are currently monitoring these developments.developments Toand date,believe we have appropriately reflected any current or deferred financial statement impact, which we do not nor, expect therebelieve to be a material financial impact.material.

Revenue for fiscal year 20242025 was $4.0$4.02 billion compared to $4.1$4.05 billion in fiscal year 2023.2024. The 2024decrease decreaseof $34.6 million, or 0.9% as compared to thefiscal correspondingyear period in 2023 was $79.4 million, or 1.9%, and2024 was primarily due to our DSA business, which experiencedcontinued to experience lower volume driven by more cautious client spending as a result of the biopharmaceutical demand environment; partially offset by higher revenue within our Manufacturing businesses and the recent acquisition of Noveprim withinin our RMS businessbusiness, primarily driven by the increase in large research model product revenue when compared to fiscal year 2023.2024.

In fiscal year 2024,2025, our operating income and operating income margin were $25.2 million and 0.6%, respectively, compared with $227.3 million and 5.6%, respectively, compared with $617.3 million and 14.9%, respectively, in fiscal year 2023.2024. The decreasesdecrease in operating income and operating income marginsmargin for fiscal year 20242025 werewas primarily due to the intangible asset impairment charges within our Manufacturing and RMS businesses, the acceleration of amortization expense recognized as a result of a decrease in the remaining useful life of certain CDMO client relationships due to a loss of key customers, and the revenue impacts described above,above; chargepartially offset by a decrease in charges related to the goodwill impairmentimpairments within our Manufacturing business, recentlower restructuringseverance activities, including severance, asset impairments,costs and otherthe siteabsence consolidation costs, andof an inventory charge incurred in connection with the investigations by the U.S. government into the non-human primate supply chain.chain in fiscal year 2024.

Net loss available to Charles River Laboratories International Inc, common shareholders was $144.3 million in fiscal year 2025, compared to Net income available to Charles River Laboratories International Inc, common shareholders decreased toof $10.3 million in fiscal year 2024, from $474.6 million in the corresponding period of 2023.fiscal year 2024. The decrease in net income available to common shareholders of $464.3$154.6 million was due principally to the decreasesdecrease in operating income described above.above; partially offset by a decline in income tax and interest expenses.

During fiscal year 2024,2025, our cash flows from operations was $734.6$737.6 million compared with $683.9$734.6 million for fiscal year 2023.2024. The increase in net cash provided by operating activities was primarily due to favorablelower performancepayments acrossof variable compensation, benefiting cash provided by operations by approximately $79 million, our revenue related accounts, including collections on trade receivables, deferred revenue, and customer deposits; benefiting cash provided by operations by $46.7approximately million, lower purchases of inventory supporting our Safety Assessment business, benefiting our cash provided by operations by $16.8$12 million; partially offset by $27.6higher million related to accrued compensation, and timingpurchases of paymentsinventory toof our suppliers and vendors reducing our cash provided by operations by $14.3$49 million.

Revenue and Operating Income (Loss)

RMS revenue increased $37.0$16.7 million due primarily todriven by an increase in large research model product revenue, principally due to the recent acquisition of Noveprim, which contributed $39.4 million, and an increase in small research model revenue in allChina geographicand areasEurope, an increase in Insourcing Solutions services revenue, and the effect of changes in foreign currency exchange rates; partially offset by lower Cell Solutions product revenue and Insourcing Solutions services revenue.

RMS operating income decreased $40.3$69.8 million compared to fiscal year 2023.2024. RMS operating income as a percentage of revenue for fiscal year 20242025 was 13.8%,5.3%, a decrease of 570850 bps from 19.5%13.8% for fiscal year 2023.2024. Operating income and operating income as a percentage of revenue decreased primarily due to highera charges$102.0 relatedmillion to recent restructuring activities, including severance, site consolidation, andintangible asset impairment charges,charge higher amortization related to acquisitions, including an inventory step up recorded in cost of revenue fromwithin the NoveprimCell acquisitionSolutions asset group; partially offset by thea impactsdecrease ofin restructuring activities, primarily related to asset impairment charges, and the RMSincrease from the revenue drivers described above.

