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Transforming Drug Development 2023 Charles River Laboratories | 2023 Annual Report
To Our Shareholders Charles River Laboratories plays a vital role in the biomedical industry to accelerate drug research and therapeutic innovation. As a leading provider of essential drug research and nonclinical development solutions, our integrated portfolio helps pharmaceutical and biotechnology companies, government agencies, and leading academic institutions around the globe discover, develop, test, and safely manufacture new therapies, which enables clients to successfully deliver them to the patients who need them. It is exactly this comprehensive portfolio of highly scientific products and services that distinguishes us from the competition. Because of the depth and breadth of the portfolio, we are a trusted, scientific partner that offers comprehensive, flexible, and efficient outsourcing solutions to support biopharmaceutical companies across the entire early-stage drug development process. We also support biopharmaceutical manufacturers in the critical testing process and the production of advanced therapies. At Charles River, we measure our progress and achievements in a number of ways, not only by our operational and financial results, but also by serving as the strongest partner for our clients, providing an excellent work experience for our people, creating value for our stakeholders, and making a positive impact on society. As I reflect on the past year, I am proud of everything that we have accomplished as we continued to make Charles River a stronger, better company. The stability and resilience of Charles River s business model was very clear in 2023: Our continued success was propelled by our proven growth strategy, as the investments we have made in recent years continued to drive growth, generate returns, and make us a more efficient organization. We made this progress in a year when the effects of macroeconomic challenges and geopolitical conflicts continued to be felt across the global economy and within the healthcare industry. A reduction in biotechnology funding from peak levels in 2021 resulted in a moderation of demand from many of our small and mid-sized biotechnology clients. We also saw many of our global biopharmaceutical clients reprioritize their drug development programs and be more cautious with their early-stage research and development spending, compared to the unprecedented level of biomedical research activity in previous years. In response to the challenging macroeconomic environment, the demand for our products and services continued to increase in 2023, but at a slower pace than in recent years. We believe that the cautious market environment and macroeconomic pressures our industry is experiencing are transitory, representing normalization of demand following the peak pandemic years. The long-term industry fundamentals for drug development remain firmly intact, because the overwhelming need to find life-saving treatments for rare diseases and many other unmet medical needs is unchanged. Biotech companies will lead the way, using advanced modalities and new technologies to drive innovation. Large pharmaceutical companies will continue to adapt to scientific advancements and the regulatory environment to drive greater efficiencies. We expect the industry s long-term growth prospects and continued investments in drug research and development will remain durable, and our biopharmaceutical client base will remain stable and resilient. The marketplace remains complex, but our strategy remains clear: our clients depend upon us to provide cutting-edge scientific expertise, state-of-the art facilities, flexible and efficient outsourcing solutions, and global scale to support them in bringing new drugs and therapies to market faster, better, and more cost effectively. We believe that the fundamental drivers of Charles River s business and our solid financial position will enable us to successfully manage through any near-term fluctuations in the market and overall economy. James C. Foster Chair, President & Chief Executive Officer 01 | Annual Report 2023 For more than 75 years, Charles River has navigated through many macroeconomic cycles while remaining true to our purpose and doing our part to address healthcare s most important unmet
