Financial Performance - Fortrea's revenues for the year ended December 31, 2024, were $2,696.4 million, a decrease of 5.1% compared to $2,842.5 million in 2023, primarily due to a 5.2% decrease in organic revenues [284]. - The company experienced a decrease in organic revenues in 2024 due to lower service revenues and a slower backlog burn rate [285]. - Revenues for 2024 were $2,696.4 million, a decrease of 5.1% from $2,842.5 million in 2023 [376]. - Operating loss for 2024 was $(161.9) million, compared to an operating income of $32.0 million in 2023 [376]. - Net loss for 2024 was $(328.5) million, significantly higher than the net loss of $(25.2) million in 2023 [378]. - Basic and diluted earnings per share from continuing operations for 2024 were $(3.03), compared to $(0.36) in 2023 [376]. - Comprehensive loss for 2024 was $(395.9) million, compared to a comprehensive income of $34.1 million in 2023 [378]. Expenses and Costs - Direct costs for 2024 were $2,162.2 million, a decrease of 4.0% from $2,251.9 million in 2023, with direct costs as a percentage of revenues increasing to 80.2% [287]. - Selling, general and administrative expenses increased by 25.1% in 2024 to $560.7 million, driven by higher professional fees and costs associated with exiting the Transition Services Agreement with Labcorp [290]. - Total costs and expenses increased to $2,858.3 million in 2024, up from $2,810.5 million in 2023, reflecting a rise of 1.7% [376]. - Restructuring and other charges increased significantly to $50.1 million in 2024, a 136.3% rise from $21.2 million in 2023, and down from $25.9 million in 2022 [294]. - Interest expense rose to $123.8 million in 2024, a 77.6% increase from $69.7 million in 2023, primarily due to a higher debt balance and a $12.2 million write-off of debt issuance costs [297]. Cash Flow and Liquidity - Net cash provided by operating activities for 2024 was $262.8 million, an increase of $94.4 million from $168.4 million in 2023 [311]. - Net cash provided by investing activities was $251.6 million in 2024, a significant turnaround from $(31.8) million in 2023, primarily due to proceeds from the sale of the Enabling Services Segment [313]. - Net cash used for financing activities increased to $(497.8) million in 2024 from $(140.8) million in 2023, mainly due to principal payments on term loans [315]. - Cash and cash equivalents at December 31, 2024, totaled $118.5 million, up from $108.6 million in 2023 [310]. Assets and Liabilities - As of December 31, 2024, total assets decreased to $3,579.2 million from $4,332.6 million in 2023, reflecting a decline of approximately 17.3% [374]. - Current liabilities increased to $949.5 million in 2024, up from $778.4 million in 2023, representing a rise of about 21.9% [374]. - Long-term debt, less current portion, decreased to $1,049.7 million in 2024 from $1,565.9 million in 2023, a reduction of approximately 32.9% [374]. - The company reported an accumulated deficit of $397.0 million as of December 31, 2024, compared to $68.5 million in 2023, indicating a significant increase in losses [374]. - Accounts receivable and unbilled services decreased to $659.5 million in 2024 from $988.5 million in 2023, a decline of approximately 33.3% [374]. Spin-off and Corporate Structure - Fortrea completed its spin-off from Labcorp on June 30, 2023, and began trading as a separate public company on NASDAQ under the ticker FTRE on July 3, 2023 [273]. - Following the spin-off, Fortrea has established primary office locations in five countries, including the United States, the United Kingdom, China, India, and Singapore, to enhance its global market access [385]. - Fortrea's financial statements for periods prior to the spin-off were prepared on a "carve-out" basis, reflecting the historical financial position and results of operations derived from Labcorp's consolidated financial statements [393]. Goodwill and Impairment - The company recorded no goodwill and other asset impairments in 2024, compared to an impairment charge of $9.8 million in 2022 [291]. - The Company has recorded $1,710.4 million and $1,739.4 million of goodwill as of December 31, 2024 and 2023, respectively [332]. - The fair value of the Clinical Development reporting unit exceeded the book value by approximately 10% based on the annual goodwill impairment testing conducted on October 1, 2024 [340]. - The Company recognized a goodwill impairment charge of $24.0 million in the first quarter of 2024 related to the Enabling Services Segment [453]. Revenue Recognition and Contracts - The Company recognizes revenue from software-as-a-service (SaaS) arrangements on a straight-line basis over the contracted hosting period [323]. - The Company’s contracts generally take the form of fixed-price, fee-for-service, or software-as-a-service arrangements, with revenue recognized based on performance obligations [321]. - Fortrea's contracts typically include a single performance obligation, with revenue recognized based on the proportional-performance basis for fixed-price contracts [405]. Market Risks and Financial Flexibility - The Second Credit Amendment increased the maximum quarterly Total Leverage Ratio from 5.30:1.00 to 6.00:1.00 for certain fiscal quarters, providing additional financial flexibility [275]. - The company expects to continue facing market risks associated with interest rate movements on its variable rate debt, with a hypothetical 1% increase in interest rates potentially resulting in increased interest expenses of $5.7 million [349]. - The Company utilizes a program of risk management to address exposure to market risks, including foreign currency exchange rates and interest rates [344]. Customer Concentration - As of December 31, 2024, two pharmaceutical customers accounted for approximately 22.2% and 13.8% of the Company's combined gross accounts receivable and unbilled services [420]. - For the year ended December 31, 2024, two customers accounted for approximately 14.3% and 10.5% of revenue, compared to 11.6% and 11.4% for the year ended December 31, 2023 [420].