DSA revenue decreased $164.3$48.4 million primarily due to decreased revenue in our Safety Assessment and Discovery Services businesses due to decreased studylower volume driven by softercontinued demandcautious client spending as a result of more cautious client spending in the biopharmaceuticalcurrent demand environment, and the impact of a recently divested site related to our Safety Assessment business which contributed $8.5 million to the decrease; partially offset by the effect of changes in foreign currency exchange rates.

DSA operating income decreased $163.6$18.0 million compared to fiscal year 2023.2024. DSA operating income as a percentage of revenue for fiscal year 20242025 was 18.1%,17.7%, a decrease of 51040 bps from 23.2%18.1% for fiscal year 2023.2024. Operating income and operating income as a percentage of revenue decreased primarily due to the lower revenue described above, as well as higher severance related to recentincreased restructuring activities, adjustmentsincluding toasset contingentimpairments considerationand associatedsite withconsolidation charges; partially offset by the acquisitionabsence of Noveprim, and higher third-party legal costs and a $27 millionthe inventory charge to cost of revenue incurred in connection with the investigations by the U.S. government into the non-human primateNHP supply chain and lower severance costs as compared to the corresponding period in 2023.fiscal year 2024.

Manufacturing revenue increaseddecreased $47.9$2.9 million primarily due to increaseddecreased revenue in both our Biologics Solutions business, driven by decreased demand for CDMO and Biologics Testing services coupled with the loss of key customers within our CDMO business; partially offset by an increase in our Microbial Solutions businesses,business driven by higher product revenue associated with endotoxin product revenue coupledand withidentification increasedservices revenue related to our Biologics Testing and CDMOthe services.effect of changes in foreign currency exchange rates.

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 $26.3$1.6 million, or 11.4%,0.6%, compared to fiscal year 20232024 is primarily relateddue to severancehigher associatedthird-party withlegal recentand restructuringadvisory activities,costs adjustmentsfor tothe contingentexecution considerationof associateda Cooperation Agreement entered into with a recentshareholder divestiture,earlier this year and theother absencetransaction ofcosts positivepartially netoffset settlementsby recognizeda on virtual power purchase agreements as compared to the corresponding perioddecline in 2023.employee compensation and benefits related costs. Costs as a percentage of revenue for fiscal year 20242025 was 6.4%,6.5%, an increase of 8010 bps from 5.6%6.4% for fiscal year 2023.2024.

Interest income for fiscal year 20242025 was $8.6$4.9 million, ana increasedecrease of $3.4$3.6 million, or 65.0%,42.4%, driven primarily from higherlower interest rates and interest bearingearning asset balances.

Interest expense for fiscal year 20242025 was $126.3$107.0 million, a decrease of $10.4$19.3 million, or 7.6%,15.3%, compared to $136.7$126.3 million in fiscal year 2023. The decrease was2024 due primarily to lower average debt balances as we continue to pay down our revolving credit facility.balances.

Income tax expense for fiscal year 20242025 was $67.8$42.7 million, a decrease of $33.1$25.2 million compared to $100.9$67.8 million for fiscal year 2023.2024. Our effective tax rate was (42.9)% for fiscal year 2025 compared to 72.8% for fiscal year 2024 compared to 17.4% for fiscal year 2023.2024. The increasechange in our effective tax rate in fiscal year 20242025 compared to fiscal year 20232024 was primarily attributable to the impact of the non-deductible goodwill impairment of the Biologic Solutions reporting unit, as well as the non-taxable gain on Noveprim of $98.5 million in fiscal year 2023.unit.