needs. Over that time, we have been committed to making decisions for the long-term and delivering value for all of our stakeholders. As a testament to the importance of our role in the drug development process, Charles River has worked on more than 80% of the drugs that were approved by the U.S. Food and Drug Administration (FDA) over the past five years. Financial Resilience Although demand trends moderated in the broader life sciences sector in 2023 due to the uncertain funding environment and more cautious spending by our biopharmaceutical clients, we delivered solid financial performance. Revenue was $4.13 billion, representing a 3.9% increase over the previous year on a reported basis. Organic revenue increased 6.5%, driven primarily by increased revenue in our Discovery and Safety Assessment (DSA) segment, augmented by healthy revenue growth in the Research Models and Services (RMS) segment. The non-GAAP operating margin was 20.3% in 2023, a moderate decrease from the prior year, reflecting operating margin declines in the Manufacturing Solutions (Manufacturing) and RMS segments as well as inflationary cost pressures. In response, we proactively implemented cost-savings actions to manage costs and drive operating efficiencies, and align our business with the moderating market demand environment. Non-GAAP earnings per share were $10.67 in 2023, a decrease over the prior year due primarily to the lower operating margin and significantly higher income tax and interest expense. Our 2023 performance reflected our ability to appropriately manage the challenges in the marketplace and to flexibly adapt to changing industry trends. We will continue to proactively manage our business through the dynamic market environment to meet the evolving needs of our clients, and we will capitalize on the Charles River has worked on more than 80% of the drugs that were approved by the U.S. Food and Drug Administration (FDA) over the past five years. Annual Report 2023 | 02
Fostering Strategic Partnerships Our partnership strategy allows Charles River to garner new, cuttingedge technologies that collectively advance our portfolio, drive efficiencies, and increase our competitive differentiation. Our investments cover all technology types from life science assays to software products and applications, to medical devices and extend across all geographies. All of our partnerships are a direct result of client input and requests, or market drivers that we have encountered as we work with our clients on candidate drugs under development. Bit.bio Charles River and bit.bio s long-standing partnership applies an engineering approach to synthetic and stem cell biology, developing proprietary technologies for the consistent, efficient and scalable reprogramming of human cells for discovering and developing novel cures. These novel therapies are implemented during the earliest stages of drug discovery and safety assessment, to demonstrate functional effects of potential new drugs, and to ensure they are effective and safe in patients. PathoQuest Through a partnership with PathoQuest, Charles River provides nextgeneration sequencing (NGS) services for viral safety testing, a powerful alternative to animal testing in the detection of viral contaminants in 03 | Annual Report 2023 biologics. PathoQuest s proprietary NGS approach is an effective and more robust replacement for in vivo adventitious virus testing of cell substrates used in the production of biologics, including monoclonal antibodies, vaccines, and cell and gene therapies. Cypre Through our strategic partnership with biotech company Cypre, Charles River expanded our 3D in vitro services for cancer immunotherapy and targeted therapy drug screening. This collaboration provides our clients with access to Cypre s proprietary 3D tumor model platform, Falcon-X , which uses 3D hydrogel patterning technology to advance the understanding of the tumor microenvironment and predict therapeutic efficacy, opening research prospects for a whole new generation of cancer drugs. Deciphex With the advanced digital pathology software and equipment through our partnership with Deciphex, Charles River has increased the speed and efficiency of pathology assessments to rapidly deliver data our clients need to progress their programs. By combining Deciphex s unique digital pathology software with Charles River s streamlined integrated drug discovery and development portfolio, our clients have access to efficient, best-in-class, advanced digital pathology software and equipment.
