10q10k10q10k.net

What changed in Fortrea Holdings Inc.'s 10-K — 2024 vs 2025

vs

Paragraph-level year-over-year comparison of Fortrea Holdings Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+379 added−368 removedSource: 10-K (2026-02-26) vs 10-K (2025-03-03)

Top changes in Fortrea Holdings Inc.'s 2025 10-K

379 paragraphs added · 368 removed · 261 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

71 edited+47 added−35 removed92 unchanged
Biggest changeWe believe these underlying market trends represent a significant opportunity for us. 1 McKinsey and Company, Fast to first-in-human | Getting new medicines to patients more quickly February 2023 2 Deloitte, Unleash AI’s potential | Measuring the return from pharmaceutical innovation – 14th edition, April 2024 3 Industry Standard Research’s May 2023 report on CRO Market Size and Growth Projections and 2024 Pharma R&D Spend.
Biggest changeWe believe these underlying market trends represent a significant opportunity for us. 1 McKinsey and Company, Operational excellence in biopharma research and early development, January 2025 2 Deloitte, Be brave, be bold – Measuring the return from pharmaceutical innovation – 15th edition, March 2025 3 Evaluate Pharma, Citeline, internal analysis 4 Evaluate Pharma, Citeline, William Blair, Jefferies, Industry Standard Research, Internal analysis In addition to the growth in R&D expenditures, an increase in outsourcing has also supported the growth of the CRO sector.
Fortrea intentionally crafted a strategic framework that focuses on our people (internally) and the patients our customers serve and other partners (externally). Our broad global footprint enables us to leverage broad and deep experience and ideas, and this is reflected in our global representation across our management and leadership.
Fortrea intentionally crafted a strategic framework that focuses on our people (internally) and the patients our customers serve and other partners (externally). Our broad global footprint enables us to leverage broad and deep experience and ideas, and this is reflected in global representation across our management and leadership.
We aspire to provide world class customer relationship management through the collaboration of scientific, operational, and technical staff with our business development, customer facing project personnel, and senior leadership teams. From the first touchpoint with a potential customer, we engage our therapeutic, scientific, and project personnel to build an understanding of the customer’s unique needs and culture.
We aspire to provide world class customer relationship management through the collaboration of scientific, regulatory, operational, and technical staff with our business development, customer facing project personnel, and senior leadership teams. From the first touchpoint with a potential customer, we engage our therapeutic, scientific, and project personnel to build an understanding of the customer’s unique needs and culture.
The coverage provided by such insurance may not be adequate for all claims made and such claims may be contested by applicable insurance carriers. 16 Table of Contents Government Regulation Regulation of Drugs and Biologics The development, testing, manufacturing, labeling, storage, approval, promotion, marketing, distribution and post-approval monitoring and reporting of pharmaceutical, biological and medical device products are subject to rigorous regulation by numerous governmental authorities in the U.S. at the federal, state and local level, including the Food and Drug Administration (“FDA”), as well as those of other countries, such as the European Medicines Agency (“EMA”) in the European Union, the Medicines and Healthcare products Regulatory Agency (“MHRA”) in the U.K., the National Medical Products Administration (“NMPA”) in China and the Pharmaceuticals and Medical Devices Agency (“PMDA”) in Japan.
The coverage provided by such insurance may not be adequate for all claims made and such claims may be contested by applicable insurance carriers. 18 Table of Contents Government Regulation Regulation of Drugs and Biologics The development, testing, manufacturing, labeling, storage, approval, promotion, marketing, distribution and post-approval monitoring and reporting of pharmaceutical, biological and medical device products are subject to rigorous regulation by numerous governmental authorities in the U.S. at the federal, state and local level, including the Food and Drug Administration (“FDA”), as well as those of other countries, such as the European Medicines Agency (“EMA”) in the European Union, the Medicines and Healthcare products Regulatory Agency (“MHRA”) in the U.K., the National Medical Products Administration (“NMPA”) in China and the Pharmaceuticals and Medical Devices Agency (“PMDA”) in Japan.
