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 $994.2 million in Q4 2025, a 2.6% decline on an organic basis from the previous year, with revenue declines in all three business segments [13] - For the full year, revenue was $4.02 billion, reflecting an organic revenue decrease of 1.6%, primarily driven by lower revenue in the DSA and manufacturing segments [14] - Earnings per share were $2.39 in Q4, a decrease of 10.2% from $2.66 in Q4 2024, while for 2025, earnings per share were nearly flat at $10.28 compared to $10.32 in 2024 [16] Business Line 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 decrease of 2.6% [17] - RMS revenue in Q4 was $206.3 million, a decrease of 0.9% on an organic basis, while for the full year, RMS revenue increased by 1.2% [21] - Manufacturing solutions revenue was $196.4 million for Q4, a decrease of 2.1% on an organic basis, with a full-year decline of 1.6% [24] 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 a backlog improvement to $1.86 billion [8][19] - The biotech funding environment saw a record level of $28 billion in Q4, contributing to a steady increase in DSA net bookings [8] Company Strategy and Development Direction - The company is focused on strategic initiatives to unlock long-term shareholder value, including acquisitions to strengthen its portfolio and enhance operational efficiency [9][10] - The planned acquisitions of K.F. Cambodia and PathoQuest are expected to improve operating margins and support the company's growth strategy [9][10] - The company aims to continue building its NAMs capabilities and evaluate additional M&A opportunities to support clients in drug development [10][11] 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 [8][34] - The company expects organic revenue in 2026 to range from down 1% to at least flat, with an operating margin improvement of 20-50 basis points [31][32] - Management highlighted the importance of maintaining a disciplined approach to capital deployment while focusing on cost-saving initiatives to protect operating margins [37][52] Other Important Information - The company plans to divest businesses totaling approximately 7% of 2025 annual revenue, with expected Non-GAAP earnings per share accretion of $0.30 on an annualized basis from these divestitures [12] - The company is transitioning leadership, with Birgit Girshick set to become the next CEO, emphasizing continuity in strategic direction and operational excellence [26][28] Q&A Session Questions and Answers Question: Can you clarify the dynamics between RMS and DSA regarding NHPs? - Management explained that RMS volumes were impacted by timing, while DSA faced higher sourcing costs due to unexpected demand for NHP studies, necessitating purchases from the open market at higher prices [58][60] Question: What are the hiring needs in relation to DSA bookings? - Management indicated that physical capacity is in good shape, and they are carefully managing headcount to align with demand, ensuring that hiring is done in a measured fashion to avoid impacting operating margins [67][68] Question: How does the company view the impact of AI on its business? - Management stated that AI is seen as an enabling technology rather than a disruptor, with ongoing investments in AI to complement their work in drug development [72][74] Question: What is the status of DSA cancellations? - Management noted that cancellations are within normal ranges and are manageable due to a strong backlog, with no significant variability expected [78][80]

Financial Data and Key Metrics Changes - The company reported revenue of $994.2 million in Q4 2025, 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 [12][14] - Earnings per share were $2.39 in Q4 2025, 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 [14] - The operating margin decreased by 100 basis points year-over-year to 18.1% in Q4, while the full-year operating margin declined by just 10 basis points to 19.8% [13][14] 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% [15] - 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% [19] - Manufacturing solutions revenue was $196.4 million for Q4, a decrease of 2.1% on an organic basis, with full-year revenue declining by 1.6% [21][22] 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 a backlog of $1.86 billion at year-end [6][17] - The biotech funding environment saw a record level of $28 billion in Q4, contributing to a steady increase in DSA net bookings [6][12] - Sales to global biopharma clients rebounded in Q4, while small and mid-sized biotech clients experienced a modest decline [12][13] 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 [8][9] - The company plans to continue evaluating additional M&A opportunities to support clients in drug development [9][10] - The emphasis on NAMs (new approach methodologies) and AI as enabling technologies is part of the long-term strategy to enhance scientific capabilities [10][66] 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 [6][30] - The company expects operating margin improvement driven by the acquisition of K.F. Cambodia, with projected non-GAAP earnings per share growth of approximately 4%-9% for 2026 [28][32] - Management acknowledged challenges in the first quarter of 2026, including higher NHP sourcing costs and stock compensation expenses due to the CEO transition [43][44] Other Important Information - The company plans to generate at least $100 million in incremental cost savings in 2026, building on previous restructuring initiatives [33] - The anticipated decrease in the non-GAAP tax rate for 2026 is expected to be in the range of 22%-23% [46] - The company is focused on maintaining a disciplined approach to capital deployment, with a projected free cash flow of $375 million-$400 million for 2026 [48][49] Q&A Session Summary Question: Dynamics between RMS and DSA regarding NHPs - Management clarified that RMS is facing headwinds from lower NHP volumes due to timing, while DSA is experiencing higher sourcing costs due to increased demand for NHP studies [54][55] Question: DSA cancellations and their impact - Management indicated that cancellations and slippage are normal elements of the business, with current levels consistent with expectations and manageable due to a strong backlog [74][75]

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]

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% [20][21] - The operating margin improved to 19.1%, an increase of 60 basis points year over year, primarily due to cost savings from restructuring initiatives [21][38] - Earnings per share were $2.34, reflecting a 3.1% increase from the same quarter last year [21] Business Segment Performance - DSA revenue was $592.6 million, a decrease of 1.4% on an organic basis, driven mainly by lower revenue for discovery services [23] - 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 for the first time in over two years, driven by higher gross bookings from global biopharmaceutical clients [25] - Revenue from small and mid-sized biotech clients grew for the second consecutive quarter, while revenue from global biopharmaceutical clients declined [20][21] Company Strategy and Industry Competition - The company is focused on integrating non-animal methods (NAMS) into its business, aligning with FDA initiatives to reduce animal testing [6][12] - The company plans to continue investing in alternative methods and technologies, including partnerships and acquisitions, to enhance its capabilities in drug development [12][66] - The strategic planning committee will undertake a comprehensive review to evaluate initiatives for unlocking additional value [35] Management's Comments on Operating Environment and Future Outlook - Management noted continued signs of stabilization in the market despite uncertainties, including government funding cuts and a slower start for biotech funding [19] - The company has modestly raised its 2025 revenue guidance due to better-than-expected DSA performance, now expecting a 2.5% to 4.5% organic revenue decline [22][40] - Management emphasized the importance of patient safety and the gradual adoption of NAMS, indicating that the transition will be evolutionary rather than revolutionary [18][60] Other Important Information - The company generated approximately $200 million in annual DSA revenue from NAMS, with expectations for meaningful growth over time [15] - The company has made strategic investments in various alternative methods, including organoid and organ-on-a-chip platforms [14] - The company 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, indicating that the focus on monoclonal antibodies is a logical starting point [50][54] Question: Use of biosimulation technologies - Management noted that while biosimulation technologies are used in early drug discovery, their application in regulated toxicology is more complex and will require significant validation [56][58] Question: Company's position in NAMS and potential M&A - Management expressed interest in acquiring technologies that enhance drug development without compromising patient safety, highlighting past acquisitions and ongoing evaluations of potential opportunities [63][66] Question: Impact of FDA changes on long-term growth - Management indicated that a comprehensive review of long-term growth rates will be conducted, considering the new FDA information and client feedback [78] Question: Pricing environment comparison to past downturns - Management noted that the pricing environment has improved slightly, driven by a favorable mix, and is not experiencing the same level of pressure as during the Great Recession [81][83]