opportunities that emerge as market demand trends stabilize and eventually improve. As always, we will take a disciplined approach to making investments to promote a more efficient and scalable organization, and at the same time generate revenue growth and operating margin improvement. Over the past five years since 2018, we have achieved compound annual growth of 12.8% for revenue and 13.0% for non-GAAP earnings per share, and generated strong operating cash flow with 9.2% growth. Despite a challenging market environment last year, we have delivered a total shareholder return (TSR) of over 15% compounded annual growth rate over the last five years (through year-end 2023), outperforming both the S&P 500 and S&P 500 Health Care indices. This meaningful value creation was made possible by both our long-term strategic focus and outstanding execution from all three of our business segments. We are confident in our ability to continue to drive profitable revenue growth, supported by the sustained, longterm fundamentals for drug development and our position as an industry leader. Trusted Scientific Partner At Charles River, our strategy is to deliver life-saving treatments to patients faster, with a focus on sustainable growth, driven by innovative technology and responsible animal use. We distinguish our Company by the strength and depth of our portfolio and our commitment to continuous scientific innovation, which ensures our clients have access to emerging technologies that span the entire drug discovery and development paradigm. We will continue to build on our solid foundation, and make investments in our business as needed to successfully execute our strategy. At Charles River, our strategy is to deliver Our strategic imperatives include: life-saving treatments to patients faster, Enhance our scientific expertise with high-impact, leading-edge capabilities, strengthening our unique portfolio including through investing in strategic partnerships and acquisitions; Develop our digital enterprise and leverage our scale to deliver flexible outsourcing solutions and drive operational excellence, maximizing synergies and reducing early-stage development timelines for our clients; and Enhance our commercial efforts through optimizing our salesforce to accelerate revenue growth by adjusting go-to-market strategies, focusing on selling across our entire portfolio, and leveraging technology to enhance sales insights and identify earlier selling opportunities. with a focus on sustainable growth, driven by innovative technology and responsible animal use. Financial Results ($ in millions, except per share data) $3,976 $4,129 $9.48 $3,540 $486 $532 $9.22 $475 $571 $531 $11.12 $549 $10.32 2023 2021 $10.67 $7.60 $391 $365 $330 2021 2022 Revenue 2023 2021 2022 2023 Free Cash Flow* 2021 2022 2023 Net Income 2021 2022 2023 Earnings Per Diluted Share 2021 2022 Non-GAAP Net Income* 2022 2023 Non-GAAP Earnings Per Diluted Share* * In accordance with Regulation G, reconciliations between GAAP and non-GAAP amounts can be found on pages A and B. Annual Report 2023 | 04
 • shareholder letter icon 3/29/2024 Letter Continued (Full PDF)
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CRL Shareholder/Stockholder Letter Transcript:

Transforming Drug Development
2023
Charles River Laboratories | 2023 Annual Report

To Our Shareholders
Charles River Laboratories plays a vital role in the biomedical industry to accelerate drug
research and therapeutic innovation. As a leading provider of essential drug research and nonclinical development solutions, our integrated portfolio helps pharmaceutical and biotechnology
companies, government agencies, and leading academic institutions around the globe discover,
develop, test, and safely manufacture new therapies, which enables clients to successfully deliver
them to the patients who need them.
It is exactly this comprehensive portfolio of highly scientific products and services that
distinguishes us from the competition. Because of the depth and breadth of the portfolio,
we are a trusted, scientific partner that offers comprehensive, flexible, and efficient outsourcing
solutions to support biopharmaceutical companies across the entire early-stage drug development
process. We also support biopharmaceutical manufacturers in the critical testing process and the
production of advanced therapies.
At Charles River, we measure our progress
and achievements in a number of ways,
not only by our operational and financial
results, but also by serving as the strongest
partner for our clients, providing an excellent
work experience for our people, creating
value for our stakeholders, and making a
positive impact on society.
As I reflect on the past year, I am proud of everything that we have accomplished as we continued
to make Charles River a stronger, better company. The stability and resilience of Charles River   s
business model was very clear in 2023: Our continued success was propelled by our proven
growth strategy, as the investments we have made in recent years continued to drive growth,
generate returns, and make us a more efficient organization. We made this progress in a year when
the effects of macroeconomic challenges and geopolitical conflicts continued to be felt across
the global economy and within the healthcare industry. A reduction in biotechnology funding from
peak levels in 2021 resulted in a moderation of demand from many of our small and mid-sized
biotechnology clients. We also saw many of our global biopharmaceutical clients reprioritize
their drug development programs and be more cautious with their early-stage research and
development spending, compared to the unprecedented level of biomedical research activity in
previous years. In response to the challenging macroeconomic environment, the demand for our
products and services continued to increase in 2023, but at a slower pace than in recent years.
