Open the filing on EDGARFortrea Reports Third Quarter 2025 Results
For the three months ended September 30, 2025, from continuing operations:
- Revenues of $701.3 million
- GAAP net loss of $(15.9) million
- Adjusted EBITDA of $50.7 million
- GAAP and adjusted net (loss) income per diluted share of $(0.17) and $0.12, respectively
- Book-to-bill ratio of 1.13x, resulting in 1.07x book-to-bill for the trailing 12 months
- Cost saving initiatives remain on track
- Raising 2025 revenue guidance to a range of $2,700 million to $2,750 million; narrowing 2025 adjusted EBITDA guidance to a range of $175 million to $195 million
DURHAM, N.C., November 5, 2025 - Fortrea (Nasdaq: FTRE) (the “Company”), a leading global contract research organization (CRO), today reported financial results for the third quarter ended September 30, 2025.
“Fortrea delivered a solid performance that met expectations in the third quarter by partnering with our clients and advancing the development of potentially life-changing treatments for patients,” said Anshul Thakral, CEO of Fortrea. “I’m pleased with how our strong team moved quickly through our leadership transition without missing a beat. I have spent my first few months connecting with clients and meeting with colleagues across the globe to build a holistic view of Fortrea today. I am confident that we have the global footprint, differentiated capabilities, therapeutic expertise, technology and innovation needed to deliver on our goals. We are committed to executing our plans with operational, commercial and financial excellence.”
All commentary in this press release relates to continuing operations unless otherwise noted.
Third Quarter 2025 Financial Results
Revenue for the third quarter was $701.3 million, compared to $674.9 million in the third quarter of 2024.
Third quarter GAAP net loss was $(15.9) million and diluted loss per share was $(0.17), compared to third quarter of 2024 GAAP net loss of $(18.5) million and diluted loss per share of $(0.21). Third quarter adjusted net income was $11.7 million and diluted income per share was $0.12 compared to third quarter of 2024 adjusted net income of $20.7 million and diluted income per share of $0.23. Third quarter adjusted EBITDA was $50.7 million, compared to third quarter of 2024 adjusted EBITDA of $64.2 million.
Backlog as of September 30, 2025, was $7,644 million, and the book-to-bill ratio for the quarter was 1.13x.
Year-To-Date 2025 Financial 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.
Year-to-Date GAAP net loss was $(953.7) million and diluted loss per share was $(10.53), inclusive of a non-cash goodwill impairment charge of $797.9 million recognized in prior quarters, which impacted diluted loss per share by $(8.81), compared to net loss of $(197.6) million and diluted loss per share of $(2.21) for the same period of 2024. Year-to-Date adjusted net income, which excludes the goodwill impairment and other charges, was $31.2 million and diluted income per share was $0.34 compared to adjusted net income of $13.5 million and diluted income per share of $0.15 for the same period of 2024. Year-to-Date adjusted EBITDA was $135.9 million, compared to adjusted EBITDA of $146.5 million for the same period of 2024.
The goodwill impairments occurred during the first half of 2025 and primarily resulted from declines in the Company’s share price, as well as a macroeconomic market-driven increase to the discount rate. There were no indicators of impairment in the third quarter of 2025.
Full-Year 2025 Guidance
The Company is increasing its revenue guidance for the full year 2025, to a range of $2,700 million to $2,750 million and narrowing adjusted EBITDA guidance to a range of $175 million to $195 million. The guidance assumes foreign currency exchange rates as of December 31, 2024, remain in effect for the forecast period.
Earnings Call and Replay
Fortrea will host a conference call at 8:00 am ET on November 5, 2025 to review its third quarter financial results and conduct a question and answer session. To participate in the earnings call, participants should register online at the Fortrea Investor Relations website. To avoid potential delays, please join at least 10 minutes prior to the start of the call. The conference call can also be accessed through the following earnings webcast link. A replay of the live conference call will be available shortly after the conclusion of the event and accessible on the events and presentations section of the Fortrea website. A supplemental slide presentation will also be available on the Investor Relations website prior to the start of the call.
