What changed in this filing

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Item 1. Financial Statements

2024-05-24 compared with 2023-11-13 · 969 added, 345 removed, 389 unchanged (77% of the section changed)

1 unchanged sentence

FORTREA HOLDINGS INC.

CONDENSED CONSOLIDATED AND COMBINED BALANCE SHEETS

CONDENSED CONSOLIDATED BALANCE SHEETS

(in millions)

September 30,

2023 December 31,

March 31, 2024 December 31, 2023

Current assets:

2 unchanged sentences

Prepaid expenses and other 91.3 84.6

Current assets of discontinued operations 74.9 69.1

Total current assets 1,200.0 1,250.8

4 unchanged sentences

Other assets, net 89.0 69.7

Long-term assets of discontinued operations 345.1 368.8

Total assets $ 4,240.2 $ 4,332.6

6 unchanged sentences

Short-term operating lease liabilities 15.2 17.2

Current liabilities of discontinued operations 51.2 52.5

Total current liabilities 818.3 778.4

2 unchanged sentences

Deferred income taxes and other tax liabilities 150.7 147.7

Long-term liabilities of discontinued operations 31.5 31.6

Other liabilities 28.9 32.1

1 unchanged sentence

Commitments and contingent liabilities (Note 9)

Former parent investment — 3,618.6

Common stock, 88.8 and 0.0 shares outstanding at September 30, 2023 and December 31, 2022, respectively

Common stock, 89.4 and 88.8 shares outstanding at March 31, 2024 and December 31, 2023, respectively

Additional paid-in capital 2,002.9 1,998.0

7 unchanged sentences

(in millions, except per share data)

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

2023 2022 2023 2022

Three Months Ended March 31,

Revenues $ 662.1 $ 693.9

Costs and expenses:

Direct costs, exclusive of depreciation and amortization (including costs incurred from related parties of $ 0.0 , $ 21.6 , $ 48.8 and $ 65.7 during the three and nine months ended September 30, 2023 and 2022, respectively)

647.3 594.8 1,932.9 1,847.6

Direct costs, exclusive of depreciation and amortization (including costs incurred from related parties of $ 0.0 and $ 21.7 during the three months ended March 31, 2024 and 2023, respectively)

Selling, general and administrative expenses, exclusive of depreciation and amortization 120.1 116.8

2 unchanged sentences

Total costs and expenses 699.5 679.8

Operating income 14.0 68.9 73.8 172.8

Operating income (loss) ( 37.4 ) 14.1

Other income (expense):

Interest expense ( 34.6 ) — ( 35.3 ) —

Interest income (expense) ( 34.3 ) 0.1

Foreign exchange gain (loss) ( 5.3 ) ( 5.2 )

Other, net 1.3 0.5

Net income (loss) before income taxes ( 17.9 ) 74.2 42.1 195.3

Provision for (benefit from) income taxes ( 4.8 ) 13.6 9.5 35.8

Income (loss) from continuing operations before income taxes ( 75.7 ) 9.5

Provision for income taxes 4.1 1.5

Income (loss) from continuing operations $ ( 79.8 ) $ 8.0

Income (loss) from discontinued operations, net of tax ( 21.2 ) 4.5

Net income (loss) $ ( 101.0 ) $ 12.5

Earnings (loss) per common share

$ ( 0.15 ) $ 0.68 $ 0.37 $ 1.80

Basic earnings (loss) per share continuing operations $ ( 0.89 ) $ 0.09

Basic earnings (loss) per share discontinued operations $ ( 0.24 ) $ 0.05

Basic earnings (loss) per share $ ( 1.13 ) $ 0.14

Diluted earnings (loss) per share continuing operations $ ( 0.89 ) $ 0.09

Diluted earnings (loss) per share discontinued operations $ ( 0.24 ) $ 0.05

Diluted earnings (loss) per share $ ( 1.13 ) $ 0.14

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

2 unchanged sentences

(in millions, except per share data)

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

2023 2022 2023 2022

Three Months Ended March 31,

Net income (loss) $ ( 101.0 ) $ 12.5

2 unchanged sentences

Unrealized gain on derivative instruments

Other comprehensive loss before tax

( 54.4 ) ( 96.6 ) ( 3.9 ) ( 216.8 )

Other comprehensive income (loss) before tax ( 25.6 ) 19.1

Provision (benefit) for income tax related to items of comprehensive income ( 0.5 ) —

Other comprehensive loss, net of tax

( 54.8 ) ( 96.6 ) ( 4.3 ) ( 216.8 )

Other comprehensive income (loss), net of tax ( 26.1 ) 19.1

Comprehensive income (loss)

7 unchanged sentences

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

— — — 17.4 — — 17.4

Other comprehensive income, net of tax

— — — — — 18.9 18.9

Net transfers from Former Parent — — — 26.6 — — 26.6

Balance at March 31, 2023 — — — 3,662.6 — ( 257.1 ) 3,405.5

— — — 28.3 — — 28.3

Other comprehensive income, net of tax

— — — — — 31.6 31.6

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

Net transfers to Former Parent — — — ( 119.4 ) — — ( 119.4 )

Reclassification of Former Parent investment to additional paid-in capital — — 1,976.5 ( 1,976.5 ) — — —

Issuance of common stock 88.8 0.1 — — — — 0.1

Balance at June 30, 2023 88.8 0.1 1,976.5 — — ( 225.5 ) 1,751.1

— — — — ( 13.1 ) — ( 13.1 )

Net loss — — — — ( 101.0 ) — ( 101.0 )

Other comprehensive loss, net of tax — — — — — ( 26.1 ) ( 26.1 )

— — — — — ( 54.8 ) ( 54.8 )

Stock compensation — — 15.1 — — — 15.1

Issuance of common stock

0.6 — — — — — —

Balance at September 30, 2023 88.8 $ 0.1 $ 1,987.6 $ — $ ( 13.1 ) $ ( 280.3 ) $ 1,694.3

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

FORTREA HOLDINGS INC.

CONDENSED CONSOLIDATED AND COMBINED STATEMENTS OF CHANGES IN EQUITY

(in millions)

Net share settlement tax payments from issuance of stock to employees

— — ( 10.4 ) — — — ( 10.4 )

Other — — 0.2 — — — 0.2

Balance at March 31, 2024 89.4 $ 0.1 $ 2,002.9 $ — $ ( 169.5 ) $ ( 241.6 ) $ 1,591.9

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

2 unchanged sentences

— — — 12.5 — — 12.5

Other comprehensive loss, net of tax

— — — — — ( 34.6 ) ( 34.6 )

Other comprehensive income, net of tax — — — — — 19.1 19.1

Net transfers from Former Parent

1 unchanged sentence

Balance at March 31, 2023 — $ — $ — $ 3,658.5 $ — $ ( 255.7 ) $ 3,402.8

— — — 66.4 — — 66.4

Other comprehensive loss, net of tax

— — — — — ( 85.6 ) ( 85.6 )

Net transfers to Former Parent

— — — ( 29.3 ) — — ( 29.3 )

Balance at June 30, 2022 — — — 3,567.2 — ( 268.6 ) 3,298.6

— — — 60.6 — — 60.6

Other comprehensive loss, net of tax

— — — — — ( 96.6 ) ( 96.6 )

Net transfers to Former Parent

— — — ( 40.1 ) — — ( 40.1 )

Balance at September 30, 2022 — $ — $ — $ 3,587.7 $ — $ ( 365.2 ) $ 3,222.5

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

2 unchanged sentences

(in millions)

Nine Months Ended September 30,

Three Months Ended March 31,

CASH FLOWS FROM OPERATING ACTIVITIES:

$ 32.6 $ 159.5

Net income $ ( 101.0 ) $ 12.5

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

2 unchanged sentences

Operating lease right-of-use asset expense 6.2 7.8

Goodwill and other asset impairments 24.0 —

Deferred income taxes 4.2 ( 3.6 )

1 unchanged sentence

Changes in assets and liabilities:

Increase in accounts receivable and unbilled services, net ( 26.6 ) ( 72.7 )

Decrease in accounts receivable and unbilled services, net 40.5 27.3

Increase in prepaid expenses and other

( 25.5 ) ( 19.1 )

Increase in accounts payable

Decrease in unearned revenue

Increase (decrease) in accounts payable

Increase (decrease) in unearned revenue

26.4 ( 12.9 )

Decrease in accrued expenses and other ( 26.0 ) ( 65.1 )

Net cash provided by operating activities

Net cash used for operating activities ( 25.6 ) ( 2.0 )

CASH FLOWS FROM INVESTING ACTIVITIES:

5 unchanged sentences

Payments on revolving credit facilities ( 242.0 ) —

Proceeds from term loans 1,061.4 —

Proceeds from issuance of senior notes 570.0 —

Debt issuance costs ( 26.4 ) —

Principal payments of long-term debt ( 7.7 ) —

Special payment to Former Parent ( 1,595.0 ) —

Net transfers to Former Parent — 24.5

Net cash used for financing activities

( 134.4 ) ( 0.4 )

Net cash provided by financing activities 21.3 24.5

Effect of exchange rate changes on cash and cash equivalents ( 2.3 ) 1.5

2 unchanged sentences

Cash and cash equivalents at end of period $ 92.8 $ 118.2

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

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

5 unchanged sentences

Fortrea Holdings Inc.

("Fortrea" or the “Company”), a Delaware corporation incorporated on January 31, 2023, is a leading global contract research organization (“CRO”) providing biopharmaceutical product and medical device development services, patient access solutions and other enabling services to pharmaceutical, biotechnology and medical device customers.

(“Fortrea” or the “Company”), a Delaware corporation incorporated on January 31, 2023, is a leading global contract research organization (“CRO”) providing biopharmaceutical product and medical device development services to pharmaceutical, biotechnology and medical device customers.

The Company offers customers highly flexible delivery models that include Full Service, Functional Service Provider, and Hybrid Service structures.

1 unchanged sentence

On June 30, 2023, the Company completed a spin-off (the “Spin” or the “Separation”) from Laboratory Corporation of America Holdings (“Labcorp” or “Former Parent”).

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

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

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

The team of approximately 19,000 employees conducts operations in more than 90 countries and delivers comprehensive phase I – IV clinical trial management, clinical pharmacology, differentiated technology enabled trial solutions and post-approval services for our customers.

The Company’s offering is scaled to deliver focused and agile solutions to customers globally, streamlining the biopharmaceutical product and medical device development process.

Additionally, Fortrea successfully utilizes enabling technologies to optimize processes and evolve with a dynamic marketplace.

The Company manages its business in two reportable segments - Clinical Services and Enabling Services.

The Clinical Services segment provides services across the clinical pharmacology and clinical development spectrum.

The Enabling Services segment provides patient access and clinical trial technology solutions to customers that streamline complex randomization and optimize the trial drug supply process, while minimizing operational costs and supporting timely and accurate patient dosing.

For further financial information about these segments, see Note 14, Business Segment Information to the condensed consolidated and combined financial statements.

The Company manages its business in one reportable segment, Clinical Services, that provides services across the clinical pharmacology and clinical development spectrum.

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.

