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– Further Strengthens Charles River’s Position as the Leading Global Early-Stage CRO –
– Transaction Expected to be Accretive to Non-GAAP EPS by
Citoxlab is a premier, non-clinical contract research organization
(CRO), specializing in regulated safety assessment services,
non-regulated discovery services, and medical device testing. With
“In addition to enhancing our value proposition for clients and meeting
our disciplined acquisition criteria, we believe that the proposed
acquisition of Citoxlab would generate value for shareholders, driving
profitable revenue growth and non-GAAP earnings per share accretion of
Jean-François Le Bigot, Ph.D., Chairman and Chief Executive Officer of Citoxlab, added, “Becoming part of the Charles River family would be a significant achievement and recognition of the accomplishments of Citoxlab and our dedicated team. After many years of growth, I am very pleased and excited to embark on a new era for Citoxlab. I am confident that Charles River is committed to our global employees and advancing our mission through our extensive scientific capabilities. At a time when new drug approvals are at record levels and the complexity of each drug candidate is increasing, we believe the collaboration of our respective scientific teams, the implementation of best practices, and the synergies between the early-stage services offered by Charles River and Citoxlab would represent a significant growth opportunity for both organizations, and also enhance the value that we provide to all of our clients to meet their individual needs.”
The proposed acquisition of Citoxlab would strengthen Charles River’s presence in growing end markets, enhance its global scale and geographic footprint, and augment its scientific capabilities, providing a compelling value proposition for both clients and shareholders.
Strengthens service portfolio – Citoxlab provides a
broad suite of early-stage services that would strengthen Charles
River’s existing capabilities in four key areas:
- General and specialty toxicology, including developmental and reproductive toxicology and ocular services, as well as agricultural and industrial chemical testing, including ecotoxicology services;
- Preclinical medical device testing services, significantly enhancing Charles River’s existing expertise;
- Non-regulated discovery solutions, ranging from traditional DMPK services to drug transporter and drug-to-drug interaction research; and
- Genomics research, adding unique expertise to Charles River’s capabilities in mechanistic and investigative toxicology.
Enhances global scale to meet growing demand – The
proposed acquisition would enhance Charles River’s presence in
Europe, particularly in Eastern Europe. Citoxlab has nine operating sites in six countries in Europeand North America, with global capacity totaling over 700,000 square feet.
- Expands client base – Citoxlab has a diverse client base of biopharmaceutical, agriculture and industrial chemical, and medical device companies worldwide. Specifically, the proposed acquisition would further expand Charles River’s small and mid-sized biotechnology client base, its fastest-growing client segment.
- Compelling financial profile – The addition of Citoxlab would enhance Charles River’s ability to achieve its long-term financial goals. The proposed acquisition is also expected to generate attractive returns on capital through profitable revenue growth and meaningful accretion to non-GAAP earnings per share.
Additional Financial and Transaction Details
The purchase price implies multiples of 13.8x non-GAAP EBITDA based on Citoxlab’s estimated last twelve-month results prior to the anticipated close, and approximately 11.7x non-GAAP EBITDA based on the estimated forward twelve-month results after the anticipated close.
The proposed acquisition is expected to add
The proposed transaction is expected to be accretive to non-GAAP
earnings per share by approximately
The proposed acquisition and associated fees are expected to be financed through Charles River’s existing revolving credit facility and cash.
Use of Non-GAAP Financial Measures
This news release contains non-GAAP financial measures, such as non-GAAP earnings per diluted share, which exclude the amortization of intangible assets, integration costs, advisory fees, and other charges related to our acquisitions and expenses associated with evaluating acquisitions. We exclude these items from the non-GAAP financial measures because they are outside our normal operations. This news release also refers to our revenue in both a GAAP and non-GAAP (constant currency) basis. There are limitations in using non-GAAP financial measures, as they are not prepared in accordance with generally accepted accounting principles, and may be different than non-GAAP financial measures used by other companies. In particular, we believe that the inclusion of supplementary non-GAAP financial measures in this news release helps investors to gain a meaningful understanding of our core operating results and future prospects without the effect of these often-one-time charges, and is consistent with how management measures and forecasts the Company's performance, especially when comparing such results to prior periods or forecasts. We believe that the financial impact of our acquisitions (and in certain cases, the evaluation of such acquisitions, whether or not ultimately consummated) is often large relative to our overall financial performance, which can adversely affect the comparability of our results on a period-to-period basis. In addition, certain activities, such as business acquisitions, happen irregularly and the underlying costs associated with such activities do not recur on a consistent basis. Presenting revenue on a constant-currency basis allows investors to measure our revenue growth exclusive of foreign currency exchange fluctuations more clearly. Non-GAAP results also allow investors to compare the Company’s operations against the financial results of other companies in the industry who similarly provide non-GAAP results. The non-GAAP financial measures included in this news release are not meant to be considered superior to or a substitute for results of operations prepared in accordance with GAAP. The Company intends to continue to periodically assess the potential value of reporting non-GAAP results consistent with applicable rules and regulations. A reconciliation of the effect of this transaction on non-GAAP earnings per share for 2019 and 2020 to the most directly comparable GAAP financial measure has not been included because it is impracticable to determine the allocation of the purchase price for the proposed acquisition and other necessary adjustments at this time.
Caution Concerning Forward-Looking Statements
This news release includes forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995. Forward-looking
statements may be identified by the use of words such as “anticipate,”
“believe,” “expect,” “will,” “would,” “may,” “estimate,” “plan,”
“outlook,” and “project” and other similar expressions that predict or
indicate future events or trends or that are not statements of
historical matters. Forward-looking statements include statements in
this news release regarding the proposed acquisition of Citoxlab,
expectations regarding the timing of the closing of the proposed
acquisition, and Charles River’s expectations with respect to the impact
of Citoxlab on the Company, its service offerings, client perception,
revenue, revenue growth rates, and earnings; Citoxlab’s final 2018
financial results; Charles River’s projected future performance
including revenue and earnings per share; as well as Charles River’s
future growth in the area of safety assessment. Forward-looking
statements are based on Charles River’s current expectations and
beliefs, and involve a number of risks and uncertainties that are
difficult to predict and that could cause actual results to differ
materially from those stated or implied by the forward-looking
statements. Those risks and uncertainties include, but are not limited
to, the ability to successfully complete the acquisition of Citoxlab. A
further description of these risks, uncertainties, and other matters can
be found in the Risk Factors detailed in Charles River's Annual Report
on Form 10-K as filed on
About Charles River
Charles River provides essential products and services to help pharmaceutical and biotechnology companies, government agencies and leading academic institutions around the globe accelerate their research and drug development efforts. Our dedicated employees are focused on providing clients with exactly what they need to improve and expedite the discovery, early-stage development and safe manufacture of new therapies for the patients who need them. To learn more about our unique portfolio and breadth of services, visit www.criver.com.
Corporate Vice President, Investor Relations
Corporate Vice President, Public Relations