What changed in this filing

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Item 1. Financial Statements

2025-11-05 compared with 2025-08-06 · 181 added, 140 removed, 520 unchanged (38% of the section changed)

3 unchanged sentences

(in millions)

June 30, 2025 December 31, 2024

September 30, 2025 December 31, 2024

Current assets:

23 unchanged sentences

Commitments and contingent liabilities (Note 9)

Common stock, 90.8 and 89.7 shares outstanding at June 30, 2025 and December 31, 2024, respectively

Common stock, 92.2 and 89.7 shares outstanding at September 30, 2025 and December 31, 2024, respectively

Additional paid-in capital 2,101.8 2,042.2

7 unchanged sentences

(in millions, except per share data)

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2025 2024 2025 2024

6 unchanged sentences

Goodwill and other asset impairments

309.1 — 797.9 —

Restructuring and other charges 4.9 8.8 21.7 22.5

6 unchanged sentences

Loss from continuing operations before income taxes ( 28.7 ) ( 35.8 ) ( 947.4 ) ( 200.1 )

Income tax expense 4.2 10.7 19.1 14.8

Income tax (benefit) expense ( 12.8 ) ( 17.3 ) 6.3 ( 2.5 )

Loss from continuing operations ( 15.9 ) ( 18.5 ) ( 953.7 ) ( 197.6 )

10 unchanged sentences

FORTREA HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(in millions, except per share data)

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2025 2024 2025 2024

2 unchanged sentences

Unrealized gain (loss) on derivative instruments 0.1 ( 3.3 ) ( 0.8 ) ( 0.8 )

Other comprehensive income (loss) before tax 82.6 ( 7.3 ) 127.1 ( 32.9 )

Benefit (provision) for income tax related to items of comprehensive income — ( 0.1 ) 0.2 ( 0.6 )

Other comprehensive income (loss), net of tax 82.6 ( 7.4 ) 127.3 ( 33.5 )

Comprehensive loss $ ( 292.3 ) $ ( 145.8 ) $ ( 810.5 ) $ ( 272.9 )

Other comprehensive (loss) income before tax ( 14.8 ) 70.1 112.3 37.2

Benefit for income tax related to items of comprehensive income — 0.8 0.2 0.2

Other comprehensive (loss) income, net of tax ( 14.8 ) 70.9 112.5 37.4

Comprehensive (loss) income $ ( 30.7 ) $ 43.0 $ ( 841.2 ) $ ( 229.9 )

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

18 unchanged sentences

Balance at June 30, 2025 90.8 0.1 2,079.5 ( 1,334.8 ) ( 155.6 ) 589.2

Net loss — — — ( 15.9 ) ( 15.9 )

Other comprehensive loss, net of tax — — — — ( 14.8 ) ( 14.8 )

Stock compensation — — 22.3 — — 22.3

Issuance of common stock under employee stock plans 1.4 — — — — —

Balance at September 30, 2025 92.2 $ 0.1 $ 2,101.8 $ ( 1,350.7 ) $ ( 170.4 ) $ 580.8

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

FORTREA HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(in millions)

Shares Amounts Additional Paid-in Capital Accumulated Deficit Accumulated

13 unchanged sentences

Balance at June 30, 2024 89.5 0.1 2,017.9 ( 307.9 ) ( 249.0 ) 1,461.1

— — — ( 27.9 ) — ( 27.9 )

Other comprehensive income, net of tax — — — — 70.9 70.9

Stock compensation — — 13.0 — — 13.0

Issuance of common stock under employee stock plans 0.2 — — — — —

Net share settlement tax payments from issuance of stock to employees — — ( 3.6 ) — — ( 3.6 )

Balance at September 30, 2024 89.7 $ 0.1 $ 2,027.3 $ ( 335.8 ) $ ( 178.1 ) $ 1,513.5

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

2 unchanged sentences

(in millions)

Six Months Ended June 30,

Nine Months Ended September 30,

CASH FLOWS FROM OPERATING ACTIVITIES:

17 unchanged sentences

(Decrease) increase in accounts payable

( 46.8 ) 13.0

Increase in deferred revenue

Increase in unearned revenue

Decrease in accrued expenses and other ( 16.2 ) ( 43.7 )

( 1.7 ) ( 23.0 )

Net cash (used for) provided by operating activities ( 15.6 ) 245.7

9 unchanged sentences

Principal payments of long-term debt — ( 482.7 )

Net cash provided by (used for) financing activities 49.4 ( 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 )

13 unchanged sentences

The Company has a rich history of providing clinical development services for more than 30 years across more than 20 therapeutic areas.

The Company leverages its global scale, clinical data insights, scientific and therapeutic expertise, technology innovation, industry network and decades of experience as a standalone company and as a business unit prior to the Spin to deliver tailored solutions to its customers.

to deliver tailored solutions to its customers.

With what the Company believes is a distinctive market offering, Fortrea meets growing global demand for clinical development services.

15 unchanged sentences

Unless otherwise noted, discussion within these notes to the condensed consolidated financial statements relates to the Company’s continuing operations.

Unaudited Interim Financial Information

FORTREA HOLDINGS INC.

1 unchanged sentence

(dollars and shares in millions, except per share data)

Unaudited Interim Financial Information

The Company’s unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S.