Reportable Segment

On March 9, 2024, the Company, together with its wholly-owned subsidiary, Fortrea Inc., entered into an Asset Purchase Agreement with Endeavor Buyer LLC to sell the operations of Fortrea Patient Access Inc.

and its subsidiaries and Endpoint Clinical, Inc.

and its subsidiaries;

which are all collectively referred to as the Enabling Services Segment.

Refer to Note 2 - Discontinued Operations for further discussion .

As of March 31, 2024, all of the Company's consolidated revenues from continuing operations were generated from the Clinical Services segment, which provides phase I-IV clinical trials, including clinical pharmacology and comprehensive clinical development capabilities.

The Company’s chief operating decision maker allocates resources and assesses performance for the Clinical Services segment.

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 condensed consolidated and combined balance sheets as of March 31, 2024 and December 31, 2023.

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

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

Agreements with Labcorp

2 unchanged sentences

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.

Basis of Financial Statement Presentation

Prior to June 30, 2023, Fortrea existed and functioned as part of the consolidated business of Former Parent.

The Company’s financial statements for periods through the Spin reflect the historical financial position, results of operations and cash flows of the Company, for the periods presented, prepared on a “carve-out” basis and have been derived from the condensed consolidated financial statements and accounting records of Labcorp using the historical results of operations and historical basis of assets and liabilities of the Company and reflect Labcorp’s net investment in the Company.

The Company’s balance sheet as of September 30, 2023 is a consolidated balance sheet based on the financial position of Fortrea as a standalone company.

The three months ended September 30, 2023

The services and assets to be provided to Fortrea by Labcorp support the Company’s enterprise functions, most

FORTREA HOLDINGS INC.

1 unchanged sentence

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

includes condensed consolidated financial statements, whereas all prior periods included combined financial statements.

notably IT applications, network and security support and hosting, as well as finance, human resources, marketing and other administrative support.

Basis of Financial Statement Presentation

Prior to June 30, 2023, Fortrea existed and functioned as part of the consolidated business of Former Parent.

The Company’s balance sheet as of March 31, 2024 is a consolidated balance sheet based on the financial position of Fortrea as a standalone company.

The three months ended March 31, 2024 includes condensed consolidated financial statements, whereas all prior periods included combined financial statements.

The Company’s unaudited condensed consolidated and combined financial statements for all periods presented are referred to throughout this document as “financial statements.”

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

The condensed consolidated and combined financial statements do not necessarily reflect what the financial position, results of operations, and cash flows would have been had it operated as a standalone company during the prior periods presented.

The accompanying condensed consolidated and combined financial statements of the Company are unaudited.

GAAP”) for interim financial information.

Accordingly, they do not include all of the information and notes required by U.S.GAAP for complete financial statements.

In the opinion of management, all adjustments necessary for a fair statement of results of operations, cash flows, and financial position have been made.

Except as otherwise disclosed, all such adjustments are of a normal recurring nature.

Interim results are not necessarily indicative of results for a full year.

The year-end condensed consolidated and combined balance sheet data was derived from audited financial statements but does not include all disclosures required by U.S.

The condensed consolidated and combined financial statements and notes are presented in accordance with the rules and regulations of the SEC and do not contain certain information included in the Company’s fiscal year 2022 reporting included within the Form 10.

Therefore, these interim statements should be read in conjunction with the combined financial statements and notes thereto contained in the Form 10.

The condensed combined statements of operations include all revenues and costs directly attributable to our business.

The condensed combined statements of operations for prior periods also include costs for certain centralized functions and programs provided and administered by Labcorp that were allocated to Fortrea.

Interim results are not necessarily indicative of results for a full year, and additionally, condensed consolidated and combined financial statements do not necessarily reflect what the financial position, results of operations, and cash flows would have been had it operated as a standalone company during the prior periods presented.

As such, the information included in this Quarterly Report on Form 10-Q should be read in conjunction with the Company’s audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023.

The condensed combined statements of operations include all revenues and costs directly attributable to Fortrea’s business.

The combined statements of operations for prior periods also include costs for certain centralized functions and programs provided and administered by Labcorp that were allocated to Fortrea.

These centralized functions and programs include, but are not limited to legal, tax, treasury, risk management, sales expenses, information technology, human resources, finance, supply chain, executive leadership and stock-based compensation.

3 unchanged sentences

Actual costs that may have been incurred if Fortrea had been a standalone company would depend on a number of factors, including, but not limited to, the organizational structure, whether functions were outsourced or performed by employees, and strategic decisions made in areas such as information technology and infrastructure.

For a period following the Spin some of these functions are provided by Labcorp as discussed within the Agreements with Labcorp section above.

Labcorp utilizes a centralized approach to cash management and financing of its operations.

The cash and cash equivalents held by Labcorp at the corporate level were not specifically identifiable to Fortrea and therefore have not been reflected in the Company’s condensed combined balance sheet as of December 31, 2022.

Cash and cash equivalents in the condensed consolidated and combined balance sheets represent cash and cash equivalents held by the Company.

As of December 31, 2022, the condensed combined financial statements include certain assets and liabilities that have historically been held at the Labcorp corporate level but are specifically identifiable or otherwise attributable to Fortrea.

Labcorp’s third-party long-term debt and the related interest expense have not been allocated to Fortrea for any of the periods presented because Fortrea was not the legal obligor of such debt.

For a period following the Spin some of these functions are provided by Labcorp.

As of December 31, 2022, a Former Parent investment is shown in lieu of common stock and retained earnings accounts in the condensed combined financial statements.

The total net effect of the settlement of the transactions between the Company and Labcorp, exclusive of those historically settled in cash, is reflected in the condensed combined statements of cash flows in cash flows from financing activities as net transfers (to) from Former Parent and in the condensed consolidated and combined balance sheets as Former Parent investment.

All intercompany transactions within the Company have been eliminated.

All transactions between the Company and Former Parent have been included in these condensed consolidated and combined financial statements.

For those transactions between the Company and Former Parent that were historically settled in cash, the Company has reflected such balances in the condensed consolidated and combined balance sheets as due from

FORTREA HOLDINGS INC.

1 unchanged sentence

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

All intercompany transactions within the Company have been eliminated.

All transactions between the Company and Former Parent have been included in these condensed consolidated and combined financial statements.

related parties or due to related parties.

The Former Parent investment and all due from or due to Former Parent were settled at the time of the Spin.

6 unchanged sentences

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

As of September 30, 2023, no customer accounted for more than 10% of the Company's combined gross accounts receivable and unbilled services.

As of December 31, 2022, one pharmaceutical company accounted for approximately 10.5 % of the Company's combined gross accounts receivable and unbilled services.

Additionally, for the three months and nine months ended September 30, 2023, one customer accounted for approximately 13.5 % and 10.2 % of revenues, respectively.

For the three and nine months ended September 30, 2022, no customer accounted for more than 10% of revenues.

As of March 31, 2024, two customers accounted for 19.3 % and 11.0 % of the Company's combined gross accounts receivable and unbilled services.

As of December 31, 2023, two pharmaceutical companies accounted for approximately 17.0 % and 11.2 % of the Company's combined gross accounts receivable and unbilled services.

Additionally, for the three months ended March 31, 2024, two customers accounted for approximately 14.0 % and 13.0 % of revenues.

For the three months ended March 31, 2023, one customer accounted for 10.0 % of revenues.

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

Additionally, the Company applies assumptions and judgments, including historical collection experience and reasonable and supportable forecasts, for assessing collectability and determining allowances for doubtful accounts.

The Company’s revenues by segment and geography for the three and nine months ended September 30, 2023 and 2022 are as follows:

Three Months Ended September 30, 2023 Three Months Ended September 30, 2022

North America Europe Other Total North America Europe Other Total

Clinical Services $ 347.4 $ 204.3 $ 160.0 $ 711.7 $ 355.3 $ 196.0 $ 145.9 $ 697.2

Enabling Services 64.4 — 0.3 64.7 64.6 — 0.5 65.1

Total $ 411.8 $ 204.3 $ 160.3 $ 776.4 $ 419.9 $ 196.0 $ 146.4 $ 762.3

Nine Months Ended September 30, 2023 Nine Months Ended September 30, 2022

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, to include information technology costs and certain facility costs in Selling, general and administrative expenses was made to improve comparability of costs against peer companies in the clinical research industry.

As a result, the Company reclassified $ 45.3 from Direct costs, exclusive of depreciation and amortization, to Selling, general and administrative expenses, exclusive of depreciation and amortization in the condensed consolidated and combined statement of operations for the period ending March 31, 2023 relating to information technology costs and certain facility charges.

There is no impact on total operating expenses, operating income or net income during the period ended March 31, 2023.

Direct costs include payroll and related benefits for project-related employees, pass through costs, transition servi ces agreement direct costs, facility costs related to phase I clinics and other direct costs.

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 condensed consolidated and combined statement of operations for the period ending March 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 on 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 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

FORTREA HOLDINGS INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED AND COMBI NED FINANCIAL STATEMENTS

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

material misstatement of the previously issued consolidated financial statements as of and for the fiscal years ended December 31, 2022 and 2023, and the previously issued unaudited condensed consolidated 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.

Previously reported financial information for such immaterial errors will be corrected in future filings, as applicable.

A summary of the corrections to the impacted financial statement line items from the previously issued financial statements are presented in Note 15 - Immaterial Financial Restatement and Reclassifications to Prior Period Financial Statements .

Recently Issued and Adopted Accounting Standards

In November 2023, the FASB issued 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 new guidance will be effective for the Company in the annual period beginning January 1, 2024 and in 2025 for interim periods.

The Company is assessing the impact of this ASU on its disclosures within the consolidated financial statements.

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 disaggregation by jurisdiction of income taxes paid.

This 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.

DISCONTINUED OPERATIONS

On March 9, 2024, the Company entered into an Asset Purchase Agreement (the “Purchase Agreement”) with Endeavor Buyer LLC, an affiliate of Arsenal Capital Partners, pursuant to which the Seller has agreed to sell, and to cause its affiliates to sell, net assets relating to its Enabling Services segment (the “Transaction”), specifically its Patient Access and Endpoint businesses, including the sale of equity interests of Fortrea Patient Access Inc.

and its subsidiaries and Endpoint Clinical, Inc.

and its subsidiaries.

The purchase price for the Transaction is $ 345.0 , subject to customary purchase price adjustments, with $ 295.0 to be paid at closing and $ 50.0 to be paid upon achievement of certain transition-related milestones.

The Transaction is targeted to close in the second quarter of 2024, subject to customary closing conditions and government approvals, as well as the parties entering into certain services and operating agreements.

