What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2026-02-26 compared with 2025-03-03 · 305 added, 519 removed, 1203 unchanged (41% of the section changed)

16 unchanged sentences

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025, and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 3, 2025, expressed an unqualified opinion on the Company's internal control over financial reporting.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 26, 2026, expressed an unqualified opinion on the Company's internal control over financial reporting.

Basis for Opinion

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As disclosed in Note 2 to the consolidated and combined financial statements, prior to June 30, 2023, the accompanying financial statements were derived from the consolidated financial statements and accounting records of Labcorp Holdings Inc.

These financial statements reflect the historical financial position, results of operations and cash flows of the Company for the periods prior to June 30, 2023, as the Company was historically managed within Labcorp Holdings Inc.

These financial statements reflect the historical results of operations and cash flows of the Company for the periods prior to June 30, 2023, on a combined basis as the Company was historically managed within Labcorp Holdings Inc.

For the periods after June 30, 2023, including the current year ended December 31, 2025, the financial statements reflect the financial position, results of operations, and cash flows of the Company as an independent entity.

These financial statements may not be indicative of the Company’s future performance and do not necessarily reflect what the results of operations, financial position and cash flows would have been had it operated as an independent company during the periods prior to June 30, 2023.

These financial statements may not be indicative of the Company's future performance and do not necessarily reflect what the results of operations, financial position and cash flows would have been had it operated as an independent entity during the periods prior to June 30, 2023.

Our opinion is not modified with respect to this matter.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of a critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Revenue - Full-Service Clinical Trial Contracts— Refer to Notes 2 and 4 to the financial statements

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• We selected a sample of fixed-price contracts and performed the following:

◦ Evaluated whether the contracts were appropriately accounted for by management based on the terms and conditions of each contract, including whether over time revenue recognition was appropriate.

◦ Evaluated whether the contracts were appropriately accounted for by management based on the terms and conditions of each contract, including whether revenue recognition over time was appropriate.

◦ Compared the transaction prices to the consideration expected to be received based on current rights and obligations under the contracts and any contract modifications that were agreed upon with the customers.

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• We evaluated management’s ability to accurately estimate total contract costs and revenue by comparing actual costs to management’s historical estimates for performance obligations that have been fulfilled.

Goodwill – Clinical Development Reporting Unit— Refer to Notes 2 and 10 to the financial statements

Critical Audit Matter Description

The Company assesses goodwill for impairment at least annually or whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable.

The Company recognizes an impairment charge for the amount by which a reporting unit's carrying amount exceeds its fair value.

Fair value of a reporting unit is estimated using both market-based valuation and income-based valuation approaches.

Management’s impairment assessments utilize significant assumptions and judgments related to the market multiples selected for the market-based fair value methodology and the estimates of cash flows arising from future revenues and profitability, terminal growth rates, and the discount rates used in the income-based fair value methodology.

During the year, due to sustained declines in the Company’s share price and uncertainties in global macroeconomic conditions, the Company determined that indicators of impairment existed and performed interim impairment tests as of March 31, 2025, and June 30, 2025.

Based on the results of the interim impairment tests, the Company recorded goodwill impairment charges totaling $797.9 million in its Clinical Development reporting unit.

Based on the annual impairment test performed on October 1, 2025, the Company determined that the fair value of the Clinical Development reporting unit was greater than its carrying value, resulting in no impairment.

We identified the Company’s interim impairment assessments for the Clinical Development reporting unit as a critical audit matter due to the significant assumptions and judgments by management to estimate the fair value of the reporting unit.

Performing audit procedures to evaluate management's estimate of fair value of the reporting unit required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the market multiples selected by management for the market-based valuation approach and management’s estimates related to the cash flows related to future revenues and profitability, terminal growth rates, and the discount rates used in the income-based valuation approach included the following, among others:

• We tested the effectiveness of controls over management's goodwill impairment evaluation, including those over the evaluation of possible triggering events that might have occurred throughout the year and the determination of the fair value of the Clinical Development reporting unit, such as controls related to management's forecasts and selection of the discount rates.

• We evaluated the reasonableness of management’s forecasts through consideration of (1) current and past performance of the reporting unit, (2) consistency with external peer and industry data, (3) the impact of changes in global macroeconomic conditions on the reporting unit, and (4) consistency with management’s growth strategy and evidence obtained in other areas of the audit.

• With the assistance of our fair value specialists, we evaluated the reasonableness of the (1) valuation methodology, (2) the discount rates, and (3) market activity by:

◦ Testing the source information underlying the determination of the discount rates and market multiples, including the mathematical accuracy of the calculations.

◦ Developing a range of independent estimates and comparing those to the discount rate and market multiples selected by management.

/s/ Deloitte & Touche LLP

Raleigh, North Carolina

March 3, 2025

February 26, 2026

We have served as the Company’s auditor since 2022.

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In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2024, of the Company and our report dated March 3, 2025, expressed an unqualified opinion on those financial statements.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2025, of the Company and our report dated February 26, 2026, expressed an unqualified opinion on those financial statements.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Report of Management on Internal Control over Financial Reporting.

The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control Over Financial Reporting.

Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit.

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Raleigh, North Carolina

March 3, 2025

February 26, 2026

FORTREA HOLDINGS INC.

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Prepaid expenses and other 132.9 170.2

Current assets of discontinued operations — 69.1

Total current assets 897.2 948.2

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Other assets, net 80.8 103.4

Long-term assets of discontinued operations — 368.8

Total assets $ 2,715.7 $ 3,579.2

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Short-term operating lease liabilities 9.2 13.4

Current liabilities of discontinued operations — 52.5

Total current liabilities 913.3 949.5

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Other liabilities 39.3 35.3

Long-term liabilities of discontinued operations — 31.6

Total liabilities 2,152.2 2,216.8

Commitments and contingent liabilities (Note 16)

Common stock, 89.7 and 88.8 shares outstanding at December 31, 2024 and December 31, 2023, respectively

Common stock, 93.1 and 89.7 shares outstanding at December 31, 2025 and 2024, respectively

Additional paid-in capital 2,116.6 2,042.2

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Costs and expenses:

Direct costs, exclusive of depreciation and amortization (including costs incurred from related parties of $ 48.8 and $ 87.1 during the years ended December 31, 2023 and 2022)

Direct costs, exclusive of depreciation and amortization (including costs incurred from related parties of $ 48.8 during the year ended December 31, 2023)

2,219.6 2,162.2 2,251.9

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Total costs and expenses 3,596.0 2,858.3 2,810.5

Operating income (loss)

( 161.9 ) 32.0 187.1

Operating (loss) income ( 872.6 ) ( 161.9 ) 32.0

Other income (expense):

Interest expense ( 91.4 ) ( 123.8 ) ( 69.7 )

Foreign exchange gain (loss) ( 10.6 ) 0.3 ( 2.0 )

Foreign exchange (loss) gain ( 26.9 ) ( 10.6 ) 0.3

Other, net 7.9 21.3 6.9

Income (loss) from continuing operations before income taxes ( 275.0 ) ( 30.5 ) 187.0

Income tax (benefit) expense ( 3.5 ) 1.2 41.1

Income (loss) from continuing operations ( 271.5 ) ( 31.7 ) 145.9

Income (loss) from discontinued operations, net of tax ( 57.0 ) 6.5 40.3

Net income (loss) $ ( 328.5 ) $ ( 25.2 ) $ 186.2

Loss from continuing operations before income taxes ( 983.0 ) ( 275.0 ) ( 30.5 )

Income tax expense (benefit) 3.2 ( 3.5 ) 1.2

Loss from continuing operations ( 986.2 ) ( 271.5 ) ( 31.7 )

(Loss) income from discontinued operations, net of tax — ( 57.0 ) 6.5

Net loss $ ( 986.2 ) $ ( 328.5 ) $ ( 25.2 )

Earnings (loss) per common share

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2025 2024 2023

Net income (loss) $ ( 328.5 ) $ ( 25.2 ) $ 186.2

Net loss $ ( 986.2 ) $ ( 328.5 ) $ ( 25.2 )

Foreign currency translation adjustments 112.2 ( 69.3 ) 59.3

Net benefit plan adjustments 1.7 1.1 1.2

Unrealized gain (loss) on derivative instruments 1.4 ( 1.9 ) —

Unrealized (loss) gain on derivative instruments ( 0.7 ) 1.4 ( 1.9 )

Other comprehensive income (loss) before tax 113.2 ( 66.8 ) 58.6

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Other comprehensive income (loss), net of tax 112.9 ( 67.4 ) 59.3

Comprehensive income (loss) $ ( 395.9 ) $ 34.1 $ 59.5

Comprehensive (loss) income $ ( 873.3 ) $ ( 395.9 ) $ 34.1

The accompanying notes are an integral part of these consolidated and combined financial statements.

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Balance at December 31, 2022 — $ — $ — $ 3,614.8 $ — $ ( 274.8 ) $ 3,340.0

Net income — — — 186.2 — — 186.2

Other comprehensive loss, net of tax — — — — — ( 126.7 ) ( 126.7 )

Net transfers from Former Parent — — — 19.1 — — 19.1

Balance at December 31, 2022 — $ — $ — $ 3,614.8 $ — $ ( 274.8 ) $ 3,340.0

Net loss — — — 43.3 ( 68.5 ) — ( 25.2 )

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Balance at December 31, 2024 89.7 0.1 2,042.2 — ( 397.0 ) ( 282.9 ) 1,362.4

Net loss — — — — ( 986.2 ) — ( 986.2 )

Other comprehensive income, net of tax — — — — — 112.9 112.9

Stock compensation — — 74.4 — — — 74.4

Issuance of common stock under employee stock plan 3.4 — — — — — —

Balance at December 31, 2025 93.1 $ 0.1 $ 2,116.6 $ — $ ( 1,383.2 ) $ ( 170.0 ) $ 563.5

The accompanying notes are an integral part of these consolidated and combined financial statements.

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Years Ended December 31,

2024 2023 2022

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income (loss) $ ( 328.5 ) $ ( 25.2 ) $ 186.2

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation and amortization

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Deferred income taxes

Unrealized foreign exchange movements

Loss on sale of business

Write-off of debt issuance costs

Other, net 9.3 ( 1.0 ) 4.1

Change in assets and liabilities:

Decrease (increase) in accounts receivable and unbilled services, net

(Increase) in prepaid expenses and other ( 78.1 ) ( 3.4 ) ( 9.1 )

Increase in accounts payable 7.2 55.3 24.8

Decrease (increase) in prepaid expenses and other

(Decrease) increase in accounts payable

Increase (decrease) in deferred revenue

(Decrease) increase in accrued expenses and other ( 14.5 ) 30.6 ( 125.4 )

Increase in accrued expenses and other

Net cash provided by operating activities

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

The Company has established access to all key markets worldwide through a strategic footprint of primary office locations in five countries (the United States, the United Kingdom, China, India and Singapore) with field operations in other jurisdictions worldwide.

