As I also indicated in my prepared remarks, we are — as I would expect, remaining disciplined in ensuring that we adjust our footprint and our infrastructure to the current demand environment. We have implemented some restructurings that will — when all completed, will translate into annualized savings of about $40 million. And so you think about the margin as we are rightsizing our businesses to the current demand environment, there’s a little bit of a lag in terms of when you’re going to see the benefit of these actions. But I think we commented that we expect — continue to expect OI to be flat to slightly down versus last year. And we provided some insights to you all in our Investor Day in terms of what we expect for the next three years in terms of margin expansion.
Patrick Donnelly: Okay. No, that’s helpful. And then maybe just one more quick one on the gross bookings side. Can you just help us think about what the gross book-to-bill was last quarter? Again, just trying to feel out the numbers here without the cancellations on the gross bookings side? I appreciate it.
Flavia Pease: Yeah. So we haven’t disclosed a specific number. What we have said is growth. Book-to-bill has been above one in Q3 as well as Q2. So it continues to be above. And as I said to an earlier question, what influence the net book-to-bill to be sequentially up in the third quarter versus the second quarter was the fact that cancellations were lower in the third quarter.
Patrick Donnelly: All right. Thank you guys.
Operator: Thank you. We will take our next question from Dave Windley with Jefferies. Your line is open.
Dave Windley: Hi, good morning. Thanks for taking my question, and thanks for the additional disclosures. I appreciate that very much. I wanted to try to follow up on a couple of prior questions. So, on the kind of Casey’s question, I guess, on the revenue per NHP implied. Flavia, I understand your point about — I think you’re talking about like maybe long-term CAR studies or something of that sort that are — that run longer without needing more animals. Is that the exclusive impact? Or is there also like a reuse that’s not in the — I’m thinking if you have 11,000 unique animals, for example, and then there are also some reuses of those animals, that would also have the effect of lowering that revenue per annum. I just want to make sure I understand the various contributors to these numbers that you’ve disclosed this morning.
Flavia Pease: Sure, David. Yes, the primary impact is your first point. Yes, it’s card studies, repro studies, those tend to last longer. So we can still get the same revenue with less units. So that’s the primary driver. And those types of studies, all post-IND, they were up significantly in Q3. And they have been up sort of Q3 year-to-date versus last year as well. So that, again, goes back to my earlier point of clients prioritizing post-IND work.
Jim Foster: So we have a reduction in numbers of NHPs use, with a meaningful amount of revenue associated with those just because of studies are much higher value — or much longer and are really essential to be getting drugs through the clinic. So a little bit of a shift at least for this year. It’s difficult to say help, but we usually have a pretty good balance between IND files and post-IND work, but that’s a really good explanation for why the units are down.
Dave Windley: Got it. Okay. Jim, on the — there are a couple of comments, I think, in the deck this morning about kind of technology references. I know in the past, the general view has been that as much as we’d like to be able to spare animals or shift to virtual technologies and silicon technologies, that those are probably a long way off. One of your lines in the deck this morning kind of references that like maybe there’s a little bit more promise there. And I wanted to — and kind of that we’re going to lead the industry context. I wondered, if you’d comment on that is, am I over reading that?
Jim Foster: Well, I’m glad you asked that, Dave. So, Charles River has a responsibility to utilize alternative adjunct technologies to the extent that they actually exist and work, and regulators and clients will embrace that. And they’ll give us decent information. And so, as the largest provider of research models, as the largest [indiscernible] company, we have to lead. So we have multiple investments, relatively small, except for one multiple investments and a whole bunch of different technologies, particularly AI, next-generation sequencing, 3D modeling would be once it come to mind immediately. I met with a company yesterday that’s in the AI field, so that’s probably going to be another one. And it’s impossible to tell how much traction we’ll get, but I do think that there’s a fair amount of work being done right now.
And I can see it sooner than later in discovery, and we can see it sooner than later in helping the clients identify a lead compound and moving away from other drugs that we’re working on that probably don’t show efficacy and being able to do that with non-animal technologies or less animals. And hopefully, that would speed up the whole process of them moving towards the clinic. So we feel really good about that. Dave, I couldn’t guess how far away this is, but I think we’ll see some of the discovery impact. And I think — we think that’s beneficial for the industry and for us sometime maybe in the next five years. I don’t think it will be substantial. But I do think it will be real. To the extent to which those technologies work, those are likely to be companies that we buy or technologies that we license.
And never is a long time, so I won’t use the word never, but from everybody that we speak to, we think it’s highly unlikely that you’re going to see any post-sale replacement of animals and classic toxicology just because it’s all about safety in a wholly animal model appears to be the best use — the best way to do that, but — and so the extent to which the non-animal technologies ever get any traction tax, I think — we think that’s way off. Having said that, we’re just going to do a lot of work, Dave, in all of this stuff. Study it, write about it, utilize it, talk to our clients about it, talk with regulators about it and make multiple shots on goal with these potentially valuable technologies to see what really has traction. So we’re going to continue to talk about it because we do think it’s important.
We do think it’s possible in some domain, and we do think that if anybody is going to lead it, it really needs to be us.
Dave Windley: Got it. Relatedly, one of the other areas that you had hoped, I think, to lead on was around this parentage testing and providence of animals. Is that still relevant? Or is that kind of faded and not strategically relevant anymore?
Jim Foster: I think that directionally, that’s going to be important, not just for regulators, regardless of the country, but for ourselves just to know that and for our clients just to make sure that these animals are purpose spread. So yes, it’s going to be sort of slow going to get kind of a sense from government agencies that they like what we’re doing. We actually found several places that we could do this on a cost-effective basis and really sort of nail down the fact that those animals are as we desire. We got out really fast working on it. I think the government is going to be a little more slow in their uptake of even having a conversation with us. But I do think that’s something that again, Dave, that I think it’s essential.
