DURHAM, N.C. - Fortrea Holdings Inc (NASDAQ:FTRE), a prominent global contract research organization, disclosed its financial results for the fourth quarter and full year ended December 31, 2023. Despite surpassing revenue expectations, the company's shares plummeted nearly 10% following the report.
For the fourth quarter, Fortrea reported revenues of $775.4 million, a slight increase from $761.7 million in the same quarter the previous year, and above the analyst consensus of $768.3 million. However, the company experienced a GAAP net loss of $36.0 million, or -$0.41 per diluted share, a stark contrast to the net income of $33.4 million, or $0.38 per share, reported in Q4 of 2022. The adjusted EBITDA for the quarter was $67.2 million, down from $109.8 million YoY.
Tom Pike, Fortrea's chairman and CEO, acknowledged the company's transformation in the latter half of 2023 and expressed confidence in delivering excellent results for customers while improving financial outcomes in the medium and longer term. The company's book-to-bill ratio was 1.30x for the quarter, reflecting a strong demand for its services.
Looking ahead to 2024, Fortrea has set revenue targets ranging from $3,140 million to $3,205 million and adjusted EBITDA guidance between $280 million and $320 million. The guidance assumes foreign exchange rates as of the end of 2023 remain constant throughout the forecast period.
The company also announced the planned divestiture of its Endpoint Clinical and Fortrea Patient Access businesses to Arsenal Capital Partners, with a purchase price of $345 million, subject to adjustments. This transaction is expected to close in the second quarter of 2024.
Despite the revenue beat and strategic divestitures, investor sentiment appeared to be affected by the reported net loss and the significant decrease in adjusted EBITDA. The nearly 10% decline in Fortrea's stock price reflects market concerns over the company's profitability and future performance.
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