12 unchanged sentences

Substantially all of the Company’s accounts receivable and unbilled services are with companies in the pharmaceutical, biotechnology and medical device industries.

As of June 30, 2025, one pharmaceutical customer accounted for 16.5 % of the Company's combined gross accounts receivable and unbilled services.

As of September 30, 2025, one pharmaceutical customer accounted for approximately 23.4 % of the Company's combined gross accounts receivable and unbilled services.

As of December 31, 2024, two pharmaceutical companies accounted for approximately 22.2 % and 13.8 % of the Company's combined gross accounts receivable and unbilled services.

Additionally, for the three months ended June 30, 2025, one customer accounted for approximately 19.5 % of revenues, and for the six months ended June 30, 2025, one customer accounted for approximately 17.5 % of revenues.

For the three months ended June 30, 2024, one customer accounted for 13.2 % of revenues, and for the six months ended June 30, 2024, two customers accounted for 13.6 % and 11.3 % of revenues.

Additionally, for the three months ended September 30, 2025, one customer accounted for approximately 19.8 % of revenues, and for the nine months ended September 30, 2025, one customer accounted for approximately 18.3 % of revenues.

For the three months ended September 30, 2024, one customer accounted for approximately 15.1 % of revenues, and for the nine months ended September 30, 2024, two customers accounted for approximately 14.2 % and 10.4 % of revenues.

Concentrations of credit risk are mitigated due to the number of the Company’s customers as well as their dispersion across many different geographic regions.

5 unchanged sentences

however, retrospective application is also permitted.

The Company does not expect the adoption of this standard to have a material impact on its results of operations, financial position or cash flows.

The Company does not expect the adoption of this standard to have a material impact on its consolidated financial statements.

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40), Disaggregation of Income Statement Expenses.

7 unchanged sentences

(dollars and shares in millions, except per share data)

In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40):

Targeted Improvements to the Accounting for Internal-Use Software .

The new guidance simplifies the accounting for internally developed software by replacing the existing phase-based capitalization model with a principles-based approach that focuses on management’s authorization and the probability of project completion.

The guidance is effective for fiscal years beginning after December 15, 2027, including interim periods within those fiscal years.

Entities may apply the guidance using a prospective, retrospective, or modified transition approach, and early adoption is permitted.

The Company is currently evaluating the impact this guidance will have on its consolidated financial statements and disclosures.

DISCONTINUED OPERATIONS

6 unchanged sentences

The first milestone payment in the amount of $ 20.0 was received in the first quarter of 2025.

The second and final milestone payment in the amount of $ 25.0 was received in the third quarter of 2025.

Financial Information of Discontinued Operations

The following table summarizes the significant line items included in income (loss) from discontinued operations, net of income tax in the condensed consolidated statements of operations for the three and six months ended June 30, 2024:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

Revenues $ — $ 106.4

6 unchanged sentences

Total costs and expenses — 117.9

Operating income (loss) 5.9 ( 11.5 )

Operating loss — ( 11.5 )

Other expense:

Foreign exchange gain (loss) 0.1 0.1

Foreign exchange gain — 0.1

Loss on sale of a business — ( 23.2 )

3 unchanged sentences

Loss from discontinued operations, net of tax $ ( 9.4 ) $ ( 69.7 )

Three Months Ended June 30, Six Months Ended June 30,

FORTREA HOLDINGS INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars and shares in millions, except per share data)

Three Months Ended September 30, Nine Months Ended September 30,

Loss from operations of discontinued component $ ( 9.4 ) $ ( 46.5 )

3 unchanged sentences

Accordingly, an impairment analysis was performed, which resulted in a goodwill impairment charge of $ 24.0 .

FORTREA HOLDINGS INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars and shares in millions, except per share data)

The cash flows related to discontinued operations have not been segregated and are included in the condensed consolidated statements of cash flows.

The following table summarizes depreciation and amortization, capital expenditures and the significant cash flow and noncash items from discontinued operations for the six months ended June 30, 2024:

Six Months Ended June 30,

The following table summarizes depreciation and amortization, capital expenditures and the significant cash flow and noncash items from discontinued operations for the nine months ended September 30, 2024:

Nine Months Ended September 30,

Depreciation and amortization $ 1.6

2 unchanged sentences

Capital expenditures 7.4

There were no significant operating or investing noncash items related to discontinued operations for the six months ended June 30, 2024.

The Company’s revenues by geography for the three and six months ended June 30, 2025 and 2024 are as follows:

Three Months Ended June 30, 2025 Three Months Ended June 30, 2024

There were no significant operating or investing noncash items related to discontinued operations for the nine months ended September 30, 2024.

The Company’s revenues by geography for the three and nine months ended September 30, 2025 and 2024 are as follows:

Three Months Ended September 30, 2025 Three Months Ended September 30, 2024

North America Europe Other Total North America Europe Other Total

$ 332.7 $ 213.2 $ 155.4 $ 701.3 $ 319.7 $ 191.8 $ 163.4 $ 674.9

Six Months Ended June 30, 2025 Six Months Ended June 30, 2024

Nine Months Ended September 30, 2025 Nine Months Ended September 30, 2024

North America Europe Other Total North America Europe Other Total

$ 986.5 $ 632.2 $ 444.2 $ 2,062.9 $ 944.4 $ 595.1 $ 459.9 $ 1,999.4

FORTREA HOLDINGS INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars and shares in millions, except per share data)

Revenue from the United States comprises substantially all revenue in North America.

