Charles River Laboratories (CRL) Jefferies 2024 Global Healthcare Conference summary

2024 outlook and financial guidance

• Full-year guidance remains consistent with February projections, despite a slower Q1 start due to timing of NHP shipments and other transient factors.

• Historically, about 52% of annual revenue is generated in the second half, a trend expected to continue in 2024, assuming modest demand improvement.

• Robust funding across PIPEs, VC, and IPOs in Q1 is seen as a leading indicator for future bookings and revenue.

• Second half growth is expected due to easier year-over-year comparisons and improving demand signals.

Margin expansion and cost management

• Margin leverage is expected in the second half, with 54% of annual margin typically realized then.

• Workforce restructuring actions, annualizing to $70 million in savings, will be fully implemented by Q3, supporting margin expansion.

• Additional margin benefits are anticipated from seasonality in the Noveprim acquisition and operational optimizations.

• Margin improvement is primarily volume-driven, with cost reductions and stable staffing levels enabling scalability.

RMS segment growth drivers

• RMS growth has accelerated from low to upper single digits, driven mainly by expansion in CRADL and differentiated services, not cell supply.

• CRADL (vivarium as a service) is seeing strong adoption from both biotech and large pharma, with anchor clients in major hubs.

• Regional optimization is ongoing, especially in South San Francisco, while new CRADL facilities are opening in robust markets like Boston and San Diego.

• Small animal model sales remain strong, with growth led by price increases and healthy demand in China and academia.