Revenue Performance - Fortrea's revenues for the three months ended September 30, 2025, were $701.3 million, a 3.9% increase from $674.9 million in the same period of 2024, driven by a 3.5% increase in organic revenues and favorable foreign currency translation of 0.4%[107]. - For the nine months ended September 30, 2025, revenues reached $2,062.9 million, reflecting a 3.2% increase from $1,999.4 million in the corresponding period in 2024, primarily due to a 3.0% increase in organic revenues[108]. Direct Costs - Direct costs for the three months ended September 30, 2025, increased by 9.9% to $578.6 million, with direct costs as a percentage of revenues rising to 82.5% from 78.0% in the same period of 2024[109]. - For the nine months ended September 30, 2025, direct costs increased by 5.2% to $1,690.2 million, with direct costs as a percentage of revenues at 81.9%, up from 80.3% in the same period of 2024[111]. Expenses - Selling, general and administrative expenses decreased by 21.6% to $106.8 million for the three months ended September 30, 2025, primarily due to lower transition service agreement and information technology costs[112]. - For the nine months ended September 30, 2025, selling, general and administrative expenses decreased by 14.3% to $353.4 million, with reductions attributed to lower transition service agreement and information technology costs[114]. Backlog and Strategic Focus - The company's backlog was $7.6 billion as of September 30, 2025, reflecting anticipated future revenue from business awards[104]. - Fortrea's strategic focus includes leveraging its global scale and therapeutic expertise to meet the growing demand for clinical development services[101]. Amortization and Impairments - Amortization of intangibles and other assets decreased by 2.6% to $14.8 million for the three months ended September 30, 2025, and by 3.7% to $43.9 million for the nine months ended September 30, 2025 compared to 2024[116]. - Goodwill impairment for the nine months ended September 30, 2025 was $797.9 million, specific to the Clinical Development reporting unit, with no impairments recorded in the corresponding periods of 2024[117]. Restructuring and Charges - Restructuring and other charges amounted to $4.9 million for the three months ended September 30, 2025, a decrease of 44.3% from $8.8 million in 2024, and $21.7 million for the nine months ended September 30, 2025, down 3.6% from $22.5 million in 2024[118]. Interest and Foreign Exchange - Interest expense increased by 0.9% to $22.6 million for the three months ended September 30, 2025, but decreased by 33.1% to $68.2 million for the nine months ended September 30, 2025 compared to 2024[120]. - Foreign exchange loss for the three months ended September 30, 2025 was $(2.6) million, a significant increase of 1200.0% compared to $(0.2) million in 2024, and for the nine months ended September 30, 2025, it was $(28.1) million, up 301.4% from $(7.0) million in 2024[121]. Cash Flow and Financial Position - Cash and cash equivalents increased to $131.3 million as of September 30, 2025, compared to $105.3 million in 2024[132]. - Net cash used for operating activities was $(15.6) million for the nine months ended September 30, 2025, a decrease of $261.3 million compared to $245.7 million provided by operations in 2024[133]. - Net cash provided by investing activities was $21.9 million for the nine months ended September 30, 2025, down $226.2 million from $248.1 million in 2024[134]. Debt and Risk Management - The company has entered into a three-year $300.0 million accounts receivable securitization program, with $300.0 million of receivables sold and derecognized from the consolidated balance sheet as of September 30, 2025[129]. - The company believes existing cash and cash flows will be sufficient to cover operational needs for at least the next 12 months, while also evaluating strategic opportunities for acquisitions and investments[130]. - The company had $572.0 million outstanding related to variable rate debt as of September 30, 2025[151]. - A hypothetical 1% increase in interest rates would result in increased interest expenses of $5.7 million[151]. - The company entered into a variable-to-fixed interest rate swap in August 2023 to manage interest rate risk associated with floating rate debt[151]. - The company is exposed to market risks from foreign currency exchange rates and interest rates, and utilizes derivative financial instruments for risk management[147]. Operational Performance - Continued performance of the business units may be impacted by factors such as delays in new customer bookings and increases in operating costs[144].

Financial Data and Key Metrics Changes - Revenue for Q3 2025 was $701.3 million, a 3.9% increase compared to the prior year quarter, driven by growth in both clinical pharmacology and clinical development businesses [19][30] - Adjusted EBITDA for the quarter was $50.7 million, down from $64.2 million in the prior year period, primarily due to lower margins related to project mix and increased pass-through costs [23][30] - The company reported a net loss of $15.9 million for Q3 2025, an improvement from a net loss of $18.5 million in the prior year [23] - The book-to-bill ratio improved to 1.13 times, with a backlog exceeding $7.6 billion [5][22] Business Line Data and Key Metrics Changes - The clinical pharmacology business saw increased demand and higher levels of pass-through costs, contributing to revenue growth [19] - The clinical development segment also experienced growth due to new business awards, although it was partially offset by lower fee-for-service (FFP) revenue [19] - Average contract size in clinical pharmacology continues to increase, reflecting expertise in managing complex early-phase clinical trials [9] Market Data and Key Metrics Changes - Demand for services has shown signs of improvement, with growth in clinical trial starts and increased biotech funding in Q3 2025 [6] - Win rates with biotech clients doubled compared to the prior quarter, indicating a positive trend in client engagement [6][37] Company Strategy and Development Direction - The company is focusing on three critical pillars: commercial excellence, operational excellence, and financial excellence, to drive growth and improve margins [15][16] - A renewed focus on client-facing activities and employee engagement has been emphasized, with efforts to deepen relationships with clients and enhance operational efficiency [12][15] - The company is committed to maintaining a healthy balance sheet and financial flexibility, including debt repayment initiatives [7][28] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the improving demand environment and the resilience of biopharma clients, despite competitive pressures [6][40] - The company anticipates continued growth in its backlog and is focused on optimizing its capital structure and cash flow [26][30] - There is a commitment to right-sizing the organization and enhancing operational efficiency to achieve industry-standard margins [54][56] Other Important Information - The company has captured over $95 million in gross savings year-to-date, contributing to improvements in EBITDA [29] - The introduction of new technology and AI initiatives is expected to enhance productivity and operational excellence [11][12] Q&A Session Summary Question: Update on pre-spend vs post-spend awards - Management noted that there has been progress in right-sizing contracts and focusing on out-of-scope work, with improved results from these efforts [32][33] Question: Details on new-to-Fortrea clients - RFP volume from new clients increased by almost 40% quarter-over-quarter, with win rates for biotech clients doubling [37][38] Question: Bookings backdrop between large pharma and small biotech - Management observed neutral to favorable trends in both segments, with improved decision-making timelines in biotech [39][40] Question: Changes in competitive intensity and pricing environment - The pricing environment remains competitive but disciplined, with a focus on leading with science and operational expertise rather than aggressive pricing [41] Question: Margin leverage and pricing strategy - Management aims to hold prices where possible, with a focus on growing direct service fee revenue to improve margins [45][46] Question: Anecdotes on industry environment - Positive anecdotes were shared regarding decision-making timelines in both biotech and large pharma, indicating a return to more stable operational processes [62]

Core Insights - Fortrea Holdings Inc. reported quarterly earnings of $0.12 per share, missing the Zacks Consensus Estimate of $0.16 per share, and down from $0.23 per share a year ago, representing an earnings surprise of -25.00% [1] - The company posted revenues of $701.3 million for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 9.21% and up from $674.9 million year-over-year [2] - Fortrea Holdings Inc. shares have declined approximately 48% since the beginning of the year, contrasting with the S&P 500's gain of 15.1% [3] Earnings Outlook - The company's earnings outlook is crucial for investors, as it includes current consensus earnings expectations for upcoming quarters and any recent changes to these expectations [4] - The current consensus EPS estimate for the next quarter is $0.14 on revenues of $636.86 million, and for the current fiscal year, it is $0.54 on revenues of $2.67 billion [7] Industry Context - The Medical - Biomedical and Genetics industry, to which Fortrea Holdings Inc. belongs, is currently in the top 40% of over 250 Zacks industries, indicating a favorable industry outlook [8] - Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact Fortrea's stock performance [5]

Q3 2025 Earnings Presentation 11.05.2025 Nasdaq: FTRE Learn more at fortrea.com. ©2025 Fortrea Inc. All rights reserved. Fortrea Q3'2025 Earnings presentation FORWARD-LOOKING STATEMENTS & NON-GAAP FINANCIAL MEASURES Forward-Looking Statements Disclosure. Certain information in this presentation contains "forward-looking" statements. You should not place undue reliance on these statements. Forward-looking statements include information concerning our possible or assumed future results of operations, includin ...

Financial Performance - Revenue for Q3 2025 was $701.3 million, a 3.9% increase from $674.9 million in Q3 2024[5] - GAAP net loss for Q3 2025 was $(15.9) million, improving from a loss of $(18.5) million in Q3 2024[6] - Adjusted net income for Q3 2025 was $11.7 million, down from $20.7 million in Q3 2024, with diluted income per share of $0.12 compared to $0.23[6] - Adjusted EBITDA for Q3 2025 was $50.7 million, a decrease from $64.2 million in Q3 2024[6] - Year-to-date revenue for 2025 was $2,062.9 million, compared to $1,999.4 million in the same period of 2024[8] - The company raised its 2025 revenue guidance to a range of $2,700 million to $2,750 million[9] - Year-to-date adjusted net income for 2025 was $31.2 million, up from $13.5 million in the same period of 2024[10] - Year-to-date adjusted EBITDA for 2025 was $135.9 million, compared to $146.5 million for the same period of 2024[10] - Net loss for the nine months ended September 30, 2025, was $953.7 million, compared to a net loss of $267.3 million for the same period in 2024, indicating a significant increase in losses[26] - Adjusted EBITDA from continuing operations for the nine months ended September 30, 2025, was $135.9 million, down from $146.5 million in 2024, reflecting a decrease of about 7.3%[28] - Adjusted diluted EPS from continuing operations for the nine months ended September 30, 2025, was $0.34, compared to $0.15 for the same period in 2024[34] Asset and Liability Management - Total assets decreased from $3,579.2 million on December 31, 2024, to $2,742.1 million on September 30, 2025, representing a decline of approximately 23.4%[24] - Total liabilities decreased from $2,216.8 million on December 31, 2024, to $2,161.3 million on September 30, 2025, a reduction of approximately 2.5%[24] - The total current liabilities decreased from $949.5 million at the end of 2024 to $914.4 million at the end of September 2025, a decrease of about 3.7%[24] Impairment and Charges - The company experienced a non-cash goodwill impairment charge of $797.9 million recognized in prior quarters, impacting diluted loss per share by $(8.81)[10] - The company reported a significant impairment charge of $797.9 million related to goodwill and other assets during the nine months ended September 30, 2025[28] Cash Flow and Investments - Cash and cash equivalents increased from $118.5 million at the beginning of the period to $131.3 million at the end of the period, marking a net change of $12.8 million[26] - The company generated net cash provided by investing activities of $21.9 million for the nine months ended September 30, 2025, compared to $248.1 million in 2024[26] - Net cash used for operating activities for the nine months ended September 30, 2025, was $(15.6) million[41] - Capital expenditures for the same period totaled $(17.7) million[41] - Free cash flow for the nine months ended September 30, 2025, was $(33.3) million[41] Backlog and Book-to-Bill Ratio - Backlog as of September 30, 2025, was $7,644 million, with a book-to-bill ratio of 1.13x for the quarter[7] Foreign Exchange Impact - The company recorded a foreign exchange loss of $28.1 million for the nine months ended September 30, 2025[34]

Core Viewpoint - Fortrea reported solid financial performance in Q3 2025, with revenue growth and a commitment to operational excellence despite ongoing challenges [2][3]. Financial Results - Revenue for Q3 2025 was $701.3 million, an increase from $674.9 million in Q3 2024, representing a growth of approximately 3.9% [3]. - The GAAP net loss for Q3 2025 was $(15.9) million, with a diluted loss per share of $(0.17), an improvement from a net loss of $(18.5) million and diluted loss per share of $(0.21) in Q3 2024 [4]. - Adjusted net income for Q3 2025 was $11.7 million, with a diluted income per share of $0.12, compared to $20.7 million and $0.23 in Q3 2024 [4]. - Adjusted EBITDA for Q3 2025 was $50.7 million, down from $64.2 million in Q3 2024 [4]. Year-To-Date Results - Year-to-date revenue for the first nine months of 2025 was $2,062.9 million, compared to $1,999.4 million in the same period of 2024, indicating a growth of approximately 3.2% [6]. - Year-to-date GAAP net loss was $(953.7) million, including a non-cash goodwill impairment charge of $797.9 million, compared to a net loss of $(197.6) million in the same period of 2024 [7]. - Adjusted net income year-to-date was $31.2 million, with a diluted income per share of $0.34, compared to $13.5 million and $0.15 in the same period of 2024 [7]. Backlog and Book-to-Bill Ratio - As of September 30, 2025, the backlog was $7,644 million, with a book-to-bill ratio of 1.13x for the quarter [5][10]. Full-Year Guidance - The company raised its revenue guidance for the full year 2025 to a range of $2,700 million to $2,750 million and narrowed adjusted EBITDA guidance to a range of $175 million to $195 million [9][10].

