By Mackenzie Tatananni

Shares of Charles River Laboratories surged Tuesday after the struggling biotech added several new directors to its board and said it would reevaluate its business with the help of its largest investor.

Charles River stock climbed 15% to $134.59, on track for the largest same-day percent increase since Jan. 10, 2012, according to Dow Jones Market Data. The benchmark S&P 500 was flat.

The monumental gains came on the heels of Charles River's latest earnings report. Adjusted earnings of $2.34 a share topped the $2.07 a share analysts had anticipated, according to FactSet. While revenue declined 2.7% from the previous year to $984.2 million, it still came in above the $941.9 million Wall Street had forecast.

The company also boosted its full-year outlook, guiding for adjusted earnings in the range of $9.30 to $9.80 a share. This compares to an earlier range of $9.10 to $9.60 a share.

Charles River isn't a traditional pharmaceutical company. The so-called contact research organization assists clients with drug discovery and provides basic research services to government institutions including the National Institutes of Health.

The latest drop in revenue should come as no surprise to investors: Total revenue has fallen steadily over the past few quarters. In the latest report, Charles River noted that revenue was down year-over-year across all three of its business segments.

The manufacturing solutions division reported the largest dip in revenue, at 3.6%. On its heels was the research models and services segment, which posted a 3.5% decline. Charles River attributed the change to lower revenue in its cell solutions business as well as the timing of shipments of animal test subjects in China.

The company noted in a January filing with the U.S. Securities and Exchange Commission that it expected 2025 revenue to "decline organically" similar to the prior year.

Now, Charles River appears to be taking steps to turn the business around. The company said Wednesday that it had entered into an agreement with Elliott Investment Management to conduct a "strategic review" of its operations.

"Charles River has a long track record of taking actions to navigate dynamic market conditions and position the company for growth," CEO James Foster said. "The initiatives announced today are a continuation of this effort for the benefit of all our stakeholders."

The company also approved the addition of four new members to its board, a development that was lauded by Elliott partner Marc Steinberg.

"We believe that the company's current value is significantly disconnected from its underlying potential, and as Charles River's largest investor, we see a substantial opportunity to unlock that value, " Steinberg said in a statement.

The news appeared to deliver a boost to the shares. Despite Tuesday's gains, the stock remains down 28% in 2025 and is down 71% from its all-time closing high of $458.30, which it reached in September 2021.

Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com

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May 07, 2025 12:17 ET (16:17 GMT)

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