About Fortrea
Fortrea (Nasdaq: FTRE) is a leading global provider of clinical development solutions to the life sciences industry. We partner with emerging and large biopharmaceutical, biotechnology, medical device and diagnostic companies to drive healthcare innovation that accelerates life changing therapies to patients. Fortrea provides phase I-IV clinical trial management, clinical pharmacology and consulting services. Fortrea’s solutions leverage three decades of experience spanning more than 20 therapeutic areas, a passion for scientific rigor, exceptional insights and a strong investigator site network. Our talented and diverse team working in about 100 countries is scaled to deliver focused and agile solutions to customers globally. Learn more about how Fortrea is becoming a transformative force from pipeline to patient at Fortrea.com and follow us on LinkedIn and X (formerly Twitter).
Cautionary Statement Regarding Forward-Looking Statements
Forward-looking statements notice
This press release contains “forward-looking statements” within the meaning of the federal securities laws, including Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including, without limitation, the Company’s 2025 financial guidance. In this context, forward-looking statements often address expected future business and financial performance and financial condition, and often contain words such as “guidance,” “expect,” “assume,” “anticipate,” “intend,” “plan,” “forecast,” “believe,” “seek,” “see,” “will,” “would,” “target,” similar expressions, and variations or negatives of these words that are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Actual results may differ materially from the Company’s expectations due to a number of factors, including, but not limited to, the following: the Company’s ability to successfully implement the Company’s business strategies and execute the Company’s long-term value creation strategy; risks and expenses associated with the Company’s international operations, tariff policies, trade sanctions and other trade restrictions and currency fluctuations; the Company’s customer or therapeutic area concentrations; any further deterioration in the macroeconomic environment or further changes in government regulations and funding, which could lead to defaults or cancellations by the Company’s customers; the risk that the Company’s backlog and net new business may not be indicative of the Company’s future revenues and that the Company might not realize all of the anticipated future revenue reflected in the Company’s backlog; the Company’s ability to generate sufficient net new business awards, or if net new business awards are delayed, terminated, reduced in scope, or fail to go to contract; the risk that establishment of our accounting and other management systems, and our efforts to improve them, could cost more than anticipated or impact internal controls; if the Company underprices its contracts, overruns its cost estimates, or fails to receive approval for, or experiences delays in documentation of change orders; and other factors described from time to time in documents that the Company files with the SEC. For a further discussion of the risks relating to the Company’s business, see the “Risk Factors” Section of the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, as filed with the Securities and Exchange Commission (the "SEC"), as such factors may be amended or updated from time to time in the Company’s subsequent periodic and other filings with the SEC, which are accessible on the SEC’s website at www.sec.gov. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this release and in the Company’s filings with the SEC. Comparisons of results for current and any prior periods are not intended to express any future trends, or indications of future performance, unless expressed as such, and should only be viewed as historical data. All forward-looking statements are made only as of the date of this release and the Company does not undertake any obligation, other than as may be required by law, to update or revise any forward-looking statements to reflect future events or developments.
Note on Non-GAAP Financial Measures
This release includes information based on financial measures that are not recognized under generally accepted accounting principles in the United States ("GAAP"), such as Adjusted EBITDA, Adjusted Net Income, Adjusted Basic and Diluted EPS, and Free Cash Flow. Non-GAAP financial measures are presented only as a supplement to the Company’s financial statements based on GAAP. Non-GAAP financial information is provided to enhance understanding of the Company’s financial performance, but none of these non-GAAP financial measures are recognized terms under GAAP, and non-GAAP measures should not be considered in isolation from, or as a substitute analysis for, the Company’s results of operations as determined in accordance with GAAP.