We believe that the cautious market environment and macroeconomic pressures our industry is
experiencing are transitory, representing normalization of demand following the peak pandemic
years. The long-term industry fundamentals for drug development remain firmly intact, because
the overwhelming need to find life-saving treatments for rare diseases and many other unmet
medical needs is unchanged. Biotech companies will lead the way, using advanced modalities
and new technologies to drive innovation. Large pharmaceutical companies will continue to
adapt to scientific advancements and the regulatory environment to drive greater efficiencies.
We expect the industry   s long-term growth prospects and continued investments in drug research
and development will remain durable, and our biopharmaceutical client base will remain stable
and resilient.
The marketplace remains complex, but our strategy remains clear: our clients depend upon
us to provide cutting-edge scientific expertise, state-of-the art facilities, flexible and efficient
outsourcing solutions, and global scale to support them in bringing new drugs and therapies to
market faster, better, and more cost effectively. We believe that the fundamental drivers of Charles
River   s business and our solid financial position will enable us to successfully manage through
any near-term fluctuations in the market and overall economy.
James C. Foster
Chair, President &
Chief Executive Officer
01 | Annual Report 2023
For more than 75 years, Charles River has navigated through many macroeconomic cycles while
remaining true to our purpose and doing our part to address healthcare   s most important unmet

needs. Over that time, we have been committed
to making decisions for the long-term and
delivering value for all of our stakeholders. As
a testament to the importance of our role in
the drug development process, Charles River
has worked on more than 80% of the drugs
that were approved by the U.S. Food and Drug
Administration (FDA) over the past five years.
Financial Resilience
Although demand trends moderated in the
broader life sciences sector in 2023 due to the
uncertain funding environment and more cautious
spending by our biopharmaceutical clients, we
delivered solid financial performance. Revenue
was $4.13 billion, representing a 3.9% increase
over the previous year on a reported basis.
Organic revenue increased 6.5%, driven primarily
by increased revenue in our Discovery and Safety
Assessment (DSA) segment, augmented by
healthy revenue growth in the Research Models
and Services (RMS) segment.
The non-GAAP operating margin was 20.3%
in 2023, a moderate decrease from the prior
year, reflecting operating margin declines in
the Manufacturing Solutions (Manufacturing)
and RMS segments as well as inflationary
cost pressures. In response, we proactively
implemented cost-savings actions to manage
costs and drive operating efficiencies, and align
our business with the moderating market demand
environment. Non-GAAP earnings per share
were $10.67 in 2023, a decrease over the prior
year due primarily to the lower operating margin
and significantly higher income tax and interest
expense. Our 2023 performance reflected our
ability to appropriately manage the challenges in
the marketplace and to flexibly adapt to changing
industry trends.
We will continue to proactively manage
our business through the dynamic market
environment to meet the evolving needs
of our clients, and we will capitalize on the
Charles River has worked on more than 80%
of the drugs that were approved by the U.S.
Food and Drug Administration (FDA) over
the past five years.
Annual Report 2023 | 02

Fostering Strategic Partnerships
Our partnership strategy allows Charles River to garner new, cuttingedge technologies that collectively advance our portfolio, drive
efficiencies, and increase our competitive differentiation. Our investments
cover all technology types     from life science assays to software
products and applications, to medical devices     and extend across all
geographies. All of our partnerships are a direct result of client input and
requests, or market drivers that we have encountered as we work with
our clients on candidate drugs under development.
Bit.bio
Charles River and bit.bio   s long-standing partnership applies an
engineering approach to synthetic and stem cell biology, developing
proprietary technologies for the consistent, efficient and scalable
reprogramming of human cells for discovering and developing novel
cures. These novel therapies are implemented during the earliest stages
of drug discovery and safety assessment, to demonstrate functional
effects of potential new drugs, and to ensure they are effective and safe
in patients.