Net cash provided by cash flows from operating activities represents the cash receipts and disbursements related to all of our activities other than investing and financing activities. Operating cash flow is derived by adjusting our net income (loss) for items including, but not limited to (1) non-cash operating items such as depreciation and amortization, stock-based compensation, goodwill impairment,impairments, debt financing costs, deferred income taxes, write downs of inventories, provisions of credit losses, long-lived asset impairment changes,charges, gains and/or losses and impairments on venture capital and strategic equity investments, gains and/or losses on divestitures, changes in fair value of contingent consideration, as well as (2) changes in operating assets and liabilities, which reflect timing differences between the receipt and payment of cash associated with transactions and when they are recognized in our results of operations.

During fiscal year 2024,2025, our cash flows from operations was $734.6$737.6 million compared with $683.9$734.6 million for fiscal year 2023.2024. The increase in net cash provided by operating activities was primarily due to favorablelower performancepayments acrossof variable compensation, benefiting cash provided by operations by approximately $79 million, our revenue related accounts, including collections on trade receivables, deferred revenue, and customer deposits; benefiting cash provided by operations by $46.7approximately million, lower purchases of inventory supporting our Safety Assessment business, benefiting our cash provided by operations by $16.8$12 million; partially offset by $27.6higher million related to accrued compensation, and timingpurchases of paymentsinventory toof our suppliers and vendors reducing our cash provided by operations by $14.3$49 million.

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual2025 Form 10-K and in Part II, “Item 1A. Risk Factors” in our Quarterly Report on Form 10-K10-Q for fiscalthe yearquarter 2025,ended March 28, 2026 (Q1 10-Q) which could materially affect our business, financial condition, and/or future results. The risks described in our Annual Report on2025 Form 10-K and in our Q1 10-Q are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition, and/or operating results. ThereExcept for the risk factor disclosed in Part II, Item 1A of the Q1 10-Q, which is hereby incorporated by reference into this Part II, Item 1A of this Form 10-Q, there have been no material changes to the Company’s risk factors setsince forththe in our Annual Report on2025 Form 10-K for fiscal year 2025 as filed with the SEC on February 18, 2026, except as disclosed below.10-K.

Our client base includes major global pharmaceutical companies,companies; many biotechnology companies; agricultural and industrial chemical, life science, veterinary medicine, medical device, diagnostic and consumer product companies; contract research and contract manufacturing organizations; and other commercial entities, as well as leading hospitals, academic institutions, and government agencies around the world.

Our RMS reportable segment includes the products and services offered within Research Models, Research Model Services, and Cell Solutions. Research Models includes the commercial production and sale of small research models, as well as the supply of large research models. Research Model Services includes: Insourcing Solutions (IS), which provides colony management of our clients’ research operations (including recruitment, training, staffing, and management services) within our clients’ facilities as well as our own vivarium space, utilizing our Charles River Accelerator and Development Lab (CRADL™) offerings, Genetically Engineered Models and Services (GEMS), which performs contract breeding and other services associated with genetically engineered models; and Research Animal Diagnostic Services (RADS), which provides health monitoring and diagnostics services related to research models;models. andIn May 2026, we sold the Cell Solutions business, reported in the RMS segment, which providesprovided controlled, consistent, customized primary cells and blood components derived from normal and mobilized peripheral blood and bone marrow as well as cells from disease state donors.

Our DSA segment is comprised of Discovery and Safety Assessment services. We provide regulated and non-regulated DSA services to support the discovery, development, and regulatory-required safety testing of potential new drugs, including in vitro (non-animal) and, in vivo (in research models) and in silico studies, laboratory support services, including bioanalytical and strategic non-clinical consulting and program management to support product development. In May 2026, we sold certain European Discovery Services businesses.

Our Manufacturing reportable segment includes Microbial Solutions, which provides in vitro lot-release testing products, microbial detection products, and species identification services and Biologics Solutions (Biologics), which performs specialized testing of biologics (Biologics Testing Solutions). asIn wellMay as2026, we sold the contract development and manufacturing products and services (CDMO). business, reported in the Manufacturing segment.

Our fiscal year is typically based on 52-weeks,52 weeks, with each quarter composed of 13 weeks ending on the last Saturday on, or closest to, March 31, June 30, September 30, and December 31. A 53rd week in the fourth quarter of the fiscal year is occasionally necessary to align with a December 31 calendar year-end.