1 unchanged sentence

The following table provides information about contract asset balances:

June 30, 2025 December 31, 2024

September 30, 2025 December 31, 2024

Sales commission assets $ 21.0 $ 22.1

1 unchanged sentence

Total $ 21.5 $ 23.2

Amortization related to sales commission assets for the three months ended June 30, 2025 and 2024 was $ 2.8 and $ 2.9 , respectively, and for the six months ended June 30, 2025 and 2024 was $ 5.9 and $ 5.5 , respectively.

Amortization related to deferred contract costs for the three months ended June 30, 2025 and 2024 was $ 0.2 and $ 0.5 , respectively, and for the six months ended June 30, 2025 and 2024 was $ 0.4 and $ 0.9 , respectively.

Amortization related to sales commission assets for the three months ended September 30, 2025 and 2024 was $ 3.0 and $ 2.9 , respectively, and for the nine months ended September 30, 2025 and 2024 was $ 8.9 and $ 8.5 , respectively.

Amortization related to deferred contract costs for the three months ended September 30, 2025 and 2024 was $ 0.2 and $ 0.6 , respectively, and for the nine months ended September 30, 2025 and 2024 was $ 0.6 and $ 1.5 , respectively.

The Company applies the practical expedient to n ot recognize the effect of financing in its contracts with customers when the difference in timing of payment and performance is one year or less.

FORTREA HOLDINGS INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars and shares in millions, except per share data)

Accounts Receivable, Unbilled Services and Unearned Revenue

The following table provides information about accounts receivable, unbilled services and unearned revenue from contracts with customers:

June 30, 2025 December 31, 2024

September 30, 2025 December 31, 2024

Accounts receivable $ 163.4 $ 156.5

3 unchanged sentences

Unearned revenue $ 411.6 $ 353.3

Revenue recognized during the period that was included in the unearned revenue balance at the beginning of the period was $ 157.5 and $ 125.5 for the six months ended June 30, 2025 and 2024, respectively.

Additionally, as of the quarter ended June 30, 2025, the Company had sold $ 300.0 of receivables as described in the Receivables Securitization Program section below.

Revenue recognized during the period that was included in the unearned revenue balance at the beginning of the period was $ 217.9 and $ 147.6 for the nine months ended September 30, 2025 and 2024, respectively.

Additionally, as of the quarter ended September 30, 2025, the Company had sold $ 300.0 of receivables as described in the Receivables Securitization Program section below.

Credit Loss Rollforward

The Company estimates future expected losses on accounts receivable and unbilled services over the remaining collection period of the instrument.

The rollforward for the allowance for credit losses for the six months ended June 30, 2025 is as follows:

The rollforward for the allowance for credit losses for the nine months ended September 30, 2025 is as follows:

Allowance for credit losses as of December 31, 2024 $ 39.3

1 unchanged sentence

Write-offs ( 3.2 )

Allowance for credit losses as of June 30, 2025 $ 47.4

Performance Obligations Under Long-Term Contracts

As of June 30, 2025, approximately $ 4,474.7 of revenues are expected to be recognized from remaining performance obligations.

The Company expects to recognize approximately 29 % of the existing performance obligations as of June 30, 2025 as revenue over the next 12 months and the remaining balance thereafter.

The Company’s long-term contracts generally range from one to eight years .

During the three and six months ended June 30, 2025, there were reductions of approximately $ 1 and $ 16 , respectively, in revenue related to performance obligations partially satisfied in previous periods.

For the three months ended June 30, 2025, the majority of the change was associated with changes in estimated effort to complete customer contract obligations, partially offset by changes in scope or price.

For the six months ended June 30, 2025, the majority of the change was associated with changes in scope or price and a smaller portion related to changes in estimated effort to complete customer contract obligations.

The gross and net amounts of revenue recognized solely from changes in estimates were not material.

During the three and six months ended June 30, 2024, there were reductions of approximately $ 18 and $ 52 , respectively, in revenue related to performance obligations partially satisfied in previous periods.

For the reduction, for the three months ended June 30, 2024, the majority of the change was associated with changes in scope or price, and a smaller portion related to changes in estimated effort to complete customer contract obligations.

For the three months ended June 30, 2024, the reduction of revenue attributed to changes in estimated effort was approximately $ 4 , and resulted in an increase in loss from continuing operations of $ 3 and in loss per share of $ 0.03 .

For the six months ended June 30, 2024, the reduction of revenue attributed to changes in estimated effort was approximately $ 21 , and resulted in an increase in loss from continuing operations of $ 19 and in loss per share of $ 0.21 .

Allowance for credit losses as of September 30, 2025 $ 49.6

FORTREA HOLDINGS INC.

1 unchanged sentence

(dollars and shares in millions, except per share data)

Performance Obligations Under Long-Term Contracts

As of September 30, 2025, approximately $ 4,547.7 of revenues are expected to be recognized from remaining performance obligations.

The Company expects to recognize approximately 29 % of the existing performance obligations as of September 30, 2025 as revenue over the next 12 months and the remaining balance thereafter.

The Company’s long-term contracts generally range from one to eight years .