FORTREA HOLDINGS INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED AND COMBI NED FINANCIAL STATEMENTS

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

Financial Information of Discontinued Operations

The following table summarizes the significant line items included in earnings from discontinued operations, net of income tax in the condensed consolidated and combined statements of operations for the three months ended March 31, 2024 and 2023:

Three Months Ended March 31,

Revenues $ 65.7 $ 69.8

Costs and expenses:

Direct costs, exclusive of depreciation and amortization 41.4 46.1

Selling, general and administrative expenses, exclusive of depreciation and amortization 15.6 15.0

Depreciation and amortization 1.6 2.2

Long-lived and goodwill asset impairments 24.0 —

Restructuring and other charges 0.5 0.6

Total costs and expenses 83.1 63.9

Operating income (loss) ( 17.4 ) 5.9

Other expense:

Foreign exchange gain (loss) — ( 0.3 )

Income (loss) from discontinued operations before income taxes ( 17.4 ) 5.6

Provision for income taxes 3.8 1.1

Income (loss) from discontinued operations, net of tax $ ( 21.2 ) $ 4.5

In the first quarter of 2024, as a result of the final 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.

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

FORTREA HOLDINGS INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED AND COMBI NED FINANCIAL STATEMENTS

(dollars and shares 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 March 31, 2024 and December 31, 2023:

2024 December 31,

Current assets:

Cash and cash equivalents $ — $ —

Accounts receivable and unbilled services, net 66.6 60.4

Prepaid expenses and other 8.3 8.7

Total current assets 74.9 69.1

Property, plant and equipment, net 43.2 40.6

Goodwill, net 252.5 276.5

Intangible assets, net 42.6 43.1

Other assets, net 6.8 8.6

Total assets of discontinued operations $ 420.0 $ 437.9

Current liabilities:

Accounts payable $ 4.7 $ 4.5

Accrued expenses and other current liabilities 12.3 17.3

Unearned revenue 31.9 28.4

Short-term operating lease liabilities 2.3 2.3

Total current liabilities $ 51.2 $ 52.5

Operating lease liabilities 3.1 3.7

Other liabilities 28.4 27.9

Total liabilities of discontinued operations $ 82.7 $ 84.1

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

The following table summarizes depreciation and amortization, capital expenditures and the significant operating noncash items from discontinued operations for the three months ended March 31, 2024 and 2023:

Three Months Ended March 31,

Depreciation and amortization $ 1.6 $ 2.2

Capital expenditures $ 3.7 $ 4.3

There are no significant operating or investing noncash items related to discontinued operations for the three months ended March 31, 2024 and 2023.

The Company’s revenues by geography for the three months ended March 31, 2024 and 2023 are as follows:

Three Months Ended March 31, 2024 Three Months Ended March 31, 2023

North America Europe Other Total North America Europe Other Total

Clinical Services $ 1,070.6 $ 600.7 $ 458.5 $ 2,129.8 $ 1,047.0 $ 642.6 $ 438.0 $ 2,127.6

Enabling Services 202.9 — 0.9 203.8 205.2 — 1.6 206.8

Total $ 1,273.5 $ 600.7 $ 459.4 $ 2,333.6 $ 1,252.2 $ 642.6 $ 439.6 $ 2,334.4

$ 305.9 $ 208.3 $ 147.9 $ 662.1 $ 353.7 $ 196.0 $ 144.2 $ 693.9

FORTREA HOLDINGS INC.

4 unchanged sentences

The following table provides information about contract asset balances:

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Sales commission assets $ 16.7 $ 15.8

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Total $ 18.6 $ 17.8

Amortization related to sales commission assets for the three months ended September 30, 2023 and 2022 was $ 2.3 and $ 3.7 , respectively, and for the nine months ended September 30, 2023 and 2022 was $ 10.2 and $ 10.2 , respectively.

Amortization related to deferred contract costs for the three months ended September 30, 2023 and 2022 was $ 2.2 and $ 3.1 , respectively, and for the nine months ended September 30, 2023 and 2022 was $ 6.9 and $ 9.1 , respectively.

The Company does 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.

Amortization related to sales commission assets for the three months ended March 31, 2024 and 2023 was $ 2.6 and $ 4.1 , respectively.

Amortization related to deferred contract costs for the three months ended March 31, 2024 and 2023 was $ 0.4 and $ 0.6 , respectively.

Th e 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.

Accounts Receivable, Unbilled Services and Unearned Revenue

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

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Accounts receivable $ 389.9 $ 420.2

Gross unbilled services 606.7 585.7

Unbilled services 587.1 600.0

allowance for credit losses ( 36.0 ) ( 31.7 )

1 unchanged sentence

Unearned revenue $ 236.9 $ 214.2

Revenue recognized during the period included in the unearned revenue balance at the beginning of the peri od was $ 187.6 and $ 212.0 for the nine months ended September 30, 2023 and 2022 , respectively.

Revenue recognized during the period that was included in the unearned revenue balance at the beginning of the period was $ 92.4 and $ 103.2 for the three months ended March 31, 2024 and 2023, respectively.

Credit Loss Rollforward

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

The rollforward for the allowance for credit losses for the nine months ended September 30, 2023 is as follows:

The rollforward for the allowance for credit losses for the three months ended March 31, 2024 is as follows:

Accounts Receivable

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Write-offs ( 1.5 )

Allowance for credit losses as of September 30, 2023 $ 28.3

Allowance for credit losses as of March 31, 2024 $ 36.0

Performance Obligations Under Long-Term Contracts

As of September 30, 2023, approximately $ 4,958.2 of revenues are expected to be recognized from remaining long-term performance obligations.

The Company expects to recognize approximately 29 % of the existing

As of March 31, 2024, approximately $ 4,302 of revenues are expected to be recognized from remaining long-term performance obligations.

The Company expects to recognize approximately 30 % of the existing performance

FORTREA HOLDINGS INC.

1 unchanged sentence

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

performance obligations as of September 30, 2023 as revenue over the next 12 months and the remaining balance thereafter.

obligations as of March 31, 2024 as revenue over the next 12 months and the remaining balance thereafter.

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

During the three and nine months ended September 30, 2023, there were reductions of approximately $ 15.6 and $ 48.5 , respectively, in the Company’s revenues related to performance obligations partially satisfied in previous periods.

These reductions primarily relate to changes in scope.

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

During the three months ended March 31, 2024, there were reductions of approximately $ 34 in revenue related to performance obligations partially satisfied in previous periods.

Of this reduction, approximately half was associated with changes in scope or price, and approximately half was related to changes in estimated effort to complete customer contract obligations.

The change in estimate resulted in an estimated reduction to revenue of $ 17 , and an increase in loss from continuing operations of $ 16 and in loss per share of $ 0.18 .

During the three months ended March 31, 2023, there were reductions of approximately $ 11 from performance obligations which were partially satisfied in previous periods;

such amounts were primarily related to changes in estimate and to a much lesser extent, changes in scope.

The change in estimate resulted in an estimated reduction to revenue of $ 10 , and a decrease in income from continuing operations of $ 8 and in income per share of $ 0.09 .

Accounts Receivable Purchase Program

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The Company continues to service, administer and collect the receivables on behalf of the Financial Institution and does not receive a servicing fee as part of the arrangement.

During the three months ended September 30, 2023, no receivables were sold.

During the nine months ended September 30, 2023, $ 17.5 of receivables were sold with net proceeds of $ 17.3 .

As of March 31, 2024, the Company had no outstanding factored customer receivables, and the ARPP was terminated in May 2024.

RESTRUCTURING AND OTHER CHARGES

In the three months ended September 30, 2023, the Company took actions to reduce overcapacity, align resources, and restructure certain operations.

During 2023, the Company took actions to reduce overcapacity, align resources, and restructure certain operations.

These actions included eliminating redundant positions and aligning resources for cost improvement and to meet customer requirements.

These restructuring actions are expected to continue throughout 2023 and 2024.

These restructuring actions are expected to continue throughout 2024.

The following summarizes a component of the Company’s restructuring and other charges:

1 unchanged sentence

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

Expense 12.0 1.0 13.0

Cash payments ( 10.5 ) ( 1.5 ) ( 12.0 )

Balance as of September 30, 2023 $ 3.4 $ 4.5 $ 7.9

The Company expects the restructuring and other charges accrued as of September 30, 2023 will be paid within the next twelve months and are included within accrued expenses and other current liabilities on the accompanying condensed consolidated and combined balance sheets.

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

Restructuring charges 4.1 — 4.1

Reduction of prior restructuring accruals — ( 2.9 ) ( 2.9 )

Cash payments and other adjustments ( 2.3 ) — ( 2.3 )

Balance as of March 31, 2024 $ 2.9 $ 0.3 $ 3.2

Severance and Other Employee Costs Facility Costs Total

Balance as of December 31, 2022 $ 1.8 $ 4.5 $ 6.3

Restructuring charges 0.3 0.3 0.6

Cash payments and other adjustments — 0.3 0.3

Balance as of March 31, 2023 $ 2.1 $ 5.1 $ 7.2

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

The non-current portion of the restructuring

FORTREA HOLDINGS INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED AND COMBI NED FINANCIAL STATEMENTS

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

liabilities is included in the condensed consolidated and combined balance sheets in other liabilities.

The non-current portion of the restructuring liabilities is expected to be paid out over 12 months.

EARNINGS (LOSS) PER SHARE

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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

FORTREA HOLDINGS INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED AND COMBI NED FINANCIAL STATEMENTS

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

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.

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, and performance share awards.

The following represents a reconciliation of basic earnings per share to diluted earnings per share.

Three Months Ended September 30,

The following represents a reconciliation of basic earnings (loss) per share to diluted earnings (loss) from continuing operations per share.

Three Months Ended March 31,

Per Share Amount

Basic earnings (loss) per share:

Basic earnings (loss) from continuing operations per share:

Net earnings (loss)

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Dilutive effect of employee stock options and awards

Net earnings (loss) including impact of dilutive adjustments $ ( 13.1 ) $ 88.8 $ ( 0.15 ) $ 60.6 88.8 $ 0.68

Nine Months Ended September 30,

Net earnings (loss) from continuing operations including impact of dilutive adjustments

$ ( 79.8 ) 89.2 $ ( 0.89 ) $ 8.0 88.8 $ 0.09

The following represents a reconciliation of basic earnings (loss) per share to diluted earnings (loss) from discontinued operations per share.

Three Months Ended March 31,

Per Share Amount

Basic earnings (loss) per share:

Basic earnings (loss) from discontinued operations per share:

Net earnings (loss)

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Dilutive effect of employee stock options and awards

Net earnings (loss) from discontinued operations including impact of dilutive adjustments

$ ( 21.2 ) 89.2 $ ( 0.24 ) $ 4.5 88.8 $ 0.05

Net earnings (loss) including impact of dilutive adjustments $ 32.6 89.0 $ 0.37 $ 159.5 88.8 $ 1.80

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

1 unchanged sentence

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

FORTREA HOLDINGS INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED AND COMBI NED FINANCIAL STATEMENTS

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

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

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

2023 2022 2023 2022

Three Months Ended March 31,

Employee stock options and awards 1.2 —

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primarily the acquisition of Covance in 2015 by Labcorp.

