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Fortrea Holdings Inc. (FTRE)
NASDAQ:FTRE
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Fortrea Holdings Inc.
(NASDAQ:FTRE)
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Rating:48Neutral
Price Target:
$10.50
▼(-2.05% Downside)
Action:ReiteratedDate:02/27/26
FTRE scores below average primarily due to sharply worsening profitability and weakening cash-flow trend, reinforced by bearish technical signals. The score is supported somewhat by reduced leverage, continued positive free cash flow, and an earnings call that outlined tangible cost/cash improvements and 2026 EBITDA/cash-flow targets, though revenue headwinds remain a key risk.
Positive Factors
Deleveraging & liquidity
A dramatic reduction in debt to roughly $68M materially lowers financial risk and interest burden, giving management durable flexibility to fund operations, pursue strategic investments or continue share/debt actions. Lower leverage supports stability through cyclical revenue periods.
Positive cash generation
Consistent positive operating and free cash flow despite net losses is a durable strength: it funds debt paydown, cost programs, and targeted investments without constant external financing. Even with weakening FCF, ongoing cash conversion supports multi-quarter operational resilience.
Backlog & bookings
A $7.7B backlog and book-to-bill above 1.0 provide visible revenue runway and indicate improving demand/booking discipline. This backlog gives multi-month revenue visibility and supports a sustainable path to margin recovery if bookings translate into higher-utilization, higher-value work.
Negative Factors
Deep profitability decline
A sustained shift to large net losses and a roughly -36% margin erodes returns and shareholder capital, constraining reinvestment and incentive capacity. Restoring profitable operations requires persistent revenue mix improvement and margin discipline over multiple quarters.
Revenue headwinds & FSP variability
Structural pressure from FSP model shifts and lumpy pass-throughs reduces top-line visibility and can compress margins long-term. If higher-margin, specialized service bookings don't recover, revenue variability will slow margin recovery and make multi-year profitability targets harder to achieve.
Customer concentration
High client concentration concentrates cash-flow and booking risk; loss or spending cuts by a few large sponsors could trigger material revenue swings. This reduces negotiating leverage and increases volatility in multi-month planning and backlog realization.
Fortrea Holdings Inc. (FTRE) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$1.00B
Dividend YieldN/A
Average Volume (3M)1.70M
Price to Earnings (P/E)―
Beta (1Y)1.77
Revenue Growth-0.54%
EPS Growth-259.57%
CountryUS
Employees15,000
SectorHealthcare
Sector Strength45
IndustryBiotechnology
Share Statistics
EPS (TTM)0.09
Shares Outstanding93,500,000
10 Day Avg. Volume1,935,201
30 Day Avg. Volume1,696,095
Financial Highlights & Ratios
PEG Ratio>-0.01
Price to Book (P/B)2.79
Price to Sales (P/S)0.58
P/FCF Ratio17.82
Enterprise Value/Market Cap0.88
Enterprise Value/Revenue0.32
Enterprise Value/Gross Profit2.65
Enterprise Value/Ebitda-1.09
Forecast
1Y Price Target
$15.22Price Target Upside41.98% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering10
EPS Forecast (FY)0.7
Revenue Forecast (FY)$2.73B
Fortrea Holdings Inc. Business Overview & Revenue Model
Company DescriptionFortrea Holdings Inc., a contract research organization, primarily engages in the provision of biopharmaceutical product and medical device development services worldwide. It operates through two segments: Clinical Services and Enabling Services. The Clinical Services segment provides across the clinical pharmacology and clinical development spectrum. The Enabling Services segment provides patient access and clinical trial technology solutions to customers that streamline complex randomization and optimize the trial drug supply process. The company offers delivery models that include full service, functional service provider, and hybrid service structures. It also offers phase I-IV clinical trial management, differentiated technology enabled trial solutions, and post approval services. The company serves pharmaceutical, biotechnology, and medical device organizations. Fortrea Holdings Inc. was incorporated in 2023 and is based in Durham, North Carolina.