During the three and nine months ended September 30, 2025, there were reductions of approximately $ 10 and $ 26 , respectively, in revenue related to performance obligations partially satisfied in previous periods.

For the three months ended September 30, 2025, the majority of the change was associated with changes in estimated effort to complete customer contract obligations and a smaller portion related to changes in scope or price.

For the nine months ended September 30, 2025, the change was associated with both changes in estimated effort to complete customer contract obligations and changes in scope or price.

For the three months ended September 30, 2025, the change in estimate resulted in an estimated reduction to revenue of $ 7 , and an increase in loss from continuing operations of $ 4 and in loss per share of $ 0.04 .

For the nine months ended September 30, 2025, the change in estimate resulted in an estimated reduction to revenue of $ 13 , and an increase in loss from continuing operations of $ 13 and in loss per share of $ 0.14 .

During the three and nine months ended September 30, 2024, there were reductions of approximately $ 6 and $ 58 , respectively, in revenue related to performance obligations partially satisfied in previous periods.

For the three months ended September 30, 2024, the majority of the change was associated with changes in estimated effort to complete customer contract obligations and a smaller portion related to changes in scope or price.

For the three months ended September 30, 2024, the change in estimate resulted in an estimated reduction to revenue of $ 4 , and an increase in loss from continuing operations of $ 2 and in loss per share of $ 0.02 .

For the nine months ended September 30, 2024, the change in estimate resulted in an estimated reduction to revenue of $ 25 , and an increase in loss from continuing operations of $ 25 and in loss per share of $ 0.28 .

The Company applies the practical expedient and does not disclose information about remaining performance obligations where (i) the performance obligation is part of a contract that has an original expected duration of one year or less or (ii) when the Company recognizes revenue from the satisfaction of the performance obligation in accordance with the right-to-invoice practical expedient.

6 unchanged sentences

The Receivables Facility is scheduled to terminate on May 6, 2027, unless terminated earlier pursuant to its terms.

As of June 30, 2025, the Company had sold $ 300.0 of receivables, which were derecognized from the Company’s consolidated balance sheet as described in the Accounts Receivable, Unbilled Services and Unearned Revenue section above.

Total costs associated with the sale were $ 4.5 and $ 8.9 for the three and six months ended June 30, 2025, and $ 2.1 for the three and six months ended June 30, 2024.

As of September 30, 2025, the Company had sold $ 300.0 of receivables, which were derecognized from the Company’s consolidated balance sheet as described in the Accounts Receivable, Unbilled Services and Unearned Revenue section above.

Total costs associated with the sale were $ 4.5 and $ 13.4 for the three and nine months ended September 30, 2025, and $ 5.3 and $ 7.4 for the three and nine months ended September 30, 2024, respectively.

These costs are included within selling, general and administrative costs in the condensed consolidated statements of operations.

FORTREA HOLDINGS INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars and shares in millions, except per share data)

RESTRUCTURING AND OTHER CHARGES

3 unchanged sentences

The following represents the Company’s restructuring accrual activities for the periods indicated:

Severance and Other Employee Costs Facility Costs Total

Severance and Other Employee Costs Facility and Other Costs Total

Balance as of December 31, 2024 $ 23.1 $ 0.6 $ 23.7

1 unchanged sentence

Cash payments and other adjustments ( 22.8 ) ( 2.2 ) ( 25.0 )

Balance as of June 30, 2025 $ 14.0 $ 0.6 $ 14.6

Severance and Other Employee Costs Facility Costs Total

Balance as of September 30, 2025 $ 10.8 $ 0.6 $ 11.4

Severance and Other Employee Costs Facility and Other Costs Total

Balance as of December 31, 2023 $ 1.1 $ 3.2 $ 4.3

2 unchanged sentences

Cash payments and other adjustments ( 14.2 ) ( 0.6 ) ( 14.8 )

Balance as of June 30, 2024 $ 5.2 $ 0.1 $ 5.3

The restructuring liabilities are current as of June 30, 2025 and December 31, 2024 and are included in accrued expenses and other current liabilities in the condensed consolidated balance sheets.

FORTREA HOLDINGS INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars and shares in millions, except per share data)

Balance as of September 30, 2024 $ 2.0 $ 0.3 $ 2.3

The restructuring liabilities are current as of September 30, 2025 and December 31, 2024 and are included in accrued expenses and other current liabilities in the condensed consolidated balance sheets.

EARNINGS (LOSS) PER SHARE

3 unchanged sentences

The following represents the computation of basic and diluted earnings (loss) per share from continuing operations per share.

Three Months Ended June 30,

Three Months Ended September 30,

Per Share Amount

3 unchanged sentences

$ ( 15.9 ) 91.2 $ ( 0.17 ) $ ( 18.5 ) 89.6 $ ( 0.21 )

Six Months Ended June 30,

FORTREA HOLDINGS INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars and shares in millions, except per share data)

Nine Months Ended September 30,

Earnings Shares Per Share Amount Earnings Shares Per Share Amount

3 unchanged sentences

The following represents the computation of basic and diluted earnings (loss) per share from discontinued operations per share.