The Company uses non-GAAP measures in its operational and financial decision making and believes that it is useful to exclude certain items in order to focus on what it regards to be a more meaningful indicator of the underlying operating performance of the business. For example, in calculating Adjusted EBITDA, the Company excludes all the amortization of intangible assets associated with acquired customer relationships and backlog, databases, non-compete agreements and trademarks, trade names and other from non-GAAP expense and income measures as such amounts can be significantly impacted by the timing and size of acquisitions. Although the Company excludes amortization of acquired intangible assets from the Company’s non-GAAP expenses, the Company believes that it is important for investors to understand that revenue generated from such intangibles is included within revenue in determining net income attributable to the Company. As a result, internal management reports feature non-GAAP measures which are also used to prepare strategic plans and annual budgets and review management compensation. The Company also believes that investors may find non-GAAP financial measures useful for the same reasons, although investors are cautioned that non-GAAP financial measures are not a substitute for GAAP disclosures.
The non-GAAP financial measures are not presented in accordance with GAAP. Please refer to the schedules attached to this release for relevant definitions and reconciliations of non-GAAP financial measures contained herein to the most directly comparable GAAP measures. The Company’s full-year 2025 guidance measures (other than revenue) are provided on a non-GAAP basis without a reconciliation to the most directly comparable GAAP measure because the Company is unable to predict with a reasonable degree of certainty certain items contained in the GAAP measures without unreasonable efforts. Such items include, but are not limited to, acquisition-related expenses, goodwill impairment, restructuring and related expenses, stock-based compensation and other items not reflective of the Company's ongoing operations.
Non-GAAP measures are frequently used by securities analysts, investors and other interested parties in their evaluation of companies comparable to the Company, many of which present non-GAAP measures when reporting their results. Non-GAAP measures have limitations as an analytical tool. They are not presentations made in accordance with GAAP, are not measures of financial condition or liquidity and should not be considered as an alternative to profit or loss for the period determined in accordance with GAAP or operating cash flows determined in accordance with GAAP. Non-GAAP measures are not necessarily comparable to similarly titled measures used by other companies. As a result, you should not consider such performance measures in isolation from, or as a substitute analysis for, the Company’s results of operations as determined in accordance with GAAP.
Fortrea Contacts
Tracy Krumme (Investors) - 984-385-6707, tracy.krumme@fortrea.com
Sue Zaranek (Media) - 919-943-5422, media@fortrea.com
Kate Dillon (Media) - 646-818-9115, kdillon@prosek.com
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share data)
(unaudited)
| Three Months Ended September 30, | Nine Months Ended September 30, |
|---|
| 2025 | 2024 | 2025 | 2024 |
|---|
| Revenues | $701.3 | | $674.9 | | $2,062.9 | | $1,999.4 | |
| Costs and expenses: | | | | |
| Direct costs, exclusive of depreciation and amortization | 578.6 | | 526.6 | | 1,690.2 | | 1,606.1 | |
| Selling, general and administrative expenses, exclusive of depreciation and amortization | 106.8 | | 136.3 | | 353.4 | | 412.6 | |
| Depreciation and amortization | 19.6 | | 21.2 | | 58.7 | | 64.5 | |
| Goodwill and other asset impairments | - | | - | | 797.9 | | - | |
| Restructuring and other charges | 4.9 | | 8.8 | | 21.7 | | 22.5 | |
| Total costs and expenses | 709.9 | | 692.9 | | 2,921.9 | | 2,105.7 | |
| Operating loss | (8.6) | | (18.0) | | (859.0) | | (106.3) | |
| Other income (expense): | | | | |
| Interest expense | (22.6) | | (22.4) | | (68.2) | | (101.9) | |
| Foreign exchange loss | (2.6) | | (0.2) | | (28.1) | | (7.0) | |
| Other, net | 5.1 | | 4.8 | | 7.9 | | 15.1 | |
| Loss from continuing operations before income taxes | (28.7) | | (35.8) | | (947.4) | | (200.1) | |
| Income tax (benefit) expense | (12.8) | | (17.3) | | 6.3 | | (2.5) | |
| Loss from continuing operations | (15.9) | | (18.5) | | (953.7) | | (197.6) | |
| Loss from discontinued operations, net of tax | - | | (9.4) | | - | | (69.7) | |