PathoQuest
Through a partnership with PathoQuest, Charles River provides nextgeneration sequencing (NGS) services for viral safety testing, a powerful
alternative to animal testing in the detection of viral contaminants in
03 | Annual Report 2023
biologics. PathoQuest   s proprietary NGS approach is an effective and
more robust replacement for in vivo adventitious virus testing of cell
substrates used in the production of biologics, including monoclonal
antibodies, vaccines, and cell and gene therapies.
Cypre
Through our strategic partnership with biotech company Cypre, Charles
River expanded our 3D in vitro services for cancer immunotherapy
and targeted therapy drug screening. This collaboration provides our
clients with access to Cypre   s proprietary 3D tumor model platform,
Falcon-X   , which uses 3D hydrogel patterning technology to advance
the understanding of the tumor microenvironment and predict therapeutic
efficacy, opening research prospects for a whole new generation of
cancer drugs.
Deciphex
With the advanced digital pathology software and equipment through our
partnership with Deciphex, Charles River has increased the speed and
efficiency of pathology assessments to rapidly deliver data our clients
need to progress their programs. By combining Deciphex   s unique digital
pathology software with Charles River   s streamlined integrated drug
discovery and development portfolio, our clients have access to efficient,
best-in-class, advanced digital pathology software and equipment.

opportunities that emerge as market demand trends stabilize and eventually improve. As always, we will
take a disciplined approach to making investments to promote a more efficient and scalable organization,
and at the same time generate revenue growth and operating margin improvement. Over the past five
years since 2018, we have achieved compound annual growth of 12.8% for revenue and 13.0% for
non-GAAP earnings per share, and generated strong operating cash flow with 9.2% growth. Despite a
challenging market environment last year, we have delivered a total shareholder return (TSR) of over 15%
compounded annual growth rate over the last five years (through year-end 2023), outperforming both the
S&P 500 and S&P 500 Health Care indices. This meaningful value creation was made possible by both
our long-term strategic focus and outstanding execution from all three of our business segments. We are
confident in our ability to continue to drive profitable revenue growth, supported by the sustained, longterm fundamentals for drug development and our position as an industry leader.
Trusted Scientific Partner
At Charles River, our strategy is to deliver life-saving treatments to patients faster, with a focus on
sustainable growth, driven by innovative technology and responsible animal use. We distinguish our
Company by the strength and depth of our portfolio and our commitment to continuous scientific
innovation, which ensures our clients have access to emerging technologies that span the entire drug
discovery and development paradigm. We will continue to build on our solid foundation, and make
investments in our business as needed to successfully execute our strategy.
At Charles River, our strategy is to deliver
Our strategic imperatives include:
life-saving treatments to patients faster,
    Enhance our scientific expertise with high-impact, leading-edge capabilities, strengthening our unique
portfolio including through investing in strategic partnerships and acquisitions;
    Develop our digital enterprise and leverage our scale to deliver flexible outsourcing solutions and drive
operational excellence, maximizing synergies and reducing early-stage development timelines for our
clients; and
    Enhance our commercial efforts through optimizing our salesforce to accelerate revenue growth by
adjusting go-to-market strategies, focusing on selling across our entire portfolio, and leveraging
technology to enhance sales insights and identify earlier selling opportunities.
with a focus on sustainable growth, driven
by innovative technology and responsible
animal use.
Financial Results ($ in millions, except per share data)
$3,976
$4,129
$9.48
$3,540
$486
$532
$9.22
$475
$571
$531
$11.12
$549
$10.32
2023
2021
$10.67
$7.60
$391
$365
$330
2021
2022
Revenue
2023
2021
2022
2023
Free Cash Flow*
2021
2022
2023
Net Income
2021
2022
2023
Earnings Per
Diluted Share
2021
2022
Non-GAAP Net Income*
2022
2023
Non-GAAP Earnings
Per Diluted Share*
* In accordance with Regulation G, reconciliations between GAAP and non-GAAP amounts can be found on pages A and B.
Annual Report 2023 | 04



shareholder letter icon 3/29/2024 Letter Continued (Full PDF)
 

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