The Company has established access to all key markets worldwide through a strategic footprint of primary office locations in five countries (the United States, the United Kingdom, China, India and Japan) with field operations in other jurisdictions worldwide.

Reportable Segment

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Discontinued Operations

In accordance with the definition of discontinued operations, the Company's decision to sell the assets relating to the Enabling Services Segment represented a strategic shift that had a major effect on the Company's results of operations and assets and liabilities for the periods presented.

As a result, the Company has classified the assets and liabilities related to the Enabling Services Segment as assets of discontinued operations and liabilities of discontinued operations on the consolidated balance sheet as of December 31, 2023.

The operations of the Enabling Services Segment have been classified as income (loss) from discontinued operations on the consolidated and combined statements of operations for all periods presented.

The operations of the Enabling Services Segment have been classified as (loss) income from discontinued operations on the consolidated and combined statements of operations for all periods presented.

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

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On June 30, 2023, the Company completed the Spin from Labcorp.

The Company has entered into several agreements with Labcorp that govern the relationship of the parties following the Separation, including the Separation and Distribution Agreement, the Tax Matters Agreement, the Employee Matters Agreement, and the Transition Services Agreement with Labcorp, which are described in the Company’s Registration Statement on Form 10, as amended (“Form 10”), as filed with the Securities and Exchange Commission (the “SEC”).

The Company entered into several agreements with Labcorp that govern the relationship of the parties following the Separation, including the Separation and Distribution Agreement, the Tax Matters Agreement, the Employee Matters Agreement, and the Transition Services Agreement with Labcorp, which are described in the Company’s Registration Statement on Form 10, as amended (“Form 10”), as filed with the Securities and Exchange Commission (the “SEC”).

Under the terms of the Transition Services Agreement, the Company and Labcorp agreed to provide each other certain transitional services.

The services and assets to be provided to Fortrea by Labcorp support the Company’s enterprise functions, most notably IT applications, network and security support and hosting, as well as finance, human resources, marketing and other administrative support.

The Transition Services Agreement expired by its terms in full on June 30, 2025.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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Refer to Note 19, “Transactions with Former Parent” for further information.

Reclassification

Certain previously reported amounts have been reclassified to conform to the current year presentation.

During the quarter ended March 31, 2024, a change in basis of presentation was made to include information technology costs and certain facility costs in selling, general and administrative expenses to improve comparability of costs against peer companies in the clinical research industry.

As a result, the Company reclassified $ 152.1 and $ 175.7 from direct costs, exclusive of depreciation and amortization, to selling, general and administrative expenses, exclusive of depreciation and amortization in the consolidated and combined statement of operations for the years ended December 31, 2023 and December 31,2022, respectively, relating to information technology costs and certain facility costs.

There is no impact on total operating expenses, operating income or net income during the years ended December 31, 2023 and December 31, 2022 .

Direct costs include payroll and related benefits for project-related employees, pass through costs, facility costs related to phase I clinics and other direct costs from the Transition Services Agreement with Labcorp.

Selling, general and administrative expenses consist primarily of administrative payroll and related benefit charges, information technology costs, other facility charges, advertising and promotional expenses, administrative travel and credit loss provisions.

Additionally, the Company reclassified $ 0.1 from other, net to interest expense in the consolidated and combined statement of operations for the year ended December 31, 2023.

Restatement of Prior Period Financial Statements

In connection with the preparation of the Company’s financial statements for the quarter ended March 31, 2024, the Company identified errors impacting previously reported financial information, including to periods prior to the June 30, 2023 Spin.

The errors consisted primarily of a goodwill impairment charge as a result of an incorrect carrying value used in the Company’s impairment calculation, a reduction in revenue due to the misstatement in the amount of the ultimate resolution of a customer matter, an understatement of expense accruals allocated from Former Parent prior to spin, and an understatement of depreciation expense associated with certain projects that were not depreciated in a timely manner.

Management assessed the materiality of the errors, including the presentation of prior period consolidated financial statements, on a qualitative and quantitative basis in accordance with SEC Staff Accounting Bulletin No.

99, Materiality , codified in Accounting Standards Codification (“ASC”) Topic 250, Accounting Changes and Error Corrections .

Based on this assessment, the Company concluded that these errors and the related impacts did not result in a material misstatement of the previously issued consolidated and combined financial statements as of and for the fiscal years ended December 31, 2022 and 2023, and the previously issued unaudited condensed consolidated and combined interim financial statements for the quarters ended March 31, June 30, and September 30, 2023.

However, correcting the cumulative effect of these errors in the first quarter of 2024 would have had a significant effect on the results of operations for that period.

Therefore, the relevant prior periods’ financial statements and related footnotes, for these and other immaterial errors for comparative purposes, have been corrected.

A summary of the corrections to the impacted financial statement line items from the previously issued financial statements are presented in Note 22, “Immaterial Financial Restatement and Reclassifications to Prior Period Financial Statements.”

FORTREA HOLDINGS INC

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

(in millions, except per share data)

Use of Estimates

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Generally, when contract modifications create new performance obligations, the modification is considered to be a separate contract and revenue is recognized prospectively.

When contract modifications change existing performance obligations, the impact on the existing transaction price and measure of progress for the performance obligation to which it relates is generally recognized as an adjustment to revenue (either as an increase in or a reduction of revenue) on a cumulative catch-up basis.

When contract modifications change existing performance obligations, the impact on the existing transaction price and measure of progress for the performance obligation to

FORTREA HOLDINGS INC

1 unchanged sentence

(in millions, except per share data)

which it relates is generally recognized as an adjustment to revenue (either as an increase in or a reduction of revenue) on a cumulative catch-up basis.

Most contracts are terminable with or without cause by the customer, either immediately or upon notice.

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

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

As of December 31, 2025, one pharmaceutical customer accounted for approximately 18.3 % of the Company’s combined gross accounts receivable and unbilled services.

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

Additionally, for the year ended December 31, 2024, two customers accounted for approximately 14.3 % and 10.5 % of revenue, for the year ended December 31, 2023, two customers accounting for approximately 11.6 % and 11.4 % of revenue, and for the year ended December 31, 2022, no customer accounted for more than 10% of revenues.

Additionally, for the year ended December 31, 2025, one customer accounted for approximately 18.1 % of revenue, for the year ended December 31, 2024, two customers accounted for approximately 14.3 % and 10.5 % of revenue, and for the year ended December 31, 2023, two customers accounted for approximately 11.6 % and 11.4 % of revenue.

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.

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Deferred cloud computing arrangement implementation costs are amortized using the straight-line method over the remaining term of the related hosting contract.

As of December 31, 2024 the Company has a current asset of $ 2.5 included in prepaid expenses and other and a non-current asset of $ 18.7 included in other assets, net in the consolidated balance sheets that have been deferred in conjunction with implementations.

There were no deferred costs for cloud computing arrangements as of December 31, 2023.

As of December 31, 2025 the Company had a current asset of $ 4.5 included in prepaid expenses and other and a non-current asset of $ 21.4 included in other assets, net in the consolidated balance sheet that have been deferred in conjunction with implementations.

As of December 31, 2024 the Company had a current asset of $ 2.5 included in prepaid expenses and other and a non-current asset of $ 18.7 included in other assets, net in the consolidated balance sheet that have been deferred in conjunction with implementations.

Cloud computing arrangement expense was $ 4.5 , $ — and $ — for the years ended December 31, 2025, 2024 and 2023, respectively.

The Company assesses goodwill for impairment at least annually or whenever events or changes in circumstances indicate that the carrying amount of goodwill may not be recoverable.

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Assets to be disposed of are reported at the lower of the carrying amount or fair value.

Management performed its annual goodwill impairment testing as of October 1, 2024.

Based upon the results of the quantitative assessment, the Company concluded that the fair values of each of its reporting units were greater than the carrying values.

Intangible Assets

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The classification will determine whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease.

A certain number of these leases contain rent escalation clauses either fixed or adjusted periodically for inflation or market rates that are factored into the Company's determination of lease payments.

As most of the Company's leases do not provide an implicit rate, the Company estimates an incremental borrowing rate based on the credit

FORTREA HOLDINGS INC

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(in millions, except per share data)

As most of the Company's leases do not provide an implicit rate, the Company estimates an incremental borrowing rate based on the credit quality of the Company and by comparing interest rates available in the market for similar debt financing, and adjusting this amount based on the impact of collateral over the term of each lease.

quality of the Company and by comparing interest rates available in the market for similar debt financing, and adjusting this amount based on the impact of collateral over the term of each lease.

The Company uses this rate to discount payments to present value.

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All other related costs are recognized when incurred.

During the periods prior to 2023, the operations of the Company were included in the consolidated U.S.

federal, certain state and local, and foreign income tax returns filed by Labcorp.

In 2023, for U.S.

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The Company filed its foreign income tax returns for 2023 inclusive of activity for the entire year.

The income tax provision in the combined financial statements for the year ended December 31, 2022 was calculated using the separate return basis, as if the Company was a separate taxpayer for the full year.

For the year ended December 31, 2023, the activity prior to the Spin was calculated on a carve-out basis while the post Spin period was based on as-reported amounts.

For the year ended December 31, 2024, the income tax provision was calculated based on full year, as-reported amounts.

For the years ended December 31, 2024 and 2025, the income tax provision was calculated based on full year, as-reported amounts.

The provision for income taxes is determined using the asset and liability approach.

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Recently Issued and Adopted Accounting Standards

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures, to improve reportable segment disclosure requirements.

The new guidance requires disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included in the reported measure of segment profit or loss.

It does not change the definition of a segment or the guidance for determining reportable segments.

The Company has adopted this ASU, see Note 21, “Business Segment Information.” The adoption of this standard did not have a material impact on the Company’s results of operations, financial position or cash flows.

In December 2023, the FASB issued guidance to require qualitative and quantitative updates to the rate reconciliation and income taxes paid disclosures, among others, in order to enhance the transparency of income tax disclosures, including consistent categories and greater disaggregation of information in the rate reconciliation and income taxes paid by jurisdiction.

This guidance is effective for fiscal years beginning after December 15, 2024, with early adoption permitted.

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures.

This guidance requires qualitative and quantitative updates to the rate reconciliation and income taxes paid disclosures, among others, in order to enhance the transparency of income tax disclosures, including consistent categories and greater disaggregation of information in the rate reconciliation and income taxes paid by jurisdiction.

The guidance is effective for fiscal years beginning after December 15, 2024, with early adoption permitted.

The amendments should be applied prospectively;

however, retrospective application is also permitted.

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

The Company has adopted this ASU, see Note 14, “Income Taxes.” The adoption of this standard did not have a material impact on the Company’s results of operations, financial position or cash flows.

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.

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

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 financial statements and disclosures.

In December 2025, the FASB issued ASU 2025-10, Government Grants (Topic 832):

Accounting for Government Grants Received by Business Entities.