| Net loss | $(15.9) | | $(27.9) | | $(953.7) | | $(267.3) | |
| Earnings (loss) per common share | | | | |
| Basic and diluted earnings (loss) per share from continuing operations | $(0.17) | | $(0.21) | | $(10.53) | | $(2.21) | |
| Basic and diluted earnings (loss) per share from discontinued operations | - | | (0.10) | | - | | (0.78) | |
| Basic and diluted earnings (loss) per share | $(0.17) | | $(0.31) | | $(10.53) | | $(2.99) | |
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars and shares in millions)
(unaudited)
| September 30, 2025 | December 31, 2024 |
|---|
| ASSETS | | |
| Current assets: | | |
| Cash and cash equivalents | $131.3 | $118.5 |
| Accounts receivable and unbilled services, net | 663.2 | 659.5 |
| Prepaid expenses and other | 124.0 | 170.2 |
| Total current assets | 918.5 | 948.2 |
| Property, plant and equipment, net | 147.6 | 156.3 |
| Goodwill, net | 958.1 | 1,710.4 |
| Intangible assets, net | 635.4 | 655.7 |
| Deferred income taxes | 8.3 | 5.2 |
| Other assets, net | 74.2 | 103.4 |
| Total assets | $2,742.1 | $3,579.2 |
| LIABILITIES AND EQUITY | | |
| Current liabilities: | | |
| Accounts payable | $49.5 | $138.2 |
| Accrued expenses and other current liabilities | 369.6 | 369.8 |
| Unearned revenue | 411.6 | 353.3 |
| Current portion of long-term debt | 74.5 | 74.8 |
| Short-term operating lease liabilities | 9.2 | 13.4 |
| Total current liabilities | 914.4 | 949.5 |
| Long-term debt, less current portion | 1,052.1 | 1,049.7 |
| Operating lease liabilities | 51.5 | 60.6 |
| Deferred income taxes and other tax liabilities | 106.9 | 121.7 |
| Other liabilities | 36.4 | 35.3 |
| Total liabilities | 2,161.3 | 2,216.8 |
| Commitments and contingent liabilities | | |
| Equity: | | |
| Common stock, 92.2 and 89.7 shares outstanding at September 30, 2025, and December 31, 2024, respectively | 0.1 | 0.1 |
| Additional paid-in capital | 2,101.8 | 2,042.2 |
| Accumulated deficit | (1,350.7) | (397.0) |
| Accumulated other comprehensive loss | (170.4) | (282.9) |
| Total equity | 580.8 | 1,362.4 |
| Total liabilities and equity | $2,742.1 | $3,579.2 |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions) (unaudited)
| Nine Months Ended September 30, |
|---|
| 2025 | 2024 |
|---|
| CASH FLOWS FROM OPERATING ACTIVITIES: | | |
| Net loss | $(953.7) | | $(267.3) | |
| Adjustments to reconcile net loss to net cash (used for) provided by operating activities: | | |
| Depreciation and amortization | 58.7 | | 66.1 | |
| Stock compensation | 59.6 | | 43.1 | |
| Credit loss expense | 13.5 | | 17.0 | |
| Operating lease right-of-use asset expense | 8.6 | | 10.8 | |
| Operating lease right-of-use asset impairment | 1.3 | | 4.8 | |
| Goodwill and other asset impairments | 797.9 | | 24.0 | |
| Deferred income taxes | (24.4) | | (23.2) | |
| Unrealized foreign exchange movements | 38.8 | | 4.2 | |
| Loss on sale of business | - | | 23.2 | |
| Write-off of debt issuance costs | - | | 12.2 | |
| Other, net | 2.2 | | 4.7 | |
| Changes in assets and liabilities: | | |
| (Increase) decrease in accounts receivable and unbilled services, net | (10.6) | | 290.9 | |
| Decrease (increase) in prepaid expenses and other | 43.8 | | (33.3) | |
| (Decrease) increase in accounts payable | (89.7) | | 5.8 | |
| Increase in unearned revenue | 54.6 | | 106.4 | |
| Decrease in accrued expenses and other | (16.2) | | (43.7) | |
| Net cash (used for) provided by operating activities | (15.6) | | 245.7 | |
| CASH FLOWS FROM INVESTING ACTIVITIES: | | |
| Capital expenditures | (17.7) | | (28.7) | |
| Proceeds from sale of business, net | 39.6 | | 276.6 | |
| Proceeds from sale of assets | - | | 0.2 | |
| Net cash provided by investing activities | 21.9 | | 248.1 | |
| CASH FLOWS FROM FINANCING ACTIVITIES: | | |
| Proceeds from revolving credit facilities | 453.9 | | 617.0 | |
| Payments on revolving credit facilities | (453.9) | | (617.0) | |
| Debt issuance costs | (0.6) | | - | |
| Principal payments of long-term debt | - | | (482.7) | |
| Payments for taxes related to net share settlement of stock awards | - | | (14.0) | |
| Net cash used for financing activities | (0.6) | | (496.7) | |
| Effect of exchange rate changes on cash and cash equivalents | 7.1 | | (0.4) | |
| Net change in cash and cash equivalents | 12.8 | | (3.3) | |
| Cash and cash equivalents at beginning of period | 118.5 | | 108.6 | |
| Cash and cash equivalents at end of period | $131.3 | | $105.3 | |
The cash flows related to discontinued operations have not been segregated and are included in the condensed consolidated statements of cash flows.
