Fortrea Holdings Reports $2.7 Billion Revenue for Fiscal Year 2024, Operating Loss of $161.9 Million

Fortrea Holdings Inc. reported a revenue of $2.7 billion for the fiscal year ending December 31, 2024, reflecting a 5.1% decrease from $2.84 billion in 2023. The decline in revenue was attributed to a 5.2% drop in organic revenues, primarily due to reduced pass-through costs and lower service revenues linked to a decrease in new business wins prior to the company's spin-off from Labcorp. The company also experienced a slower backlog burn rate and a mix of mature and longer-duration studies in its portfolio. Despite these challenges, Fortrea noted an increase in revenue from clinical pharmacology services.

In terms of profitability, Fortrea reported an operating loss of $161.9 million for 2024, compared to an operating income of $32 million in 2023. This significant shift was driven by increased selling, general, and administrative expenses, which rose by 25.1% to $560.7 million, largely due to higher professional fees and costs associated with transitioning from Labcorp. The company also incurred restructuring charges of $50.1 million, reflecting ongoing efforts to align resources and streamline operations.

Strategically, Fortrea completed the sale of its Enabling Services Segment, which included the operations of Fortrea Patient Access Inc. and Endpoint Clinical Inc., to Endeavor Buyer LLC for a total adjusted purchase price of $340 million. This transaction, finalized in the second quarter of 2024, was part of a strategic shift aimed at focusing on core clinical services. The company’s backlog stood at $7.7 billion as of December 31, 2024, indicating potential future revenue, although management cautioned that backlog figures may not always translate directly into revenue due to the nature of contract cancellations and delays.

Operationally, Fortrea employed approximately 15,500 individuals across 100 countries, maintaining a diverse customer base with significant revenue contributions from large pharmaceutical clients. The company reported that two customers accounted for approximately 14.3% and 10.5% of its revenue in 2024. Fortrea's geographic revenue distribution showed that North America generated $1.27 billion, Europe $800 million, and other regions $626.9 million. The company continues to invest in technology and data analytics to enhance its service offerings and improve operational efficiency.

Looking ahead, Fortrea expressed optimism about its growth potential, driven by increasing R&D investments in the pharmaceutical and biotechnology sectors. The company plans to leverage its expertise in clinical development and expand its capabilities in high-growth therapeutic areas. However, it acknowledged the risks associated with market conditions, including potential funding challenges for its customers and the competitive landscape within the contract research organization sector.