Three Months Ended June 30,

Three Months Ended September 30,

Per Share Amount

3 unchanged sentences

$ — — $ — $ ( 9.4 ) 89.6 $ ( 0.10 )

Six Months Ended June 30,

Nine Months Ended September 30,

Per Share Amount

3 unchanged sentences

$ — — $ — $ ( 69.7 ) 89.4 $ ( 0.78 )

FORTREA HOLDINGS INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars and shares in millions, except per share data)

Diluted earnings per share represent the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock.

3 unchanged sentences

The following table summarizes the potential common shares not included in the computation of diluted earnings per share because their impact would have been antidilutive:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended

September 30, Nine Months Ended September 30,

2025 2024 2025 2024

3 unchanged sentences

Based on the annual test performed on October 1, 2024, it was previously determined that the fair values of the Company’s reporting units were greater than the carrying values, resulting in no impairment.

For the Clinical Development reporting unit, the fair value of the business exceeded the book value by approximately 10 % as of October 1, 2024.

For the Clinical Development reporting unit, the fair value of the business exceeded the carrying value by approximately 10 % as of October 1, 2024.

FORTREA HOLDINGS INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars and shares in millions, except per share data)

During the first and second quarters of 2025, due to sustained declines in the Company’s share price and uncertainties in global macroeconomic conditions, the Company determined that indicators of impairment existed.

As a result, the Company performed interim impairment tests as of March 31, 2025 and June 30, 2025.

There were no indicators of impairment for the three months ended September 30, 2025.

Based upon the results of the quantitative assessment as of March 31, 2025, the Company concluded that the fair value of the Clinical Development reporting unit was less than its carrying value and recorded a goodwill impairment of $ 488.8 .

9 unchanged sentences

The share price used to calculate the Company’s market capitalization was $ 7.55 per share and $ 4.94 per share as of March 31, 2025 and June 30, 2025, respectively.

FORTREA HOLDINGS INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars and shares in millions, except per share data)

The changes in the carrying amount of goodwill for the six months ended June 30, 2025 and 2024 are as follows:

The changes in the carrying amount of goodwill for the nine months ended September 30, 2025 and 2024 are as follows:

Balance as of December 31 $ 1,710.4 $ 1,739.4

1 unchanged sentence

Foreign currency impact and other adjustments to goodwill 45.6 27.6

Balance as of June 30 $ 965.2 $ 1,725.7

Balance as of September 30 $ 958.1 $ 1,767.0

FORTREA HOLDINGS INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars and shares in millions, except per share data)

The current portion of long-term debt consisted of the following:

June 30, 2025 December 31, 2024

September 30, 2025 December 31, 2024

Current portion of 7.5 % senior notes due 2030

3 unchanged sentences

Long-term debt consisted of the following:

June 30, 2025 December 31, 2024

September 30, 2025 December 31, 2024

7.5 % senior notes due 2030

5 unchanged sentences

Total long-term debt $ 1,052.1 $ 1,049.7

During the three and six months ended June 30, 2024, the Company paid down $ 64.0 and $ 70.2 , respectively, on term loan A and $ 411.0 and $ 412.5 , respectively, on term loan B.

Additionally, the Company wrote off $ 12.2 of unamortized debt issuance costs associated with the pay down of debt, which were recorded in interest expense in the condensed consolidated statements of operations, during the three and six months ended June 30, 2024.

During the three and nine months ended September 30, 2024, the Company paid down $ 0.0 and $ 70.2 , respectively, on its senior secured term loan A due 2028 (“term loan A”) and $ 0.0 and $ 412.5 , respectively, on its senior secured term loan B due 2030 (“term loan B”).

Additionally, in the second quarter of 2024, the Company wrote off $ 12.2 of unamortized debt issuance costs associated with the pay down of debt, which were recorded in interest expense in the condensed consolidated statements of operations during the nine months ended September 30, 2024.

On June 27, 2023, the Company issued $ 570.0 aggregate principal amount of 7.50 % senior notes due 2030 (the “Notes”).

1 unchanged sentence

Net proceeds from the offering of the Notes were $ 560.2 after deducting expenses of the offering.

FORTREA HOLDINGS INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars and shares in millions, except per share data)

The bond indenture for the Notes contains an asset sale covenant that effectively requires the Company to utilize a prorated portion of the Net Cash Proceeds from an Asset Sale, each as defined in the indenture, to retire Notes at par.

Absent an amendment to the indenture or other transaction related to these Notes, Fortrea currently expects that the sale of net assets relating to its Enabling Services Segment will require the Company to offer to repurchase, purchase on the open market or redeem approximately $ 76.0 of the Notes in accordance with the terms of the indenture and no later than the fourth quarter of 2025, which amount has been classified as current portion of long-term debt in the consolidated balance sheet as of June 30, 2025.

As a result of Fortrea’s sale of assets relating to its Enabling Services Segment, Fortrea intends to repurchase up to $ 75.7 of the Notes in accordance with the terms of the indenture by the end of November 2025, which amount has been classified as current portion of long-term debt in the consolidated balance sheet as of September 30, 2025.

Credit Facilities

7 unchanged sentences

The term loans accrue interest at a per annum rate equal to the sum of, at the option of the Company, a Base Rate or a Term SOFR Rate and the Applicable Margin as defined by the Credit Agreement.

As of June 30, 2025, the effective interest rate on the term loan A and term loan B was 6.33 % and 8.08 %, respectively.