How the Company Makes MoneyFortrea Holdings generates revenue through multiple streams, including the sale of pharmaceutical products, licensing agreements, and partnerships with other healthcare organizations. The company monetizes its proprietary therapeutics by distributing them through established healthcare channels. Additionally, Fortrea engages in strategic collaborations with research institutions and other biotech firms, allowing it to share development costs and access broader markets. The company may also receive milestone payments and royalties from partners as its products progress through clinical trials and achieve regulatory approvals, further enhancing its revenue potential.
Fortrea Holdings Inc. Earnings Call Summary
Earnings Call Date:Feb 26, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:May 18, 2026
Earnings Call Sentiment Neutral
The call balanced measurable operational and financial progress (positive cash generation in Q4, exceeded cost-savings targets, debt paydown, improved DSO, backlog and book-to-bill stabilization, AI investments and commercial wins) against persistent near-term revenue headwinds (Q4 revenue decline, FSP/pass-through variability, and 2026 revenue guidance implying a YoY decline). Management reiterated a multi‑pillar turnaround approach and provided a constructive outlook for improving EBITDA and cash flow across 2026, while cautioning the recovery may be uneven in the first half. Overall, the call reflected cautious optimism with concrete execution on cost and cash metrics but continued top-line risks that make recovery incremental.Q4-2025 Updates
Positive Updates
Revenue in Line with Full-Year Guidance
Full year 2025 revenue of $2,723.4 million, up ~1% year-over-year and reported in line with management guidance; Q4 2025 revenue was $660.5 million.
Strong Cash Generation and Improved Collections
Generated positive Q4 operating cash flow of $129.1 million and Q4 free cash flow of $121.6 million. Full year operating cash flow was $113.5 million and free cash flow $88.3 million. Day Sales Outstanding (DSO) improved to 16 days (improved 17 days sequentially and 24 days year-over-year).
Exceeded Cost-Savings Targets
Delivered approximately $153 million in gross savings and $93 million in net savings for 2025, exceeding original targets and supporting margin and cash improvement.
Balance Sheet Strengthening and Liquidity
Paid down ~$75.7 million of senior secured notes in Q4 using cash on hand (since the spin, ~35% of original debt repaid). Ended the quarter with no revolver borrowings and available liquidity in excess of $600 million.
Backlog and Book-to-Bill Indicate Improving Demand
Q4 book-to-bill was 1.14x and trailing 12-month book-to-bill was 1.02x, reflecting improvement in demand in the second half of 2025. Backlog stood at $7.7 billion and cancellations remained in line with historical trends.
Adjusted EBITDA Performance
Full year adjusted EBITDA was $189.9 million (toward the higher end of guidance). Q4 adjusted EBITDA was $54 million (vs. $56 million a year ago) showing relative stability against a challenging backdrop.
Operational and Commercial Progress
Notable wins in Q4 including a long-term clinical pharmacology partnership with a top-5 pharma company, multiple FSP renewals, and a healthy mix of Phase II and Phase III global clinical development wins. Net Promoter Score and employee engagement improved year-over-year.
Technology and AI Investments Driving Productivity
Advanced deployment of the accelerate platform and AI-enabled tools (AI risk radar in production, CRA mobile app, My Day platform, feasibility intelligence pilot). Operational outcomes cited include accelerating recruitment by ~3 months in a complex respiratory study and completing enrollment in a Phase II Alzheimer's study.
Leadership Additions
Expanded leadership team with hires including Aggie Gallagher (General Counsel) and Dr. Scott Dave (clinical pharmacology lead); Dr. Oren Cohen now full-time Chief Medical Officer to deepen scientific engagement.
Negative Updates
Quarterly Revenue Decline
Q4 2025 revenue declined 5.2% year-over-year to $660.5 million, driven primarily by lower pass-through costs in clinical pharmacology and clinical development and continued FSP headwinds.
Pressure from FSP Headwinds and Pass-Through Variability
Management highlighted ongoing FSP (functional service provider) headwinds and lumpy pass-through revenue (including one-time high pass-through clinical pharmacology studies in 2024 that burned off), contributing to revenue variability and a projected YoY revenue decline for 2026.
Profitability Impacts and Lower Quarterly Adjusted Net Income
Q4 adjusted net income decreased to $9.2 million from $16.6 million a year ago; Q4 net loss narrowed to $32.5 million (improvement vs. prior year) but adjusted EBITDA declined modestly to $54 million from $56 million.
2026 Revenue Guidance Shows Decline
Management guided 2026 revenue to $2.55 billion–$2.65 billion (implying a year-over-year decline) due primarily to prior bookings phasing, ongoing FSP headwinds and anticipated reductions in pass-through costs.
Near-Term Cash Flow Seasonality and Q1 Headwind
While full-year 2026 operating cash flow is targeted to be positive, Q1 2026 is expected to be cash flow negative (driven by variable compensation payouts and a partial reversal of timing-related DSO benefits).
Customer Concentration Risk
Top 10 customers represented 56.8% of 2025 revenue and the largest customer accounted for 18.1% of revenue, indicating elevated customer-concentration risk.
Adjusted EBITDA and Margin Recovery Is a Multiyear Journey
Management emphasized that margin improvement is a multiyear effort dependent on sustainable revenue growth and continued structural cost actions; peers-level margins are a longer-term target rather than near-term certainty.
Reduction in Full-Year Cash vs. 2024 (Securitization Impact)
Full year 2025 operating cash flow ($113.5M) and free cash flow ($88.3M) were lower than 2024 ($262.8M and $237.3M respectively), although management noted 2024 benefited from securitization proceeds and that on a comparable basis cash flow improved materially (~$148M improvement).
Company Guidance
Fortrea's 2026 guidance calls for revenue of $2.55–$2.65 billion and adjusted EBITDA of $190–$220 million, with the company targeting positive full‑year operating cash flow (while expecting Q1 cash flow to be negative due to variable compensation payouts and a partial reversal of DSO timing, with that Q1 use of cash to be more than offset by positive cash generation in the rest of the year). Management expects incremental 2026 cost savings of roughly $70–80 million gross and $40–50 million net (moving compensation toward normalized levels by year‑end), plans continued debt repayment (Q4 2025 repurchased ~$75.7 million of senior notes and ~35% of original debt has been paid since the spin), and expects to maintain ample liquidity and covenant flexibility (available liquidity >$600 million with the revolver undrawn). Key operating/leading metrics cited at year‑end 2025: DSO 16 days (improved 17 days sequentially, 24 days YoY), Q4 book‑to‑bill 1.14x (trailing 12‑month 1.02x), backlog $7.7 billion and Q4 backlog burn 8.6%; management noted 2026 revenue pressure primarily from FSP headwinds, first‑half 2025 booking effects and reduced pass‑throughs, and expects margins to gradually improve through the year toward peer‑level (mid‑teens) over a multi‑year path.Fortrea Holdings Inc. Financial Statement Overview
Summary
Financials are mixed but pressured overall: profitability deteriorated sharply into deep losses in 2024–2025 on slightly declining revenue, and free cash flow fell materially in 2025. Offsetting this, leverage improved significantly with major debt reduction and the company still generated positive operating cash flow and free cash flow.Income Statement
Profitability has deteriorated sharply: the company moved from modest profitability in 2021–2022 to near break-even in 2023, then deep losses in 2024 and an even larger loss in 2025 (net margin worsening to roughly -36%). Revenue has been flat to down overall (slight declines in 2024 and 2025), and operating performance is weak with negative EBITDA in the last two years. A partial positive is that revenue has remained relatively stable around $2.7–$2.8B despite the margin compression, but the earnings trajectory is the dominant concern.22