We are continuing to see a cautiouscautious, but improving, spending environment from our client base, principally within our DSA segment as the challenging demand environment experienced in the recent prior quarters has persisted. As we continue to navigate these challenges in the current macroeconomic environment, DSA backlog heldincreased consistentslightly atto $2.0 billion as of June 27, 2026 from $1.9 billion as of March 28, 2026 and December 27, 2025, respectively.2025.

In response to recent trends, we continue to implement cost savings initiatives focused on driving greater efficiencies, as well as restructuring actions that have been implemented over the past three years that were focused on workforce right-sizing and site optimization. More recently, efficiency initiatives have targeted incremental savings through process improvements, procurement synergies, and implementation of a global business services model. Collectively, these actions are expected to generate approximately $300 million in cumulative, annualized cost savings by the end of 2026, of which more than $175 million benefitted fiscal year 2025. Workforce right-sizing actions resulted in severance and transition costs while costs related to the consolidation of facilities to optimize our global footprint and drive greater operating efficiency across the company resulted in asset impairments, accelerated depreciation, and other site consolidation charges. We incurred restructuring charges of $31.6$23.1 million and $54.6 million during the three and six months ended MarchJune 28,27, 2026, and $99.8 million and $107.0 million during the fiscal years 2025 and 2024, respectively.

On January 14, 2026, we completed the acquisition of certain assets of K.F. Cambodia Ltd (Cambodian NHP Supplier), a leading supplier of non-human primates (NHPs) located in Cambodia. The preliminary purchase price for the Cambodian NHP Supplier was $507.3 million, consisting of $335.0 million paid at closing and $172.3 million representing the acquisition date fair value of deferred consideration, which is payable upon the satisfaction of certain post-close conditions. As of June 27, 2026, $105.0 million of deferred consideration remains to be paid which is recorded in Accrued liabilities on the unaudited condensed consolidated balance sheets. The acquisition was funded through a combination of available cash and proceeds from our Credit Facility. This business is reported as part of our DSA reportable segment for NHPs vertically integrated into the DSA supply chain and the RMS reportable segment for those NHPs sold to third party customers. For more details, please see Note 2 – Acquisitions and Divestitures in Part I, Item 1.

The CompanyWe routinely evaluatesevaluate the strategic fit and fundamental performance of itsour global businesses, divesting operations that do not meet key business criteria. As part of this ongoing assessment, the Companywe determined that certain capital could be better deployed in other long-term growth opportunities.

On May 6, 2026, we completed the sale ofsold our CDMO and Cell solutionsSolutions businesses (CDMO and Cell Solutions Divestiture) to GI Partners (GI) for futurenet contingentcash performance-based payments uppaid to $50.0the buyer of $12.4 million, net of costs to sell and subject to certain customary closing adjustments. Additionally, we may be required to fund up to $45.0 million of future EBITDA losses and capital expenditures of the divested businesses over a four year period.period, which is expected to be fully used by GI. Conversely, we may also earn up to $50.0 million of contingent payments, which are tied to future performance and achievement of milestones. The contingent payments receivable have been valued at $15.7 million using a discounted probability weighted model. The results of the CDMO and Cell Solutions businesses were reported in our Manufacturing reportable segment and RMS reportable segment, respectively. During the three and six months ended MarchJune 28,27, 2026, we recognizedrecorded a pre-taxloss losson the divestiture of $118.0$63.7 million and $181.7 million, which represents the excess carrying value over the fair value less cost to sell. The loss is recognizedrespectively, within Other (expense) incomeincome, withinnet on the unaudited condensed consolidated statements of income (loss). We will complete our analysis related to the transaction, including determining the final loss on sale, which will be recognized in the second quarter of fiscal year 2026.