As of September 30, 2025, the effective interest rate on the term loan A and term loan B was 6.26 % and 8.06 %, respectively.

FORTREA HOLDINGS INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars and shares in millions, except per share data)

The revolving credit facility is permitted, subject to certain covenant restrictions, to be used for general corporate purposes, including working capital and capital expenditures.

There was $ 50.0 outstanding on the Company’s revolving credit facility and $ 400.0 was available for borrowing as of June 30, 2025.

There were no balances outstanding on the Company’s revolving credit facility and there were $ 2.3 in letters of credit issued under the letter of credit sublimit, resulting in $ 447.7 available for borrowing as of September 30, 2025.

No balances were outstanding as of December 31, 2024.

As of June 30, 2025, the effective interest rate on the revolving credit facility was 6.32 %.

As of September 30, 2025, the effective interest rate on the revolving credit facility was 6.16 %, assuming a one-month interest election.

There is an annual agency fee associated with the Credit Agreement ($ 0.1 paid in quarterly installments) and a variable commitment fee associated with the revolving credit facility based on the Company’s Total Leverage Ratio as defined under the Credit Agreement.

As of June 30, 2025, the commitment fee was 0.30 % (per annum and paid quarterly).

As of September 30, 2025, the commitment fee was 0.30 % (per annum and paid quarterly).

The credit facility matures on June 30, 2028.

There were no outstanding letters of credit under the Credit Agreement as of June 30, 2025.

Under the Credit Agreement, the Company is subject to negative covenants limiting subsidiary indebtedness and certain other covenants typical for similarly rated borrowers, and the Company is required to maintain certain net leverage and interest coverage ratios.

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On February 28, 2025, the Company entered into an amendment to modify certain financial covenants for additional flexibility under the Credit Agreement.

The Company was in compliance with all covenants in the Credit Agreement at June 30, 2025 and believes it will be in compliance with all covenants for a period of at least 12 months from the date these financial statements are issued.

The Company was in compliance with all covenants in the Credit Agreement at September 30, 2025 and believes it will be in compliance with all covenants for a period of at least 12 months from the date these financial statements are issued.

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

9 unchanged sentences

The table below presents the fair value of the Company’s derivatives on a gross basis and the balance sheet classification of those instruments:

June 30, 2025 December 31, 2024

September 30, 2025 December 31, 2024

Balance Sheet Classification Asset Liability Asset Liability

6 unchanged sentences

Accrued expenses and other — ( 0.1 ) — ( 1.2 )

The notional amounts of the Company’s interest rate swaps and foreign currency forward contracts were $ 150.0 and $ 256.8 as of June 30, 2025 and $ 150.0 and $ 468.6 as of December 31, 2024, respectively.

The following table presents the pre-tax effects of cash flow hedges included in the Company’s condensed consolidated statements of comprehensive loss:

Pre-Tax Gain (Loss) Included in Other Comprehensive Income (Loss)

Three Months Ended June 30, Six Months Ended June 30,

The notional amounts of the Company’s interest rate swaps and foreign currency forward contracts were $ 150.0 and $ 308.6 as of September 30, 2025 and $ 150.0 and $ 468.6 as of December 31, 2024, respectively.

The following table presents the pre-tax effects of cash flow hedges included in the Company’s condensed consolidated statements of comprehensive (loss) income:

Pre-Tax Gain (Loss) Included in Other Comprehensive (Loss) Income

Three Months Ended September 30, Nine Months Ended September 30,

2025 2024 2025 2024

1 unchanged sentence

The following table presents amounts reclassified out of accumulated other comprehensive loss and recognized in the condensed consolidated statements of operations:

Amounts Reclassified from Other Comprehensive Income (Loss) into Earnings

Three Months Ended June 30, Six Months Ended June 30,

Amounts Reclassified from Other Comprehensive (Loss) Income into Earnings

Three Months Ended

September 30, Nine Months Ended

September 30,

Statement of Operations Classification 2025 2024 2025 2024

Interest rate swaps Interest expense $ — $ ( 0.4 ) $ ( 0.1 ) $ ( 1.2 )

The estimated amount of pre-tax net losses included in other comprehensive income (loss) that is expected to be reclassified into earnings over the twelve months following June 30, 2025, is $ 0.6 .

The estimated amount of pre-tax net losses included in other comprehensive (loss) income that is expected to be reclassified into earnings over the twelve months following September 30, 2025, is $ 0.9 .

Refer to Note 10, “Preferred Stock and Common Shareholders' Equity” for the impact of the Company’s derivative instruments included in accumulated other comprehensive loss.

The following table presents a summary of the loss for derivative contracts not designated as hedges included in the Company’s condensed consolidated statements of operations:

The following table presents a summary of the gain (loss) for derivative contracts not designated as hedges included in the Company’s condensed consolidated statements of operations:

Gain (Loss) on Derivatives Recognized in Earnings

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended

September 30, Nine Months Ended

September 30,

Statement of Operations Classification 2025 2024 2025 2024

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however the Company also considers and enters into discussions regarding settlement of disputes, and may enter into settlement agreements, if in management’s judgment, it is in the best interest of the Company to do so.