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

FORTREA HOLDINGS INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED AND COMBI NED FINANCIAL STATEMENTS

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

The changes in the carrying amount of goodwill for the nine months ended September 30, 2023 and 2022 are as follows:

Clinical Services Enabling Services Total

September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022

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

The changes in the carrying amount of goodwill for the three months ended March 31, 2024 and 2023 are as follows:

March 31, 2024 March 31, 2023

Balance as of December 31 $ 1,739.4 $ 1,707.4

Goodwill acquired during the period — — — — — —

Foreign currency impact ( 2.6 ) ( 143.7 ) — — ( 2.6 ) ( 143.7 )

Balance as of September 30 $ 1,704.8 $ 1,647.3 $ 289.9 $ 289.9 $ 1,994.7 $ 1,937.2

Foreign currency impact and other adjustments to goodwill ( 11.8 ) 12.5

Balance as of March 31 $ 1,727.6 $ 1,719.9

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.

7 unchanged sentences

A future impairment charge for goodwill or intangible assets could have a material effect on the Company’s consolidated financial position and results of operations.

FORTREA HOLDINGS INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED AND COMBI NED FINANCIAL STATEMENTS

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

The components of identifiable intangible assets are as follows:

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount

3 unchanged sentences

Total $ 1,175.9 $ ( 468.0 ) $ 707.9 $ 1,183.7 $ ( 455.6 ) $ 728.1

Amortization of intangible assets for the three and nine months ended September 30, 2023 was $ 16.0 and $ 47.9 , respectively.

For the three and nine months ended September 30, 2022, amortization was $ 16.2 and $ 49.7 , respectively.

Amortization of intangible assets for the three months ended March 31, 2024 and 2023 was $ 15.3 and $ 15.0 , respectively.

Amortization expense of intangible assets is estimated to be $ 45.5 for the remainder of 2024, $ 58.3 in 2025, $ 57.4 in 2026, $ 57.4 in 2027, $ 50.1 in 2028 and $ 439.2 thereafter.

1 unchanged sentence

Fortrea also entered into a $ 450.0 senior secured revolving credit facility.

Fortrea used the proceeds from

FORTREA HOLDINGS INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED AND COMBI NED FINANCIAL STATEMENTS

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

these debt transactions to make a cash distribution to Labcorp as consideration for the assets that were contributed to the Company in connection with the Spin.

The current portion of long-term debt at September 30, 2023 and December 31, 2022 consisted of the following:

September 30, 2023 December 31, 2022

Fortrea used the proceeds from these debt transactions to make a cash distribution to Labcorp as consideration for the assets that were contributed to the Company in connection with the Spin.

The current portion of long-term debt at March 31, 2024 and December 31, 2023 consisted of the following:

March 31, 2024 December 31, 2023

Current portion of senior secured term loan A facility due 2028 $ 25.0 $ 25.0

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

Revolving credit facility

Debt issuance discount and fees ( 4.7 ) ( 4.6 )

Total short-term borrowings and current portion of long-term debt $ 55.0 $ 26.1

Long-term debt at September 30, 2023 and December 31, 2022 consisted of the following:

September 30, 2023 December 31, 2022

Long-term debt at March 31, 2024 and December 31, 2023 consisted of the following:

March 31, 2024 December 31, 2023

7.5 % senior notes due 2030

$ 570.0 $ 570.0

Senior secured term loan A due 2028 456.3 462.5

5 unchanged sentences

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

FORTREA HOLDINGS INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED AND COMBI NED FINANCIAL STATEMENTS

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

Credit Facilities

7 unchanged sentences

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

As of September 30, 2023, the effective interest rate on the term A loan and term B loan was 7.57 % and 9.07 %, respectively.

As of March 31, 2024, the effective interest rate on the term A loan and term B loan was 7.58 % and 9.08 %, respectively.

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 as of September 30, 2023 and December 31, 2022.

As of September 30, 2023, the effective interest rate on the revolving credit facility, assuming one month borrowing, was 7.57 %.

There was $ 29.0 outstanding on the Company’s current revolving credit facility as of March 31, 2024 and no balances outstanding as of December 31, 2023.

As of March 31, 2024, the effective interest rate on the revolving credit facility was 9.75 %.

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).

2 unchanged sentences

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

The Company was in compliance with all covenants in the Credit Agreement at September 30, 2023.

There were no outstanding letters of credit under the Credit Agreement as of September 30, 2023.

FORTREA HOLDINGS INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED AND COMBI NED FINANCIAL STATEMENTS

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

DERIVATIVE INSTRUMENTS AND HEDGING

The Company was in compliance with all covenants in the Credit Agreement at March 31, 2024 and believes it will be in compliance with all covenants for a period at least 12 months from the date these financial statements are issued.

The covenants were modified subsequent to March 31, 2024, as described in Note 16 - Subsequent Events.

There were no outstanding letters of credit under the Credit Agreement as of March 31, 2024.

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

Summary of Derivative Instruments

The Company addresses its exposure to market risks, principally the market risk associated with changes in interest rates and foreign currency exchange rates, through a controlled program of risk management that includes, from time to time, the use of derivative instruments such as foreign currency forward contracts (see “Foreign Currency Forward Contracts” section below) and interest rate swap agreements (see “Interest Rate Swaps” section below).

The Company does not hold or issue derivative instruments for trading purposes.

1 unchanged sentence

The Company does not believe that its exposure to market risk is material to the Company’s financial position or results of operations.

Interest rate swap agreements, which are used by the Company from time to time in the management of interest rate exposure, are accounted for at fair value.

These derivative instruments are accounted for as cash flow hedges and recognized as assets and liabilities, as applicable, and classified as current or noncurrent based on the swap’s settlement dates.

The derivative instruments have been assessed and are considered to be perfectly effective hedges and accordingly, changes in the fair value of the interest rate swaps are initially recorded in the condensed consolidated and combined statements of comprehensive income.

Cash flows from the interest rate swaps are included in financing activities.

Foreign currency forward contracts, which are used by the Company to hedge the Company’s foreign currency exposure, are accounted for at fair value.

As these contracts are short-term in nature and are not designated hedging instruments, changes in the fair value of the Company’s foreign currency forward contracts are recognized directly in earnings.

FORTREA HOLDINGS INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED AND COMBI NED FINANCIAL STATEMENTS

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

The fair value of the Company’s interest rate swaps and foreign currency forward contracts are determined based on observable market inputs (Level 2).

1 unchanged sentence

Fair Value of Derivatives At

September 30, 2023 December 31, 2022

Balance Sheet Classification Asset Liability Asset Liability

March 31, 2024 December 31, 2023

Balance Sheet Classification Asset Liability Notional

Asset Liability Notional

Derivatives designated as hedging instruments:

Interest rate swaps Prepaid expenses and other/

Other liabilities $ 1.1 $ ( 0.9 ) $ 150.0 $ 0.7 $ ( 2.6 ) $ 150.0

Derivatives not designated as hedging instruments:

Foreign currency forward contracts Prepaid expenses and other/

Derivative Contracts Designated as Hedges

Other current liabilities $ 0.6 $ ( 0.6 ) $ 477.9 $ 0.8 $ — $ 458.3

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

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

Three Months Ended March 31,

Interest rate swaps $ 2.5 $ —

In August 2023, the Company entered into two fixed-to-variable interest rate swap agreements for its senior secured term A loan facilities to hedge the cash flow variability associated with the Company’s floating interest rate exposure.

The interest rate swaps, both of which mature on December 31, 2026, had an aggregate notional amount of $ 150.0 at September 30, 2023, each had a fixed interest rate of 4.20 %, and each return variable interest rates based on one-month SOFR.

Because these derivative instruments meet the criteria for hedge accounting, all related gains and losses are accumulated within other comprehensive loss and are being reclassified to earnings as interest payments are recognized in the condensed consolidated and combined statements of operations.

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

Amounts Reclassified from Other Comprehensive Loss into Earnings

Three Months Ended March 31,

Statement of Operations Classification 2024 2023

Deferred gain (loss) reclassified into earnings Interest expense $ ( 0.4 ) $ —

The estimated amount of pre-tax net losses included in other comprehensive loss that is expected to be reclassified into earnings over the twelve months following March 31, 2024, is $ 1.1 .

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

Derivative Contracts Not Designated as Hedges

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

Gain (Loss) on Derivatives Recognized in Earnings

Three Months Ended March 31,

Statement of Operations Classification 2024 2023

Foreign currency forward contracts Foreign exchange gain (loss) $ ( 0.8 ) $ —

FORTREA HOLDINGS INC.

1 unchanged sentence

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

Foreign Currency Forward Contracts

The Company utilizes foreign currency forward contracts with external counterparties to hedge the Company’s exposure to foreign currencies with exposure predominantly to the Euro and British Pound.

These contracts do not qualify for hedge accounting and are recognized as assets or liabilities at their fair value with changes in fair value recorded directly to earnings.

The contracts are short-term in nature and the fair value of these contracts is based on market prices for comparable contracts.

The aggregate notional value of these contracts was $ 406.3 at September 30, 2023.

COMMITMENTS AND CONTINGENT LIABILITIES

12 unchanged sentences

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

It was previously disclosed that there were dosing sequence errors in a customer’s trial by a third-party vendor not associated with the Company.

As part of working with this customer, the Company has agreed to make concessions and provide discounts and other consideration to the customer of an estimated amount of $ 12.5 as part of a multi-party solution to facilitate the ongoing trials, of which $ 1.7 was recorded as a reduction of revenue during the three months ended March 31, 2024.

FORTREA HOLDINGS INC.

4 unchanged sentences

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

There were no preferred shares outstanding as of September 30, 2023 and December 31, 2022.

There were no preferred shares outstanding as of March 31, 2024 and December 31, 2023.

Accumulated Other Comprehensive Income (Loss)

The components of accumulated other comprehensive income (loss) are as follows:

Three months ended September 30, 2023

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

Balance at June 30, 2023 $ ( 218.8 ) $ ( 6.7 ) $ — $ ( 225.5 )

Current quarter foreign exchange adjustments ( 56.0 ) — — ( 56.0 )

Unrealized gain on derivative instrument — — 1.6 1.6

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

Balance at September 30, 2023 $ ( 274.8 ) $ ( 6.7 ) $ 1.2 $ ( 280.3 )

Three months ended September 30, 2022

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

Balance at June 30, 2022 $ ( 260.4 ) $ ( 8.2 ) $ — $ ( 268.6 )

Current quarter foreign exchange adjustments ( 96.6 ) — — ( 96.6 )

Tax effect of adjustments — — — —

Balance at September 30, 2022 $ ( 357.0 ) $ ( 8.2 ) $ — $ ( 365.2 )

Nine months ended September 30, 2023

Three months ended March 31, 2024

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

2 unchanged sentences

Unrealized gain on derivative instrument — — 2.5 2.5

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

Tax effect of adjustments — — ( 0.5 ) ( 0.5 )

Transfer from Former Parent — 2.1 — 2.1

Balance at September 30, 2023 $ ( 274.8 ) $ ( 6.7 ) $ 1.2 $ ( 280.3 )

Nine months ended September 30, 2022

Balance at March 31, 2024 $ ( 234.4 ) $ ( 7.4 ) $ 0.2 $ ( 241.6 )

Three months ended March 31, 2023

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

1 unchanged sentence

Current quarter foreign exchange adjustments 19.1 — — 19.1

Tax effect of adjustments — — — —

Balance at September 30, 2022 $ ( 357.0 ) $ ( 8.2 ) $ — $ ( 365.2 )

FORTREA HOLDINGS INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED AND COMBI NED FINANCIAL STATEMENTS

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

Prior to the Separation, the Company’s operations were historically included in Labcorp’s U.S.

combined federal, certain state and local, and foreign income tax returns.