Negative
Balance Sheet
Leverage has improved meaningfully: total debt fell from about $1.67B (2023) and $1.20B (2024) to roughly $68M in 2025, bringing debt-to-equity down to ~0.12. That said, equity also dropped significantly (to ~$563M in 2025 from ~$1.36B in 2024), and returns on equity are deeply negative in 2024–2025, reflecting heavy losses and weaker capital base. Overall, the balance sheet shows reduced debt risk, but declining equity and poor returns remain key weaknesses.54
Neutral
Cash Flow
Cash generation is positive but weakening: operating cash flow and free cash flow are both positive across the years shown, including 2025 (about $114M operating cash flow and $88M free cash flow). However, free cash flow fell substantially in 2025 versus 2024, and cash flow covers only a small portion of the current loss level, indicating earnings quality and/or working-capital volatility risk. The main strength is continued positive free cash flow despite net losses; the main weakness is the sharp year-over-year decline in free cash flow and limited cash coverage relative to losses.43
Neutral
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 2.72B | 2.70B | 2.84B | 2.84B | 3.06B |
| Gross Profit | 0.00 | 534.20M | 590.60M | 724.40M | 604.40M |
| EBITDA | -813.60M | -64.30M | 137.20M | 280.80M | 302.90M |
| Net Income | -986.20M | -328.50M | -25.20M | 186.20M | 98.00M |
Balance Sheet | |||||
| Total Assets | 2.72B | 3.58B | 4.33B | 4.29B | 4.37B |
| Cash, Cash Equivalents and Short-Term Investments | 174.60M | 118.50M | 108.60M | 112.00M | 94.60M |
| Total Debt | 68.00M | 1.20B | 1.67B | 63.40M | 77.20M |
| Total Liabilities | 2.15B | 2.22B | 2.62B | 945.30M | 1.11B |
| Stockholders Equity | 563.50M | 1.36B | 1.71B | 3.34B | 3.26B |
Cash Flow | |||||
| Free Cash Flow | 88.30M | 237.30M | 128.10M | 28.30M | 143.30M |
| Operating Cash Flow | 113.50M | 262.80M | 168.40M | 82.70M | 169.80M |
| Investing Cash Flow | 14.40M | 251.60M | -31.80M | -54.00M | -26.20M |
| Financing Cash Flow | -76.30M | -497.80M | -140.80M | -6.30M | -128.50M |
Fortrea Holdings Inc. Technical Analysis
Negative
10.72
Price Trends
15.24
Negative
13.35
Negative
10.08
Positive
Market Momentum
-1.46
Positive
34.23
Neutral
69.61
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For FTRE, the sentiment is Negative. The current price of 10.72 is below the 20-day moving average (MA) of 12.49, below the 50-day MA of 15.24, and above the 200-day MA of 10.08, indicating a neutral trend. The MACD of -1.46 indicates Positive momentum. The RSI at 34.23 is Neutral, neither overbought nor oversold. The STOCH value of 69.61 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for FTRE.
Fortrea Holdings Inc. Risk Analysis
Fortrea Holdings Inc. disclosed 59 risk factors in its most recent earnings report. Fortrea Holdings Inc. reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Fortrea Holdings Inc. Peers Comparison
UnderperformOutperform
Sector (51)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
59 Neutral | $4.23B | -30.31 | -32.00% | ― | ― | 45.66% | |
58 Neutral | $1.00B | -12.35 | -37.82% | ― | -100.00% | -28.79% | |
51 Neutral | $7.86B | -0.30 | -43.30% | 2.27% | 22.53% | -2.21% | |
49 Neutral | $558.11M | ― | -25.30% | ― | -100.00% | -305.92% | |
48 Neutral | $1.00B | -0.98 | -102.41% | ― | -0.54% | -259.57% | |
47 Neutral | $1.93B | -8.69 | -180.24% | ― | -32.79% | 36.87% | |
42 Neutral | $374.03M | -3.05 | -64.26% | ― | ― | -11.41% |
* Healthcare Sector Average
FTRE
Fortrea Holdings Inc.
10.72
0.34
3.28%
NKTR
Nektar Therapeutics
68.98
56.95
473.40%
FULC
Fulcrum Therapeutics
8.38
5.14
158.64%
CMPX
Compass Therapeutics
5.65
2.92
106.96%
ERAS
Erasca
13.66
12.38
967.19%
AURA
Aura Biosciences Inc
5.89
-1.32
-18.31%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.