RECONCILIATION OF NON-GAAP MEASURES
NET INCOME TO ADJUSTED EBITDA RECONCILIATION
(in millions)
(unaudited)
| Trailing Twelve Months Ended September 30, 2025 | | Three Months Ended September 30, | | Nine Months Ended September 30, |
|---|
| | 2025 | | 2024 | | 2025 | | 2024 | |
|---|
| Adjusted EBITDA from continuing operations: | | | | | | | | | |
| Net loss from continuing operations | $(1,027.6) | | $(15.9) | | $(18.5) | | $(953.7) | | $(197.6) |
| Income tax expense (benefit) | 5.3 | | (12.8) | | (17.3) | | 6.3 | | (2.5) |
| Interest expense, net | 90.1 | | 22.6 | | 22.4 | | 68.2 | | 101.9 |
| Foreign exchange loss | 31.7 | | 2.6 | | 0.2 | | 28.1 | | 7.0 |
| Depreciation and amortization (a) | 79.5 | | 19.6 | | 21.2 | | 58.7 | | 64.5 |
| Goodwill and other asset impairments | 797.9 | | - | | - | | 797.9 | | - |
| Restructuring and other charges (b) | 51.7 | | 6.3 | | 8.9 | | 23.8 | | 23.3 |
| Stock based compensation | 74.9 | | 22.3 | | 13.0 | | 59.6 | | 41.9 |
| Disposition-related costs (c) | 15.0 | | 2.3 | | 5.9 | | 8.9 | | 7.3 |
| One-time spin-related costs (d) | 55.5 | | 3.0 | | 27.0 | | 23.4 | | 97.9 |
| Customer matter (e) | 0.8 | | - | | 0.9 | | - | | 5.2 |
| Enabling Services Segment costs (f) | - | | - | | - | | - | | 7.3 |
| CEO transition related costs | 5.1 | | 0.3 | | - | | 5.1 | | - |
| Other (g) | 12.0 | | 0.4 | | 0.5 | | 9.6 | | (9.7) |
| Adjusted EBITDA from continuing operations | $191.9 | | $50.7 | | $64.2 | | $135.9 | | $146.5 |
(a) Includes amortization of intangible assets acquired as part of business acquisitions.
(b) Restructuring and other charges represent amounts incurred in connection with the elimination of redundant positions to reduce overcapacity, align resources and facilities, and restructure certain operations.
(c) Disposition-related costs are short-term incremental costs to support the transition services agreement associated with the sale of the Enabling Services Segment.
(d) Represents one-time or incremental costs required to implement capabilities to exit the Transition Services Agreement with former parent.
(e) As part of working with a customer, the Company agreed to make concessions and provide discounts and other consideration to the customer as part of a multi-party solution. There were no related adjustments in 2025 as the agreed upon amounts had been satisfied.
(f) These adjustments remove the impact of certain Enabling Services costs not included in discontinued operations. The Enabling Services Segment was sold in the second quarter of 2024.