This ASU establishes guidance on the recognition, measurement, and presentation of government grants received by business entities.

The guidance is intended to improve consistency and transparency by providing a comprehensive accounting framework for government grants under U.S.

The guidance is effective for fiscal years beginning after December 15, 2028, including interim periods within those fiscal years.

Early adoption is permitted.

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

DISCONTINUED OPERATIONS

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The Transaction closed during the second quarter of 2024.

Estimated proceeds of $ 285.2 resulted in a loss on disposal of $ 19.6 , subject to further adjustment based on customary purchase price adjustments.

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.

The Transaction resulted in a loss on disposal of $ 19.6 .

FORTREA HOLDINGS INC

4 unchanged sentences

Years Ended December 31,

2024 2023 2022

Revenues $ 106.4 $ 263.3

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Total costs and expenses 117.9 254.9

Operating income (loss) ( 11.5 ) 8.4 40.7

Operating (loss) income

Other expense:

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Other, net 0.1 ( 0.1 )

Income (loss) from discontinued operations before income taxes ( 30.9 ) 8.1 41.2

(Loss) income from discontinued operations before income taxes ( 30.9 ) 8.1

Income tax expense 26.1 1.6

Income (loss) from discontinued operations, net of tax $ ( 57.0 ) $ 6.5 $ 40.3

(Loss) income from discontinued operations, net of tax $ ( 57.0 ) $ 6.5

Years Ended December 31,

2024 2023 2022

Gain (loss) from operations of discontinued component $ ( 37.4 ) $ 6.5 $ 40.3

(Loss) gain from operations of discontinued component $ ( 37.4 ) $ 6.5

Loss on disposal of discontinued operations

Gain (loss) on discontinued operations $ ( 57.0 ) $ 6.5 $ 40.3

(Loss) gain on discontinued operations $ ( 57.0 ) $ 6.5

In the first quarter of 2024, as a result of the negotiated sale price of the Patient Access and Endpoint businesses, the Company evaluated the Enabling Services Segment for impairment and determined that it was more likely than not that the carrying value of the assets exceeded its fair value.

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In addition, an impairment charge of $ 13.4 was recognized specific to the Enabling Services Segment in the fourth quarter of 2023 as part of the Company’s annual impairment testing where it was determined that it was more likely than not that the carrying value of the assets exceeded its fair value.

The cash flows related to discontinued operations have not been segregated and are included in the consolidated and combined 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 years ended December 31, 2024 and 2023:

FORTREA HOLDINGS INC

1 unchanged sentence

(in millions, except per share data)

The following table summarizes the carrying value of the significant classes of assets and liabilities classified as discontinued operations as of December 31, 2023:

Current assets:

Cash and cash equivalents $ —

Accounts receivable and unbilled services, net 60.4

Prepaid expenses and other 8.7

Total current assets 69.1

Property, plant and equipment, net 40.6

Goodwill, net 276.5

Intangible assets, net 43.1

Other assets, net 8.6

Total assets of discontinued operations $ 437.9

Current liabilities:

Accounts payable $ 4.5

Accrued expenses and other current liabilities 17.3

Unearned revenue 28.4

Short-term operating lease liabilities 2.3

Total current liabilities 52.5

Operating lease liabilities 3.7

Other liabilities 27.9

Total liabilities of discontinued operations $ 84.1

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

Years Ended December 31,

2024 2023 2022

Depreciation and amortization $ 1.6 $ 8.7

4 unchanged sentences

The Company’s revenues by geography for the years ended December 31, 2025, 2024 and 2023 are as follows:

FORTREA HOLDINGS INC

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

(in millions, except per share data)

Years Ended December 31, 2025

17 unchanged sentences

The Company applies the practical expedient to not 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 CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

(in millions, except per share data)

Accounts Receivable, Unbilled Services and Unearned Revenue

10 unchanged sentences

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

FORTREA HOLDINGS INC

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

(in millions, except per share data)

The rollforward for the allowance for credit losses for the years ended December 31, 2025 and 2024, is as follows:

7 unchanged sentences

Performance Obligations Under Long-Term Contracts

As of December 31, 2024, approximately $ 4,430.5 of revenues are expected to be recognized from remaining performance obligations.

The Company expects to recognize approximately 27.5 % of the existing performance obligations as of December 31, 2024, as revenue over the next 12 months, and the remaining balance thereafter.

As of December 31, 2025, approximately $ 4,632.1 of revenues are expected to be recognized in the future from remaining performance obligations.

The Company expects to recognize approximately 29.3 % of the remaining performance obligations 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 year ended December 31, 2025, there were reductions of approximately $ 16 in revenue related to performance obligations partially satisfied in previous periods.

For the year ended December 31, 2024, the change was associated with both changes in estimated effort to complete customer contract obligations and changes in scope or price.

For the year ended December 31, 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 year ended December 31, 2025, the change in estimate resulted in an estimated reduction to revenue of $ 17 , and an increase in loss from continuing operations of $ 17 and in loss per share of $ 0.19 .

During the year ended December 31, 2024, there were reductions of approximately $ 61 in revenue related to performance obligations partially satisfied in previous periods.

During the year ended December 31, 2022, there was recognition of approximately $ 72 in revenue related to performance obligations partially satisfied in previous periods.

Substantially all of these adjustments were associated with changes in scope or price for full service clinical studies.

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

For the year ended December 31, 2024, the change was associated with both changes in estimated effort to complete customer contract obligations and changes in scope

FORTREA HOLDINGS INC

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

(in millions, except per share data)

For the year ended December 31, 2024, the change in estimate resulted in an estimated reduction to revenue of $ 29 , and an increase in loss from continuing operations of $ 29 and in loss per share of $ 0.33 .

During the year ended December 31, 2023, there were reductions of approximately $ 60 in revenue related to performance obligations partially satisfied in previous periods.

For the year ended December 31, 2023, substantially all of the change was associated with changes in scope or price for full service clinical studies.

The gross and net amount of revenue recognized solely from changes in estimates was not material.

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.

Accounts Receivable Purchase Program

7 unchanged sentences

The ARPP was terminated in May 2024, and there were no receivables outstanding as of the date of termination.

FORTREA HOLDINGS INC

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

(in millions, except per share data)

Receivables Securitization Program

5 unchanged sentences

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

As of December 31, 2024, the Company had sold $ 300.0 of receivables, which were derecognized from the Company’s consolidated balance sheet, with net proceeds of $ 297.9 , as described in the Accounts Receivable, Unbilled Services and Unearned Revenue section above.

Total costs associated with the sale were $ 12.3 for the year ended December 31, 2024 and are included within selling, general and administrative costs in the consolidated statement of operations for the year ended December 31, 2024.

The proceeds related to the Receivables Facility are reflected in cash from operating activities in the consolidated statement of cash flows.

As of December 31, 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 $ 17.8 and $ 12.3 for the years ended December 31, 2025 and 2024, respectively, and are included within selling, general and administrative costs in the consolidated and combined statement of operations.

The proceeds related to the Receivables Facility are reflected in cash from operating activities in the consolidated and combined statement of cash flows.

On February 24, 2026, the Company amended its Receivables Facility, which had been scheduled to terminate on May 6, 2027.

The amended Receivables Facility is scheduled to terminate on February 23, 2029, unless terminated earlier pursuant to its terms.

RESTRUCTURING AND OTHER CHARGES

The Company regularly undertakes various programs aimed at increasing efficiency, utilizing lower cost locations and adapting to changes in the needs of its customers.

These programs include the regular review of the number and location of the Company’s existing employees and facilities compared to the shifting needs of its customers, developments in technology and remote working, and its capabilities to utilize lower cost locations.

These programs include the regular review of the number and location of the Company’s existing employees and facilities compared to the shifting needs of its

FORTREA HOLDINGS INC

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

(in millions, except per share data)

customers, developments in technology and remote working, and its capabilities to utilize lower cost locations.

Restructuring and other charges are not allocated to the Company’s reportable segment as they are not part of the segment performance measures regularly reviewed by management.

1 unchanged sentence

These actions, which primarily relate to employee severance benefits accounted for under ASC 420, Exit or Disposal Cost Obligations and right-of-use asset impairment charges, included eliminating redundant positions and aligning resources and facilities for cost improvements and to meet customer requirements.

In addition, in the fourth quarter of 2024, the Company approved a restructuring plan to streamline its operations and eliminate redundant positions.

The Company recorded a restructuring charge of $ 21.3 related to this 2024 plan, which relate primarily to severance benefits and are accounted for under ASC 712, Compensation - Nonretirement Postemployment Benefits .

In addition, in the fourth quarters of 2024 and 2025, the Company approved restructuring plans to streamline its operations and eliminate redundant positions.

The Company recorded restructuring charges of $ 21.3 and $ 18.1 related to the 2024 and 2025 plans, respectively, which relate primarily to severance benefits and are accounted for under ASC 712, Compensation - Nonretirement Postemployment Benefits.

Actions under these restructuring plans are expected to continue through 2026.

1 unchanged sentence

During 2025, the Company recorded net restructuring charges of $ 44.1 , including impairment of facility related assets of $ 3.2 and other charges of $ 7.3 , which are reflected within restructuring and other charges in the consolidated and combined statements of operations.

The charges were comprised of $ 46.7 in severance and other employee costs and $ 7.2 in lease and other facility-related costs.

The charges were partially offset by the reversal of the previously established liability of $ 0.8 in unused severance and $ 3.0 in unused facility-related costs.

The charges were comprised of $ 37.1 in severance and other employee costs and $ 7.0 in facility-related and other costs.

The Company expects the restructuring and other charges accrued as of December 31, 2025 will be paid within the next twelve months and are included within accrued expenses and other current liabilities on the accompanying consolidated balance sheet.

2024 Restructuring

During 2023, the Company recorded net restructuring charges of $ 21.2 which were comprised of $ 17.4 in severance and other employee costs and $ 3.8 in lease and other facility-related costs.

FORTREA HOLDINGS INC

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

(in millions, except per share data)

During 2024, the Company recorded net restructuring charges of $ 50.1 , including impairment of facility related assets of $ 4.8 and other charges of $ 7.1 , which are reflected within restructuring and other charges in the consolidated and combined statements of operations.

The charges were comprised of $ 46.7 in severance and other employee costs and $ 7.2 in facility-related and other costs.

The charges were partially offset by the reversal of the previously established liability of $ 0.8 in unused severance and $ 3.0 in unused facility-related costs.

2023 Restructuring

During 2022, the Company recorded net restructuring charges of $ 25.9 , including impairment of facility related assets of $ 2.0 , which are reflected within restructuring and other charges in the combined statements of operations.

The charges were comprised of $ 15.0 in severance and other employee costs and $ 11.1 in lease and other facility-related costs.

The charges were partially offset by the reversal of the previously established liability of $ 0.2 in unused severance.

