Charles River Laboratories
Charles River revealed that it will sell its phase 2-4 clinical trial services business to Kendle
The research model segment continued to be the major drag on Charles River's performance. Revenue in that business grew a scant 1%, while operating earnings declined 4.4% to $40.5 million. Meanwhile, the preclinical area, which has been the growth engine in recent quarters, turned in respectable top-line growth of 7.4%. However, operating earnings here were also down on stock-compensation expense, the closure of a facility, and study delays and the cost structure at the Montreal facility.
Charles River announced it will implement a variety of measures to bump up operating efficiency. Even though the firm asserts that demand for preclinical services remains strong, the restructuring plans call for a staff cut at its Montreal preclinical facility. This is an unsettling sign, since the company opened new space at the site just last year.
Demand for outsourcing services remains solid, which is clear from the performance of other companies in the segment like Covance
For more on Charles River:
Fool contributor Brian Gorman is a freelance writer in Chicago. He does not own shares of any companies mentioned in this article.