We plan to continue to invest in our capabilities, our ability to generate insights through data and analytics, reduce cost, and increase the speed and efficiency of clinical trial execution to enhance the quality of our offerings for our customers.
We plan to continue to invest in our capabilities, our ability to generate insights through data and analytics, reduce cost, and increase the speed and efficiency of clinical trial execution to enhance the quality and value of our offerings for our customers.
These differences can impact regulatory processes for all aspects of product development and management, including preclinical tests, clinical studies, manufacturing and control data as well as adverse event reporting. 17 Table of Contents The study protocol must also be reviewed and approved by an IRB/IEC for each principal investigator’s site in which a study is proposed to be conducted, and each IRB/IEC may impose additional requirements on the conduct of the study in its institution.
These differences can impact regulatory processes for all aspects of product development and management, including preclinical tests, clinical studies, manufacturing and control data as well as adverse event reporting. 19 Table of Contents The study protocol must also be reviewed and approved by an IRB/IEC for each principal investigator’s site in which a study is proposed to be conducted, and each IRB/IEC may impose additional requirements on the conduct of the study in its institution.
We are a recognized leader in clinical pharmacology, known for first-in-human and exploratory clinical pharmacology studies as well as biopharma label support studies. We offer an integrated clinical pharmacology solution that delivers precision, quality and safety.
We are a recognized leader in clinical pharmacology, known for first-in-human and exploratory clinical pharmacology studies as well as biopharma label support studies. We offer an integrated clinical pharmacology solution that delivers with precision, quality and safety.
Our main competition consists of these small and large CROs, as well as in-house departments of pharmaceutical, biotechnology, and medical device companies and, to a lesser extent, select universities and teaching hospitals and site management organizations. 12 Table of Contents We believe our success with customers has been rooted in transparent partnerships that offer agile solutions and support speed to market.
Our main competition consists of these small and large CROs, as well as in-house departments of pharmaceutical, biotechnology, and medical device companies and, to a lesser extent, select universities and teaching hospitals and site management organizations. 13 Table of Contents We believe our success with customers has been rooted in transparent partnerships that offer agile solutions and support speed to market.
All marketed products require post-marketing safety surveillance. 18 Table of Contents Regulation of Personal Information We hold personal and health information relating to individuals who sponsor, support and participate in clinical trials, the possession, retention, use and disclosure of which is highly regulated, both in the U.S. and in other jurisdictions to which we are subject.
All marketed products require post-marketing safety surveillance. 20 Table of Contents Regulation of Personal Information We hold personal and health information relating to individuals who sponsor, support and participate in clinical trials, the possession, retention, use and disclosure of which is highly regulated, both in the U.S. and in other jurisdictions to which we are subject.
Our solutions include our clinical pharmacology units and external partnerships, project management, study design and monitoring, bioanalytics and biomarkers, pharmacokinetics (“PK”), modeling and simulation, and biometrics. Fortrea’s clinical research units (“CRUs”) are located in Leeds, U.K. offering 100 bed capacity; Dallas, Texas with 100 bed capacity; Daytona, Florida with 88 bed capacity; and Madison, Wisconsin with 88 bed capacity.
Our solutions include our clinical research units (“CRUs”) and external partnerships, project management, study design and monitoring, bioanalytics and biomarkers, pharmacokinetics (“PK”), modeling and simulation, and biometrics. Fortrea’s CRUs are located in Leeds, U.K. offering 100 bed capacity; Dallas, Texas with 100 bed capacity; Daytona, Florida with 88 bed capacity; and Madison, Wisconsin with 88 bed capacity.
GCP requirements address, among other things, IRBs, qualified investigators, informed consent, recordkeeping and reporting. These laws and regulations might not be similar to the laws and regulations administered by the FDA, and other laws and regulations regarding the protections of patient safety and privacy and the control of study pharmaceuticals, medical devices or other materials may apply.
GCP requirements address, among other things, IRBs, qualified investigators, informed consent, recordkeeping and reporting and data governance. These laws and regulations might not be similar to the laws and regulations administered by the FDA, and other laws and regulations regarding the protections of patient safety and privacy and the control of study pharmaceuticals, medical devices or other materials may apply.
