Charles River Laboratories generates $824 million in first quarter

According to recently published financial results, Charles River Laboratories’ first quarter (Q1) revenue was $824.6 million, an increase of 16.6 percent from $707.1 million reported in the first quarter of 2020.

The company stated that acquisitions contributed 0.7 percent to consolidated Q1 revenue growth and that foreign currency translation benefited the reported growth by 2.9 percent. Excluding these, the organic revenue growth of 13.0 percent was driven by contributions from all three business segments: Research Models and Services (RMS), Discovery and Safety Assessment (DSA) and Manufacturing. The year-on-year comparison to 2020’s COVID-19-related revenue impact contributed approximately 140 basis points to the reported and organic revenue growth rates in the Q1, principally in the RMS segment.

On a Generally Accepted Accounting Principles (GAAP) basis, Q1 net income attributable to common shareholders was $61.5 million, an increase of 21.2 percent from the net income of $50.8 million for the same period in 2020. Q1 diluted earnings per share were $1.20, an increase of 17.6 percent from $1.02 for Q1 2020. The increases in the GAAP net income and earnings per share were driven primarily by higher revenue and operating margin improvement, partially offset by debt extinguishment costs and the write-off of deferred financing costs related to debt refinancing activities in the first quarter of 2021.

On a non-GAAP basis, net income from continuing operations was $129.2 million for Q1 2021, an increase of 40.7 percent from $91.8 million for the same period in 2020. First‑quarter diluted earnings per share on a non-GAAP basis were $2.53, an increase of 37.5 percent from $1.84 per share for Q1 2020. The non-GAAP net income and earnings per share increases were driven primarily by higher revenue and operating margin improvement.

James Foster, Chairman, President and Chief Executive Officer, commented: “Our first-quarter performance demonstrates the power of our unique, non-clinical portfolio and the strength of the biopharmaceutical market environment. A global focus on scientific innovation is driving record levels of investment in the biopharmaceutical industry, which is generating biomedical breakthroughs across multiple therapeutic areas at a rapid pace. We believe these factors are resulting in unprecedented client demand across most of our businesses.”

“To maintain and enhance our position as the leading, non-clinical contract research organisation (CRO), we are strategically expanding our portfolio and enhancing our scientific capabilities, especially in the use of more complex research techniques and advanced drug modalities such as cell and gene therapies. These investments are enabling us to offer greater value to our clients and capitalise on the significant growth opportunities,” Mr. Foster concluded.

Results by segment

RMS

Revenue was $176.9 million for the RMS segment in Q1 2021, an increase of 21.2 percent from $146.0 million in Q1 2020. The impact of foreign currency translation contributed 4.2 percent and acquisitions, principally Cellero which was completed in August 2020, contributed 2.2 percent to Q1 RMS revenue. Organic revenue growth of 14.8 percent was driven by robust demand for research models in China, as well as higher revenue for research models services, particularly Genetically Engineered Models and Services (GEMS).

In Q1 2021, the RMS segment’s GAAP operating margin increased to 25.4 percent from 18.7 percent in Q1 2020. On a non-GAAP basis, the operating margin increased to 28.7 percent from 23.0 percent in Q1 2020. The GAAP and non-GAAP operating margin increases were driven primarily by higher sales volumes for research models.

DSA

Revenue for the DSA segment was $501.2 million in Q1 2021, an increase of 14.2 percent from $438.7 million in Q1 2020. The impact of foreign currency translation contributed 2.3 percent to DSA revenue growth and the organic revenue growth of 11.6 percent was primarily driven by robust demand from global biopharmaceutical and biotechnology clients in both the Discovery Services and Safety Assessment businesses.

In Q1 2021, the DSA segment’s GAAP operating margin increased to 18.1 percent from 16.5 percent in Q1 2020. On a non-GAAP basis, the operating margin increased to 23.8 percent from 22.0 percent in Q1 2020. The GAAP and non-GAAP operating margin increases were driven primarily by higher revenue in both the Discovery Services and Safety Assessment businesses.

Manufacturing

Revenue for the manufacturing segment was $146.5 million in Q1 2021, an increase of 19.7 percent from $122.4 million in Q1 2020. The impact of foreign currency translation contributed 4.1 percent. Organic revenue growth of 15.6 percent was driven by strong demand in the Biologics Testing Solutions (Biologics) and Microbial Solutions businesses.

In Q1 2021, the Manufacturing segment’s GAAP operating margin increased slightly to 33.8 percent from 33.6 percent Q1 2020. On a non-GAAP basis, the operating margin decreased slightly to 35.5 percent from 35.6 percent in Q1 2020.