Charles River Prepares to Report Q2 Earnings: What's in Store?

Q2 Estimates for CRL

The Zacks Consensus Estimate for the company’s second-quarter revenues is pegged at $970.8 million, suggesting a 5.9% decline from the year-ago reported figure.

The Zacks Consensus Estimate for EPS projects a decrease of 12.8% year over year to $2.72. The estimate has dropped 1.1% in the past 30 days.

Let’s briefly review the company’s performance leading up to the announcement.

Trends Likely to Shape CRL’s Q2 Results

Research Models and Services (“RMS”)

In the second quarter of 2026, the segment likely faced pressure from lower sales of small models and research model services. The first-quarter headwind from the timing of NHP shipments, affecting large model revenues, is expected to have eased, consistent with management’s expectations. Meanwhile, lower volumes in North America may have continued to weigh on small model revenues, as in-house research activity among large pharma and midsized biotech clients is yet to fully recover. 

In addition, subdued demand from early-stage biotech clients likely kept occupancy levels at Charles River Accelerator and Development Lab (CRADL) constrained, weighing on RMS revenue growth.

On the positive side, demand for small models in China from mid-tier biotech and CRO clients likely remained solid. During the quarter, Charles River launched an enhanced In Vitro Fertility (IVF) service bundle to accelerate rat-model programs across therapeutic areas, including oncology, neurology, cardiology, and metabolic. The offering provides researchers with a new avenue to advance drug development research and help bring treatments to patients faster.

Our model estimates that Charles River’s RMS business revenues will decrease 5.5% in the second quarter of 2026.

Discovery and Safety Assessment (“DSA”)

For the past several quarters, Charles River has been navigating a challenging demand environment within this segment. Discovery Services revenues are likely to have declined in the second quarter, partly as a result of site consolidation activities.

Earlier this year, the company signed a definitive agreement to divest certain European assets within this business to IQVIA Holdings Inc. for roughly $145 million in cash, subject to customary closing adjustments.  The transaction was expected to close during the second quarter of 2026.

Meanwhile, Safety Assessment services likely continued to generate stable revenues. The acquisition of K.F. Cambodia’s assets earlier this year, now Charles River Cambodia, is expected to have strengthened and secured the company’s NHP supply chain for its Safety Assessment operations.

Management also indicated that the overall DSA demand environment was tracking in line with its expectations, as reflected in a net book-to-bill of 1.04x and a slight sequential increase in backlog at the end of the first quarter. Net bookings remained above the $600 million threshold, supported by continued strength from the small and mid-sized biotech client base.

Demand trends for global biopharmaceutical clients remained moderately below year-over-year levels, while healthy proposal activity in the first quarter signaled continued improvement in bookings momentum. All these trends are expected to have influenced the second-quarter performance as well.

Per our model estimate, Charles River’s DSA business revenues are expected to decline 5.5% year over year.

Manufacturing Solutions

Within this, the Microbial Solutions business likely delivered another solid performance, aided by the Endosafe and Celsis manufacturing quality control testing platforms. Underlying demand for both Microbial Solutions and Biologics Testing may have remained healthy, with clients continuing to advance their late-stage development and commercial programs.

Further, the segment’s profitability is also expected to have benefited from higher revenues and benefits from ongoing cost-saving efforts.

A key development occurred in May 2026, when the company completed the sale of its contract development and manufacturing products and services (“CDMO”) and Cell Solutions businesses to GI Partners (GI) for future contingent performance-based payments up to $50.0 million, subject to certain customary closing adjustments. The completed divestiture is expected to have reduced Manufacturing Solutions revenues in the second quarter.

Our model estimates segment revenues to decrease 8.2% year over year.

Earnings Whispers for CRL Stock

Per our proven model, stocks with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), along with a positive Earnings ESP, have a higher chance of beating estimates, which is the case here:

Earnings ESP: Charles River has an Earnings ESP of +1.43%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Charles River currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks Rank #1 stocks here.

Other Key MedTech Picks

Here are some medical stocks worth considering, as these also have the right combination of elements to post an earnings beat this time:

CVS Health CVS has an Earnings ESP of +1.42% and a Zacks Rank #2. The company is slated to release second-quarter 2026 results on Aug. 5.

CVS’ earnings surpassed estimates in each of the trailing four quarters, the average surprise being 16.79%. The Zacks Consensus Estimate for the company’s second-quarter EPS indicates an increase of 3.3% from the year-ago quarter’s figure.

Cardinal Health CAH has an Earnings ESP of +1.24% and a Zacks Rank #2. The company is slated to release fourth-quarter fiscal 2026 results on Aug. 11.

CAH’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 10.27%. The Zacks Consensus Estimate for the company’s fourth-quarter EPS calls for a rise of 16.4% from the year-ago quarter’s figure.

Cencora, Inc. COR has an Earnings ESP of +1.49% and a Zacks Rank #2. The company is slated to release third-quarter fiscal 2026 results on Aug. 5.

COR’s earnings beat estimates in three of the trailing four quarters and missed on one occasion, the average surprise being 1.59%. The Zacks Consensus Estimate for the company’s third-quarter EPS implies an increase of 9.3% from the year-ago quarter’s figure.

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This article originally published on Zacks Investment Research (zacks.com).

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