Within the time period required by the SEC and Nasdaq, we will post on our website any amendment to the Code of Conduct or any waiver of such policy applicable to any of our senior financial officers, executive officers or directors. 21 Table of Contents
Within the time period required by the SEC and Nasdaq, we will post on our website any amendment to the Code of Conduct or any waiver of such policy applicable to any of our senior financial officers, executive officers or directors. 23 Table of Contents
All employees are responsible for upholding our Code of Conduct, which forms the foundation of our personnel and ethics policies and practices. Building on our CEO's signing of the CEO Action Pledge, we continue to collaborate with the broader business community to drive meaningful change in advancing responsible people practices in the workplace.
All employees are responsible for upholding our Code of Conduct, which forms the foundation of our personnel and ethics policies and practices. 14 Table of Contents Building on our CEO's signing of the CEO Action Pledge, we continue to collaborate with the broader business community to drive meaningful change in advancing responsible people practices in the workplace.
Our service offering delivers comprehensive, strategic solutions designed to adapt to the level of customer control and infrastructure. Our FSP team can provide dedicated offerings in clinical operations, clinical data management, biostatistics, statistical programming, pharmacovigilance, mobile clinical services, and medical writing, among other customized solutions. 6 Table of Contents ◦ Hybrid .
Our service offering delivers comprehensive, strategic solutions designed to adapt to the level of customer control and infrastructure. Our FSP team can provide dedicated offerings in clinical operations, clinical data management, biostatistics, statistical programming, pharmacovigilance, mobile clinical services, and medical writing, among other customized solutions. ◦ Hybrid .
Our competitive strengths include: 8 Table of Contents Extensive History as a Market Leader Across Clinical Development We have more than 30 years of experience providing clinical development services to the pharmaceutical, biotechnology, and medical device industries. We have an extensive history as a leading organization with a differentiated service offering.
Our competitive strengths include: Extensive History as a Market Leader Across Clinical Development We have more than 30 years of experience providing clinical development services to the pharmaceutical, biotechnology, and medical device industries. We have an extensive history as a leading organization with a differentiated service offering.
The information contained in, or accessible through, our website does not constitute a part of this Annual Report on Form 10-K. 20 Table of Contents Available Information Our website address is www.fortrea.com, and our investor relations website is located at http://ir.fortrea.com.
The information contained in, or accessible through, our website does not constitute a part of this Annual Report on Form 10-K. Available Information Our website address is www.fortrea.com, and our investor relations website is located at http://ir.fortrea.com.
We will continue to expand our small and mid-size customer base and to build long-tenured partnerships with these customers, enhancing our offerings to meet their needs. 11 Table of Contents Fortrea also supports leading large pharmaceutical customers as a preferred provider for services across our range of offerings, including Clinical Pharmacology, Phase I-IV Full Service, Consulting Services, Clinical/Biometrics/Safety FSP, and Hybrid models that combine Full Service and FSP.
We will continue to expand our small and mid-size customer base and to build long-tenured partnerships with these customers, enhancing our biotech operating model and offerings to meet their needs. 12 Table of Contents Fortrea also supports leading large pharmaceutical customers as a preferred provider for services across our range of offerings, including Clinical Pharmacology, Phase I-IV Full Service, Consulting Services, Clinical/Biometrics/Safety FSP, and Hybrid models that combine Full Service and FSP.
This approach allows for more adaptability to trial types with customer-tailored designs. ◦ Functional Service Provider . Offers customers experienced personnel to perform targeted activities throughout their development programs. This approach reduces our customers’ need to recruit and train dedicated internal resources which saves on cost and time and enables flexibility.
This approach allows for more adaptability to trial types with customer-tailored designs. 6 Table of Contents ◦ Functional Service Provider . Offers customers experienced personnel to perform targeted activities throughout their development programs. This approach reduces our customers’ need to recruit and train dedicated internal resources which saves on cost and time and enables flexibility.