(g) Includes adjustments to estimated contingent consideration on a sale of a facility, income related to services provided under Transition Services Agreements, settlements related to litigation initiated prior to the Spin, the yield expense incurred on amounts received under the Company’s Receivables Securitization Program, and amortization of implementation costs deferred in connection with cloud computing arrangements.
NET INCOME TO ADJUSTED NET INCOME RECONCILIATION
(dollars and shares in millions, except per share data) (unaudited)
| Three Months Ended September 30, | Nine Months Ended September 30, |
|---|
| 2025 | 2024 | 2025 | 2024 |
|---|
| Adjusted net income from continuing operations: | | | | |
| Net loss from continuing operations | $(15.9) | | $(18.5) | | $(953.7) | | $(197.6) | |
| Foreign exchange loss | 2.6 | | 0.2 | | 28.1 | | 7.0 | |
| Amortization (a) | 14.8 | | 15.2 | | 43.9 | | 45.6 | |
| Goodwill and other asset impairments | - | | - | | 797.9 | | - | |
| Restructuring and other charges (b) | 6.3 | | 8.9 | | 23.8 | | 23.3 | |
| Stock based compensation | 22.3 | | 13.0 | | 59.6 | | 41.9 | |
| Disposition-related costs (c) | 2.3 | | 5.9 | | 8.9 | | 7.3 | |
| One-time spin-related costs (d) | 3.0 | | 27.0 | | 23.4 | | 97.9 | |
| Customer matter (e) | - | | 0.9 | | - | | 5.2 | |
| Enabling Services Segment costs (f) | - | | - | | - | | 7.3 | |
| CEO transition related costs | 0.3 | | - | | 5.1 | | - | |
| Other (g) | 0.4 | | 0.5 | | 9.6 | | (9.7) | |
| Income tax impact of adjustments (h) | (24.4) | | (32.4) | | (15.4) | | (14.7) | |
| Adjusted net income from continuing operations | $11.7 | | $20.7 | | $31.2 | | $13.5 | |
| Basic shares | 91.2 | | 89.6 | | 90.6 | | 89.4 | |
| Diluted shares | 93.8 | | 90.1 | | 92.0 | | 90.3 | |
| Adjusted basic EPS from continuing operations | $0.13 | | $0.23 | | $0.34 | | $0.15 | |
| Adjusted diluted EPS from continuing operations | $0.12 | | $0.23 | | $0.34 | | $0.15 | |
(a) Includes amortization of intangible assets acquired as part of business acquisitions.
(b) Restructuring and other charges represent amounts incurred in connection with the elimination of redundant positions to reduce overcapacity, align resources and facilities, and restructure certain operations.
(c) Disposition-related costs are short-term incremental costs to support the transition services agreement associated with the sale of the Enabling Services Segment.
(d) Represents one-time or incremental costs required to implement capabilities to exit the Transition Services Agreement with former parent.
(e) As part of working with a customer, the Company agreed to make concessions and provide discounts and other consideration to the customer as part of a multi-party solution. There were no related adjustments in 2025 as the agreed upon amounts had been satisfied.
(f) These adjustments remove the impact of certain Enabling Services costs not included in discontinued operations. The Enabling Services Segment was sold in the second quarter of 2024.
(g) Includes adjustments to estimated contingent consideration on a sale of a facility, income related to services provided under Transition Services Agreements, settlements related to litigation initiated prior to the Spin, the yield expense incurred on amounts received under the Company’s Receivables Securitization Program, and amortization of implementation costs deferred in connection with cloud computing arrangements.
(h) Income tax impact of adjustments represents the amount of additional tax expense that the Company estimates it would record if it used Non-GAAP results instead of GAAP results in the calculation of its provision.
NET CASH USED FOR OPERATING ACTIVITIES TO FREE CASH FLOW RECONCILIATION
(in millions)
(unaudited)
| Nine Months Ended September 30, 2025 |
|---|
| Net cash used for operating activities | $(15.6) |
| Capital expenditures | (17.7) |
| Free cash flow | $(33.3) |