Revenue for the three months ended MarchJune 28,27, 2026 increaseddecreased $11.7$28.1 million, or 1.2%,2.7%, to $995.8$1,004.1 million compared to $984.2$1,032.1 million in the corresponding period in 2025,2025. 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 ana increasedecrease in Manufacturing revenue,revenue driven by the sale of our MicrobialCDMO Solutionsbusiness business,and DSA revenue driven by the European Discovery Divestiture, and to a lesser extent DSA revenue; partially offset by a decrease in RMS revenue, due to decreased largecell andsupply smallrevenue, modelcompared productto revenue.the corresponding period in 2025.

For the three months ended MarchJune 28,27, 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 $74.7$174.8 million and 7.6%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 MarchJune 28,27, 2026 were primarily driven by the gain on sale of certain assets at our Wilmington, Massachusetts site,site in the absencefirst quarter of 2026, lower accelerated amortization expense, and certain third-party legal costs incurred in fiscal year 2025,2025; andpartially offset by the increasedecrease in revenue described above; partially offset byand 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 $14.8$1.5 million in the three months ended MarchJune 28,27, 2026, compared to Net income attributable to Charles River Laboratories International Inc,Inc., common shareholders of $25.5$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 $40.3$53.8 million for the three months ended MarchJune 28,27, 2026 was due principally to the loss on assets held for sale related to the CDMO and Cell Solutions Divestiture loss of $118.0$63.7 million,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 threesix months ended MarchJune 28,27, 2026, our cash flows from operations were $41.1$220.8 million compared with $171.7$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.quarter, as well as higher acquisition, integration and divestiture-related payments.

Three Months Ended MarchJune 28,27, 2026 Compared to the Three Months Ended MarchJune 29,28, 2025

RMS revenue decreased $4.7$3.8 million primarily driven by decreasesthe divestiture of the Cell Solutions business, a decrease in largeservice research model product revenue,revenue and small research model product revenue in North America, and to a lesser extent Cell Supply product revenue and GEMS service revenueAmerica; partially offset by increasedincreases revenue forin small research modelsmodel product revenue in ChinaChina, and the effect of changes in foreign currency exchange rates.rates compared to the corresponding period in 2025.

RMS operating income increased $6.2$0.5 million compared to the corresponding period in 2025. RMS operating income as a percentage of revenue for the three months ended MarchJune 28,27, 2026 was 23.9%,17.3%, an increase of 34050 bps from 20.5%16.8% for the corresponding period in 2025. Operating income and operating income as a percentage of revenue increased primarily due to lowera sitedecrease consolidationin chargesamortization andof intangible assets related to the gain on sale of certainthe assetsCell atSolutions our Wilmington, Massachusetts site recognized within Selling, general and administrative expensesbusiness; partially offset bywith ana increasedecrease in asset impairments recognized within Cost of revenue, and the lower revenue described above, specifically due to lower sales volume and an unfavorable geographic mix, compared to the corresponding period in 2025.

ManufacturingDSA revenue increaseddecreased $12.1$11.5 million due primarily due to increasedthe revenuesale inof ourcertain MicrobialEuropean SolutionsDiscovery businessServices drivenbusinesses; partially offset by higher endotoxinrevenue productfor revenueregulated safety assessment services and the effect of changes in foreign currency exchange rates; partiallycompared offsetto bythe decreasedcorresponding demandperiod forin CDMO services.2025.

ManufacturingDSA operating income increased $55.5$1.6 million during the three months ended June 27, 2026 compared to the corresponding period in 2025. ManufacturingDSA operating income as a percentage of revenue for the three months ended MarchJune 28,27, 2026 was 24.6%,20.5%, an increase of 2,94060 bps from (4.8)%19.9% for the corresponding period in 2025. Operating income and operating income as a percentage of revenue increased primarily due to lowerthe decrease in amortization expenseof withinintangible theassets CDMO business principally duerelated to the absenceEuropean 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 acceleratedrevenue; amortizationpartially expenseoffset aswith a result of athe decrease in the remaining useful life of certain client relationships due to a loss of key customers in fiscal year 2025, and due to the increased revenue described above, compared to the corresponding period in 2025.