For the three and six months ended June 30, 2025, the Company recorded legal expenses of $ — and $ 1.9 , respectively, related to the settlement of legal matters initiated prior to the spin.

For the three and nine months ended September 30, 2025, the Company recorded legal expenses of $ — and $ 1.9 , respectively, related to the settlement of legal matters initiated prior to the spin.

The Company does not believe that any liabilities resulting from claims and legal actions will have a material effect on its financial condition, results of operations or cash flows.

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The complaint alleges that defendants made omissions and misrepresentations to investors that they claim violated certain securities laws.

A motion for lead plaintiff is expected in August, and it is anticipated that an amended complaint will be filed thereafter, to which the Company will respond.

The Construction Industry Laborers Pension Fund and City of Pontiac Reestablished General Employees Retirement System were appointed as lead plaintiffs on September 3, 2025 and the lead plaintiffs have until November 10, 2025 to file an amended complaint, to which the Company will respond.

The Company believes it has valid defenses to the claims alleged and intends to vigorously defend itself, but there is no guarantee that the Company will prevail.

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It was previously disclosed that there was an issue in a customer’s trial caused by a third-party vendor not affiliated with the Company.

As part of working with this customer, the Company made concessions and provided discounts and other consideration to the customer in the amount of $ 12.5 as part of a multi-party solution to facilitate the ongoing trials, of which $ 0.4 and $ 2.1 were recorded as a reduction of revenue for the three and six months ended June 30, 2024.

There were no related reductions of revenue during the three and six months ended June 30, 2025, as the agreed-upon amount had been satisfied.

As part of working with this customer, the Company made concessions and provided discounts and other consideration to the customer in the amount of $ 12.5 as part of a multi-party solution to facilitate the ongoing trials, of which $ 0.9 and $ 3.0 were recorded as a reduction of revenue for the three and nine months ended September 30, 2024.

There were no related reductions of revenue during the three and nine months ended September 30, 2025, as the agreed-upon amount had been satisfied.

The Company believes that it is in compliance in all material respects with all statutes, regulations, and other requirements applicable to its drug development support services.

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The Company is authorized to issue up to 30.0 shares of preferred stock, par value $ 0.001 per share.

There were no preferred shares outstanding as of June 30, 2025 and December 31, 2024.

There were no preferred shares outstanding as of September 30, 2025 and December 31, 2024.

Stockholder Rights Plan

26 unchanged sentences

Balance at June 30, 2025 ( 148.0 ) ( 6.5 ) ( 1.1 ) ( 155.6 )

Current quarter foreign exchange adjustments ( 14.9 ) — — ( 14.9 )

Unrealized gain on derivative instruments — — 0.1 0.1

Amounts reclassified from accumulated other comprehensive loss — — — —

Tax effect of adjustments — — — —

Balance at September 30, 2025 $ ( 162.9 ) $ ( 6.5 ) $ ( 1.0 ) $ ( 170.4 )

FORTREA HOLDINGS INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars and shares in millions, except per share data)

Foreign Currency Translation Adjustments Net Benefit Plan Adjustments Unrealized Gain (Loss) on Derivative Instruments Accumulated Other Comprehensive Loss

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Balance at June 30, 2024 ( 242.1 ) ( 7.4 ) 0.5 ( 249.0 )

FORTREA HOLDINGS INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars and shares in millions, except per share data)

For the three months ended June 30, 2025 and 2024, the Company recognized income tax expenses of $ 4.2 and $ 10.7 , respectively, which resulted in effective tax rates of ( 1.1 )% and ( 12.1 )%, respectively.

The effective tax rate for the three months ended June 30, 2025 was lower than the Company’s statutory tax rate primarily due to impairment of goodwill that has no tax benefit, an increase in valuation allowance, BEAT, non-deductible compensation expenses and withholding taxes for 2025 non-U.S.

Current quarter foreign exchange adjustments 73.4 — — 73.4

Unrealized loss on derivative instruments — — ( 2.9 ) ( 2.9 )

Amounts reclassified from accumulated other comprehensive loss — — ( 0.4 ) ( 0.4 )

Tax effect of adjustments — — 0.8 0.8

Balance at September 30, 2024 $ ( 168.7 ) $ ( 7.4 ) $ ( 2.0 ) $ ( 178.1 )

For the three months ended September 30, 2025 and 2024, the Company recognized income tax benefits of $ 12.8 and $ 17.3 , respectively, which resulted in effective tax rates of 44.6 % and 48.3 %, respectively.

The effective tax rate for the three months ended September 30, 2025 was higher than the Company’s statutory tax rate primarily due to an increase in the Company’s U.S.

operating losses partially offset by non-deductible compensation expenses, Base Erosion and Anti-Abuse Tax (“BEAT”), an increase in valuation allowance and withholding taxes for 2025 non-U.S.

earnings that are not permanently reinvested.

The effective tax rate for the three months ended June 30, 2024 was lower than the Company’s statutory tax rate primarily due to a change in valuation allowance, earnings mix, and non-deductible compensation expenses.

More specifically, for the quarter ended June 30, 2024, the Company included income tax expense of approximately $ 10.7 primarily due to a forecasted valuation allowance on the deferred tax asset for the carryforward of disallowed interest expense.