Core Viewpoint - Fortrea has initiated a debt tender offer to purchase up to $75,744,000 in outstanding 7.500% Senior Secured Notes due 2030, primarily to comply with indenture provisions following a divestiture [1][2]. Group 1: Tender Offer Details - The tender offer is subject to the satisfaction or waiver of specific terms outlined in the Offer to Purchase dated October 20, 2025 [2]. - The tender offer will expire at 5:00 p.m. New York City time on November 18, 2025, unless extended or terminated [3]. - Each $1,000 principal amount of the Notes validly tendered will receive $1,000 in cash, plus accrued and unpaid interest from the last interest payment date to the settlement date [3][5]. Group 2: Conditions and Procedures - The tender offer is contingent upon the satisfaction or waiver of conditions described in the Offer to Purchase [6]. - Notes must be transferred to the Tender Agent through DTC's Automated Tender Offer Program for holders wishing to tender [4]. - If the total purchase price of validly tendered Notes exceeds the Maximum Amount, proration may occur [5]. Group 3: Company Overview - Fortrea is a leading global provider of clinical development solutions, partnering with biopharmaceutical, biotechnology, and medical device companies [9]. - The company offers services across various phases of clinical trials and has extensive experience in over 20 therapeutic areas [9][10].

Core Insights - Fortrea, a leading global contract research organization (CRO), will release its third quarter 2025 financial results on November 5, 2025, before market opens [1] - A conference call will be held at 8:00 am ET on the same day to discuss the financial results and conduct a Q&A session [1] Company Overview - Fortrea is a prominent provider of clinical development solutions to the life sciences industry, partnering with biopharmaceutical, biotechnology, medical device, and diagnostic companies [3] - The company offers phase I-IV clinical trial management, clinical pharmacology, and consulting services, leveraging over three decades of experience across more than 20 therapeutic areas [3] - Fortrea operates in approximately 100 countries, delivering focused and agile solutions to its global customers [3]

Core Insights - Fortrea Holdings Inc. is identified as a cheap stock with potential for growth over the next five years, with Barclays raising its price target to $8 from $6 while maintaining an Underweight rating [1][3] Financial Performance - In Q2, Fortrea reported quarterly revenue of $710.3 million, reflecting a year-over-year increase of 7.23% [1][2] - The company achieved an Adjusted EBITDA of $54.9 million and an adjusted net income per diluted share of $0.19, prompting management to raise its full-year 2025 revenue guidance to a range of $2.6 to $2.7 billion [2] - Despite revenue growth, Fortrea recorded a GAAP net loss of $374.9 million, or $4.14 per diluted share, primarily due to a non-cash goodwill impairment charge of $309.1 million [3] Business Overview - Fortrea Holdings Inc. operates as a contract research organization, providing biopharmaceutical product and medical device development solutions to pharmaceutical, biotechnology, and medical device customers [4] - The company's backlog stood at $7.547 billion, indicating a strong pipeline of future business [3] - Fortrea affirmed that its cost-saving initiatives are on track, which may enhance future profitability [3]

Core Viewpoint - Fortrea has appointed William Sharbaugh to its Board of Directors, bringing over three decades of experience in the pharmaceutical industry, which will enhance the company's leadership and strategic direction [2][3][4]. Company Overview - Fortrea (Nasdaq: FTRE) is a leading global contract research organization (CRO) that provides clinical development solutions to the life sciences industry, partnering with biopharmaceutical, biotechnology, medical device, and diagnostic companies [5]. - The company offers phase I-IV clinical trial management, clinical pharmacology, and consulting services, leveraging over 30 years of experience across more than 20 therapeutic areas [5]. Leadership Appointment - William Sharbaugh's extensive background includes roles as chairman of the board of Ora LLC and board member of Launch Therapeutics, Inc., along with previous positions at PPD, Inc. and Bristol-Myers Squibb [4]. - Sharbaugh's experience in both CRO and pharmaceutical companies is expected to provide practical insights to Fortrea's Board, aligning with the company's mission to deliver life-changing treatments to patients [3][4]. Strategic Focus - The appointment of Sharbaugh is seen as a strategic move to enhance Fortrea's capabilities in drug development and to strengthen its position as a trusted partner to clients [3][4].