During 2023, the Company recorded net restructuring charges of $ 21.2 which were comprised of $ 17.4 in severance and other employee costs and $ 3.8 in lease and other facility-related costs.

The Company recorded restructuring and other charges as follows:

5 unchanged sentences

Total $ 44.1 $ 50.1 $ 21.2

FORTREA HOLDINGS INC

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

(in millions, except per share data)

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

Severance and

Employee Costs Facility Costs Total

Employee Costs Facility and Other Costs Total

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

Restructuring charges 41.2 0.8 42.0

Reduction of prior restructuring accruals ( 0.8 ) ( 3.0 ) ( 3.8 )

Cash payments and other adjustments ( 18.4 ) ( 0.4 ) ( 18.8 )

1 unchanged sentence

Restructuring charges 31.0 2.6 33.6

Reduction of prior restructuring accruals ( 0.8 ) ( 3.0 ) ( 3.8 )

Cash payments and other adjustments ( 31.2 ) ( 2.7 ) ( 33.9 )

Balance as of December 31, 2025 $ 22.9 $ 0.5 $ 23.4

The current portion of the restructuring liabilities is included in the consolidated balance sheets in accrued expenses and other current liabilities.

The non-current portion of the restructuring liabilities is included in the consolidated balance sheets in other liabilities.

The non-current portion of the restructuring liabilities as of December 31, 2024 and 2023, was $ 0.0 and $ 2.4 , respectively.

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

EARNINGS (LOSS) PER SHARE

On June 30, 2023, the Separation from Labcorp was effected through a pro-rata distribution of one share of the Company’s common stock for every share of Labcorp common stock held at the close of business on the record date of June 20, 2023.

As a result, on June 30, 2023, the Company had 88.8 shares of common stock outstanding.

This share amount is being utilized for the calculation of basic earnings per share for all periods presented through the Separation date.

As of the Separation date, actual outstanding shares are used to calculate basic weighted average common shares outstanding.

Basic earnings per share is computed by dividing net earnings attributable to the Company by the weighted average number of common shares outstanding.

Diluted earnings per share is computed by dividing net earnings including the impact of dilutive adjustments by the weighted average number of common shares outstanding plus potentially dilutive shares, as if they had been issued at the earlier of the date of issuance or the beginning of the period presented.

Potentially dilutive common shares result primarily from the Company’s outstanding stock options, restricted stock awards, restricted stock units (“RSUs”), and performance share awards.

FORTREA HOLDINGS INC

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

(in millions, except per share data)

Potentially dilutive common shares result primarily from the Company’s outstanding stock options, restricted stock awards, restricted stock units (“RSUs”), and performance share units (“PSUs”).

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

17 unchanged sentences

These potential shares include dilutive stock options and unissued restricted stock awards.

Potential common shares are also considered antidilutive in the event of a net loss from operations.

Potential common shares are also considered antidilutive in the event

FORTREA HOLDINGS INC

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

(in millions, except per share data)

of a net loss from operations.

There were no dilutive common shares for any period presented as the inclusion would be antidilutive.

12 unchanged sentences

Prepaid expenses and other $ 132.9 $ 170.2

FORTREA HOLDINGS INC

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

(in millions, except per share data)

The Company has operating leases for clinical facilities, general office spaces, vehicles, and office equipment.

11 unchanged sentences

Operating leases $ 16.0 $ 15.2 $ 60.1

FORTREA HOLDINGS INC

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

(in millions, except per share data)

Supplemental balance sheet information related to leases was as follows:

13 unchanged sentences

Total maturities, due beyond one year $ 54.0

FORTREA HOLDINGS INC

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

(in millions, except per share data)

There was $ 2.9 and $ 0.2 rent expense for short term leases with a term less than one year for the years ended December 31, 2024 and 2023 and no rent expense for short term leases with a term less than one year for the year ended December 31, 2022.

There was $ 3.9 , $ 2.9 and $ 0.2 rent expense for short term leases with a term less than one year for the years ended December 31, 2025 and 2024 and 2023, respectively.

Additionally, the Company earned $ 4.0 , $ 3.4 and $ 1.7 in sublease income for the years ended December 31, 2025, 2024 and 2023.

2 unchanged sentences

There were no variable payments for the years ended December 31, 2025, 2024 and 2023.

FORTREA HOLDINGS INC

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

(in millions, except per share data)

PROPERTY, PLANT AND EQUIPMENT, NET

19 unchanged sentences

Subsequent acquisitions of businesses were allocated to Fortrea based on the inclusion of the business activities using valuations at the time of acquisition.

The Company's policy is to assess goodwill for impairment annually as of October 1, with more frequent assessments if events or changes in circumstances indicate the carrying amount may not be recoverable.

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 carrying value by approximately 10 % as of October 1, 2024.

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 third and fourth quarters of 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 .

FORTREA HOLDINGS INC

1 unchanged sentence

(in millions, except per share data)

Based upon the results of the quantitative assessment as of June 30, 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 $ 309.1 .

For the goodwill impairment tests, the fair values of the Clinical Development and Clinical Pharmacology reporting units were computed using both income-based and market-based valuation methods.

The income-based approach is based on the reporting unit's forecasted future cash flows that are discounted to the present value using the reporting unit's weighted average cost of capital.

The discount rate used reflects the risks inherent in realizing the forecasted cash flows and considers the risk-free rate of return on long-term treasury securities, the risk premium associated with investing in equity securities of comparable companies, the beta obtained from the comparable companies and the cost of debt for investment grade issuers.

The discount rate used for the Clinical Development reporting unit quantitative assessments as of March 31, 2025 and June 30, 2025 was 10.0 % and 10.5 %, respectively.

The increase in the discount rate was primarily the result of macroeconomic and market factors.

For the market-based approach, the Company utilizes a number of factors such as publicly available information regarding the market capitalization of the Company as well as operating results, business plans, market multiples, and present value techniques.

Based upon the range of estimated values developed from the income and market-based methods, the Company determines the estimated fair value for the reporting unit.

The resulting estimated fair values of the combined reporting units are reconciled to the Company's market capitalization including an estimated implied control premium.

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.

In performing its annual goodwill impairment test as of October 1, 2025, the Company elected to perform the qualitative assessment on its two reporting units, Clinical Development and Clinical Pharmacology.

Based on the results of the qualitative assessment, the Company concluded that the fair values of each of its reporting units were greater than the carrying values, resulting in no impairment.

The changes in the carrying amount of goodwill for the years ended December 31, 2025 and 2024 are as follows:

1 unchanged sentence

Balance as of January 1 $ 1,710.4 $ 1,739.4

Impairment ( 797.9 ) —

Foreign currency impact and other adjustments to goodwill 47.5 ( 29.0 )

Balance at end of year $ 960.0 $ 1,710.4

The cumulative goodwill impairment for the Company through December 31, 2025 and 2024 was $ 797.9 and $ — , respectively, and relates to the Clinical Development reporting unit as noted above.

The components of identifiable intangible assets are as follows:

7 unchanged sentences

Amortization expense of intangible assets is estimated to be $ 55.6 in 2026, $ 55.6 in 2027, $ 49.1 in 2028, $ 48.0 in 2029, $ 48.0 in 2030, and $ 365.7 thereafter.

In 2022, an impairment of identifiable intangible assets of $ 9.8 was recorded for impairment of technology assets.

There were no goodwill impairment losses for the years ended December 31, 2024, 2023 or 2022.

FORTREA HOLDINGS INC

1 unchanged sentence

(in millions, except per share data)

There were no goodwill impairment losses for the years ended December 31, 2024 or 2023.

There were no identifiable intangible asset impairment losses for the years ended December 31, 2025, 2024 or 2023.

In connection with the Spin, Fortrea incurred indebtedness in an aggregate principal amount of approximately $ 1,640.0 , which consisted of borrowings under senior secured term loan facilities and senior secured notes.

5 unchanged sentences

Current portion of senior secured term loan A facility due 2028 4.8 —

Current portion of senior secured term loan B facility due 2030 — 5.7

Debt issuance discount and fees — ( 1.2 )

14 unchanged sentences

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

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.

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 during the fourth quarter of 2025, which has been classified as current portion of long-term debt in the consolidated balance sheet as of December 31, 2024.

As a result of Fortrea’s sale of assets relating to its Enabling Services Segment, the Company repurchased $ 75.7 of the Notes in accordance with the terms of the indenture in the fourth quarter of 2025.

Credit Facilities

12 unchanged sentences

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 were no balances outstanding on the Company’s current revolving credit facility and $ 450.0 was available for borrowing as of December 31, 2024.

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 December 31, 2025.

No balances were outstanding as of December 31, 2024.

As of December 31, 2025, the effective interest rate on the revolving credit facility was 5.72 %, assuming a one-month interest election.

There is a commitment fee associated with the revolving credit facility of 0.35 % (per annum and paid quarterly) and an annual $ 0.1 agency fee (paid in quarterly installments).

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 December 31, 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 December 31, 2024.

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.

The Company is permitted to make adjustments, such as excluding certain costs, from the calculation of leverage and interest coverage ratios for compliance purposes.

On May 3, 2024, the Company entered into an amendment to modify certain financial covenants for additional flexibility under the Credit Agreement.

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 December 31, 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 covenants were modified subsequent to December 31, 2024, as described in Note 23, “Subsequent Events.”

The scheduled payments of long-term debt at the end of 2025 are summarized as follows:

Thereafter 648.7

Total scheduled principal payments 1,066.3

87 unchanged sentences

Foreign ( 341.9 ) 115.3 110.9

Total pre-tax income (loss) $ ( 275.0 ) $ ( 30.5 ) $ 187.0

Income tax (benefit) expense in the accompanying consolidated and combined statements of operations consist of the following:

Total pre-tax loss $ ( 983.0 ) $ ( 275.0 ) $ ( 30.5 )

Income tax expense (benefit) in the accompanying consolidated and combined statements of operations consist of the following:

Years Ended December 31,

8 unchanged sentences

( 30.6 ) ( 39.1 ) ( 39.1 )

Total income tax (benefit) expense $ ( 3.5 ) $ 1.2 $ 41.1

Income tax expense (benefit) $ 3.2 $ ( 3.5 ) $ 1.2

FORTREA HOLDINGS INC

1 unchanged sentence

(in millions, except per share data)

The effective tax rates on earnings before income taxes are reconciled to statutory U.S.

income tax rates as follows:

Upon adoption of ASU 2023-09, Improvements to Income Tax Disclosures, cash paid for income taxes, net of refunds, by jurisdiction are as follows:

Years Ended December 31,

2025 2024 2023

Federal $ — $ 29.0 $ —

California ( 1.3 ) — —

Other 1.2 7.1 —

Australia — — 1.3

Belgium — — 1.3

Brazil 1.6 — 1.5

Canada — — 1.9

China — 4.0 3.5

Germany 3.1 — 2.0

India 7.0 4.1 3.6

Ireland 1.0 — —

Italy 1.0 — —

Spain ( 1.6 ) — ( 1.2 )

Other 4.9 9.5 4.1

$ 16.9 $ 53.7 $ 18.0

Upon adoption of ASU 2023-09, Improvements to Income Tax Disclosures, the reconciliation of taxes at the federal statutory rate to our provision for (benefit from) income taxes for the year ended December 31, 2025 was as follows:

FORTREA HOLDINGS INC

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

(in millions, except per share data)

Year Ended December 31, 2025

Statutory U.S.

rate $ ( 206.4 ) 21.0 %

Effect of cross-border tax laws — —

Tax credits ( 1.2 ) 0.1

Nontaxable or nondeductible items

Goodwill impairment 84.0 ( 8.6 )

Other 14.1 ( 1.4 )

Valuation allowance 17.8 ( 1.8 )

Other 14.9 ( 1.5 )

State and local income taxes, net of U.S.