While some companies anticipate a reduction in Full Service in the near-term, they expect increased use of Functional Service Provider models, which is sometimes referred to as insourcing. Both Full Service and Functional Service Provider delivery models create demand for CROs, and we believe Fortrea is well positioned as we offer flexible delivery models to the industry.
While some companies anticipate a reduction in Full Service in the near-term, they expect increased use of Functional Service Provider models. Both Full Service and Functional Service Provider delivery models create demand for CROs, and we believe Fortrea is well positioned as we offer flexible delivery models to the industry.
In addition, similar data protection regulations addressing access, use, disclosure and transfer of personal data have been enacted or updated in regions where we do business, including in Asia, Latin America, and Europe. We have established processes and frameworks, including appropriate technical and organizational safeguards, to protect the personal and health information we collect, process and otherwise maintain.
In addition, similar data protection regulations addressing access, use, disclosure, and transfer of personal data have been enacted or updated in other regions where we do business. We have established processes and frameworks, including appropriate technical and organizational safeguards, to protect the personal and health information we collect, process and otherwise maintain.
Workforce Diversity Profile: Our diversity profile as of December 31, 2024: In the United States, approximately 60% of our employees identify as white and approximately 40% identify as a minority, including 13% who identify as Black or African American. Approximately 69% of our employees globally identify as female and approximately 60% of employees worldwide at management levels identify as female.
Workforce Diversity Profile: Our diversity profile as of December 31, 2025: In the United States, approximately 59% of our employees identify as white and approximately 41% identify as a minority, including 13% who identify as Black or African American. Approximately 69% of our employees globally identify as female and approximately 60% of employees worldwide at management levels identify as female.
Our FOUR cultural beliefs underpinning how we care and deliver are: • Forward Together - I partner with my customers to understand their needs and achieve results together • Own It - I hold myself accountable and work across perceived boundaries to find solutions and deliver • Uphold Integrity - I do the right things in the right way, with the safety of patients and research volunteers always coming first • Respect People - I am inclusive, seek feedback and create positive experiences for all In addition, we will continue our investments with global early talent development academies; career paths; a broad range of learning and development opportunities; our Responsible People Practices Advisory Committee to operationalize people initiatives throughout the organization; and Employee Resource Groups (“ERG”).
Fortrea’s distinctive culture is underpinned by FOUR cultural beliefs that guide how we care and deliver: • Forward Together - I partner with my customers to understand their needs and achieve results together • Own It - I hold myself accountable and work across perceived boundaries to find solutions and deliver • Uphold Integrity - I do the right things in the right way, with the safety of patients and research volunteers always coming first • Respect People - I am inclusive, seek feedback and create positive experiences for all In addition, we plan to continue our investments in global early talent development; career paths; a broad range of learning and development opportunities; our Responsible People Practices Advisory Committee to operationalize people initiatives throughout the organization; and Employee Resource Groups (“ERG”).
Global and Stable Customer Relationships Our scale and expertise are key competitive advantages that make us a multi-dimensional partner for our customers. Our top 20 customers have consistently represented approximately 64% of total revenue for 2024, 61% for 2023, and 55% for 2022. Additionally, most of our customers use us for more than one service.
Global and Stable Customer Relationships Our scale and expertise are key competitive advantages that make us a multi-dimensional partner for our customers. Our top 20 customers represented approximately 69% of total revenue for 2025, 64% for 2024, and 61% for 2023. Additionally, most of our customers use us for more than one service.
Over the past decade, we have seen the biopharma industry leverage science, technology, and AI to advance the level of understanding of the pathogenesis of human disease, and to identify new therapeutic targets and treatments. R&D spend of large biopharmaceutical companies is forecast to grow at approximately 3% CAGR over the period 2024-2027.
Over the past decade, we have seen the biopharma industry leverage science, technology, and AI to advance the level of understanding of the pathogenesis of human disease, and to identify new therapeutic targets and treatments. R&D spend of large biopharmaceutical companies is forecast to grow at approximately 4-5% CAGR over the period 2025-2030.
Clinical Development is enhanced by our pharmacology learnings, which we apply to future clinical programs. We also have a medical device and diagnostics offering, which has conducted more than 500 studies in the previous five years. We believe Fortrea is poised to capture additional market share in the large and expanding development market.
Clinical Development is enhanced by our pharmacology learnings, which we apply to future clinical programs. We also have a medical device and diagnostics offering, which has conducted more than 500 studies during that same period. We believe Fortrea is poised to capture additional market share in the large and expanding development market.
A global bedside data capture system has been implemented across all CRUs. • Clinical Development . We are a leading full-service provider of phase I through IV clinical and real-world evidence (“RWE”) studies with a flexible approach to serving our customers.
A global bedside data capture system has been implemented across all CRUs, enabling increased efficiency and quality, and providing real time access to data. • Clinical Development . We are a leading full-service provider of phase I through IV clinical and real-world evidence (“RWE”) studies with a flexible approach to serving our customers.
We are also focused on optimizing delivery in more complex hybrid study designs that include both healthy volunteers and patients through the utilization of our own clinics in combination with a global site network, to expand our service offerings into phase 1B studies in patients and serve as investigator sites for phase 2 studies and vaccine studies.
We seek to optimize delivery in more complex hybrid study designs that include both healthy volunteers and patients through the utilization of our four clinics in combination with a global site network to expand our service offerings into phase 1B studies in patients and serve as investigator sites for phase 2 studies and vaccine studies.
We believe we are well positioned to leverage our global scale, scientific and therapeutic expertise, access to clinical data-driven insights, industry network, and decades of experience to bring customers distinctive, expert solutions. Our team of approximately 15,500 employees provides services in approximately 100 countries. Our solutions streamline the biopharmaceutical product and medical device development process.
We believe we are well positioned to leverage our global scale, scientific and therapeutic expertise, access to clinical data-driven insights, industry network, and decades of experience to bring customers distinctive, expert solutions. Our team of approximately 14,300 employees is able to conduct operations in approximately 100 countries. Our solutions streamline the biopharmaceutical product and medical device development process.
Violations of these rules may result in criminal and civil fines and penalties. Properties As of December 31, 2024, we had 73 operating facilities located in 41 countries. Our corporate headquarters and principal executive offices are at 8 Moore Drive, Durham, NC 27709, and our telephone number is (877) 495-0816. Our website address is www.fortrea.com.
Violations of these rules may result in criminal and civil fines and penalties. 22 Table of Contents Properties As of December 31, 2025, we had 62 operating facilities located in 42 countries. Our corporate headquarters and principal executive offices are at 8 Moore Drive, Durham, NC 27713, and our telephone number is (877) 495-0816. Our website address is www.fortrea.com.
We are committed to increasing the representation of patient populations within clinical trials, and we developed a holistic strategy focused on partnering with customers, sites, investigators, and communities to address this commitment.
We are committed to increasing the representation of patient populations within clinical trials, and developed a holistic strategy focused on partnering with customers, sites, investigators, and communities to address this commitment and support the diversity plans expected by global regulatory authorities.
For example, in the European Economic Area we are subject to the EU General Data Protection Regulation, and in the U.K., we are subject to the U.K. data protection regime consisting primarily of the U.K. General Data Protection Regulation and the U.K. Data Protection Act 2018 (together the EU and U.K. data protection regulations are referred to as “GDPR”).
For example, in the European Economic Area, we are subject to the EU General Data Protection Regulation, and in the U.K., we are subject to the U.K. data protection regime consisting primarily of the U.K. General Data Protection Regulation and the U.K.
Large and Diversified Customer Base We have a balanced and diverse customer mix serving large, small and emerging pharmaceutical, biotechnology, and medical device organizations. As of the fiscal year ended 2024, two customers accounted for approximately 14.3% and 10.5% of our revenue. In 2024, 56% of our revenue came from leading pharmaceutical customers.
Large and Diversified Customer Base We have a balanced and diverse customer mix serving large, mid-size, small and emerging pharmaceutical, biotechnology, and medical device organizations. As of the fiscal year ended 2025, one customer accounted for approximately 18.1% of our revenue. In 2025, 56% of our revenue came from leading pharmaceutical customers.
We work with key sites to plan, design and win new studies through therapeutic guidance and patient engagement strategies. As noted below, Fortrea is leading a collaboration with top technology innovators in our industry to deliver integrated patient and site centric solutions that streamline the clinical trial experience.
We work with key sites to plan, design and win new studies through therapeutic guidance and patient engagement strategies, recognizing the importance of site and patient-centricity in a trial’s success. Fortrea collaborates with top technology innovators in our industry to deliver integrated patient and site centric solutions that streamline the clinical trial experience.
Despite the large, attractive and growing market that Fortrea operates in, our business is subject to a number of risks inherent to our industry, including our customers’ ability to access sufficient funding to run clinical trials, our ability to generate net new business awards or our new business awards being delayed, terminated, reduced in scope, or failing to go to contract, and our ability to contract with suitable investigators and recruit and enroll patients for clinical trials, among others.
According to multiple industry investment sources, the CRO market is expected to grow more slowly in the short term, and return to a higher growth rate in the longer term. 8 Table of Contents Despite the large, attractive and growing market that Fortrea operates in, our business is subject to a number of risks inherent to our industry, including our customers’ ability to access sufficient funding to run clinical trials, our ability to generate net new business awards or our new business awards being delayed, terminated, reduced in scope, or failing to go to contract, and our ability to contract with suitable investigators and recruit and enroll patients for clinical trials, among others.
Additionally, we have deep scientific expertise in a broad spectrum of therapeutic areas and diseases, such as cardiovascular disease, nephrology (renal), infectious diseases, dermatology, ophthalmology, respiratory, and women’s health, among others. Over the previous five years, we have conducted more than 5,925 phase I through IV clinical trial projects involving more than 1,000,000 subjects.
Additionally, we have deep scientific expertise in a broad spectrum of therapeutic areas and diseases, such as cardiovascular disease, nephrology (renal), infectious diseases, dermatology, ophthalmology, respiratory, and women’s health, among others. For instance, during the period from January 2020 to December 2024, we conducted more than 5,930 phase I through IV clinical trial projects involving approximately 1,000,000 subjects.
The third-party clinical sites we work with include healthcare systems, dedicated research networks, large group practices, consortiums, and governmental coordinating bodies that represent multiple research partners around the globe. Our Global Site Advisory Board now includes more than 440 unique sites and includes representatives from customers.
The third-party clinical sites we work with include healthcare systems, dedicated research networks, large group practices, consortiums, and governmental coordinating bodies that represent multiple research partners around the globe. Our Global Site Advisory Board represents a network of more than 400 sites and community partners, as well as our customers.
Our service offerings are supported by technological innovations such as digital and decentralized clinical trial capabilities. We focus on rapidly expanding research areas such as oncology, central nervous system and neurodegenerative, metabolic disorders including MASH (metabolic dysfunction-associated steatohepatitis), immunology and inflammation (including autoimmune diseases and rheumatology), rare diseases, and cell and gene therapies.
We focus on rapidly expanding research areas such as oncology, central nervous system and neurodegenerative, metabolic disorders including MASH (metabolic dysfunction-associated steatohepatitis), immunology and inflammation (including autoimmune diseases and rheumatology), rare diseases, and cell and gene therapies.
Fortrea’s strategy includes the following elements: 9 Table of Contents Lead with Scientific and Therapeutic Expertise, Expand in Existing and Novel Therapeutic Areas We believe our therapeutic expertise across phase I through phase IV of drug development is critical to early engagement with customers and to optimizing the design and management of clinical trials.
Through these initiatives, we aim to grow our reach, relevance and repeat business. Lead with Scientific and Therapeutic Expertise, Expand in Existing and Novel Therapeutic Areas We believe our therapeutic expertise across phase I through phase IV of drug development is critical to early engagement with customers and to optimizing the design and management of clinical trials.