Q4 2024 Earnings Presentation 03.03.2025 Learn more at fortrea.com. ©2025 Fortrea Inc. All rights reserved. Fortrea Q4'2024 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, including description ...

Financial Data and Key Metrics Changes - For Q4 2024, revenues were $697 million, a decline of 1.8% year-on-year, primarily due to lower late-stage clinical service revenue, partially offset by higher service fee revenues from the Phase I Clinical Pharmacology business [30][31] - Full-year 2024 revenue was $2,696.4 million, down 5.1% from $2,842.5 million in 2023 [33] - Adjusted EBITDA for Q4 2024 was $56 million, compared to $58.9 million in the prior year, while full-year adjusted EBITDA was $202.5 million, down from $245.8 million in 2023 [36][38] - The net loss for Q4 2024 was $73.9 million, compared to a net loss of $48.6 million in the prior year, with a full-year net loss of $271.5 million compared to $31.7 million in 2023 [38] Business Line Data and Key Metrics Changes - The Phase I Clinical Pharmacology Services (CPS) business saw strong performance, contributing to the overall sales despite challenges in other areas [10][31] - The later-stage clinical business faced revenue declines due to a mix of projects that were later in their lifecycle and longer duration studies, particularly in oncology [32][46] Market Data and Key Metrics Changes - The backlog grew to approximately $7.7 billion, reflecting a 4.2% increase over the past twelve months [36] - The company reported a book-to-bill ratio of 1.35 for Q4 2024 and an average of 1.2 since the spin-off [9][35] Company Strategy and Development Direction - The company aims to transform its operations and improve efficiency by implementing new management systems and processes tailored for its size as an independent entity [24][50] - There is a focus on increasing investments in biotech and enhancing the commercial engine to drive growth [48][62] - The company plans to achieve net savings of $40 to $50 million in 2025 through various cost-reduction initiatives [50] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that the financial performance in 2025 would be impacted by the mix of older pre-spin projects, which are less profitable, and emphasized the need to accelerate new business wins [21][22] - The management expressed confidence in the long-term growth of the CRO industry, driven by advancements in science and technology, particularly AI [62][66] Other Important Information - The company successfully exited most of the transition service agreements with its former parent, which is expected to reduce costs significantly moving forward [18][44] - The effective tax rate for continuing operations for Q4 2024 was a benefit of 1.2%, influenced by withholding taxes on non-US earnings [35] Q&A Session Summary Question: Trajectory from 2025 to 2026 - Management discussed the challenges in identifying the financial performance of pre-spin projects and the slower-than-expected start of new work, particularly in biotech and oncology [72][78] Question: Shareholder Return Opportunities - Management highlighted strong bookings and ongoing efforts to grow the clinical pharmacology business and optimize SG&A costs to enhance shareholder value [79][81] Question: Cost Structure and Top-Line Assumptions - Management confirmed a conservative approach to modeling burn rates and emphasized the importance of optimizing resources for ongoing projects [90][96] Question: Backlog and Burn Rate Concerns - Management reassured that the backlog is appropriate and that they are focused on completing existing projects while accelerating new work [108][118] Question: Current Market Environment - Management noted that cancellation rates are not elevated and expressed confidence in the pipeline of opportunities in both large pharma and biotech [121][125] Question: Analysis Catalyst and Resource Overlap - Management explained that the analysis was prompted by signs of potential revenue shortfalls, leading to a deeper examination of the backlog and project performance [129][130]

Fortrea Holdings (FTRE) Q4 2024 Earnings Call March 03, 2025 09:00 AM ET Company Participants Hima Inguva - Head of Investor Relations & Corporate DevelopmentThomas Pike - CEO, President & ChairmanJill McConnell - Chief Financial OfficerPatrick Donnelly - Managing DirectorDavid Windley - Managing DirectorCharles Rhyee - Managing DirectorMichael Ryskin - Managing Director Conference Call Participants Justin Bowers - AnalystElizabeth Anderson - Senior Managing Director & Research AnalystLuke Sergott - Analyst ...

Core Viewpoint - Fortrea Holdings Inc. reported quarterly earnings of $0.18 per share, missing the Zacks Consensus Estimate of $0.36 per share, representing a 50% earnings surprise [1] - The company has consistently failed to surpass consensus EPS estimates over the last four quarters [2] Financial Performance - Fortrea Holdings Inc. posted revenues of $697 million for the quarter ended December 2024, missing the Zacks Consensus Estimate by 0.63%, and down from $775.4 million year-over-year [2] - The company has only topped consensus revenue estimates once in the last four quarters [2] Stock Performance - Fortrea Holdings Inc. shares have declined approximately 25.7% since the beginning of the year, while the S&P 500 has gained 1.2% [3] - The stock currently holds a Zacks Rank 4 (Sell), indicating expected underperformance in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.22 on revenues of $659.7 million, and for the current fiscal year, it is $1.28 on revenues of $2.72 billion [7] - The trend of estimate revisions for Fortrea Holdings Inc. has been unfavorable leading up to the earnings release [6] Industry Context - The Medical - Biomedical and Genetics industry, to which Fortrea Holdings Inc. belongs, is currently in the top 28% of over 250 Zacks industries, suggesting a favorable industry outlook [8] - Research indicates that the top 50% of Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1 [8]

Revenue Performance - Fourth quarter revenue was $697.0 million, a decrease of 1.9% from $709.7 million in Q4 2023[3] - Full year revenue for 2024 was $2,696.4 million, down 5.1% from $2,842.5 million in 2023[5] Net Loss and Earnings - Fourth quarter GAAP net loss was $(73.9) million, compared to a loss of $(48.6) million in Q4 2023, resulting in a diluted loss per share of $(0.82)[3] - Full year GAAP net loss was $(271.5) million, significantly higher than the $(31.7) million loss in 2023, with a diluted loss per share of $(3.03)[5] - Net income loss for the twelve months ended December 31, 2024, was $328.5 million, compared to a loss of $25.2 million in 2023, representing a significant increase in losses[24] Adjusted EBITDA - Adjusted EBITDA for Q4 2024 was $56.0 million, down from $58.9 million in Q4 2023[3] - Full year adjusted EBITDA was $202.5 million, compared to $245.8 million in 2023, reflecting a decrease of 17.6%[5] - Adjusted EBITDA from continuing operations for the twelve months ended December 31, 2024, was $202.5 million, down from $245.8 million in 2023, a decrease of about 17.6%[25] Cash and Debt Position - Cash and cash equivalents were $118.5 million, with gross debt of $1,142.0 million as of December 31, 2024[8] - Cash and cash equivalents increased to $118.5 million at the end of December 2024, up from $108.6 million at the end of December 2023, an increase of approximately 8.7%[24] Assets and Liabilities - Total assets decreased from $4,332.6 million in December 2023 to $3,579.2 million in December 2024, a decline of approximately 17.4%[22] - Total current liabilities rose from $778.4 million in December 2023 to $949.5 million in December 2024, an increase of about 21.9%[22] Impairments and Charges - The company recorded $24.0 million in goodwill and other asset impairments during the twelve months ended December 31, 2024[24] - Restructuring and other charges amounted to $51.2 million for the twelve months ended December 31, 2024, compared to $23.8 million in 2023, indicating increased restructuring efforts[25] Future Guidance - The company targets 2025 revenues in the range of $2,450 million to $2,550 million, with adjusted EBITDA guidance of $170 million to $200 million[9] - The company expects to complete its restructuring plan to reduce overcapacity by the end of 2025, with $21.3 million recorded in the fourth quarter related to this plan[26] Cash Flow and Investments - Proceeds from the sale of business amounted to $276.6 million in 2024, contributing positively to cash flows from investing activities[24] - Net cash provided by operating activities for the twelve months ended December 31, 2024, was $262.8 million[37] - Capital expenditures for the same period amounted to $25.5 million[37] - Free cash flow for the twelve months ended December 31, 2024, was $237.3 million[37] Operational Independence - The company has largely exited its Transition Services Agreement with its former parent company, enhancing operational independence[2]