The effective tax rate for the three months ended September 30, 2024 was higher than the Company’s statutory tax rate primarily due to the geographic mix of earnings, partially offset by a forecasted valuation allowance on the deferred tax asset for the carryforward of disallowed interest expense, which impacts the annualized effective tax rate of the Company by approximately 14.8 %.

This deferred tax asset exists due to limitations imposed under the Internal Revenue Code on the annual deductibility of business interest expense.

This amount resulted in a significant impact to the effective tax rate.

For the six months ended June 30, 2025 and 2024, the Company recognized income tax expense of $ 19.1 and $ 14.8 , respectively, which resulted in effective tax rates of ( 2.1 )% and ( 9.0 )%, respectively.

The effective tax rate for the six months ended June 30, 2025 was lower than the Company’s statutory tax rate primarily due to impairment of goodwill that has no tax benefit, an increase in valuation allowance, BEAT, non-deductible compensation expenses and withholding taxes for 2025 non-U.S.

For the nine months ended September 30, 2025, the Company recognized income tax expense of $ 6.3 resulting in an effective tax rate of ( 0.7 )%.

For the nine months ended September 30, 2024, the Company recognized income tax benefit of $ 2.5 resulting in an effective tax rate of 1.2 %.The effective tax rate for the nine months ended September 30, 2025 was lower than the Company’s statutory tax rate primarily due to impairment of goodwill that has no tax benefit, non-deductible compensation expenses, BEAT, an increase in valuation allowance and withholding taxes for 2025 non-U.S.

earnings that are not permanently reinvested.

The effective tax rate for the six months ended June 30, 2024 was lower than the Company’s statutory tax rate primarily due to a change in the valuation allowance, earnings mix, and non-deductible compensation expenses.

On July 4, 2025, the One Big Beautiful Bill Act of 2025 (the “Tax Act”) was signed into law.

The effective tax rate for the nine months ended September 30, 2024 was lower than the Company’s statutory tax rate primarily due to the valuation allowance recognized on the deferred tax asset for the carryforward of disallowed interest expense and non-deductible compensation expenses.

FORTREA HOLDINGS INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars and shares in millions, except per share data)

On July 4, 2025, new legislation commonly referred to as the One Big Beautiful Bill Act of 2025 (the “Tax Act”) was signed into law.

The Tax Act includes substantial changes to the U.S.

federal tax code and broader fiscal policy.

There are several provisions of the Tax Act that will impact the Company’s calculation of its tax position in the future.

The Company is currently assessing the impact of the Tax Act on its condensed consolidated financial statements.

federal tax code and broader fiscal policy for tax year 2025 and forward.

The Company has recorded any applicable impacts to its three months ended September 30, 2025 tax provision, which were not significant.

There are several provisions of the Tax Act that do not go into effect until future tax years but are also not expected to have a significant impact on tax positions as currently recorded.

STOCK COMPENSATION PLANS

The Company granted 0.3 and 5.9 of restricted stock units, respectively, during the three and six months ended June 30, 2025 with weighted average grant date fair values of $ 5.14 and $ 10.33 per share.

The Company granted 0.5 of performance share units during the six months ended June 30, 2025 with weighted average grant date fair values of $ 8.13 per share.

The Company granted 1.3 and 7.2 of restricted stock units, respectively, during the three and nine months ended September 30, 2025 with weighted average grant date fair values of $ 6.63 and $ 9.65 per share.

The Company granted 1.3 and 1.8 of performance share units during the three and nine months ended September 30, 2025 with weighted average grant date fair values of $ 5.89 and $ 6.56 per share.

Total stock-based compensation expense and the associated income tax benefits recognized by the Company in the condensed consolidated statements of operations were as follows:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended

September 30, Nine Months Ended

September 30,

2025 2024 2025 2024

3 unchanged sentences

Income tax benefits $ 3.1 $ 2.1 $ 8.5 $ 6.4

FORTREA HOLDINGS INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars and shares in millions, except per share data)

SUPPLEMENTAL CASH FLOW INFORMATION

Six Months Ended June 30,

Nine Months Ended September 30,

Supplemental schedule of cash flow information:

6 unchanged sentences

BUSINESS SEGMENT INFORMATION

The following table is a summary of segment information for the three and six months ended June 30, 2025 and 2024.

The following table is a summary of segment information for the three and nine months ended September 30, 2025 and 2024.

The segment information is based upon the way the management of the Company organizes segments within an enterprise for making operating decisions and assessing performance.

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The Fortrea Chief Executive Officer has been identified as the CODM.

FORTREA HOLDINGS INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars and shares in millions, except per share data)

The CODM allocates resources and assesses performance based on the underlying businesses which determines the Company's operating segments.

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Corporate costs not included in the segment operating income measure provided to the CODM are included within “Corporate costs not included in segment operating income.” Segment asset information is not presented because it is not used by the CODM at the segment level.

FORTREA HOLDINGS INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars and shares in millions, except per share data)

Segment operating income for the three and six months ended June 30, 2025 and 2024 is reconciled to loss from continuing operations before income taxes as follows:

Three Months Ended June 30, Six Months Ended June 30,

Segment operating income for the three and nine months ended September 30, 2025 and 2024 is reconciled to loss from continuing operations before income taxes as follows:

Three Months Ended September 30, Nine Months Ended September 30,

2025 2024 2025 2024

15 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements