CRL

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How CRL rewrote its risk factors

10-K ITEM 1A · FY2024 → FY2025

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Consequently, you should not consider the following to be a complete discussion of all potential risks or uncertainties and the risks described below should be carefully considered together with the other information set forth in this report and in future documents we file with the SEC.
Business and Operational Risks • We bear financial risk for contracts that may be terminated or reduced in scope, underpriced, subject to cost overruns or delays. • Upgrading and integrating our business systems could result in implementation issues and business disruptions. • We have in the past experienced and in the future could experience unauthorized access into our information systems. • Uncertainties with respect to the development, deployment, and use of artificial intelligence present new risks and challenges and could adversely affect our business and reputation. • If we are not successful in executing our business strategy, including our failure in selecting and integrating the businesses and technologies we acquire, or in managing our current and future site closures and divestitures, our business may be adversely impacted. • If we are not successful in realizing cost savings from our restructuring initiatives, our business may be adversely impacted. • Our business is subject to risks relating to operating internationally, including changes in foreign currency exchange rates. • Our operations might be affected by the occurrence of a natural disaster or other catastrophic event. • Negative attention from special interest groups may impair our business. • Our review of potential strategic alternatives may not result in an executed or consummated transaction or other strategic alternative, and the process of reviewing strategic alternatives or the outcome could adversely affect our business.
CHARLES RIVER LABORATORIES INTERNATIONAL, INC. • Failure to comply with applicable data privacy and security laws in various jurisdictions could subject us to denial of the right to conduct business, fines, criminal penalties and/or other enforcement actions that could have a material adverse effect on our business. • Failure to comply with U.S., state, local or international environmental, health, safety and sustainability laws and regulations could result in fines and penalties and loss of licensure and have a material adverse effect upon the Company’s business. • Changes in U.S. and International Tax Law, results of tax audits, or material changes in our stock price could have a material adverse impact on our effective tax rate and financial results. • Non-clinical and clinical contract research services create a risk of liability. • The failure to successfully obtain, maintain and enforce intellectual property rights and defend against assertions of third parties to intellectual property rights could adversely affect us. • Our by-laws designate the state courts located in the State of Delaware as the sole and exclusive forum for certain actions, which could limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable and may discourage lawsuits with respect to certain claims. • We are involved in legal proceedings that could adversely affect our business, financial condition, and results of operations. • Significant developments or changes in national laws or policies to protect or promote domestic interests and/or address foreign competition can have an adverse effect on our business and financial statements.
If a counterparty CHARLES RIVER LABORATORIES INTERNATIONAL, INC. terminates a contract with us, we are typically entitled under the terms of the contract to receive revenue earned to date as well as certain other costs and, in some cases, termination fees; however, in many cases we are not entitled to any termination fees in the event of a termination.
As with all work conducted in our regulated sites, these too are subject to government inspections.
As of the date of this filing, to our knowledge, we have not experienced a material information security breach or material cybersecurity incident since an event in 2019.
We are at risk of being targeted, and we have in the past been victim to, business email compromise fraud, which results in payments being made to illegitimate bank accounts.
We leverage software and hardware solutions from technology and services providers, including software-as-a-service and public cloud infrastructure, who have been subject to cybersecurity incidents in the past and may have incidents or breaches in the future.
As of the date of this filing, to our knowledge, no prior cybersecurity incident or breach at a third party has had a material impact on our business.
However, future incidents or breaches could cause us to suffer significant harm.
Uncertainties with respect to the development, deployment, and use of artificial intelligence present new risks and challenges and could adversely affect our business and reputation.
We, along with many businesses in the biopharmaceutical industry, are adopting and exploring the use of artificial intelligence (AI) in our business, and as an emerging and rapidly evolving technology, our use of AI introduces potential opportunities but also presents risks that could adversely affect our operations, information security and reputation.
For example, algorithms may be flawed; data sets may be insufficient, of poor quality, or contain biased information; and inappropriate or controversial data practices by data scientists, engineers, and end-users could impair results.
If the analyses that artificial intelligence-based applications assist in producing are deficient or inaccurate, we could be subjected to competitive harm, potential legal liability and brand or reputational harm.
Use of AI-based software may also lead to cybersecurity risks or the release of confidential proprietary information, including personal data, which may impact our ability to realize the benefit of our intellectual property or violate our internal policies, data protection laws or contractual requirements.
The use of AI-based software may also result in unauthorized access of personal data or the intellectual property of third parties.
The legal and regulatory landscape regarding the use of AI is rapidly evolving, including in the areas of intellectual property, cybersecurity, and privacy and data protection.
