Despite announcing better-than-expected financials for Q4 2022, Charles River Laboratories ( NYSE: CRL ) lost ~10% pre-market Wednesday after the non-clinical contract research organization issued an underwhelming outlook amid supply constraints.
In November, the U.S. Department of Justice (DoJ) criminally charged two officials and a supplier of non-human primates ((NHPs)) from Cambodia, which accounts for a bulk of Charles River’s ( CRL ) NHP supplies.
With its financials on Wednesday, Charles River ( CRL ) disclosed that the DoJ sent a subpoena for the company concerning an investigation into the Cambodian NHP supply chain, especially in connection with several NHP shipments the company received from its Cambodian supplier.
“Charles River intends to fully cooperate with the U.S. government as part of their investigation,” the company said.
Citing the ongoing probe and concerns about NHP supplies from Cambodia in recent months, Charles River ( CRL ) said it suspended NHP shipments from the country.
The company added that NHP supply issues could cut its consolidated revenue growth forecast by ~200bps – 400bps in 2023 due to pressure on the Discovery and Safety Assessment (DSA) business.
Charles River ( CRL ) projects a non-GAAP adj. EPS impact of ~ $1.20 – $1.40 in 2023 due to multiple factors, including NHP supply constraints, higher tax rate, and the divestiture of its Avian Vaccine business.
For 2023, the company projects 1.5% – 4.5% revenue growth and $9.70 – $10.90 in non-GAAP EPS compared to ~6.1% and $11.62 in the consensus, respectively.
In Q4 2022, Charles River ( CRL ) reported $1.1B in revenue, implying a ~22% YoY growth as the DSA segment added $691.7M to the topline with ~30% YoY growth. Full-year revenue climbed ~12% YoY to $4.0B, driven by ~16% YoY growth in the DSA unit, which generated $2.5B in revenue.
Read: Seeking Alpha contributor, Daniel Jones issued a Buy rating on Charles River ( CRL ) in February, citing its business model and consistent growth in the top and bottom lines.
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Charles River slides 14% despite Q4 beat amid supply chain woes