Charles River added $66.7 million to inventory, more than half its $119.9 million of operating income for the latest three months. Revenue fell 2.7% from the comparable period, but the operating line improved anyway.
That is the easy part of the filing. Operating income rose 19.7%, and operating margin reached 11.9% from 9.7%. The harder part sits below it: net income swung from a $52.3 million profit to a $1.5 million loss, pushing diluted EPS from $1.06 to negative $0.03.
Management says the business kept more of its revenue because several costs that had weighed on the comparable period receded. The company disclosed that lower legal costs tied to the U.S. government’s investigations into the non-human primate supply chain and lower restructuring activity did much of the work.
"Operating income and operating income as a percentage of revenue increased primarily due to lower third-party legal costs associated with the investigations by the U.S. government into the NHP supply chain, and lower restructuring activities, including asset impairments recognized within Cost of revenue; partially offset with the decrease in revenue described above, compared to the corresponding period in 2025."
Charles River Laboratories, Form 10-Q, Aug. 5, 2026
In plain English, the operating improvement was helped by fewer charges, not by a larger sales base. That distinction matters because revenue was lower, and the company’s latest annual results already showed a 2025 operating margin of 0.6%, versus 16.7% in 2021.
Then came the divestiture bill. Other expense swung to $37.4 million from other income of $0.2 million, primarily because Charles River recognized a $63.7 million loss tied to the CDMO and Cell Solutions divestiture.
"Other expense, net for the three months ended June 27, 2026 was $37.4 million compared to Other income, net of $0.2 million for the corresponding period in 2025 primarily due to the loss of $63.7 million in connection with the CDMO and Cell Solutions Divestiture recognized in the second quarter of 2026; partially offset by a $18.9 million gain in the fair value of life insurance policies in the second quarter of 2026 compared to a $5.4 million gain in 2025 as well as $9.5 million of venture capital and strategic equity investment gains, net of impairments, in the second quarter of 2026 compared to $0.3 million of venture capital and strategic equity investment losses and impairments in 2025."
Charles River Laboratories, Form 10-Q, Aug. 5, 2026
The result is a filing with two different clocks. Operations looked cleaner, while the divestiture pushed the bottom line into the red. The balance sheet adds another unresolved detail: inventory grew 23.9% while revenue declined, and the company does not disclose the reason for that buildup in the supplied filing receipts.
That does not make the inventory a forecast. It does make it a concrete number to carry into Charles River’s next quarterly report, alongside the divestiture-related expense and the operating costs management says have fallen.
The tension is simple: Charles River generated more operating profit from less revenue, but still lost money after the costs below operations arrived.
Source: Charles River Laboratories’ Form 10-Q filed Aug. 5, 2026.