Federal income tax effect ( 5.4 ) 0.6

Foreign tax effects

United Kingdom

Goodwill impairment 52.6 ( 5.4 )

Other ( 4.0 ) 0.4

Other foreign jurisdictions 36.6 ( 3.7 )

Worldwide changes in unrecognized tax benefits 0.2 —

Grand Total $ 3.2 ( 0.3 ) %

The majority of the tax effect of state and local income taxes, net of U.S.

federal income taxes results from activity in California, Massachusetts, and New Jersey.

The reconciliation of taxes at the federal statutory rate to our provision for (benefit from) income taxes for the years ended December 31, 2024 and 2023 in accordance with the guidance prior to the adoption of ASU 2023-09 was as follows:

Years Ended December 31,

Statutory U.S.

rate 21.0 % 21.0 %

State and local income taxes, net of U.S.

Federal income tax effect 5.0 12.1

Foreign earnings taxed at rates different than the statutory U.S.

32 unchanged sentences

Intangible assets ( 148.5 ) ( 155.1 )

Outside basis difference in foreign subsidiaries ( 10.2 ) ( 3.1 )

Property, plant and equipment ( 3.1 ) ( 5.9 )

7 unchanged sentences

The Company will continue to monitor this situation and record a valuation allowance for the portion of its DTAs that are not expected to be realized based on the available sources of income.

The change in valuation allowance related to the Sec.

163(j) DTA is recorded as tax expense in continuing operations of $ 43.5 and a tax benefit in discontinued operations of $ 18.2 .

The Company has no U.S.

Federal Net Operating Loss (“NOL”) carryforwards and a gross State NOL carryforward of $ 1,242.8 with $ 1,007.3 expiring between 2025 and 2044 and $ 235.5 having an indefinite carryforward.

The Company has U.S.

Federal Net Operating Loss (“NOL”) carryforwards of $ 16.9 and a gross State NOL carryforward of $ 217.3 with $ 118.4 expiring between 2034 and 2045 and $ 98.9 having an indefinite carryforward.

As of December 31, 2025, the Company has recorded a full valuation allowance of $ 3.6 against the DTA for these state NOLs.

The Company has gross foreign net operating losses of $ 11.6 , all of which are expected to be fully realized as they either expire between 2029 and 2044 or carryforward indefinitely.

The Company has pre-tax foreign net operating losses of $ 31.2 , all of which are expected to be fully realized as they either expire between 2030 and 2045 or carryforward indefinitely.

FORTREA HOLDINGS INC

5 unchanged sentences

Decreases related to positions taken on prior year items ( 0.1 ) ( 0.1 ) ( 1.4 )

Increases related to positions taken on prior year items — — 2.0

Increases related to positions taken on current year items 0.2 0.2 0.3

Settlement of uncertain tax positions with tax authorities — — ( 3.1 )

Exchange (gain) loss — — 0.2

Balance as of December 31 $ 0.5 $ 0.4 $ 0.3

2 unchanged sentences

Accrued interest and penalties related to uncertain tax positions are immaterial to the financial statements for December 31, 2025, 2024 and 2023, respectively.

During the years ended December 31, 2024 and 2023, the Company did not recognize any interest and penalties expense while recognizing a tax benefit of $ 2.2 for the year ended December 31, 2022.

During the years ended December 31, 2025, 2024 and 2023 the Company did not recognize any interest and penalties expense.

As of December 31, 2025, 2024 and 2023, there are $ 0.5 , $ 0.4 and $ 0.3 , respectively, of tax benefits, including interest and penalties, that, if recognized would favorably affect the effective income tax rate.

2 unchanged sentences

federal income tax matters for years through 2018, while it filed as part of the Labcorp consolidated group, and it is currently under IRS examination for tax years 2019 to 2022.

The Company has filed its first U.S.

federal tax return for 2023 as a separate taxpayer and therefore that is the only year open to examination.

The Company has substantially concluded all material separate state and local and foreign income tax matters through 2018 and 2017, respectively.

The Company has filed its own state and foreign tax returns for 2023 and is subject to examination for that year in all respective jurisdictions.

The Company has filed its U.S.

federal tax return for 2023 and 2024 as a separate taxpayer and therefore those are the only years open to examination.

The Company has substantially concluded all material state and local and separate foreign income tax matters through 2017.

The Company has filed its own state and most foreign tax returns for 2023 and 2024 and is subject to examination for those years in all respective jurisdictions.

The Company has recognized a deferred tax liability for withholding taxes associated with certain intercompany notes related to the Separation.

The Company has also accrued applicable withholding taxes of $ 3.0 on its 2024 foreign earnings as these earnings are not permanently reinvested in our foreign subsidiaries.

As of December 31, 2024, 2023 and 2022, the Company has unremitted earnings and profits of $ 1,449.8 , $ 1,449.8 and $ 1,572.7 , respectively, that are permanently reinvested in its foreign subsidiaries.

A determination of the amount of the unrecognized deferred tax liability related to these undistributed earnings is not practicable due to the complexity and variety of assumptions necessary based on the manner in which the undistributed earnings would be repatriated.

The Company has also cumulatively accrued applicable withholding taxes of $ 10.6 on the portion of foreign earnings that are not permanently reinvested in our foreign subsidiaries, which mostly represents 2024 and 2025 earnings.

STOCK COMPENSATION PLANS

3 unchanged sentences

The Former Parent-sponsored stock compensation arrangements are approved under the Laboratory Corporation of America Holdings 2016 Omnibus Incentive Plan (the “Labcorp Plan”).

In June of 2023, Fortrea’s pre-Spin Board of Directors approved Fortrea’s Omnibus Incentive Plan and Employee Stock Purchase Plan (the “Plans”) and the post-Spin Board of Directors of Fortrea ratified the Plans by a unanimous written consent dated July 3, 2023.

Under the Plans, the Company may grant incentive stock options, restricted stock units, and performance shares, as well as other forms of stock-based compensation to the Company’s employees, officers, and non-employee directors.

During 2025, Fortrea’s Board of Directors approved the 2025 Inducement Award Plan (the “Inducement Plan”).

The Inducement Plan provides for, among other things, the grant of awards of options, stock appreciation rights, restricted stock, restricted stock units, deferred stock units, unrestricted stock, dividend equivalent rights, performance shares and other performance-based awards, other equity-based awards, and cash bonus awards to eligible grantees as a material inducement to such grantees commencing employment with Fortrea or its affiliates.

FORTREA HOLDINGS INC

1 unchanged sentence

(in millions, except per share data)

On July 18, 2023, all Labcorp equity incentive awards held by Fortrea employees that were outstanding on the distribution date were converted to 2.5 shares of Fortrea restricted stock units and 0.1 shares of Fortrea performance shares.

Additionally, during the remainder of 2023 and in 2024, the Company granted awards under the Plans, as indicated below.

As of December 31, 2024, there are 11.0 shares authorized for issuance and 6.2 shares available for grant under Fortrea’s Omnibus Incentive Plan, and 1.8 shares authorized for issuance and available for grant under the Employee Stock Purchase Plan.

As of December 31, 2025, there are 17.5 shares authorized for issuance and 7.9 shares available for grant under Fortrea’s Omnibus Incentive Plan, 1.8 shares authorized for issuance and available for grant under the Employee Stock Purchase Plan, and 5.0 shares authorized for issuance and 2.2 shares available for grant under the Inducement Plan.

The Company measures stock compensation cost for all equity awards at fair value on the date of grant and recognizes compensation expense over the service period for awards expected to vest.

9 unchanged sentences

Options vest ratably over a period of 3 years on the anniversaries of the grant date and have a contractual exercise period of 10 years subject to their earlier expiration or termination.

No stock options were issued in 2024.

No stock options were issued in 2025 or 2024.

Number of Options Weighted-Average Exercise Price per Option Weighted-Average Remaining Contractual Term Aggregate Intrinsic Value

2 unchanged sentences

Cancelled ( 0.8 ) 26.52

Outstanding at December 31, 2024 0.8 $ 26.52 8.6 years $ —

Exercisable at December 31, 2024 0.3 $ 26.52 8.6 years $ —

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between the Company’s closing stock price on the last trading day of the period and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on December 31, 2024.

FORTREA HOLDINGS INC

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

(in millions, except per share data)

The Company uses the Black-Scholes model to calculate the fair value of stock options.

The following table shows the weighted average grant-date fair values of options issued in 2023 (no options were issued in 2024) and the weighted average assumptions that the Company used to develop the fair value estimates:

December 31, 2023

Weighted-average grant date fair value per option $ 12.51

Weighted-average expected life (in years) 6.3

Risk free interest rate 4.4 %

Expected volatility 40.4 %

Expected dividend yield — %

The volatility used in the determination of the fair value of the stock options was based on analysis of the historical volatility of guideline public companies and factors specific to the Company.

Outstanding at December 31, 2025 — $ — — $ —

Exercisable at December 31, 2025 — $ — — $ —

Restricted Stock Units and Performance Shares

4 unchanged sentences

Unearned RSU and performance share compensation is amortized to expense, when probable, over the applicable vesting periods.

FORTREA HOLDINGS INC

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

(in millions, except per share data)

The following table shows a summary of RSU and performance share award activity for the year ended December 31, 2025:

7 unchanged sentences

As of December 31, 2025, there was $ 55.5 of total unrecognized compensation cost related to non-vested restricted stock, restricted stock unit and performance share-based compensation arrangements granted under the Plans.

That cost is expected to be recognized over a weighted average period of 1.3 years and will be included in direct costs and selling, general and administrative expenses.

FORTREA HOLDINGS INC

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

(in millions, except per share data)

That cost is expected to be recognized over a weighted average period of 1.3 and will be included in direct costs and selling, general and administrative expenses.

All Stock Awards

6 unchanged sentences

Income tax benefits $ 11.0 $ 9.1 $ 7.1

Of the total stock-based compensation expense recognized by the Company for the years ended December 31, 2024, 2023 and 2022, $ 57.2 , $ 37.8 and $ 18.9 , respectively, related directly to Company employees and $ 0.0 , $ 2.5 and $ 5.1 , respectively, related to allocations of Labcorp’s corporate and shared employee stock compensation expenses.

Of the total stock-based compensation expense recognized by the Company for the year ended December 31, 2023, $ 37.8 related directly to Company employees and $ 2.5 related to allocations of Labcorp’s corporate and shared employee stock compensation expense.

COMMITMENTS AND CONTINGENT LIABILITIES

6 unchanged sentences

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 year ended December 31, 2024, the Company recorded legal expenses of $ 2.2 related to the settlement of legal matters initiated prior to the spin.

For the years ended December 31, 2025, 2024 and 2023, the Company recorded legal expenses of $ 1.9 , $ 2.2 and $ — , 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.

On June 2, 2025, a purported shareholder class action complaint captioned Lucas Deslande v.

Fortrea Holdings Inc., et al.

, No 1:25-sv-04630 was filed in the U.S.

District Court for the Southern District of New York, naming the

FORTREA HOLDINGS INC

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

(in millions, except per share data)

Company and certain of its current and former officers as defendants.

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

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 filed an amended complaint on November 10, 2025.

The Company filed a motion to dismiss the amended complaint on January 28, 2026.

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.

The case is at a very early stage and the Company is unable to estimate the possible loss or range of loss, if any, associated with this action.

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 trials, of which $ 3.8 and $ 8.7 was recorded as a reduction of revenue for the years ended December 31, 2024 and 2023, respectively.

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 trials, of which $ 3.8 million and $ 8.7 million was recorded as a reduction of revenue for the years ended December 31, 2024 and 2023, respectively.

There were no related reductions of revenue during the year ended December 31, 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.

6 unchanged sentences

Provisions for losses expected under these programs are recorded based upon the Company’s estimates of the aggregated liability of claims incurred.

FORTREA HOLDINGS INC

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

(in millions, except per share data)

PREFERRED STOCK AND COMMON SHAREHOLDERS' EQUITY

2 unchanged sentences

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

Stockholder Rights Plan

On June 11, 2025, the Company’s Board of Directors adopted a limited duration stockholder rights plan (the “Rights Agreement”).

Pursuant to the Rights Agreement, on June 11, 2025, the Company’s Board of Directors declared a dividend of one preferred share purchase right (a “Right”) for each share of common stock, par value $ 0.001 per share, of the Company (the “Common Shares”) outstanding on June 23, 2025 to the stockholders of record on that date.

Each Right entitles the registered holder to purchase from the Company one one thousandth of a share of Series A Preferred Stock, par value $ 0.001 per share, of the Company (the “Preferred Shares”) at a price of $ 50.00 per one one thousandth of a Preferred Share represented by a Right, subject to adjustment.

Initially, the Rights will be attached to all Common Share certificates and no separate certificates evidencing the Rights will be issued.

Until the Distribution Date (as defined per the Rights Agreement), the Rights will be transferred with and only with the Common Shares.

As long as the Rights are attached to the Common Shares, the Company will issue one Right with each new Common Share so that all such Common Shares will have Rights attached.

The Rights are generally exercisable only in the event that a person or group of affiliated or associated persons (such person or group being an “Acquiring Person”), acquires (or commences a tender offer or exchange offer the consummation of which would result in) beneficial ownership of 10 % or more of the outstanding Common Shares.

FORTREA HOLDINGS INC

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

(in millions, except per share data)

In such case (with certain limited exceptions), each holder of a Right (other than the Acquiring Person, whose Rights shall become void) will have the right to receive, upon exercise at the then current exercise price of the Right, Common Shares (or, if the Board so elects, cash, securities, or other property) having a value equal to two times the exercise price of the Right.

Until a Right is exercised, the holder thereof, as such, will have no rights as a stockholder of the Company, including, without limitation, the right to vote or to receive dividends.

The Rights will expire at the close of business on June 10, 2026.

Accumulated Other Comprehensive Loss

4 unchanged sentences

Current year benefit plan adjustments — 1.1 — 1.1

Unrealized loss on derivative instruments — — ( 1.5 ) ( 1.5 )

Unrealized gain on derivative instruments — — 2.9 2.9

Amounts reclassified from accumulated other comprehensive loss — — ( 1.5 ) ( 1.5 )

Tax effect of adjustments — ( 0.2 ) ( 0.4 ) ( 0.6 )

Transfers from Former Parent — 2.1 — 2.1

Balance at December 31, 2024 ( 276.0 ) ( 6.5 ) ( 0.4 ) ( 282.9 )

1 unchanged sentence

Current year benefit plan adjustments — 1.7 — 1.7

Unrealized gain on derivative instruments — — 2.9 2.9

Unrealized loss on derivative instruments — — ( 0.6 ) ( 0.6 )

Amounts reclassified from accumulated other comprehensive loss — — ( 0.1 ) ( 0.1 )

3 unchanged sentences

Defined Contribution Retirement Plans

The Company has various U.S.

defined contribution retirement plans (401K Plans).

Under these 401K Plans, employees can contribute a portion of their salary to the plan and the Company makes minimum non-elective contributions and matching contributions, depending on the terms of the specific plan.

On January 1, 2021, all of the 401K Plans were modified to provide for 100 % match of employee contributions up to 5 % of their salary.

The Company has a U.S.

defined contribution retirement plan (the “401K Plan”).

Under the 401K Plan, employees can contribute a portion of their eligible earnings to the Plan and the Company makes matching contributions, depending on the terms of the plan.

The 401K Plan includes an automatic enrollment at 1 % which the employee can change or opt out of.

On January 1, 2025, the 401K Plan was modified to provide for 100 % employer match of employee contributions of 3 % and 50 % on the next 2 % of eligible earnings.

In addition to the U.S.

1 unchanged sentence

Total expense for all defined contribution plans for the years ended December 31, 2025, 2024 and 2023 was $ 47.7 , $ 51.4 and $ 53.0 respectively.

Defined Benefit Pension Plans

Company employees participate in a funded defined benefit pension plan in the United Kingdom (the “UK Plan”).

The UK Plan provides benefits based on various criteria such as years of service and salary, and is closed to new entrants and the accrual of service credits is as of December 31, 2020.

FORTREA HOLDINGS INC

1 unchanged sentence

(in millions, except per share data)

Defined Benefit Pension Plans

Company employees participate in a funded defined benefit pension plan in the United Kingdom (the “UK Plan”).

The UK Plan provides benefits based on various criteria such as years of service and salary, and is closed to new entrants and the accrual of service credits is as of December 31, 2020.

Net Periodic Benefit Costs

12 unchanged sentences

Net actuarial gain (loss) in accumulated other comprehensive loss $ 1.2 $ 0.9 $ ( 1.0 )

$ 0.9 $ ( 1.0 ) $ ( 0.6 )

Change in Projected Benefit Obligation

3 unchanged sentences

Interest cost 1.8 1.7

Actuarial (gain) loss ( 6.2 ) 1.9

Actuarial gain ( 1.0 ) ( 6.2 )

Benefits and administrative expenses paid ( 2.0 ) ( 1.0 )

1 unchanged sentence

Balance at end of the year $ 33.2 $ 31.8

FORTREA HOLDINGS INC

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

(in millions, except per share data)

Change in Fair Value of Plan Assets

6 unchanged sentences

Fair value of plan assets at end of year $ 36.0 $ 32.9

FORTREA HOLDINGS INC

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

(in millions, except per share data)

Change in Funded Status and Reconciliation of Amounts Recorded in the Balance Sheet

18 unchanged sentences

higher discount rates reduce the size of the benefit obligation and generally reduce subsequent-year pension expense.

FORTREA HOLDINGS INC

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

(in millions, except per share data)

The expected return on plan assets is the estimated long-term rate of return that will be earned on the investments used to fund the pension obligations.

6 unchanged sentences

These differences are amortized into earnings over the remaining average future service of active participating employees or the expected life of inactive participants, as applicable.

FORTREA HOLDINGS INC

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

(in millions, except per share data)

The fair values of the assets at December 31, 2025 by asset category are as follows:

21 unchanged sentences

Plan fiduciaries of various plans set investment policies and strategies, based on consultation with professional advisors, and oversee investment allocation, which includes selecting investment managers and setting long-term strategic targets.

The primary strategic investment objectives are balancing investment risk and return and monitoring the plan’s liquidity position in order to meet the near-term benefit payment and other cash needs.

Target allocation percentages are established at an asset class level by plan fiduciaries.

Target allocation ranges are guidelines, not limitations, and occasionally plan fiduciaries will approve allocations above or below a target range.

The primary strategic investment objectives are balancing investment risk and return and

FORTREA HOLDINGS INC

1 unchanged sentence

(in millions, except per share data)

monitoring the plan’s liquidity position in order to meet the near-term benefit payment and other cash needs.

Target allocation percentages are established at an asset class level by plan fiduciaries.

Target allocation ranges are guidelines, not limitations, and occasionally plan fiduciaries will approve allocations above or below a target range.

The weighted average asset allocation of the plan assets by asset category is as follows:

19 unchanged sentences

The following discussion summarizes activity between the Company and Labcorp.

This activity, which occurred prior to the Separation, is included in the combined financial statements in 2023 and 2022.

This activity, which occurred prior to the Separation, is included in the combined financial statements in 2023.

FORTREA HOLDINGS INC

13 unchanged sentences

Total corporate and other allocations $ 194.0

Included in the aforementioned amounts are $ 147.6 and $ 286.8 related to costs for certain centralized functions and programs provided and administered by Labcorp that were charged directly to the Company for the years ended December 31, 2023 and 2022, respectively.

Included in the aforementioned amounts are $ 147.6 related to costs for certain centralized functions and programs provided and administered by Labcorp that were charged directly to the Company for the year ended December 31, 2023.

In addition, a portion of Labcorp’s total corporate expenses were allocated to the Company for services from Labcorp.

These costs were $ 46.4 and $ 95.2 for the years ended December 31, 2023 and 2022, respectively.

These costs were $ 46.4 for the year ended December 31, 2023.

The allocations of foreign exchange gain (loss) represent the allocation of the results of hedging activities performed by Labcorp on behalf of the Company prior to the Separation.

The Company had arrangements with third parties where the services are subcontracted to Labcorp (and its affiliates that were not part of the transaction).

The Company’s direct costs include services purchased from Labcorp for commercial contracts totaling $ 48.8 and $ 87.1 in 2023 and 2022, respectively.

The Company’s direct costs include services purchased from Labcorp for commercial contracts totaling $ 48.8 in 2023.

Hedging Activities

40 unchanged sentences

The CODM uses segment operating income to monitor budget versus actual results and to make decisions about resources to be allocated to the segment and assess its performance.

In accordance with ASU 2023-07, Improvements to Reportable Segment Disclosures, significant expenses included within segment operating income have been assessed and disclosed in the table below.

Segment asset information is not presented because it is not used by the CODM at the segment level.

FORTREA HOLDINGS INC

1 unchanged sentence

(in millions, except per share data)

In accordance with ASU 2023-07, Improvements to Reportable Segment Disclosures, significant expenses included within segment operating income have been assessed and disclosed in the table below.

Segment asset information is not presented because it is not used by the CODM at the segment level.

Through the Spin, the combined statements of operations included costs for certain centralized functions and programs provided and administered by Labcorp that were charged directly to the Company.

2 unchanged sentences

After the Separation, 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 operating income for the years ended December 31, 2024, 2023 and 2022 is reconciled to income (loss) from continuing operations before income taxes as follows:

Segment operating income for the years ended December 31, 2025, 2024 and 2023 is reconciled to loss from continuing operations before income taxes as follows:

Years Ended December 31,

10 unchanged sentences

Restructuring and other charges 44.1 50.1 21.2

Operating income (loss) ( 161.9 ) 32.0 187.1

Interest expense ( 123.8 ) ( 69.7 ) ( 0.2 )

Foreign exchange gain (loss) ( 10.6 ) 0.3 ( 2.0 )

Other, net 21.3 6.9 2.1

Income (loss) from continuing operations before income taxes $ ( 275.0 ) $ ( 30.5 ) $ 187.0

IMMATERIAL FINANCIAL RESTATEMENT AND RECLASSIFICATIONS TO PRIOR PERIOD FINANCIAL STATEMENTS

As discussed in Note 2, “Summary of Significant Accounting Policies” the Company identified errors in the consolidated and combined financial statements of prior periods during the first quarter of 2024.

A summary of the corrections to the impacted financial statement line items in the previously issued Consolidated Balance Sheet as of December 31, 2023, and the Consolidated and Combined Statements of Operations, Comprehensive Income, Changes in Stockholders’ Equity, and Cash Flows as of and for the years ended December 31, 2023 and 2022, included in the previously filed Annual Report on Form 10-K, are provided below.

FORTREA HOLDINGS INC

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

(in millions, except per share data)

CONSOLIDATED BALANCE SHEET

As of December 31, 2023

As Previously Reported Adjustments As Restated Discontinued Operations Reclassifications As Restated and Reclassified

Current assets:

Cash and cash equivalents $ 108.6 $ — $ 108.6 $ — $ 108.6

Accounts receivable and unbilled services, net 1,052.1 ( 3.2 ) 1,048.9 ( 60.4 ) 988.5

Prepaid expenses and other 92.4 0.9 93.3 ( 8.7 ) 84.6

Current assets held for sale from discontinued operations — — — 69.1 69.1

Total current assets 1,253.1 ( 2.3 ) 1,250.8 — 1,250.8

Property, plant and equipment, net 220.9 ( 7.7 ) 213.2 ( 40.6 ) 172.6

Goodwill, net 2,029.3 ( 13.4 ) 2,015.9 ( 276.5 ) 1,739.4

Intangible assets, net 771.2 — 771.2 ( 43.1 ) 728.1

Deferred income taxes 3.2 — 3.2 — 3.2

Other assets, net 79.5 ( 1.2 ) 78.3 ( 8.6 ) 69.7

Long-term assets held for sale from discontinued operations — — — 368.8 368.8

Total assets $ 4,357.2 $ ( 24.6 ) $ 4,332.6 $ — $ 4,332.6

LIABILITIES AND EQUITY

Current liabilities:

Accounts payable $ 132.8 $ 4.6 $ 137.4 $ ( 4.5 ) $ 132.9

Accrued expenses and other current liabilities 356.1 ( 3.3 ) 352.8 ( 17.3 ) 335.5

Unearned revenue 241.4 1.2 242.6 ( 28.4 ) 214.2

Current portion of long-term debt 26.1 — 26.1 — 26.1

Short-term operating lease liabilities 19.5 — 19.5 ( 2.3 ) 17.2

Current liabilities held for sale from discontinued operations — — — 52.5 52.5

Total current liabilities 775.9 2.5 778.4 — 778.4

Long-term debt, less current portion 1,565.9 — 1,565.9 — 1,565.9

Operating lease liabilities 66.5 — 66.5 ( 3.7 ) 62.8

Deferred income taxes and other tax liabilities 148.8 ( 1.1 ) 147.7 — 147.7

Other liabilities 61.3 ( 1.3 ) 60.0 ( 27.9 ) 32.1

Long-term liabilities held for sale from discontinued operations — — — 31.6 31.6

Total liabilities 2,618.4 0.1 2,618.5 — 2,618.5

Commitments and contingent liabilities

Former parent investment — — — — —

Common stock 0.1 — 0.1 — 0.1

Additional paid-in capital 2,006.2 ( 8.2 ) 1,998.0 — 1,998.0

Accumulated deficit ( 49.1 ) ( 19.4 ) ( 68.5 ) — ( 68.5 )

Accumulated other comprehensive loss ( 218.4 ) 2.9 ( 215.5 ) — ( 215.5 )

Total equity 1,738.8 ( 24.7 ) 1,714.1 — 1,714.1

Total liabilities and equity $ 4,357.2 $ ( 24.6 ) $ 4,332.6 $ — $ 4,332.6

FORTREA HOLDINGS INC

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

(in millions, except per share data)

CONSOLIDATED AND COMBINED STATEMENT OF OPERATIONS

Year Ended December 31, 2023

As Previously Reported Adjustments As Restated Discontinued Operations Reclassifications Change in Basis of Presentation As Restated and Reclassified

Revenues $ 3,109.0 $ ( 3.2 ) $ 3,105.8 $ ( 263.3 ) $ — $ 2,842.5

Costs and expenses:

Direct costs, exclusive of depreciation and amortization 2,588.6 0.9 2,589.5 ( 176.8 ) ( 160.8 ) 2,251.9

Selling, general and administrative expenses, exclusive of depreciation and amortization 336.6 3.6 340.2 ( 52.9 ) 160.8 448.1

Depreciation and amortization 96.4 1.6 98.0 ( 8.7 ) — 89.3

Goodwill and other asset impairments — 13.4 13.4 ( 13.4 ) — —

Restructuring and other charges 24.3 — 24.3 ( 3.1 ) — 21.2

Total costs and expenses 3,045.9 19.5 3,065.4 ( 254.9 ) — 2,810.5

Operating income 63.1 ( 22.7 ) 40.4 ( 8.4 ) — 32.0

Other income (expense):

Interest expense ( 69.8 ) — ( 69.8 ) — 0.1 ( 69.7 )

Foreign exchange gain (loss) 0.9 ( 0.8 ) 0.1 0.2 — 0.3

Other, net 6.9 — 6.9 0.1 ( 0.1 ) 6.9

Income (loss) from continuing operations before income taxes 1.1 ( 23.5 ) ( 22.4 ) ( 8.1 ) — ( 30.5 )

Provision for income taxes 4.5 ( 1.7 ) 2.8 ( 1.6 ) — 1.2

Loss from continuing operations $ ( 3.4 ) $ ( 21.8 ) $ ( 25.2 ) $ ( 6.5 ) $ — $ ( 31.7 )

Earnings per common share

Basic - continuing operations $ ( 0.04 ) $ ( 0.29 ) $ ( 0.36 )

Basic - discontinuing operations $ — $ — $ 0.07

Basic $ ( 0.04 ) $ ( 0.29 ) $ ( 0.29 )

Diluted - continuing operations $ ( 0.04 ) $ ( 0.29 ) $ ( 0.36 )

Diluted - discontinuing operations $ — $ — $ 0.07

Diluted $ ( 0.04 ) $ ( 0.29 ) $ ( 0.29 )

FORTREA HOLDINGS INC

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

(in millions, except per share data)

COMBINED STATEMENT OF OPERATIONS

Year-Ended December 31, 2022

As Previously Reported Adjustments As Restated Discontinued Operations Reclassifications Change in Basis of Presentation As Restated and Reclassified

Revenues $ 3,096.1 $ — $ 3,096.1 $ ( 259.1 ) $ — $ 2,837.0

Costs and expenses:

Direct costs, exclusive of depreciation and amortization 2,447.4 5.0 2,452.4 ( 155.5 ) ( 184.3 ) 2,112.6

Selling, general and administrative expenses, exclusive of depreciation and amortization 279.8 2.2 282.0 ( 50.2 ) 184.3 416.1

Depreciation and amortization 92.7 0.9 93.6 ( 8.1 ) — 85.5

Goodwill and other asset impairments 9.8 — 9.8 — — 9.8

Restructuring and other charges 30.5 — 30.5 ( 4.6 ) — 25.9

Total costs and expenses 2,860.2 8.1 2,868.3 ( 218.4 ) — 2,649.9

Operating income 235.9 ( 8.1 ) 227.8 ( 40.7 ) — 187.1

Other income (expense):

Operating (loss) income ( 872.6 ) ( 161.9 ) 32.0

Interest expense ( 91.4 ) ( 123.8 ) ( 69.7 )

Foreign exchange gain (loss) ( 0.9 ) ( 0.7 ) ( 1.6 ) ( 0.4 ) — ( 2.0 )

Other, net 2.2 — 2.2 ( 0.1 ) — 2.1

Income (loss) from continuing operations before income taxes 237.0 ( 8.8 ) 228.2 ( 41.2 ) — 187.0

Provision for income taxes 44.1 ( 2.1 ) 42.0 ( 0.9 ) — 41.1

Income from continuing operations $ 192.9 $ ( 6.7 ) $ 186.2 $ ( 40.3 ) $ — $ 145.9

Earnings per common share

Basic - continuing operations $ 2.17 $ 2.09 $ 1.64

Basic - discontinued operations $ — $ — $ 0.45

Basic $ 2.17 $ 2.09 $ 2.09

Diluted - continuing operations $ 2.17 $ 2.09 $ 1.64

Diluted - discontinued operations $ — $ — $ 0.45

Diluted $ 2.17 $ 2.09 $ 2.09

FORTREA HOLDINGS INC

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

(in millions, except per share data)

CONSOLIDATED AND COMBINED STATEMENT OF COMPREHENSIVE INCOME (LOSS)

Year Ended December 31, 2023

As Previously Reported Adjustments As Restated

Net loss $ ( 3.4 ) $ ( 21.8 ) $ ( 25.2 )

Foreign currency translation adjustments 57.6 1.7 59.3

Net benefit plan adjustments 1.2 — 1.2

Unrealized gain (loss) on derivative instruments ( 1.9 ) — ( 1.9 )

Other comprehensive earnings (loss) before tax 56.9 1.7 58.6

Provision (benefit) for income tax related to items of comprehensive Income 0.7 — 0.7

Other comprehensive income (loss), net of tax 57.6 1.7 59.3

Comprehensive income $ 54.2 $ ( 20.1 ) $ 34.1

COMBINED STATEMENT OF COMPREHENSIVE INCOME (LOSS)

