Charles River reports lower Q4 2025 revenue in struggling CDMO business

Charles River Laboratories on Wednesday reported fourth-quarter 2025 revenue of $994.2 million, a 2.6% decline on an organic basis compared to the same period in 2024, beating the consensus forecast of $987.2 million.

“Fourth-quarter results included slightly better-than-expected revenue driven by outperformance in discovery and safety assessment (DSA) and research models and services (RMS), which more than offset modestly lower-than-expected revenue in manufacturing solutions,” William Blair analysts wrote in a note to investors.

Organic revenue for Charles River’s manufacturing solutions segment decreased 2.1% in Q4 of 2025, driven by weakness in its contract development and manufacturing organization (CDMO) business. For the full year 2025, Charles River reported the manufacturing segment’s revenue declined 1.6% on an organic basis.

CEO James Foster in an earnings call with analysts on Wednesday said the lower Q4 and full-year growth rates for the manufacturing segment “were primarily driven by lower CDMO revenue, principally the result of the loss of one commercial cell therapy client whose revenue declined by nearly $25 million in 2025.”

Looking ahead, Charles River expects its 2026 organic revenue to range from a decrease of 1% to at least flat. In the manufacturing segment, the company said this year’s revenue will increase organically by a low single digit due in part to the continuation of “solid demand trends” in its microbial solutions business. However, in the first quarter of 2026, Charles River’s struggling CDMO business will have an “approximately $10 million impact” on Q1 manufacturing segment revenue. 

Still, following a challenging few years, William Blair analysts contend that the “pieces are in place” for Charles River to “meaningfully outperform in 2026” as an improving biotechnology funding environment and the removal of key pharma sector “overhangs” result in a “more immediate and pronounced recovery in preclinical spend” this year.

Foster told analysts Charles River is “cautiously optimistic” that positive demand trends will continue in 2026.

CDMO business continues to struggle

Earlier this month, Charles River Laboratories said it is closing a cell therapy CDMO site in Hanover, Maryland. In 2021, the company purchased the Hanover facility as part of its $875 million acquisition of Cognate BioServices, along with gene therapy CDMO providers Cobra Biologics and Vigene Biosciences.

The Hanover plant closure comes as Charles River continues to adapt its cell and gene therapy CDMO strategy amid a shifting market landscape. 

At the J.P. Morgan Healthcare Conference in January 2025, Foster disclosed that a major cell therapy client had terminated its commercial agreement with the company. In the company’s earnings call in February 2025, he said Charles River expected lower revenue from two commercial CDMO clients would reduce consolidated revenue by approximately 1% in 2025 and the manufacturing segment’s growth rate by more than 5%.

Last month, Foster gave a presentation at the 2026 J.P. Morgan Healthcare Conference and described Charles River’s cell and gene therapy CDMO as the “new piece” of the company’s manufacturing solutions business. He noted that Charles River in 2025 conducted a “deep” strategic review of the company’s entire portfolio with the decision to divest some “non-performing” businesses.

“Those are businesses that we obviously liked,” Foster said. “We thought they had great promise. I think you have to step up to those things when that doesn’t work out. These businesses are a big-time headwind to our operating margins.” 

In Wednesday’s earnings call, Foster said Charles River continues to make progress in its planned divestitures, which represent approximately 7% of 2025 annual revenue. Negotiations with potential buyers of these businesses are ongoing, with the divestitures expected to be completed by the middle of 2026.

Foster, who has served as CEO of Charles River for more than 30 years, is slated to retire in May.