The income tax provision included in these combined financial statements has been calculated using the separate return basis as if the Company had filed separate tax returns.

The Company believes the assumptions supporting its allocation and presentation of income taxes on a separate return basis are reasonable.

The Company’s tax results, as presented in the combined financial statements, do not necessarily reflect what the financial position, results of operations, and cash flows would have been had it operated as a standalone company during the periods presented.

For the periods prior to the Separation, the income tax expense and deferred tax balances that are presented in these financial statements were calculated on a carve-out basis, which applied the accounting guidance as if the Company filed its own tax returns in each jurisdiction and included tax losses and tax credits that may not reflect tax positions taken by the Former Parent.

Applicable accounting standards provide that the Company may estimate an annual effective tax rate (“AETR method”) and apply that forecasted tax rate to year-to-date income for each interim period.

However, the AETR method resulted in an unreliable estimate of the Company’s annual effective tax rate due to changes in the Company’s post spin-off operational forecast as well as the impact of certain components of the forecast which are not inherent in the Company’s results of operations for the nine months ended September 30, 2023.

Therefore, the Company recorded its interim income tax provision through September 30, 2023 using the discrete method, as allowed under ASC 740-270, Income Taxes – Interim Reporting .

Using the discrete method, the Company determined income tax expense as if the nine months ended September 30, 2023 were an annual period.

For the three months ended September 30, 2023, the Company’s effective tax rate was 26.8 % compared to 18.3 % for the three months ended September 30, 2022.

The effective tax rate for the three months ended September 30, 2023 was higher than the Company’s statutory tax rate primarily due to earnings mix partially offset by U.S.

taxes on foreign earnings.

The effective tax rate for the three months ended September 30, 2022 was lower than the Company’s statutory tax rate primarily due to U.S.

taxes on foreign earnings and domestic tax credits, partially offset by state taxes and additional tax deductions.

The effective income tax rate for the nine months ended September 30, 2023 was 22.6 % compared to 18.3 % for the nine months ended September 30, 2022.

The effective tax rate for the nine months ended September 30, 2023 was higher than the statutory tax rate primarily due to earnings mix and foreign withholding taxes partially offset by U.S.

Balance at March 31, 2023 $ ( 246.9 ) $ ( 8.8 ) $ — $ ( 255.7 )

For the three months ended March 31, 2024, the Company’s effective tax rate was 5.4 % compared to 15.8 % for the three months ended March 31, 2023.

The effective tax rate for the three months ended March 31, 2024 was lower than the Company’s statutory tax rate primarily due to a change in valuation allowance, the geographic mix of earnings, and non-deductible compensation expenses.

The effective tax rate for the three months ended March 31, 2023 was lower than the Company’s statutory tax rate primarily due to the geographic mix of earnings partially offset by U.S.

taxes on foreign earnings.

The effective tax rate for the nine months ended September 30, 2022 was lower than the statutory tax rate primarily due to U.S.

taxes on foreign earnings and domestic tax credits, partially offset by state taxes and additional tax deductions.

The Company will file a consolidated U.S.

federal income tax return, as well as separate and combined income tax returns in numerous state and international jurisdictions.

The Company has not filed its initial consolidated U.S.

federal income tax return and therefore there are no open IRS examinations.

However, the Company is currently subject to examination by various U.S.

state and international tax authorities where existing legal entities were transferred to the Company as part of the Separation.

Management regularly assesses the potential outcomes of both ongoing and future examinations for the current and prior years and has concluded that the Company’s provision for income taxes is adequate.

Management does not anticipate that ongoing audits or negotiations will conclude during the next 12 months.

During the nine months ended September 30, 2023, the amount of net unrecognized tax positions decreased by $ 0.3 .

Management believes that it is reasonably possible that the amount of unrecognized income tax benefits and interest may decrease during the next 12 months by approximately $ 1.0 .

More specifically, for the quarter ended March 31, 2024, the Company included income tax expense of approximately $ 4.1 in continuing operations primarily due to a forecasted valuation allowance on the deferred tax asset for the carryforward of disallowed interest expense.

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

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

During the three months ended March 31, 2024, the amount of net unrecognized tax positions increased by $ 0.1 million.

Management believes it is likely that none of the unrecognized income tax benefits and interest will decrease during the next 12 months.

STOCK COMPENSATION PLANS

1 unchanged sentence

Prior to the Separation, certain Company employees were covered by the Former Parent-sponsored stock compensation arrangements.

The stock compensation expense for the period prior to the Separation has been derived from the equity awards granted by Labcorp to the Company’s employees who are specifically identified in the plans, as well as an allocation of expense related to corporate employees of Labcorp.

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

FORTREA HOLDINGS INC.

1 unchanged sentence

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

as well as an allocation of expense related to corporate employees of Labcorp.

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 Board of Directors approved Fortrea’s Omnibus Incentive Plan and Employee Stock Purchase Plan (the “Plans”) and the current 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.

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 three months ended September 30, 2023, the Company granted awards under the Plans, including restricted stock units, performance stock units, and stock options, as indicated below.

As of September 30, 2023, 11.0 and 1.8 shares were authorized for future grants under Fortrea’s Omnibus Incentive Plan and Employee Stock Purchase Plan, respectively.

Additionally, during the three months ended March 31, 2024, the Company granted awards under the Plans, including restricted stock units and performance stock units, as indicated below.

As of March 31, 2024, 11.0 and 1.8 shares were authorized for future grants under Fortrea’s Omnibus Incentive Plan and Employee Stock Purchase Plan, respectively.

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.

8 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.

Changes in options outstanding under the plans for the three months ended September 30, 2023, were as follows:

Changes in options outstanding under the plans for the three months ended March 31, 2024, were as follows:

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

Outstanding at June 30, 2023 — $ —

Outstanding at December 31, 2023

Granted — $ —

Cancelled — $ —

Outstanding at September 30, 2023 0.8 $ 26.52 9.9 years $ 1.7

Exercisable at September 30, 2023 — $ — 0.0 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 September 30, 2023.

Outstanding at March 31, 2024 0.8 $ 26.52 9.4 years $ 10.9

Exercisable at March 31, 2024

— $ — 0.0 years $ —

FORTREA HOLDINGS INC.

3 unchanged sentences

The following table shows the weighted average grant-date fair values of options issued during the period and the weighted average assumptions that the Company used to develop the fair value estimates:

Three Months Ended September 30, 2023

Three Months Ended March 31, 2024

Weighted-average grant date fair value per option $ 12.51

8 unchanged sentences

The Company grants performance shares (non-vested shares) to officers and key employees.

Performance share awards are subject to a 3 year cliff vesting period in addition to certain revenue and adjusted EBITDA targets, the achievement of which may increase or decrease the number of shares which the grantee earns and therefore receives upon vesting.

Performance share awards are subject to a 3 year cliff vesting period in addition to certain revenue and adjusted EBITDA targets and a total shareholder return multiplier, the achievement of which may increase or decrease the number of shares which the grantee earns and therefore receives upon vesting.

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

The following table shows a summary of non-vested shares for the three months ended September 30, 2023:

The following table shows a summary of non-vested shares for the three months ended March 31, 2024:

Number of Shares Weighted-Average Grant Date Fair Value

Restricted Stock Units Performance Shares Restricted Stock Units Performance Shares

Non-vested at June 30, 2023 — — $ — $ —

Non-vested at December 31, 2023

3.6 0.1 $ 28.24 $ 43.78

Converted — — — —

2 unchanged sentences

Cancelled — — — —

Non-vested at September 30, 2023 3.0 0.1 $ 32.9 $ 43.8

Non-vested at March 31, 2024

3.9 0.1 $ 29.62 $ 41.58

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

Three Months Ended September 30, 2023 Nine Months Ended September 30, 2023

Three Months Ended March 31, 2024 Three Months Ended March 31, 2023

Direct costs $ 9.0 $ 3.6

6 unchanged sentences

Unrecognized Compensation Cost

As of September 30, 2023, there was $ 83.4 of total unrecognized compensation cost related to non-vested stock options, restricted stock units and performance share-based compensation arrangements granted under the Plans.

As of March 31, 2024, there was $ 119.3 of total unrecognized compensation cost related to non-vested stock options, restricted stock units and performance share-based compensation arrangements granted under the Plans.

That cost is expected to be recognized over a weighted average period of 2.0 years and will be included in cost of revenues and selling, general and administrative expenses.

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The following discussion summarizes activity between the Company and Labcorp.

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

Allocation of General Corporate and Other Expenses

Prior to the Separation, the Company’s condensed consolidated and combined statements of operations included expenses for certain centralized functions and other programs provided and administered by Labcorp that are charged directly to the Company.

In addition, for purposes of preparing these condensed consolidated and combined financial statements on a carve-out basis, a portion of Labcorp’s total corporate expenses were allocated to the Company.

See Note 1 - Basis of Financial Statement Presentation for a discussion of the methodology used to allocate corporate-related costs for purposes of preparing these financial statements on a carve-out basis.

The following table is a summary of corporate and other allocations for the three and nine months ended September 30, 2023 and 2022:

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

2023 2022 2023 1

Some of these services continue to be provided by Labcorp to the Company on a temporary basis under the Transition Services Agreement.

The following table is a summary of corporate and other allocations for the three months ended March 31, 2023:

Three Months Ended March 31, 2023

Direct costs $ 41.2

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Corporate and other allocations $ 95.4

1 Activity reflected through the Separation date

Included in the aforementioned amou nts are $ 0.0 and $ 72.0 related to costs for certain centralized functions and programs provided and administered by Labcorp that are charged directly to the Company for the three months ended September 30, 2023 and 2022 , respectively, and $ 147.6 and $ 214.8 for the nine months ended September 30, 2023 and 2022 , respectively.

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

These costs were $ 0.0 and $ 28.4 for the three months ended September 30, 2023 and 2022 , respectively, and $ 46.4 and $ 80.9 for the nine months ended September 30, 2023 and 2022 , respectively.

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

The Company has 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 $ 0.0 and $ 21.6 for the three months ended September 30, 2023 and 2022 , respectively, and $ 48.8 and $ 65.7 for the nine months ended September 30, 2023 and 2022, respectively.

Hedging Activities

Prior to the Separation, the Company did not enter into any derivative contracts with external counterparties.

However, foreign currency forward contracts with external counterparties were utilized to hedge certain foreign currency transactions with exposure predominantly to the Euro and British Pound.

These contracts do not qualify for hedge accounting and the changes in fair value are recorded directly to earnings.

Earnings related to these contracts

Included in the aforementioned amou nts are $ 73.4 related to costs for certain centralized functions and programs provided and administered by Labcorp that are charged directly to the Company for the three months ended March 31, 2023 .

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

These costs were $ 22.0 for the three months ended March 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 $ 21.7 for the three months ended March 31, 2023.