Year Ended December 31, 2022

As Previously Reported Adjustments As Restated

Net income $ 192.9 $ ( 6.7 ) $ 186.2

Foreign currency translation adjustments ( 127.0 ) 0.9 ( 126.1 )

Net benefit plan adjustments ( 0.6 ) — ( 0.6 )

Other comprehensive earnings (loss) before tax ( 127.6 ) 0.9 ( 126.7 )

Provision (benefit) for income tax related to items of comprehensive Income — — —

Other comprehensive income (loss), net of tax ( 127.6 ) 0.9 ( 126.7 )

Comprehensive income $ 65.3 ( 5.8 ) 59.5

FORTREA HOLDINGS INC

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

(in millions, except per share data)

CONSOLIDATED AND COMBINED STATEMENT OF CHANGES IN EQUITY

Shares Amounts Additional Paid-in Capital Former Parent Investment Accumulated Deficit Accumulated

Comprehensive

Previously reported

Balance at December 31, 2022 — $ — $ — $ 3,618.6 $ — $ ( 276.0 ) $ 3,342.6

Net income (loss) — — — 45.7 ( 49.1 ) — ( 3.4 )

Other comprehensive income, net of tax — — — — — 57.6 57.6

Special payment to Former Parent — — — ( 1,595.0 ) — — ( 1,595.0 )

Net transfers to Former Parent — — — ( 89.7 ) — — ( 89.7 )

Reclassification of Former Parent investment to additional paid-in capital — — 1,979.6 ( 1,979.6 ) — — —

Issuance of common stock 88.8 0.1 — — — — 0.1

Stock compensation — — 26.6 — — — 26.6

Balance at December 31, 2023 88.8 $ 0.1 $ 2,006.2 $ — $ ( 49.1 ) $ ( 218.4 ) $ 1,738.8

Balance at December 31, 2022 — — — ( 3.8 ) — 1.2 ( 2.6 )

Net income (loss) — — — ( 2.4 ) ( 19.4 ) — ( 21.8 )

Other comprehensive income, net of tax — — — — — 1.7 1.7

Net transfers to Former Parent — — — ( 2.0 ) — — ( 2.0 )

Reclassification of Former Parent investment to additional paid-in capital — — ( 8.2 ) 8.2 — — —

Balance at December 31, 2023 — $ — $ ( 8.2 ) $ — $ ( 19.4 ) $ 2.9 $ ( 24.7 )

Balance at December 31, 2022 — — — 3,614.8 — ( 274.8 ) 3,340.0

Net income (loss) — — — 43.3 ( 68.5 ) — ( 25.2 )

Other comprehensive income, net of tax — — — — — 59.3 59.3

Special payment to Former Parent — — — ( 1,595.0 ) — — ( 1,595.0 )

Net transfers to Former Parent — — — ( 91.7 ) — — ( 91.7 )

Reclassification of Former Parent investment to additional paid-in capital — — 1,971.4 ( 1,971.4 ) — — —

Issuance of common stock 88.8 0.1 — — — — 0.1

Stock compensation — — 26.6 — — — 26.6

Balance at December 31, 2023 88.8 $ 0.1 $ 1,998.0 $ — $ ( 68.5 ) $ ( 215.5 ) $ 1,714.1

FORTREA HOLDINGS INC

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

(in millions, except per share data)

COMBINED STATEMENT OF CHANGES IN EQUITY

Shares Amounts Additional Paid-in Capital Former Parent Investment Accumulated Deficit Accumulated

Comprehensive

Previously reported

Balance at December 31, 2021 — $ — $ — $ 3,409.0 $ — $ ( 148.4 ) $ 3,260.6

Net income — — — 192.9 — — 192.9

Other comprehensive loss, net of tax — — — — — ( 127.6 ) ( 127.6 )

Net transfers from Former Parent — — — 16.7 — — 16.7

Balance at December 31, 2022 — — — 3,618.6 — ( 276.0 ) 3,342.6

Balance at December 31, 2021 — — — 0.5 — 0.3 0.8

Net income — — — ( 6.7 ) — — ( 6.7 )

Other comprehensive loss, net of tax — — — — — 0.9 0.9

Net transfers from Former Parent — — — 2.4 — — 2.4

Balance at December 31, 2022 — — — ( 3.8 ) — 1.2 ( 2.6 )

Balance at December 31, 2021 — — — 3,409.5 — ( 148.1 ) 3,261.4

Net income — — — 186.2 — — 186.2

Other comprehensive loss, net of tax — — — — — ( 126.7 ) ( 126.7 )

Net transfers from Former Parent — — — 19.1 — — 19.1

Balance at December 31, 2022 — $ — $ — $ 3,614.8 $ — $ ( 274.8 ) $ 3,340.0

FORTREA HOLDINGS INC

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

(in millions, except per share data)

CONSOLIDATED AND COMBINED STATEMENT OF CASH FLOWS

Year Ended December 31, 2023

As Previously Reported Adjustments As Restated

CASH FLOWS FROM OPERATING ACTIVITIES:

Net loss $ ( 3.4 ) $ ( 21.8 ) $ ( 25.2 )

Adjustments to reconcile net earnings to net cash provided by operating activities:

Depreciation and amortization 96.4 1.6 98.0

Stock compensation 42.7 — 42.7

Operating lease right-of-use asset expense 27.4 — 27.4

Goodwill and other asset impairments — 13.4 13.4

Deferred income taxes ( 40.5 ) ( 1.1 ) ( 41.6 )

Other, net ( 1.0 ) — ( 1.0 )

Change in assets and liabilities (net of effects of acquisitions):

Increase in accounts receivable and unbilled services, net ( 28.8 ) 3.2 ( 25.6 )

Increase in prepaid expenses and other ( 2.0 ) ( 1.4 ) ( 3.4 )

Increase in accounts payable 51.1 4.2 55.3

Decrease in deferred revenue ( 3.4 ) 1.2 ( 2.2 )

Increase in accrued expenses and other 28.9 1.7 30.6

Net cash provided by operating activities 167.4 1.0 168.4

CASH FLOWS FROM INVESTING ACTIVITIES:

Capital expenditures ( 40.3 ) — ( 40.3 )

Proceeds from sale of assets 8.5 — 8.5

Net cash used for investing activities ( 31.8 ) — ( 31.8 )

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from revolving credit facilities 164.0 — 164.0

Payments on revolving credit facilities ( 164.0 ) — ( 164.0 )

Proceeds from term loans 1,061.4 — 1,061.4

Proceeds from issuance of senior notes 570.0 — 570.0

Debt issuance costs ( 26.4 ) — ( 26.4 )

Principal payments of long-term debt ( 15.4 ) — ( 15.4 )

Special payment to Former Parent ( 1,595.0 ) — ( 1,595.0 )

Net transfers to Former Parent ( 133.6 ) ( 1.8 ) ( 135.4 )

Net cash provided by financing activities ( 139.0 ) ( 1.8 ) ( 140.8 )

Effect of exchange rate changes on cash and cash equivalents — 2.4 2.4

Net change in cash and cash equivalents ( 3.4 ) 1.6 ( 1.8 )

Cash and cash equivalents at beginning of period 112.0 ( 1.6 ) 110.4

Cash and cash equivalents at end of period $ 108.6 $ — $ 108.6

The cash flows related to discontinued operations have not been segregated and are included in the adjusted and restated statements of cash flows included above.

FORTREA HOLDINGS INC

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

(in millions, except per share data)

COMBINED STATEMENT OF CASH FLOWS

Year Ended December 31, 2022

As Previously Reported Adjustments As Restated

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income $ 192.9 $ ( 6.7 ) $ 186.2

Adjustments to reconcile net earnings to net cash provided by operating activities:

Depreciation and amortization 92.7 0.9 93.6

Stock compensation 25.4 — 25.4

Operating lease right-of-use asset expense 24.9 — 24.9

Goodwill and other asset impairments 9.8 — 9.8

Deferred income taxes ( 16.5 ) — ( 16.5 )

Foreign exchange (loss) gain ( 26.9 ) ( 10.6 ) 0.3

Other, net 7.9 21.3 6.9

Change in assets and liabilities (net of effects of acquisitions):

Increase in accounts receivable and unbilled services, net ( 105.0 ) — ( 105.0 )

(Increase) decrease in prepaid expenses and other ( 12.2 ) 3.1 ( 9.1 )

Increase (decrease) in accounts payable 22.4 2.4 24.8

Increase (decrease) in deferred revenue ( 32.5 ) 2.4 ( 30.1 )

Increase (decrease) in accrued expenses and other ( 118.5 ) ( 6.9 ) ( 125.4 )

Net cash (used for) provided by operating activities 87.5 ( 4.8 ) 82.7

CASH FLOWS FROM INVESTING ACTIVITIES:

Capital expenditures ( 54.4 ) — ( 54.4 )

Proceeds from sale of assets 0.4 — 0.4

Net cash used for investing activities ( 54.0 ) — ( 54.0 )

CASH FLOWS FROM FINANCING ACTIVITIES:

Net transfers to Former Parent ( 8.7 ) 2.4 ( 6.3 )

Net cash used for financing activities ( 8.7 ) 2.4 ( 6.3 )

Effect of exchange rate changes on cash and cash equivalents ( 7.4 ) 0.8 ( 6.6 )

Net change in cash and cash equivalents 17.4 ( 1.6 ) 15.8

Cash and cash equivalents at beginning of period 94.6 — 94.6

Cash and cash equivalents at end of period $ 112.0 $ ( 1.6 ) $ 110.4

The cash flows related to discontinued operations have not been segregated and are included in the adjusted and restated statements of cash flows included above.

SUBSEQUENT EVENTS

Credit Agreement Amendment

On February 28, 2025, the Company entered into an amendment (the “,Second Credit Amendment”) to modify a financial covenant to provide the Company with additional flexibility under the Company’s credit agreement dated as of June 30, 2023 and as amended on May 3, 2024 (the “Existing Credit Agreement”), by and among the Company, certain subsidiaries of the Company and Goldman Sachs Bank USA (as administrative agent and collateral agent), governing the Company’s existing senior credit facility.

The Second Credit Amendment increased the Company’s maximum quarterly Total Leverage Ratio (as defined in the Existing Credit Agreement) from 5.30 :1.00 to 6.00 :1.00 for the fiscal quarters ending on September 30, 2025 through June 30, 2026, decreasing to 5.75 :1.00 for the fiscal quarter ending on September 30, 2026, further decreasing to 5.50 :1.00 for the fiscal quarter ending on December 31, 2026, and reverting to 5.30 :1.00 thereafter.

In consideration of this adjustment, the Company paid a fee to consenting lenders and has agreed during the covenant adjustment period to certain additional limitations with respect to investments, restricted payments and liens.

Loss from continuing operations before income taxes $ ( 983.0 ) $ ( 275.0 ) $ ( 30.5 )

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES

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-K

Item 8. Financial Statements and Supplementary Data