Compliance may impose operational costs and limit our ability to use AI-based software, and failure to comply may result in potential government actions, litigation, fines, penalties or adverse publicity.
Acquisitions and alliances involve numerous risks which may include: • difficulties in achieving business and financial success (due to unplanned events such as ongoing geopolitical conflicts or economic factors such as fluctuations in interest and foreign exchange rates, as well as tax regulations); • difficulties and expenses incurred in assimilating and integrating operations, services, products, information technology platforms, technologies or pre-existing relationships with our clients, distributors and suppliers; • challenges with developing and operating new businesses, including those that are materially different from our existing businesses, which may require the development or acquisition of new internal capabilities and expertise; • potential losses resulting from operational weaknesses or undiscovered liabilities of acquired companies that are not covered by the indemnifications we may obtain from sellers or any insurance we may acquire in connection with transactions; • loss of key employees; • loss of key customers; • the presence or absence of adequate internal controls and/or significant fraud in the financial systems of acquired companies; • diversion of management’s attention from other business concerns; • a more expansive regulatory environment; • dilution to earnings, or in the event of acquisitions made through the issuance of our common stock to the shareholders of the acquired company, dilution to the percentage of ownership of our existing shareholders; • differences in foreign business practices, customs and importation regulations, language and other cultural barriers in connection with the acquisition of foreign companies; • new technologies and products may be developed that cause businesses or assets we acquire to become less valuable; and • disagreements or disputes with prior owners of an acquired business, technology, service or product that may result in legal settlements, litigation expenses and diversion of our management’s attention.
In addition, we may encounter difficulty in finding buyers or alternative exit strategies at acceptable prices and terms, and in a timely CHARLES RIVER LABORATORIES INTERNATIONAL, INC. manner.
Our strategy is to deliver a comprehensive and integrated portfolio of drug discovery and non-clinical development products, services and solutions to support our clients’ discovery, preclinical, early clinical and early stage scale up and early stage manufacturing efforts, and enable them to bring new and improved therapies to market faster and more cost effectively.
As a focus, CRL aims to be the premier provider of products and services that ensure our clients develop, produce and release their products safely.
Similarly, if we are unable to successfully execute on the Board of Directors’ comprehensive strategic review and evaluation of Charles River’s business and growth prospects, this could negatively impact our future results of operations and market capitalization.
In recent years, we experienced such a lower-than-expected demand growth in a number of businesses, including the businesses that comprise our DSA reporting segment.
Factors such as insufficient capital, inflation, supply chain interruptions, inadequate forecasting, increases in construction material costs, or labor shortages could interfere with the successful execution of our strategy and our ability to timely build infrastructure to satisfy capacity needs and support business growth.
As discussed in the section above entitled “Our Strategy,” we are taking decisive action to manage the Company through the current demand environment, including appropriately right-sizing our infrastructure, driving efficiency, and optimizing operations, including through process improvement, procurement synergies, and implementation of a global business services model, with a goal to protect operating margin.
Similarly, we are working to execute the Board of Directors’ comprehensive strategic review and evaluation of Charles River’s business and growth prospects.
Bribery Act and the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions; • unexpected changes in regulatory requirements; • the difficulties of compliance with a wide variety of foreign laws and regulations; • unfavorable labor regulations in foreign jurisdictions; • changes in trade relationships, including new tariffs, trade protection measures, import or export licensing requirements, trade embargoes and sanctions, and other trade barriers; • longer accounts receivable cycles in certain foreign countries; • potentially reduced protection of our intellectual property rights in certain foreign countries; and • compliance with export controls, import requirements and other trade regulations, including those relating to certain products of which there is limited supply.
Despite any precautions we take for natural disasters or other catastrophic events, these events, including terrorist attack, a pandemic, epidemic or outbreak of a disease, geopolitical conflict, information system disruption, hurricanes, tornadoes, fire, wildfire, floods and ice and snow storms, could result in damage to and closure of our or our customers’ facilities, our suppliers’ facilities, or the infrastructure on which such facilities rely.
Such disruptions could include significant delays in the shipments of our products, reduce our capacity to provide services, adversely impact unique manufacturing capabilities, result in our customers’ inability to pay for our products or CHARLES RIVER LABORATORIES INTERNATIONAL, INC. services and, ultimately, result in the loss of revenue and clients.
Any natural disaster or catastrophic event affecting us, our customers, or our suppliers, could have a significant negative impact on our operations and financial performance.
Any negative attention, threats, acts of vandalism or legal action directed against our animal research or procurement activities (including species of research models), or our third-party service providers, such as our airline carriers or suppliers, or that restrict our or their ability to access protected or conservation areas, could impair our ability to operate our business efficiently.
Our review of potential strategic alternatives may not result in an executed or consummated transaction or other strategic alternative, and the process of reviewing strategic alternatives or the outcome could adversely affect our business.
On May 6, 2025, in connection with a Cooperation Agreement entered into with a large shareholder of the Company, we agreed, among other things, to have the Strategic Planning and Capital Allocation Committee of our Board of Directors oversee and direct a comprehensive strategic review and evaluation of the Company’s business and prospects, including an examination of various alternatives to enhance long-term stockholder value.
On November 5, 2025, the Company announced that, as part of our Board of Directors’ comprehensive strategic review of our business and growth prospects, we will focus on strategic initiatives to strengthen our leading scientific portfolio within our core markets through strategic acquisitions, partnerships, and internal investments; divest certain non-core assets; maximize our financial performance, including by implementing additional initiatives aimed at driving greater operating efficiency, which are expected to generate incremental net cost savings; and maintain a disciplined approach to capital deployment through regularly evaluating the optimal balance between strategic acquisitions, stock repurchases, debt repayment, and other uses of capital.
There is no assurance that the process will result in the approval or completion of any specific transaction or outcome.
Further, there is no guarantee that any transaction resulting from the strategic review will ultimately benefit our stockholders.
The process of reviewing potential strategic and operational alternatives is time consuming and costly and may divert management’s attention.
It may also be disruptive to our business operations and long-term planning, which may cause concern to our current or potential investors, customers, employees, strategic partners, vendors and other stakeholders and may have a material impact on our operating results or result in increased volatility in our stock price.
Any potential transaction or other strategic alternative, including, without limitation the acquisitions of the assets of K.F.

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Gone since FY2024

Consequently, you should not consider the following to be a complete discussion of all potential risks or uncertainties CHARLES RIVER LABORATORIES INTERNATIONAL, INC. and the risks described below should be carefully considered together with the other information set forth in this report and in future documents we file with the SEC.
Business and Operational Risks • We bear financial risk for contracts that may be terminated or reduced in scope, underpriced, subject to cost overruns or delays. • Upgrading and integrating our business systems could result in implementation issues and business disruptions. • We have in the past experienced and in the future could experience unauthorized access into our information systems. • If we are not successful in executing our business strategy, including our failure in selecting and integrating the businesses and technologies we acquire, or in managing our current and future site closures and divestitures, our business may be adversely impacted. • If we are not successful in realizing cost savings from our restructuring initiatives, our business may be adversely impacted. • Our business is subject to risks relating to operating internationally, including changes in foreign currency exchange rates. • Our operations might be affected by the occurrence of a natural disaster or other catastrophic event. • Negative attention from special interest groups may impair our business.
Legal and Regulatory Risk Factors • Any failure by us to comply with applicable regulations and related guidance could harm our reputation and operating results, and compliance with new regulations and guidance may result in additional costs. • Failure to comply with applicable data privacy and security laws in various jurisdictions could subject us to denial of the right to conduct business, fines, criminal penalties and/or other enforcement actions that could have a material adverse effect on our business.
CHARLES RIVER LABORATORIES INTERNATIONAL, INC. • Failure to comply with U.S., state, local or international environmental, health, safety and sustainability laws and regulations could result in fines and penalties and loss of licensure and have a material adverse effect upon the Company’s business. • Changes in U.S. and International Tax Law, results of tax audits, or material changes in our stock price could have a material adverse impact on our effective tax rate and financial results. • Non-clinical and clinical contract research services create a risk of liability. • The failure to successfully obtain, maintain and enforce intellectual property rights and defend against assertions of third parties to intellectual property rights could adversely affect us. • Our by-laws designate the state courts located in the State of Delaware as the sole and exclusive forum for certain actions, which could limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable and may discourage lawsuits with respect to certain claims. • We are involved in legal proceedings that could adversely affect our business, financial condition, and results of operations.
If a counterparty terminates a contract with us, we are typically entitled under the terms of the contract to receive revenue earned to date as well as certain other costs and, in some cases, termination fees; however, in many cases we are not entitled to any termination fees in the event of a termination.
As with all work conducted in our regulatory sites, these too are subject to government inspections.
As of the date of this filing, to our knowledge, we have not experienced an information security breach or material cybersecurity incident since an event in 2019.
Further, we are at risk of being targeted, and we have in the past been victim to, business email compromise fraud, which results in payments being made to illegitimate bank accounts.
Acquisitions and alliances involve numerous risks which may include: • difficulties in achieving business and financial success (due to unplanned events such as ongoing geopolitical conflicts, such as between the Russian Federation and Ukraine, and between Israel and Hamas, as well as the US-China relationship which could potentially influence sourcing patterns and tariff costs); CHARLES RIVER LABORATORIES INTERNATIONAL, INC. • difficulties and expenses incurred in assimilating and integrating operations, services, products, information technology platforms, technologies or pre-existing relationships with our clients, distributors and suppliers; • challenges with developing and operating new businesses, including those that are materially different from our existing businesses, which may require the development or acquisition of new internal capabilities and expertise; • potential losses resulting from operational weaknesses or undiscovered liabilities of acquired companies that are not covered by the indemnifications we may obtain from sellers or any insurance we may acquire in connection with transactions; • loss of key employees; • loss of key customers; • the presence or absence of adequate internal controls and/or significant fraud in the financial systems of acquired companies; • diversion of management’s attention from other business concerns; • a more expansive regulatory environment; • dilution to earnings, or in the event of acquisitions made through the issuance of our common stock to the shareholders of the acquired company, dilution to the percentage of ownership of our existing shareholders; • differences in foreign business practices, customs and importation regulations, language and other cultural barriers in connection with the acquisition of foreign companies; • new technologies and products may be developed that cause businesses or assets we acquire to become less valuable; and • disagreements or disputes with prior owners of an acquired business, technology, service or product that may result in legal settlements, litigation expenses and diversion of our management’s attention.
In addition, we may encounter in closing or difficulty in finding buyers or alternative exit strategies at acceptable prices and terms, and in a timely manner.
Our strategy is to deliver a comprehensive and integrated portfolio of drug discovery and non-clinical development products, services and solutions to support our clients’ discovery and early-stage drug research, process development, scale up and manufacturing efforts, and enable them to bring new and improved therapies to market faster and more cost effectively.
In 2024, we experienced such a lower-than-expected demand growth in a number of businesses, including the businesses that comprise our DSA reporting segment.
Factors such as insufficient capital, inflation, supply chain interruptions, inadequate forecasting, increases in construction material costs, or labor shortages CHARLES RIVER LABORATORIES INTERNATIONAL, INC. could interfere with the successful execution of our strategy and our ability to timely build infrastructure to satisfy capacity needs and support business growth.
As discussed in the section above entitled “Our Strategy,” we are taking decisive action to manage the Company through the current demand environment, including appropriately right-sizing our infrastructure, optimizing operations, and driving efficiency with a goal to protect operating margin.
Bribery Act and the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions; CHARLES RIVER LABORATORIES INTERNATIONAL, INC. • unexpected changes in regulatory requirements; • the difficulties of compliance with a wide variety of foreign laws and regulations; • unfavorable labor regulations in foreign jurisdictions; • tariff regulations; • longer accounts receivable cycles in certain foreign countries; • potentially reduced protection of our intellectual property rights in certain foreign countries; and • compliance with export controls, import requirements and other trade regulations, including those relating to certain products of which there is limited supply.
Despite any precautions we take for natural disasters or other catastrophic events, these events, including terrorist attack, a pandemic, epidemic or outbreak of a disease, geopolitical conflict, information system disruption, hurricanes, tornadoes, fire, wildfire, floods and ice and snow storms, could result in damage to and closure of our or our customers’ facilities or the infrastructure on which such facilities rely.
Such disruptions could include significant delays in the shipments of our products, reduce our capacity to provide services, adversely impact unique manufacturing capabilities, result in our customers’ inability to pay for our products or services and, ultimately, result in the loss of revenue and clients.
Any natural disaster or catastrophic event affecting us or our customers could have a significant negative impact on our operations and financial performance.
Any negative attention, threats, acts of vandalism or legal action directed against our animal research or procurement activities (including species or research models), or our third-party service providers, such as our airline carriers or suppliers, or that restrict our or their ability to access protected or conservation areas, could impair our ability to operate our business efficiently.
Disruptions to their continued supply from time to time arise from colony health problems (including as a result of the spread of diseases), export or import laws/restrictions or embargoes, tariffs, inflation, international trade regulations, foreign government or economic instability, severe weather conditions, increased competition among suppliers for models, disruptions to the air travel system, activist campaigns, commercial disputes, supplier insolvency, geopolitical disputes, or other ordinary course or unanticipated events.
Department of Justice (DOJ) announced that a Cambodia supplier of non-human primates and two Cambodian officials had been criminally charged in connection with illegally importing non-human primates into the United States.
While the Company was not named or referenced in the November 2022 proceedings, the Company shortly thereafter announced that Cambodia was the primary country of origin for non-human primates imports to Charles River, and that it had begun to operate under the expectation that for some time period supply of Cambodia-sourced non-human primates (which according to CDC statistics, at that time accounted for approximately 60% of supply to the United States) would be difficult to obtain in the United States.
Subsequent to the Company’s announcement, USFWS denied clearance to certain shipments of non-human primates the Company had received from Cambodia.
“Legal Proceedings” in this Annual Report on Form 10-K, in February 2023 the Company received a grand jury subpoena requesting certain documents related to an investigation by the DOJ and the USFWS into the Company’s conduct regarding several shipments of non-human primates from Cambodia, which is occurring in parallel to a civil investigation being undertaken by the DOJ and USFWS.
Additionally, in May 2023, the Company received an inquiry from the Enforcement Division of the SEC requesting it to voluntarily provide information, subsequently augmented with a document subpoena and additional inquiries, primarily related to the sourcing of non-human primates and related disclosures.
In connection with the civil investigation, the Company has voluntarily suspended planned future shipments of Cambodia non-human primates into the United States until such time that the Company and USFWS can agree upon and implement additional procedures to reasonably ensure that non-human primates imported to the United States from Cambodia are purpose-bred.
Accordingly, the Company believes that for some undetermined period of time it will not be able to import Cambodia-sourced non-human primates into the United States, and overall supply of non-human primates from Cambodia on a world-wide basis is more limited than it was previously.
For instance, on February 4, 2025, the standing committee of the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) decided to postpone review of proposed restrictions on the exportation of NHPs from Cambodia until a future CITES meeting, which is expected to occur in late 2025.
Due to any pandemic, epidemic or outbreak in one or more regions in which our Cell Solutions business operates, the portion of the donor pool that typically donates may be unable, or unwilling to donate, thereby CHARLES RIVER LABORATORIES INTERNATIONAL, INC. significantly reducing the availability of research products upon which we rely.
Our CDMO services establish us as a premier scientific partner for cell and gene therapy development, testing, and manufacturing; enable us to provide clients with an integrated solution from basic research and discovery through cGMP production; enable us to drive efficiency and accelerate clients’ speed-to-market by integrating manufacturing and the required testing; and enable our clients to seamlessly conduct analytical testing, process development, and manufacturing for advanced modalities with the same scientific partner.
Any such delay in delivering products to our clients may create liability for us to our customers for breach of contract or cause us to experience order cancellations and loss of customers.
Our ability to continue to grow and win new business is dependent in large part upon the ability and willingness of the pharmaceutical and biotechnology industries to continue to spend on molecules in the non-clinical phases of R&D (and in particular discovery and safety assessment) and to outsource the products and services we provide.
A portion of revenue, predominantly in our RMS segment, is derived from clients at academic institutions and research laboratories whose funding is partially dependent on both the level and timing of funding from government sources such as the U.S.
While, as of the date of this filing, the order has been temporarily stayed, there can be no assurance that it will not take effect or that other adverse actions will not be taken.
However, some changes in regulations, such as a relaxation in regulatory requirements or the introduction of streamlined or expedited drug approval procedures, or an increase in regulatory requirements that we have difficulty satisfying or that make our services less competitive, could eliminate or substantially reduce the demand for our services.
For example, in December 2022, the FDA Modernization Act 2.0 was passed, which clarifies methods manufacturers and sponsors can use to investigate the safety and efficacy of a drug.
While we are committed to working with the industry to support development and to provide the best translational models to supplement or replace traditional models as part of our 3Rs initiative, the use of animals in research is highly regulated and proposed changes to current regulations will need to be carefully evaluated to ensure that they do not compromise the safety and efficacy of new drugs and medical treatments.
Risk Factors – Industry Risk Factors - Several of our product and service offerings, including our non-human primate supply, are dependent on a limited source of supply that, CHARLES RIVER LABORATORIES INTERNATIONAL, INC. when interrupted, adversely affects our business”, and “Item 3.
Implementation of healthcare reform legislation, such as certain provisions of the Inflation Reduction Act, may have certain benefits, but also may contain costs that could limit the profits that can be made from the development of new drugs.
While it is not possible to predict whether and when any such changes will occur, changes at the local, state or federal level, or in laws and regulations in effect in foreign jurisdictions in which we operate or have business relationships, may significantly impact our domestic and foreign businesses and/or those of our clients.

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Sentence-level comparison of Item 1A in the two most recent 10-Ks (FY2024 ↗, FY2025 ↗). A reworded sentence counts as one dropped and one added, so heavy edits read as low “kept”. Headings and page furniture are stripped; nothing is summarised by a model.

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