Charles River Labs reshapes board, plans strategic review

WILMINGTON, Mass. - Charles River Laboratories International, Inc. (NYSE: CRL), a $5.67 billion market cap company currently trading significantly below its InvestingPro Fair Value, has announced a significant reshuffle of its Board of Directors and a strategic review of its business aimed at enhancing shareholder value. The announcement comes as the company’s stock has experienced a challenging period, declining by 45% over the past six months. The company will see four new directors join the board after four current members decided not to seek re-election at the upcoming Annual Meeting of Shareholders on May 20, 2025.

The new directors, Steven Barg, Abe Ceesay, Mark Enyedy, and Paul Graves, will take their positions following the meeting, bringing the board’s total to eleven, with nine being independent. The board changes also include new committee appointments: Martin Mackay, Ph.D., as Lead Independent Director; Nancy Andrews, M.D., Ph.D., as Chair of the Corporate Governance and Nominating Committee; Reshema Kemps-Polanco as Chair of the Compensation Committee; and Virginia Wilson continuing as Chair of the Audit Committee. Additionally, a New Approach Methodologies and Science Committee (NAMS) will be established, chaired by Craig Thompson, M.D.

The Strategic Planning and Capital Allocation Committee, joined by Barg, Enyedy, and Graves, will conduct a comprehensive review of the company’s business and prospects, with Graves serving as Chair. This review will explore various options to enhance long-term stockholder value, with recommendations to be presented to the full board upon completion. According to InvestingPro data, the company maintains a healthy financial position with a good overall health score and strong gross profit margin of 34.76%. For deeper insights into Charles River’s financial health and growth potential, investors can access the comprehensive Pro Research Report, one of 1,400+ detailed company analyses available on InvestingPro.

Charles River also entered into a Cooperation Agreement with Elliott Investment Management L.P., the company’s largest investor. Elliott has agreed to customary standstill, voting, confidentiality, and other provisions. Elliott Partner Marc Steinberg expressed confidence in the company’s potential and the steps being taken to realize it.

James C. Foster, Chair, President, and CEO of Charles River Laboratories, emphasized the company’s commitment to growth and efficiency, noting the valuable experience and perspectives the new board members will contribute. He also expressed gratitude to the outgoing directors for their significant contributions to the company’s development.

The Cooperation Agreement with Elliott will be filed with the Securities and Exchange Commission in a Current Report on Form 8-K. Gordon Dyal & Co. Advisory Group LP and Davis Polk & Wardwell LLP are serving as financial and legal advisors, respectively, to Charles River.

The information in this article is based on a press release statement from Charles River Laboratories International, Inc. InvestingPro subscribers have access to additional insights, including 11 key ProTips about the company’s performance, comprehensive financial metrics, and expert analysis to better understand the potential impact of these corporate changes.

In other recent news, Charles River Laboratories reported its fourth-quarter 2024 earnings, surpassing analysts’ expectations with an earnings per share of $2.66 compared to the forecasted $2.54, and revenue of $1 billion, slightly above the anticipated $985.18 million. This positive performance was noted despite a full-year revenue decline of 11% and a drop in EBITDA by 23.6%. The U.S. Food and Drug Administration (FDA) announced a significant policy shift away from animal testing, which could impact companies like Charles River Labs that provide preclinical laboratory services. This decision aims to replace animal testing with more human-relevant methods, potentially affecting the traditional business model of such companies.

Goldman Sachs downgraded Charles River Labs from a Buy to Neutral rating, reducing the price target to $170 from $190, reflecting concerns about the company’s Contract Development and Manufacturing Organization business and current valuation. Jefferies maintained a Hold rating on Charles River Labs with a price target of $169, citing industry challenges such as increased pricing pressure and budgetary risks from the National Institutes of Health. These developments reflect a cautious outlook on the company’s stock amidst evolving industry dynamics. The FDA’s new approach and analyst evaluations highlight the challenges and opportunities facing Charles River Labs in adapting to regulatory changes and market conditions.

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