Fortrea reports Q4 and full-year 2023 results

Fortrea reported financial results for the fourth quarter and full year ended December 31, 2023.

“Fortrea successfully navigated the second half 2023 transforming a “division of a division” into a leader in clinical development,” said Tom Pike, chairman and CEO of Fortrea. “Customers and employees have responded favorably to our patient-inspired purpose and our innovative solutions, combining leading science, technology and people. The planned divestiture of our Patient Access and Endpoint businesses strengthens our focus on Phase 1 to 4 Clinical Services. We are also pleased to put an important issue in the rear-view mirror. 2024 is an important year for us to continue demonstrating that we can deliver excellent results for customers while improving the financial results for the medium and longer term. I’m confident our talented global team will continue to execute our plans with discipline and focus.”

Fourth quarter 2023 financial results
Revenue for the fourth quarter was $775.4 million, compared to $761.7 million in the fourth quarter of 2022. Revenue for Clinical Services was $709.7 million and was $65.7 million for Enabling Services.

Fourth quarter GAAP net loss was $(36.0) million and diluted loss per share was $(0.41) compared to fourth quarter of 2022 GAAP net income of $33.4 million and earnings per share of $0.38. Fourth quarter adjusted EBITDA was $67.2 million, compared to fourth quarter of 2022 adjusted EBITDA of $109.8 million.

Fortrea’s book-to-bill ratio was 1.30x for the fourth quarter of 2023, achieving the target of more than 1.2x for its first six months as an independent organization.

Full year 2023 financial results
Revenue for the full year was $3,109.0 million, compared to $3,096.1 million for the full year 2022. Revenue for Clinical Services was $2,839.5 million and was $269.5 million for Enabling Services.

Full year GAAP net loss was $(3.4) million and diluted loss/earnings per share was $(0.04) compared to 2022 GAAP net income of $192.9 million and earnings per share of $2.17. Full year adjusted EBITDA was $267.3 million, compared to 2022 adjusted EBITDA of $405.1 million.

Backlog as of December 31, 2023, was $7,392 million.

The Company’s cash and cash equivalents were $108.6 million and gross debt was $1,624.7 million on December 31, 2023. For the full year 2023, operating cash flow was $167.4 million and free cash flow was $127.1 million.

2024 financial guidance
For the full year 2024, the Company targets revenues in the range of $3,140 million to $3,205 million and adjusted EBITDA guidance in the range of $280 million to $320 million, excluding the impact of the planned transaction described below. The guidance assumes foreign currency exchange rates as of December 31, 2023, remain in effect for the forecast period. The Company’s 2024 financial guidance and the planned transaction will be discussed during the Earnings Call at 9:00 am ET on March 11, 2024.

Other developments
On March 9, 2024, the Company entered into an agreement to divest Endpoint Clinical and Fortrea Patient Access to Arsenal Capital Partners. More information about the transaction was made available in Fortrea’s press release dated March 11, 2024.The purchase price for the transaction is $345 million, subject to customary purchase price adjustments, with $295 million to be paid at closing and $50 million to be paid upon achievement of certain transition-related milestones. The transaction is targeted to close in the second calendar quarter of 2024, subject to customary closing conditions and regulatory approvals, as well as the parties entering into certain services and operating agreements.
MB Bureau