Management believes that the expense and cost allocations have been determined on a basis that is a reasonable reflection of the utilization of services provided or the benefit received by the Company during the three months ended March 31, 2023.

The amounts that have been or will be incurred post-Separation on a stand-alone basis, could materially differ from the amounts allocated due to economies of scale, difference in management judgment, a requirement for more or fewer employees, or other factors.

FORTREA HOLDINGS INC.

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

were included in the condensed consolidated and combined statements of operations as part of corporate allocations.

Refer to Note 7, Derivative Instruments and Hedging , for information regarding derivative contracts entered into after Separation.

Hedging Activities

Prior to the Separation, the Company did not enter into any derivative contracts with external counterparties.

However, Labcorp entered into foreign currency forward contracts with external counterparties to hedge certain foreign currency transactions with exposure predominantly to the Euro and British Pound.

These contracts did not qualify for hedge accounting and the changes in fair value are recorded directly to earnings.

Earnings related to these contracts were included in the condensed consolidated and combined statements of operations as part of corporate allocations.

Refer to Note 8 - Derivative Instruments and Hedging Activities , for information regarding derivative contracts entered into after Separation.

Net Transfers To and From Labcorp

Net transfers to and from Labcorp are included within Former Parent company investment on the condensed consolidated and combined statements of changes in equity.

The components of the transfers to and from Labcorp during the three and nine months ended September 30, 2023 and 2022 were as follows:

Three Months Ended September 30,

General financing activities $ — $ ( 140.5 )

Corporate allocations — 94.0

Stock compensation expense — 6.4

Total net transfers (to) from Former Parent $ — $ ( 40.1 )

Nine Months Ended September 30,

Special Payment to Former Parent $ ( 1,595.0 ) $ —

The components of the transfers to and from Labcorp during the three months ended March 31, 2023 were as follows:

Three Months Ended March 31, 2023

General financing activities $ ( 63.4 )

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Total net transfers (to) from Former Parent $ 31.2

1 Activity reflected through the Separation date.

SUPPLEMENTAL CASH FLOW INFORMATION

Nine Months Ended September 30,

Three Months Ended March 31,

Supplemental schedule of cash flow information:

4 unchanged sentences

Change in accrued property, plant and equipment ( 0.5 ) ( 0.1 )

Disclosure of non-cash transfers to (from) Parent:

Change in right-of-use lease assets 13.9 —

Change in property, plant and equipment, net ( 27.7 ) —

BUSINESS SEGMENT INFORMATION

The following tables are a summary of segment information for the three and nine months ended September 30, 2023 and 2022.

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

Financial information is reported on the basis that it is used internally by the chief operating decision maker (“CODM”) for evaluating segment performance and deciding how to allocate resources to segments.

The Fortrea chief executive officer has been identified as the CODM.

FORTREA HOLDINGS INC.

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

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

The Company reports its business in two reportable segments:

Clinical Services, which provides phase I-IV clinical trials, including clinical pharmacology and comprehensive clinical development capabilities, and Enabling Services, which provides post-approval patient access services and technology enabled solutions to support clinical trials.

When determining the reportable segments, the Company aggregated operating segments based on their similar economic and operating characteristics.

The CODM evaluates performance using revenue and segment operating income.

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

Revenues from external customers by reportable segment were as follows:

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

2023 2022 2023 2022

Revenues from external customers:

Clinical Services $ 711.7 $ 697.2 $ 2,129.8 $ 2,127.6

Enabling Services 64.7 65.1 203.8 206.8

Total revenues $ 776.4 $ 762.3 $ 2,333.6 $ 2,334.4

Intersegment revenues, which are eliminated in consolidation, were as follows:

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

2023 2022 2023 2022

Intersegment revenues:

Clinical Services $ 0.3 $ 0.3 $ 0.9 $ 0.8

Enabling Services 2.5 1.8 6.9 7.1

Total revenues $ 2.8 $ 2.1 $ 7.8 $ 7.9

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

These additional allocations were reported as “corporate costs not allocated to segments” in the table below.

After the Separation, as a standalone public company, the Company has allocated costs for certain centralized functions and programs to the Clinical Services and Enabling Services segments based on appropriate metrics such as revenues or headcount.

The Corporate costs not allocated to segments include the costs of centralized functions including corporate governance, executive management and related human resources, finance, legal, risk management, and information technology functions.

Operating income of each segment represents revenues less directly identifiable expenses to arrive at operating income for the segment.

Operating income by reportable segment was as follows:

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

2023 2022 2023 2022

Operating Income:

Clinical Services $ 59.9 $ 108.5 $ 192.4 $ 299.8

Enabling Services 2.3 5.7 6.0 21.3

Segment operating income:

62.2 114.2 198.4 321.1

Corporate costs not allocated to segments ( 20.6 ) ( 23.9 ) ( 60.0 ) ( 70.8 )

Amortization ( 16.0 ) ( 16.2 ) ( 47.9 ) ( 49.7 )

Restructuring and other ( 11.6 ) ( 5.2 ) ( 16.7 ) ( 27.8 )

Total operating income $ 14.0 $ 68.9 $ 73.8 $ 172.8

IMMATERIAL FINANCIAL RESTATEMENT AND RECLASSIFICATIONS TO PRIOR PERIOD FINANCIAL STATEMENTS

As discussed in Note 1 - Basis of Financial Statement Presentation the Company identified errors in the consolidated and combined financial statements of prior periods.

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, is provided below.

A summary of the corrections to the impacted financial statement line items in the Company’s previously issued Condensed Consolidated and Combined Statements of Operations, Comprehensive Income, Changes in Stockholders’ Equity, and Cash Flows for the quarterly periods ended March 31, June 30 and September 30 of 2023, which were previously filed in 2023, are also provided below.

FORTREA HOLDINGS INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED AND COMBI NED FINANCIAL STATEMENTS

(dollars and shares 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 UNAUDITED CONDENSED CONSOLIDATED AND COMBI NED FINANCIAL STATEMENTS

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

CONDENSED COMBINED STATEMENT OF OPERATIONS

Three Months Ended March 31, 2023

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

Revenues $ 764.2 $ ( 0.5 ) $ 763.7 $ ( 69.8 ) $ — $ 693.9

Costs and expenses:

Direct costs, exclusive of depreciation and amortization 636.2 — 636.2 ( 46.1 ) ( 48.6 ) 541.5

Selling, general and administrative expenses, exclusive of depreciation and amortization 78.0 5.2 83.2 ( 15.0 ) 48.6 116.8

Depreciation and amortization 22.8 0.3 23.1 ( 2.2 ) — 20.9

Restructuring and other charges 1.2 — 1.2 ( 0.6 ) — 0.6

Total costs and expenses 738.2 5.5 743.7 ( 63.9 ) — 679.8

Operating income (loss) 26.0 ( 6.0 ) 20.0 ( 5.9 ) — 14.1

Other income (expense):

Interest income — — — — 0.1 0.1

Foreign exchange gain (loss) ( 5.5 ) — ( 5.5 ) 0.3 — ( 5.2 )

Other, net 0.6 — 0.6 — ( 0.1 ) 0.5

Income (loss) before income taxes 21.1 ( 6.0 ) 15.1 ( 5.6 ) — 9.5

Provision for (benefit from) income taxes 3.7 ( 1.1 ) 2.6 ( 1.1 ) — 1.5

Net income $ 17.4 $ ( 4.9 ) $ 12.5 $ ( 4.5 ) $ — $ 8.0

Earnings per common share

Basic - continuing operations $ 0.20 $ 0.14 $ 0.09

Basic - discontinued operations $ — $ — $ 0.05

Basic $ 0.20 $ 0.14 $ 0.14

Diluted - continuing operations $ 0.20 $ 0.14 $ 0.09

Diluted - discontinued operations $ — $ — $ 0.05

Diluted $ 0.20 $ 0.14 $ 0.14

FORTREA HOLDINGS INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED AND COMBI NED FINANCIAL STATEMENTS

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

CONDENSED CONSOLIDATED AND COMBINED STATEMENT OF OPERATIONS

Three Months Ended June 30, 2023

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

Revenues $ 793.0 $ ( 3.1 ) $ 789.9 $ ( 64.8 ) $ — $ 725.1

Costs and expenses:

Direct costs, exclusive of depreciation and amortization 649.4 ( 1.2 ) 648.2 ( 44.3 ) ( 35.2 ) 568.7

Selling, general and administrative expenses, exclusive of depreciation and amortization 80.8 ( 5.4 ) 75.4 ( 12.8 ) 35.2 97.8

Depreciation and amortization 25.1 0.4 25.5 ( 2.1 ) — 23.4

Restructuring and other charges 3.9 — 3.9 ( 0.3 ) — 3.6

Total costs and expenses 759.2 ( 6.2 ) 753.0 ( 59.5 ) — 693.5

Operating income (loss) 33.8 3.1 36.9 ( 5.3 ) — 31.6

Other income (expense):

Interest expense ( 0.7 ) — ( 0.7 ) — — ( 0.7 )

Foreign exchange gain (loss) 5.4 ( 0.2 ) 5.2 — — 5.2

Other, net 0.4 — 0.4 0.1 — 0.5

Income (loss) before income taxes 38.9 2.9 41.8 ( 5.2 ) — 36.6

Provision for (benefit from) income taxes 10.6 0.4 11.0 0.6 — 11.6

Net income $ 28.3 $ 2.5 $ 30.8 $ ( 5.8 ) $ — $ 25.0

Earnings per common share:

Basic - continuing operations $ 0.32 $ 0.35 $ 0.28

Basic - discontinued operations $ — $ — $ 0.07

Basic $ 0.32 $ 0.35 $ 0.35

Diluted - continuing operations $ 0.32 $ 0.35 $ 0.28

Diluted - discontinued operations $ — $ — $ 0.07

Diluted $ 0.32 $ 0.35 $ 0.35

FORTREA HOLDINGS INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED AND COMBI NED FINANCIAL STATEMENTS

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

CONDENSED CONSOLIDATED AND COMBINED STATEMENT OF OPERATIONS

Six Months Ended June 30, 2023

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

Revenues $ 1,557.2 $ ( 3.6 ) $ 1,553.6 $ ( 134.6 ) $ — $ 1,419.0

Costs and expenses:

Direct costs, exclusive of depreciation and amortization 1,285.6 ( 1.2 ) 1,284.4 ( 90.4 ) ( 83.8 ) 1,110.2

Selling, general and administrative expenses, exclusive of depreciation and amortization 158.8 ( 0.2 ) 158.6 ( 27.8 ) 83.8 214.6

Depreciation and amortization 47.9 0.7 48.6 ( 4.3 ) — 44.3

Restructuring and other charges 5.1 — 5.1 ( 0.9 ) — 4.2

Total costs and expenses 1,497.4 ( 0.7 ) 1,496.7 ( 123.4 ) — 1,373.3

Operating income (loss) 59.8 ( 2.9 ) 56.9 ( 11.2 ) — 45.7

Other income (expense):

Interest expense ( 0.7 ) — ( 0.7 ) — 0.1 ( 0.6 )

