Charles River Labs: Back in black

February 8, 2010 by MassDevice staff

Wilmington, Mass.-based CRO Charles River Laboratories International Inc. recovers from a rough year, but sales are still sluggish.

Less than a month after it announcing layoffs for 300 workers in Massachusetts, Charles River Laboratories International Inc. (NYSE:CRL) swung to a profit during 2009.

But it's unlikely that anyone at the Wilmington, Mass.-based contract research organization, which announced in January that it will suspend operations at its preclinical services unit in Shrewsbury, was celebrating the return to black ink.

In the fourth quarter of 2008, the company took a massive, non-cash goodwill impairment charge of $700 million, which led it to report a a $525 million loss for the year. Absent the write-down, the 2009 results looked rosier, but only on the surface.

During the three months ended Dec. 26, 2009, Charles River Labs reported a $17.5 million profit on $295 million in sales, compared to a $663 million loss on $311 million in sales during Q4 2008. Excluding the massive write-off, CRL actually saw its net income shrink by about 20 percent; sales were off 5 percent.

For the full year, CRL reported a 10 percent drop-off in revenues, posting $114 million in profits on $1.2 billion in sales, compared to a net loss of $525 million on $1.3 billion in sales for 2008.

As expected, sales for the company's preclinical services unit were a drag on performance, dropping by 19 percent during the quarter and 20 percent overall during 2009.

The preclinical unit provides the services required to take a drug through the development process, including discovery support, toxicology, pathology and Phase I clinical trials. The unit makes up about half of the company's total sales.

The company blamed slumping sales in the unit for the layoffs in January. Earlier this year, CRL began cutting jobs in its preclinical unit, as part of broader cost-cutting efforts, and laid off additional employees in October.