Financial Data and Key Metrics Changes - The company reported Q4 2025 revenue of $994.2 million, a 2.6% decline on an organic basis from the previous year, with full-year revenue of $4.02 billion, reflecting a 1.6% organic revenue decrease [17][19] - Non-GAAP earnings per share for Q4 were $2.39, a decrease of 10.2% from $2.66 in Q4 2024, while full-year earnings per share were nearly flat at $10.28 compared to $10.32 in 2024 [19][20] - The operating margin decreased by 100 basis points year-over-year to 18.1% in Q4, primarily due to lower revenue and higher costs [18][23] Business Segment Data and Key Metrics Changes - DSA revenue in Q4 was $591.6 million, a decrease of 3.3% on an organic basis, with a full-year decline of 2.6% [20][23] - RMS revenue in Q4 was $206.3 million, a decrease of 0.9% on an organic basis, while full-year RMS revenue increased by 1.2% [24][25] - Manufacturing solutions revenue for Q4 was $196.4 million, a decrease of 2.1% on an organic basis, with full-year revenue declining 1.6% [26][27] Market Data and Key Metrics Changes - The DSA net book-to-bill improved to 1.1 times in Q4, driven by small and mid-sized biotech clients, with net bookings of $665 million [9][22] - The biotech funding environment saw a record level of $28 billion in Q4, contributing to a steady increase in DSA net book-to-bill [8][9] Company Strategy and Development Direction - The company is focused on strategic acquisitions to strengthen its portfolio, including the acquisition of K.F. Cambodia and PathoQuest, aimed at enhancing operational efficiency and securing supply chains [10][12] - The company plans to continue evaluating additional M&A opportunities to support clients in drug development programs [13][14] - The transition in leadership to Birgit Girshick as the new CEO is expected to drive forward the company's strategic direction and operational excellence [30][34] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding favorable DSA demand trends continuing into 2026, anticipating a return to organic revenue growth in the second half of the year [9][37] - The company expects operating margin improvement in 2026, driven by the acquisition of K.F. Cambodia and cost-saving initiatives [35][39] - Management acknowledged challenges in the first quarter of 2026, including higher NHP sourcing costs and stock compensation expenses due to the CEO transition [54][42] Other Important Information - The company plans to generate at least $100 million in incremental cost savings in 2026, building on previous restructuring initiatives [41][58] - The anticipated Non-GAAP tax rate for 2026 is expected to decrease to 22%-23% from 24.6% in 2025, benefiting from favorable geographic mix and tax rate changes [56][57] Q&A Session Summary Question: Dynamics between RMS and DSA regarding NHPs - Management clarified that RMS volumes were impacted by timing, while DSA faced higher sourcing costs due to unexpected demand for NHP studies [63][65] Question: DSA cancellations and their impact - Management indicated that cancellations were within normal ranges and manageable due to a strong backlog [83][85] Question: Hiring needs in relation to DSA bookings - Management stated that they are in good shape regarding capacity and headcount, with careful alignment to demand [72][74] Question: Impact of AI on the business - Management emphasized that AI is viewed as an enabling technology rather than a disruptor, and they are embracing it strategically [76][78]

Financial Data and Key Metrics Changes - The company reported revenue of $984.2 million in Q1 2025, a 2.7% decrease compared to the previous year, with an organic revenue decline of 1.8% [21][38] - The operating margin improved to 19.1%, an increase of 60 basis points year over year, primarily due to cost savings from restructuring initiatives [22][38] - Earnings per share were $2.34, reflecting a 3.1% increase from the same quarter last year [22][38] Business Segment Data and Key Metrics Changes - DSA revenue was $592.6 million, a decrease of 1.4% on an organic basis, driven mainly by lower revenue for discovery services [24] - RMS revenue was $213.1 million, a decrease of 2.5% on an organic basis, primarily due to timing of NHP shipments in China and lower revenue for the cell solutions business [28] - Manufacturing segment revenue was $178.5 million, a 2.2% decrease on an organic basis, driven by lower commercial revenue in the CDMO business [30] Market Data and Key Metrics Changes - The DSA backlog was $1.99 billion at the end of Q1, up slightly from $1.97 billion at year-end [24] - The net book-to-bill ratio improved to 1.04 times, the first time above one since the second half of 2022, driven by higher gross bookings from global biopharmaceutical clients [25][26] Company Strategy and Development Direction - The company is focused on expanding its non-animal platforms and investing in alternative methods to reduce animal testing, aligning with FDA initiatives [13][19] - The company plans to continue its strategic investments in areas central to the NAMS ecosystem, including organoid and organ-on-a-chip platforms [15] - A comprehensive strategic review is underway to evaluate initiatives for unlocking additional value, in collaboration with new board members and Elliott Investment Management [34][47] Management's Comments on Operating Environment and Future Outlook - Management noted continued signs of stabilization in the market despite uncertainties, with a cautious approach to the second half of the year [20] - The company modestly raised its 2025 revenue guidance by 100 basis points, expecting a 2.5% to 4.5% organic revenue decline [23][40] - Management emphasized the importance of scientific validation in the transition to NAMS and the need for a hybrid approach in drug development [11][19] Other Important Information - The company generated approximately $200 million in annual DSA revenue from NAMS, with expectations for meaningful growth over time [16] - The company has repurchased $350 million in shares during Q1 2025 as part of its capital allocation strategy [38] Q&A Session Summary Question: Thoughts on FDA guidance and mixed messaging - Management acknowledged the complexity of changes at the FDA and emphasized the ongoing development of NAMS, expressing optimism about leading clients in sync with regulatory agencies [52][54] Question: Use of biosimulation technologies - Management indicated that while biosimulation technologies are used in early drug discovery, their application in regulated toxicology is more complex and will require significant validation [59][60] Question: Areas of investment and M&A in NAMS - Management expressed interest in acquiring technologies that enhance drug development without compromising patient safety, highlighting past acquisitions and ongoing evaluations of potential opportunities [66][70] Question: Impact of FDA changes on long-term growth - Management stated that a refresh of long-term growth rates is necessary, considering the new FDA information, but refrained from providing specific numbers at this time [84] Question: Pricing environment comparison to past crises - Management noted that the current pricing environment is stable compared to the Great Recession, with better capacity management and less severe price pressure [86][87]