Fortrea Holdings Reports $651.3M Revenue in Q1 2025, Operating Loss of $520.1M

Fortrea Holdings Inc. reported a revenue of $651.3 million for the first quarter of 2025, reflecting a 1.6% decrease from $662.1 million in the same period of 2024. The decline was attributed to a 1.1% decrease in organic revenues, primarily due to a slower backlog burn rate and delays in study start-ups for biotech projects. Additionally, unfavorable foreign currency translation contributed to the revenue drop by 0.5%. The company experienced a significant operating loss of $520.1 million, compared to a loss of $37.4 million in the prior year, largely due to a goodwill impairment charge of $488.8 million.

In terms of operational metrics, Fortrea's direct costs decreased by 3.5% to $534.8 million, representing 82.1% of revenues, down from 83.7% in the previous year. Selling, general, and administrative expenses rose slightly by 1.4% to $121.8 million, driven by increased personnel costs and professional fees associated with establishing corporate functions as a standalone entity. The company’s total equity decreased to $858.8 million from $1.362 billion at the end of 2024, primarily due to the net loss incurred during the quarter.

Strategically, Fortrea completed the sale of its Enabling Services Segment in March 2024, which has been classified as discontinued operations. The transaction, valued at $340 million, was finalized with an initial payment of $295 million, and the company received a milestone payment of $20 million in the first quarter of 2025. This divestiture is part of Fortrea's strategy to focus on its core Clinical Services segment, which provides comprehensive clinical development solutions.

As of March 31, 2025, Fortrea had approximately 15,000 employees and reported a backlog of $7.7 billion, indicating anticipated future revenue from business awards. The company’s cash and cash equivalents stood at $101.6 million, down from $118.5 million at the end of 2024. The company utilized $124.2 million in cash for operating activities during the quarter, a significant increase from $25.6 million in the prior year, primarily due to a decrease in cash received from accounts receivable.

Looking ahead, Fortrea expects to leverage its existing cash flows and credit facilities to support its operations and potential growth initiatives. The company is focused on maintaining compliance with its financial covenants and is evaluating strategic opportunities, including potential acquisitions and investments in complementary businesses. However, it acknowledges the risks associated with market conditions and operational challenges that could impact its future performance.