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 $26.3$35.9 million, or 48.5%,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, increased stock-based compensation expense related to our recently announced transition of executives,and higher professional services fees related to enterprise-wide efficiency initiatives; partially offset by the gain on sale of certain assets at our Wilmington, Massachusetts site.initiatives. Costs as a percentage of revenue for the three months ended MarchJune 28,27, 2026 werewas 8.1%,10.6%, an increase of 260380 bps from 5.5%6.8% for the corresponding period in 2025.

Interest income for the three months ended MarchJune 28,27, 2026 was $1.0 million, a decrease of $0.4$0.1 million, or 26.4%,5.9%, driven primarily from lower interest earning asset balances.

Interest expense for the three months ended MarchJune 28,27, 2026 was $26.7$30.3 million, aan decreaseincrease of $1.1$0.4 million, or 4.1%,1.2%, compared to $27.9$30.0 million in the corresponding period in 2025 primarily due primarilyto tonon-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 MarchJune 28,27, 2026 was $124.1$37.4 million compared to $12.2Other income, net of $0.2 million for the corresponding period in 2025 primarily due principally to the loss on assets held for sale of $118.0$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 of $1.1 million as compared to $10.4 million in 2025.

Income tax benefitexpense for the three months ended MarchJune 28,27, 2026 was $15.1$53.9 million, an increase of $35.2 million compared to income tax expense of $10.1$18.7 million for the corresponding period in 2025. Our effective tax rate was 50.6%101.4% for the three months ended MarchJune 28,27, 2026 compared to 28.1%26.2% for the corresponding period in 2025. The differenceincrease in our effective tax rate in the three months ended MarchJune 28,27, 2026 compared to the corresponding period in 2025 was primarily attributable to the tax effects of the $118.0European millionDiscovery loss on assets held for sale in connection with theand CDMO and Cell Solutions Divestiture,Divestitures, asnon-deductible welltransaction costs, and higher accrued interest relating to acquired uncertain tax positions during the three months ended March 28, 2026.positions.

In generalgeneral, we require cash to fund our working capital needs, capital expansion, acquisitions, debt payments, lease payments, venture capital and strategic equity investments, restructuring initiatives, and pension obligations. Our principal sources of liquidity have been our cash flows from operations supplemented by long-term borrowings. Based on our current business plan, we believe that our existing funds, when combined with cash generated from operations and our access to financing resources, are sufficient to fund our operations for the foreseeable future.

Net cash provided by operating activities represents the cash receipts and disbursements related to all of our activities other than investing and financing activities. Operating cash flow is derived by adjusting our net income for (1) non-cash operating items such as depreciation and amortization, stock-based compensation, goodwill impairment, debt financing costs, deferred income taxes, write downs of inventories, provisions of credit losses, long-lived asset impairment changes, gains and/or losses on venture capital and strategic equity investments, gains and/or losses on divestitures, and changes in fair value of contingent consideration, as well as (2) changes in operating assets and liabilities, which reflect timing differences between the receipt and payment of cash associated with transactions and when they are recognized in our results of operations.

During the threesix months ended MarchJune 28,27, 2026, our cash flows from operations were $41.1$220.8 million compared with $171.7$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.quarter, as well as higher acquisition, integration and divestiture-related payments.

For the threesix months ended MarchJune 28,27, 2026, cash used in investing activities was primarily driven by the acquisition of the Cambodian NHP Supplier and PathoQuest coupled with capital expenditures; partially offset by proceeds from the sale of the European Discovery Services businesses and the sale of certain assets at our Wilmington, Massachusetts site.

For the threesix months ended MarchJune 29,28, 2025, cash used in investing activities was primarily driven by capital expenditures; partially offset by proceeds from divestitures of certain site and business assets.

The following table presents our net cash provided by (used in) financing activities:

For the threesix months ended MarchJune 28,27, 2026, net cash provided by financing activities was primarily driven by the following activity: