Financial Data and Key Metrics Changes - Total revenue for Q1 2026 was $120.9 million, a slight increase of $1 million or 0.8% compared to $119.9 million in Q1 2025, primarily driven by increased DSA revenue and partially offset by decreased RMS revenue [11][18] - DSA revenue increased to $48 million from $42.8 million, reflecting a year-over-year growth of 12% [5][11] - RMS revenue decreased by 5.4% to $72.9 million, primarily due to lower NHP volumes sold [7][13] - The overall operating loss increased to $16.3 million from $15.5 million, driven by a higher RMS operating loss [14][18] - Consolidated net loss totaled $28.4 million or $0.83 loss per diluted share, compared to a net loss of $27.6 million or $1.02 loss per diluted share in Q1 2025 [17][18] Business Line Data and Key Metrics Changes - DSA business saw strong growth with discovery awards up 44% and safety assessment awards up 22% year-over-year [6] - DSA margins improved, achieving the strongest first quarter margins in three years [6][15] - RMS services revenue grew by 13% compared to Q1 2025, mainly due to higher NHP colony management services revenue [7][13] - The book-to-bill ratio for DSA was 1.16 to 1 for the quarter and 1.08 to 1 for the trailing twelve months [6][13] Market Data and Key Metrics Changes - The DSA backlog increased to $145.4 million at December 31, 2025, compared to $138.2 million at September 30, 2025 [13] - The conversion rate for DSA backlog was 33.2%, slightly up from 32.8% in the prior year [12] Company Strategy and Development Direction - The company is focused on improving revenue and margins in the DSA business while reducing costs and diversifying revenue sources in the RMS business [9] - Continued emphasis on innovation through collaborations that integrate machine learning tools and enhance data analysis capabilities [9][50] - The company is committed to optimizing its operational footprint and enhancing client satisfaction [10][57] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges in the RMS business due to macroeconomic factors and lower NHP sales, but expressed optimism about future improvements in margins [8][9] - The company plans to resume providing financial guidance once there is greater clarity on market demand and tariff impacts [20][21] - Management remains confident in the company's strategic direction and ongoing improvements in financial performance [57] Other Important Information - The company engaged Perella Weinberg Partners for financial advisory services to explore debt refinancing alternatives [8] - Capital expenditures for Q1 2026 were $5.2 million, with expectations to keep annual CapEx below 4% of revenue [20] Q&A Session Questions and Answers Question: Can you provide more detail on profitability and adjusted EBITDA trends? - Management indicated that seasonality impacts the first quarter, and increased operating expenses were noted, particularly in cost of goods sold [23][25] Question: What is the outlook for DSA awards and growth? - Management highlighted that DSA growth is supported by improved customer relationships and scientific capabilities, contributing to increased recurring sales [28][30] Question: How will the recent lease exits impact operating costs? - Management confirmed that lease exits will lead to additional cost reductions in the upcoming quarters, although current volume reductions in NHPs overshadowed some operating leverage benefits [38][40]