Core Insights - Fortrea reported a GAAP net loss of $(73.9) million for Q4 2024, compared to a loss of $(48.6) million in Q4 2023, indicating a decline in profitability [3][10] - The company's full-year revenue for 2024 was $2,696.4 million, down from $2,842.5 million in 2023, reflecting a decrease in overall sales [5][10] - Fortrea's book-to-bill ratio for Q4 2024 was 1.35x, showing strong demand for its services [4][10] Financial Performance - Q4 2024 revenue was $697.0 million, a decrease from $709.7 million in Q4 2023 [3][10] - Full-year 2024 adjusted EBITDA was $202.5 million, down from $245.8 million in 2023 [5][10] - The trailing twelve-month book-to-bill ratio was 1.16x, with a backlog of $7,699 million as of December 31, 2024 [6][10] Cash Flow and Debt - As of December 31, 2024, the company had cash and cash equivalents of $118.5 million and gross debt of $1,142.0 million [7][10] - Operating cash flow for the full year was $262.8 million, with free cash flow of $237.3 million [7][10] 2025 Financial Guidance - For 2025, Fortrea targets revenues between $2,450 million and $2,550 million, with adjusted EBITDA guidance of $170 million to $200 million [8][10]

Core Points - Fortrea sponsors the SCRS Collaborate Forward working group to enhance collaboration and improve clinical trial efficiency [1][2] - The working group consists of 16 leading Global Impact Partner organizations focused on reducing administrative burdens in clinical research [1][2] - The initiative aims to optimize internal processes, promote sustainability in clinical research institutions, and enhance patient experiences [1][2] Company Overview - Fortrea is a leading global provider of clinical development solutions in the life sciences sector, collaborating with biopharmaceutical, biotechnology, medical device, and diagnostic companies [5] - The company offers management services for Phase I to IV clinical trials, clinical pharmacology, and consulting services, leveraging over 30 years of experience across more than 20 therapeutic areas [5] - Fortrea operates in approximately 100 countries with a diverse team, providing targeted and flexible solutions to global clients [5] Industry Context - The clinical trial landscape is becoming increasingly complex, necessitating innovation to ensure patient safety and streamline processes [2] - The Collaborate Forward working group will focus initially on startup research, sharing success stories and data-driven insights to demonstrate the benefits of collaboration [2] - SCRS invites sponsors and CROs committed to sustainable research practices to contribute to a more efficient and collaborative clinical research environment [3]

Group 1 - Fortrea sponsors the SCRS Collaborate Forward working group to enhance collaboration and efficiency in clinical trials [1][3] - The working group consists of 16 Global Impact Partner organizations focused on reducing administrative burdens in clinical research [2] - The initiative aims to improve internal processes, making clinical research sites more sustainable and trials more efficient [2][4] Group 2 - Fortrea's involvement signifies a commitment to industry-wide innovation and prioritizing clinical research sites in trial planning [3][4] - The Collaborate Forward group will initially focus on study startup, sharing success stories and data-driven insights [4] - SCRS encourages other sponsors and CROs to join the effort for a more effective clinical research landscape [5] Group 3 - The Society for Clinical Research Sites (SCRS) represents over 11,000 research sites globally, advocating for site-focused initiatives [6] - Fortrea provides comprehensive clinical development solutions across various therapeutic areas, emphasizing its role in healthcare innovation [7][8]

Core Insights - Pomerantz LLP is investigating claims on behalf of investors of Fortrea Holdings Inc. regarding potential securities fraud or unlawful business practices [1] - Fortrea's stock has experienced significant declines following downgrades from Jefferies and Baird due to concerns over its business model and abrupt cancellations of scheduled conferences [2][3] Group 1: Company Performance - On September 25, 2024, Jefferies downgraded Fortrea, leading to a stock price drop of $2.73 per share, or 12.29%, closing at $19.48 per share [2] - On December 6, 2024, Baird downgraded Fortrea to neutral from outperform, resulting in a stock price decline of $1.90 per share, or 8.06%, closing at $21.67 per share [3] Group 2: Legal Investigation - Pomerantz LLP is recognized for its expertise in corporate, securities, and antitrust class litigation, and is currently investigating Fortrea for potential securities fraud [1][4]