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

Other, net 1.0 — 1.0 0.1 ( 0.1 ) 1.0

Income (loss) before income taxes 60.0 ( 3.1 ) 56.9 ( 10.8 ) — 46.1

Provision for (benefit from) income taxes 14.3 ( 0.7 ) 13.6 ( 0.5 ) — 13.1

Net income $ 45.7 $ ( 2.4 ) $ 43.3 $ ( 10.3 ) $ — $ 33.0

Earnings per common share:

Basic - continuing operations $ 0.51 $ 0.49 $ 0.37

Basic - discontinued operations $ — $ — $ 0.12

Basic $ 0.51 $ 0.49 $ 0.49

Diluted - continuing operations $ 0.51 $ 0.49 $ 0.37

Diluted - discontinued operations $ — $ — $ 0.12

Diluted $ 0.51 $ 0.49 $ 0.49

FORTREA HOLDINGS INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED AND COMBI NED FINANCIAL STATEMENTS

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

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

Three Months Ended September 30, 2023

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

Revenues $ 776.4 $ 0.8 $ 777.2 $ ( 63.4 ) $ — $ 713.8

Costs and expenses:

Direct costs, exclusive of depreciation and amortization 647.3 1.4 648.7 ( 44.8 ) ( 40.1 ) 563.8

Selling, general and administrative expenses, exclusive of depreciation and amortization 78.9 ( 0.1 ) 78.8 ( 12.1 ) 40.1 106.8

Depreciation and amortization 24.6 0.4 25.0 ( 2.2 ) — 22.8

Restructuring and other charges 11.6 — 11.6 ( 1.5 ) — 10.1

Total costs and expenses 762.4 1.7 764.1 ( 60.6 ) — 703.5

Operating income (loss) 14.0 ( 0.9 ) 13.1 ( 2.8 ) — 10.3

Other income (expense):

Interest expense ( 34.6 ) — ( 34.6 ) — — ( 34.6 )

Foreign exchange gain (loss) ( 0.9 ) ( 0.2 ) ( 1.1 ) ( 0.1 ) — ( 1.2 )

Other, net 3.6 — 3.6 — — 3.6

Income (loss) before income taxes ( 17.9 ) ( 1.1 ) ( 19.0 ) ( 2.9 ) — ( 21.9 )

Provision for (benefit from) income taxes ( 4.8 ) ( 0.2 ) ( 5.0 ) ( 0.8 ) — ( 5.8 )

Net loss $ ( 13.1 ) $ ( 0.9 ) $ ( 14.0 ) $ ( 2.1 ) $ — $ ( 16.1 )

Earnings (loss) per common share:

Basic - continuing operations $ ( 0.15 ) $ ( 0.16 ) $ ( 0.18 )

Basic - discontinued operations $ — $ — $ 0.02

Basic $ ( 0.15 ) $ ( 0.16 ) $ ( 0.16 )

Diluted - continuing operations $ ( 0.15 ) $ ( 0.16 ) $ ( 0.18 )

Diluted - discontinued operations $ — $ — $ 0.02

Diluted $ ( 0.15 ) $ ( 0.16 ) $ ( 0.16 )

FORTREA HOLDINGS INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED AND COMBI NED FINANCIAL STATEMENTS

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

CONDENSED CONSOLIDATED AND COMBINED STATEMENT OF OPERATIONS

Nine Months Ended September 30, 2023

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

Revenues $ 2,333.6 $ ( 2.8 ) $ 2,330.8 $ ( 198.0 ) $ — $ 2,132.8

Costs and expenses:

Direct costs, exclusive of depreciation and amortization 1,932.9 0.2 1,933.1 ( 135.2 ) ( 123.9 ) 1,674.0

Selling, general and administrative expenses, exclusive of depreciation and amortization 237.7 ( 0.3 ) 237.4 ( 39.9 ) 123.9 321.4

Depreciation and amortization 72.5 1.1 73.6 ( 6.5 ) — 67.1

Restructuring and other charges 16.7 — 16.7 ( 2.4 ) — 14.3

Total costs and expenses 2,259.8 1.0 2,260.8 ( 184.0 ) — 2,076.8

Operating income (loss) 73.8 ( 3.8 ) 70.0 ( 14.0 ) — 56.0

Other income (expense):

Interest expense ( 35.3 ) — ( 35.3 ) — 0.1 ( 35.2 )

Foreign exchange gain (loss) ( 1.0 ) ( 0.4 ) ( 1.4 ) 0.2 — ( 1.2 )

Other, net 4.6 — 4.6 0.1 ( 0.1 ) 4.6

Income (loss) before income taxes 42.1 ( 4.2 ) 37.9 ( 13.7 ) — 24.2

Provision for (benefit from) income taxes 9.5 ( 0.9 ) 8.6 ( 1.3 ) — 7.3

Net income $ 32.6 $ ( 3.3 ) $ 29.3 $ ( 12.4 ) $ — $ 16.9

Earnings per common share:

Basic - continuing operations $ 0.37 $ 0.33 $ 0.19

Basic - discontinued operations $ — $ — $ 0.14

Basic $ 0.37 $ 0.33 $ 0.33

Diluted - continuing operations $ 0.37 $ 0.33 $ 0.19

Diluted - discontinued operations $ — $ — $ 0.14

Diluted $ 0.37 $ 0.33 $ 0.33

FORTREA HOLDINGS INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED AND COMBI NED FINANCIAL STATEMENTS

(dollars and shares 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

Long-lived and goodwill 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 (loss) 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) before income taxes 1.1 ( 23.5 ) ( 22.4 ) ( 8.1 ) — ( 30.5 )

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

Net loss $ ( 3.4 ) $ ( 21.8 ) $ ( 25.2 ) $ ( 6.5 ) $ — $ ( 31.7 )

Earnings (loss) per common share:

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

Basic - discontinued operations $ — $ — $ 0.07

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

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

Diluted - discontinued operations $ — $ — $ 0.07

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

FORTREA HOLDINGS INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED AND COMBI NED FINANCIAL STATEMENTS

(dollars and shares 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

Long-lived and goodwill 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 (loss) 235.9 ( 8.1 ) 227.8 ( 40.7 ) — 187.1

Other income (expense):

Interest expense ( 0.2 ) — ( 0.2 ) — — ( 0.2 )

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) before income taxes 237.0 ( 8.8 ) 228.2 ( 41.2 ) — 187.0

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

Net income $ 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 UNAUDITED CONDENSED CONSOLIDATED AND COMBI NED FINANCIAL STATEMENTS

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

CONDENSED COMBINED STATEMENT OF COMPREHENSIVE INCOME (LOSS)

Three Months Ended March 31, 2023

As Previously Reported Adjustments As Restated

Net income $ 17.4 $ ( 4.9 ) $ 12.5

Foreign currency translation adjustments 18.9 0.2 19.1

Other comprehensive income (loss) before tax 18.9 0.2 19.1

Provision for income tax related to items of comprehensive income — — —

Other comprehensive income, net of tax 18.9 0.2 19.1

Comprehensive income $ 36.3 $ ( 4.7 ) $ 31.6

CONDENSED CONSOLIDATED AND COMBINED STATEMENT OF COMPREHENSIVE INCOME (LOSS)

Three Months Ended June 30, 2023

As Previously Reported Adjustments As Restated

Net income $ 28.3 $ 2.5 $ 30.8

Foreign currency translation adjustments 29.5 0.4 29.9

Net benefit plan adjustments 2.1 — 2.1

Other comprehensive income, before tax 31.6 0.4 32.0

Provision for income tax related to items of comprehensive income — — —

Other comprehensive income, net of tax 31.6 0.4 32.0

Comprehensive income $ 59.9 $ 2.9 $ 62.8

CONDENSED CONSOLIDATED AND COMBINED STATEMENT OF COMPREHENSIVE INCOME (LOSS)

Six Months Ended June 30, 2023

As Previously Reported Adjustments As Restated

Net income $ 45.7 $ ( 2.4 ) $ 43.3

Foreign currency translation adjustments 48.4 0.6 49.0

Net benefit plan adjustments 2.1 — 2.1

Other comprehensive income, before tax 50.5 0.6 51.1

Provision for income tax related to items of comprehensive income — — —

Other comprehensive income, net of tax 50.5 0.6 51.1

Comprehensive income $ 96.2 $ ( 1.8 ) $ 94.4

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS)

Three Months Ended September 30, 2023

As Previously Reported Adjustments As Restated

Net loss $ ( 13.1 ) $ ( 0.9 ) $ ( 14.0 )

Foreign currency translation adjustments ( 56.0 ) 0.4 ( 55.6 )

Unrealized gain on derivative instruments 1.6 — 1.6

Other comprehensive loss, before tax ( 54.4 ) 0.4 ( 54.0 )

Provision for income tax related to items of comprehensive loss ( 0.4 ) — ( 0.4 )

Other comprehensive loss, net of tax ( 54.8 ) 0.4 ( 54.4 )

Comprehensive loss $ ( 67.9 ) $ ( 0.5 ) $ ( 68.4 )

FORTREA HOLDINGS INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED AND COMBI NED FINANCIAL STATEMENTS

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

CONDENSED CONSOLIDATED AND COMBINED STATEMENT OF COMPREHENSIVE INCOME (LOSS)

Nine Months Ended September 30, 2023

As Previously Reported Adjustments As Restated

Net income $ 32.6 $ ( 3.3 ) $ 29.3

Foreign currency translation adjustments ( 7.6 ) 1.0 ( 6.6 )

Net benefit plan adjustments 2.1 — 2.1

Unrealized gain on derivative instruments 1.6 — 1.6

Other comprehensive loss, before tax ( 3.9 ) 1.0 ( 2.9 )

Provision for income tax related to items of comprehensive loss ( 0.4 ) — ( 0.4 )

Other comprehensive loss, net of tax ( 4.3 ) 1.0 ( 3.3 )

Comprehensive income $ 28.3 $ ( 2.3 ) $ 26.0

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 on derivative instruments ( 1.9 ) — ( 1.9 )

Other comprehensive income, 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, 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 loss, before tax ( 127.6 ) 0.9 ( 126.7 )

Provision for income tax related to items of comprehensive loss — — —

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

Comprehensive income $ 65.3 ( 5.8 ) 59.5

FORTREA HOLDINGS INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED AND COMBI NED FINANCIAL STATEMENTS

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

CONDENSED 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 — — — 17.4 — — 17.4

Other comprehensive income, net of tax — — — — — 18.9 18.9

Net transfers from Former Parent — — — 26.6 — — 26.6

Balance at March 31, 2023 — — — 3,662.6 — ( 257.1 ) 3,405.5

Net income — — — 28.3 — — 28.3

Other comprehensive income, net of tax — — — — — 31.6 31.6

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

Net transfers to Former Parent — — — ( 119.4 ) — — ( 119.4 )

Reclassification of Former Parent investment to additional paid-in capital — — 1,976.5 ( 1,976.5 ) — — —

Issuance of common stock 88.8 0.1 — — — — 0.1

Balance at June 30, 2023 88.8 0.1 1,976.5 — — ( 225.5 ) 1,751.1

Net loss — — — — ( 13.1 ) — ( 13.1 )

Other comprehensive loss, net of tax — — — — — ( 54.8 ) ( 54.8 )

Stock compensation — — 11.1 — — — 11.1

Balance at September 30, 2023 88.8 $ 0.1 $ 1,987.6 $ — $ ( 13.1 ) $ ( 280.3 ) $ 1,694.3

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

Net income — — — ( 4.9 ) — — ( 4.9 )

Other comprehensive income, net of tax — — — — — 0.2 0.2

Net transfers from Former Parent — — — 4.6 — — 4.6

Balance at March 31, 2023 — — — ( 4.1 ) — 1.4 ( 2.7 )

Net income — — — 2.5 — — 2.5

Other comprehensive income, net of tax — — — — — 0.4 0.4

Net transfers to Former Parent — — — ( 3.5 ) — — ( 3.5 )

Reclassification of Former Parent investment to additional paid-in capital — — ( 5.1 ) 5.1 — — —

Balance at June 30, 2023 — — ( 5.1 ) — — 1.8 ( 3.3 )

Net loss — — — — ( 0.9 ) — ( 0.9 )

Other comprehensive loss, net of tax — — — — — 0.4 0.4

Balance at September 30, 2023 — $ — $ ( 5.1 ) $ — $ ( 0.9 ) $ 2.2 $ ( 3.8 )

FORTREA HOLDINGS INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED AND COMBI NED FINANCIAL STATEMENTS

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

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

Comprehensive

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

Net income — — — 12.5 — — 12.5

Other comprehensive income, net of tax — — — — — 19.1 19.1

Net transfers from Former Parent — — — 31.2 — — 31.2

Balance at March 31, 2023 — — — 3,658.5 — ( 255.7 ) 3,402.8

Net income — — — 30.8 — — 30.8

Other comprehensive income, net of tax — — — — — 32.0 32.0

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

Net transfers to Former Parent — — — ( 122.9 ) — — ( 122.9 )

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

Balance at June 30, 2023 88.8 0.1 1,971.4 — — ( 223.7 ) 1,747.8

Net loss — — — — ( 14.0 ) — ( 14.0 )

Other comprehensive loss, net of tax — — — — — ( 54.4 ) ( 54.4 )

Stock compensation — — 11.1 — — — 11.1

Balance at September 30, 2023 88.8 $ 0.1 $ 1,982.5 $ — $ ( 14.0 ) $ ( 278.1 ) $ 1,690.5

FORTREA HOLDINGS INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED AND COMBI NED FINANCIAL STATEMENTS

(dollars and shares 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 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 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 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 UNAUDITED CONDENSED CONSOLIDATED AND COMBI NED FINANCIAL STATEMENTS

(dollars and shares 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 to 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 to 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 to Former Parent — — — 19.1 — — 19.1

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

FORTREA HOLDINGS INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED AND COMBI NED FINANCIAL STATEMENTS

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

CONDENSED COMBINED STATEMENT OF CASH FLOWS

Three Months Ended March 31, 2023

As Previously Reported Adjustments As Restated

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income $ 17.4 $ ( 4.9 ) $ 12.5

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

Depreciation and amortization 22.8 0.3 23.1

Stock compensation 6.7 — 6.7

Operating lease right-of-use asset expense 7.8 — 7.8

Goodwill and other asset impairments — — —

Deferred income taxes ( 3.7 ) 0.1 ( 3.6 )

Other, net 0.8 0.1 0.9

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

Decrease in accounts receivable and unbilled services, net 26.8 0.5 27.3

Increase in prepaid expenses and other ( 18.6 ) ( 0.5 ) ( 19.1 )

Increase in accounts payable 20.9 ( 0.5 ) 20.4

Decrease in deferred revenue ( 13.9 ) 1.0 ( 12.9 )

Decrease in accrued expenses and other ( 63.6 ) ( 1.5 ) ( 65.1 )

Net cash provided by (used for) operating activities 3.4 ( 5.4 ) ( 2.0 )

CASH FLOWS FROM INVESTING ACTIVITIES:

Capital expenditures ( 16.2 ) — ( 16.2 )

Proceeds from sale of assets — — —

Net cash used for investing activities ( 16.2 ) — ( 16.2 )

CASH FLOWS FROM FINANCING ACTIVITIES:

Net transfers from Parent 19.9 4.6 24.5

Net cash provided by financing activities 19.9 4.6 24.5

Effect of exchange rate changes on cash and cash equivalents 1.1 0.4 1.5

Net change in cash and cash equivalents 8.2 ( 0.4 ) 7.8

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

Cash and cash equivalents at end of period $ 120.2 $ ( 2.0 ) $ 118.2

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 UNAUDITED CONDENSED CONSOLIDATED AND COMBI NED FINANCIAL STATEMENTS

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

CONDENSED CONSOLIDATED AND COMBINED STATEMENT OF CASH FLOWS

Six Months Ended June 30, 2023

As Previously Reported Adjustments As Restated

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income $ 45.7 $ ( 2.4 ) $ 43.3

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

Depreciation and amortization 47.9 0.7 48.6

Stock compensation 16.1 — 16.1

Operating lease right-of-use asset expense 14.3 — 14.3

Deferred income taxes ( 3.9 ) ( 0.6 ) ( 4.5 )

Other, net 6.5 — 6.5

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

Decrease in accounts receivable and unbilled services, net 7.8 3.6 11.4

Increase in prepaid expenses and other ( 16.0 ) ( 1.2 ) ( 17.2 )

Increase in accounts payable 23.7 ( 3.8 ) 19.9

Decrease in deferred revenue ( 7.7 ) 2.2 ( 5.5 )

Increase in accrued expenses and other 19.8 ( 4.6 ) 15.2

Net cash provided by operating activities 154.2 ( 6.1 ) 148.1

CASH FLOWS FROM INVESTING ACTIVITIES:

Capital expenditures ( 25.8 ) — ( 25.8 )

Proceeds from sale of assets 0.3 — 0.3

Net cash used for investing activities ( 25.5 ) — ( 25.5 )

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from revolving credit facilities — — —

Payments on revolving credit facilities — — —

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 — — —

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

Net transfers from Parent ( 136.7 ) 1.3 ( 135.4 )

Net cash used for financing activities ( 126.7 ) 1.3 ( 125.4 )

Effect of exchange rate changes on cash and cash equivalents 0.3 1.0 1.3

Net change in cash and cash equivalents 2.3 ( 3.8 ) ( 1.5 )

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

Cash and cash equivalents at end of period $ 114.3 $ ( 5.4 ) $ 108.9

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 UNAUDITED CONDENSED CONSOLIDATED AND COMBI NED FINANCIAL STATEMENTS

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

CONDENSED CONSOLIDATED AND COMBINED STATEMENT OF CASH FLOWS

Nine Months Ended September 30, 2023

As Previously Reported Adjustments As Restated

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income $ 32.6 $ ( 3.3 ) $ 29.3

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

Depreciation and amortization 72.5 1.1 73.6

Stock compensation 27.2 — 27.2

Operating lease right-of-use asset expense 20.9 — 20.9

Goodwill and other asset impairments — — —

Deferred income taxes ( 12.7 ) ( 0.6 ) ( 13.3 )

Other, net 3.5 — 3.5

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

Increase in accounts receivable and unbilled services, net ( 26.6 ) 3.5 ( 23.1 )

Increase in prepaid expenses and other ( 3.1 ) 3.7 0.6

Increase in accounts payable 47.3 ( 1.4 ) 45.9

Decrease in deferred revenue ( 6.5 ) 0.5 ( 6.0 )

Decrease in accrued expenses and other ( 0.1 ) ( 8.5 ) ( 8.6 )

Net cash provided by operating activities 155.0 ( 5.0 ) 150.0

CASH FLOWS FROM INVESTING ACTIVITIES:

Capital expenditures ( 30.9 ) — ( 30.9 )

Proceeds from sale of assets 8.1 — 8.1

Net cash used for investing activities ( 22.8 ) — ( 22.8 )

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from revolving credit facilities 24.0 — 24.0

Payments on revolving credit facilities ( 24.0 ) — ( 24.0 )

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 ( 7.7 ) — ( 7.7 )

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

Net transfers from Parent ( 136.7 ) 1.3 ( 135.4 )

Net cash used for financing activities ( 134.4 ) 1.3 ( 133.1 )

Effect of exchange rate changes on cash and cash equivalents ( 2.3 ) 1.6 ( 0.7 )

Net change in cash and cash equivalents ( 4.5 ) ( 2.1 ) ( 6.6 )

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

Cash and cash equivalents at end of period $ 107.5 $ ( 3.7 ) $ 103.8

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 UNAUDITED CONDENSED CONSOLIDATED AND COMBI NED FINANCIAL STATEMENTS

(dollars and shares 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 from Parent ( 133.6 ) ( 1.8 ) ( 135.4 )

Net cash used for 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 UNAUDITED CONDENSED CONSOLIDATED AND COMBI NED FINANCIAL STATEMENTS

(dollars and shares 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 )

Other, net 4.1 — 4.1

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.

FORTREA HOLDINGS INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED AND COMBI NED FINANCIAL STATEMENTS

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

SUBSEQUENT EVENTS

Receivables Securitization Program

On May 6, 2024, the Company entered into a three-year $ 300 account receivable securitization program (the “Receivables Facility”).

Under this program, Fortrea Inc.

conveys accounts receivable and unbilled services (including contract assets) balances to a wholly-owned, bankruptcy-remote special purpose entity (“SPE”), who in turn, may sell receivables to PNC Bank, National Association.

The facility is without recourse to the Company or any subsidiaries of the Company other than with respect to limited indemnity obligations of Fortrea Inc.

in respect to the character of the receivables sold and as to the performance of its duties as servicer and a limited performance guaranty by the Company

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

Credit Agreement Amendment

On May 3, 2024, the Company entered into an amendment (the “Credit Amendment”) to modify certain financial covenants for additional flexibility under the Company’s credit agreement dated as of June 30, 2023 (the “Existing Credit Agreement”), 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 Credit Amendment amended (i) 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 June 30 and September 30, 2024, decreasing to 5.75 :1.00 for the fiscal quarters ending on December 31, 2024, and March 31, 2025, further decreasing to 5.50 :1.00 for the fiscal quarter ending on June 30, 2025, and reverting to 5.30 :1.00 thereafter, and (ii) adjusted the Company’s minimum quarterly Interest Coverage Ratio (as defined in the Existing Credit Agreement) from 2.00 :1.00 to 1.70 :1.00 for the fiscal quarters ending on June 30 and September 30, 2024, increasing to 1.80 :1.00 for the fiscal quarters ending on December 31, 2024, and March 31, 2025, further increasing to 1.90 :1.00 for the fiscal quarter ending on June 30, 2025, and reverting to 2.00 :1.00 thereafter.

In consideration of these adjustments, the Company has agreed during the covenant adjustment period to certain additional limitations with respect to investments and restricted payments, and to apply net cash proceeds of the Company’s previously announced divestiture of its Fortrea Patient Access and Endpoint businesses to the repayment of senior indebtedness.

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

What changed 10-Q

Item 1. Financial Statements