Employees are globally dispersed, with 28% in the Americas, 28% in EMEA, and 44% in Asia-Pacific. Of our global workforce, 96% of our employees are full time, and 4% are part time.
Employees are globally dispersed, with 26% in the Americas, 27% in EMEA, and 47% in Asia-Pacific. Of our global workforce, 97% of our employees are full time, and 3% are part time.
We believe in cultivating a workplace where all employees can thrive. 13 Table of Contents Our focus on responsible people practices is core and fundamental to our purpose and strategy. With our code of conduct forming the foundation of who we are and how we work together, our company ethos is to promote the voice of all our employees.
We believe in cultivating a workplace where all employees can thrive. Our focus on responsible people practices is core to our purpose and strategy. Our company ethos is to promote the voice of all employees.
Recognizing the need for external talent, we market our people and brand across the globe and ensure that we are visible to top talent in every region. Our Talent Acquisition team provides us with a competitive edge through its diverse and global presence, utilizing a blend of innovative and traditional recruitment strategies.
Recognizing the importance of external talent, we actively market our people and brand worldwide to remain visible and appealing to top talent in every region. Talent Acquisition provides a competitive edge through its diverse, global presence and a blend of innovative and traditional recruitment strategies.
Department of Commerce, the United Nations Security Council, the European Union, His Majesty’s Treasury and other relevant sanctions authorities. 19 Table of Contents Violations of these anti-corruption laws or export controls and economic sanctions laws and regulations, or even allegations of such violations, could disrupt our business and result in a material adverse effect on our reputation, business, results of operations, financial condition and/or cash flows.
Violations of these anti-corruption laws or export controls and economic sanctions laws and regulations, or even allegations of such violations, could disrupt our business and result in a material adverse effect on our reputation, business, results of operations, financial condition and/or cash flows.
As a result, bringing a new biopharmaceutical product or medical device to market can take up to 12 years 1 and costs $2.3 billion or more on average. 2 The biopharmaceutical product development process consists of three stages: preclinical, clinical, and commercialization.
As a result, bringing a new biopharmaceutical product to market takes about a decade 1 and costs $2.23 billion on average. 2 The biopharmaceutical product development process consists of three stages: preclinical, clinical, and commercialization.
Fortrea offers a range of site augmentation services to support sites with selecting trials, identifying and enrolling patients, conducting and closing out of studies. These services include administrative and clinical support, tools, data and analysis to enable sites to be more productive and help to overcome challenges with disparate technologies, complex protocols and their resource constraints.
These services include administrative and clinical support, tools, data and analysis to enable sites to be more productive and help to overcome challenges with disparate technologies, complex protocols and their resource constraints.
Oncology makes up a large portion of our business and continues to grow. Over the previous five years, we have completed over 1,200 oncology clinical trials involving approximately 250,000 patients and more than 30,000 investigator sites. In 2024, 47% of our full service therapeutic-based revenue related to oncology studies.
These scientific areas represent the majority of the life sciences industry’s existing drug development pipelines. Oncology makes up a large portion of our business and continues to grow. Over the previous five years, we have completed over 1,200 oncology clinical trials involving approximately 250,000 patients and more than 30,000 investigator sites.
We will continue to provide high levels of service and to expand existing partnerships, as well as to add new partnerships where there is a strong strategic alignment.
We will continue to provide high levels of service and to expand existing partnerships, as well as to add new partnerships where there is a strong strategic alignment. Fortrea believes that excellence in project management is foundational to the consistency of delivery for customers of all sizes and types.
We work to manage labor costs effectively while fostering an environment where employees thrive and add lasting value. We prioritize skills development, career transitions, and talent retention with a strong commitment to inclusion and learning opportunities.
We balance effective labor cost management with creating an environment where employees thrive and deliver lasting value. We prioritize skills development, career transitions, and talent retention, underpinned by a strong commitment to inclusion and continuous learning.
We support customers from early to late phase, both locally with country-level regulatory and operational capabilities, and regionally/globally as they seek to broaden their strategy to key global markets.
We provide expert full-service teams, data-driven site selection and patient-centric recruitment approaches to deliver their studies with agility and flexibility, underpinned by quality. We support customers from early to late phase, both locally with country-level regulatory and operational capabilities, and regionally/globally as they seek to broaden their strategy to key global markets.
Preliminary assessment of the relationships between dosage, safety, and effectiveness follow in phase II before expanding to larger trials, phase III, to formally test effectiveness and safety in the target population. Phase IV, or post-approval trials, involves monitoring or verifying the risks and benefits of a drug product that has been approved and on the market.
Preliminary assessment of the relationships between dosage, safety, and effectiveness follow in phase II before expanding to larger trials, phase III, to formally test effectiveness and safety in the target population.
The clinical development market is a large, attractive and growing market. Clinical development spend by the pharmaceutical and biotechnology industry was estimated to be $100 billion in 2024 3 . Of this, we estimate the current addressable market for Fortrea to be $35 billion.
Phase I-IV clinical development spend by the pharmaceutical and biotechnology industry is forecast to be ~$145 billion in 2026 3 . Of this, we estimate the current addressable market for Fortrea to be approximately $41 billion 4 .
“Risk Factors—Risks Relating to Regulatory and Compliance Matters—Failure to comply with privacy and security laws and regulations could result in fines, penalties and damage to our reputation with customers and have a material adverse effect upon our business.” Anti-Corruption Laws and Regulations We are subject to various U.S. and non-U.S. anti-corruption laws, including the U.S.
“Risk Factors—Risks Relating to Regulatory and Compliance Matters—Failure to comply with privacy and security laws and regulations could result in fines, penalties and damage to our reputation with customers and have a material adverse effect upon our business.” As AI is adopted within the industry, we are aware of the risks to clinical trials in the potential for re-identification of study subjects particularly in smaller populations.
Access to Actionable Clinical Data and Insights Access to data is foundational to any CRO and we believe our arrangements with strategic data partners provide a higher quality of insights to our customers. We continue to prioritize actionable data as we further scale our data repositories.
Data Driven Insights to Optimize Trials Access to data is foundational to any CRO and we believe our arrangements with strategic data partners together with our ability to integrate, analyze and visualize datasets provide a higher quality of insights to our customers.
Expertise Across Therapeutic Areas We believe that our focus and expertise across rapidly growing scientific areas provide us with advantages over our competitors. Fortrea’s expertise spans oncology, CNS and neurodegenerative disease, cardiovascular, renal, MASH, rare disease, cell and gene therapy, and many more. These scientific areas represent the majority of the life sciences industry’s drug development pipelines.
Deep Therapeutic Expertise in High Growth Therapeutic Areas We believe that our focus and expertise across rapidly growing scientific areas provide us with advantages over our competitors. Fortrea’s expertise spans oncology, CNS and neurodegenerative disease, metabolic diseases including MASH, immunology and inflammation, cardiovascular, renal, rare disease, cell and gene therapy, ophthalmology and several emerging therapeutic areas.
Fortrea has invested in building centralized capability hubs for efficient processing of trial activities, supporting site and customer-facing teams. We will continue to strategically invest in markets to meet the needs of our customers and the demands of the global clinical trial landscape.
We will continue to strategically invest in markets to meet the needs of our customers and the demands of the global clinical trial landscape.
In addition, in the event that we seek to enforce such an indemnification provision, the indemnifying party may not have sufficient resources to fully satisfy its indemnification obligations or may otherwise not comply with its contractual obligations.
In addition, in the event that we seek to enforce such an indemnification provision, the indemnifying party may not have sufficient resources to fully satisfy its indemnification obligations or may otherwise not comply with its contractual obligations. 17 Table of Contents We generally require our customers and other counterparties to maintain adequate insurance, and we currently maintain errors, omissions and professional liability insurance coverage with limits we believe to be appropriate.
Our people strategy is designed to grow and further evolve in alignment with the changing dynamics of the global workforce. Employee Listening and Engagement Since becoming an independent company, Fortrea has prioritized connecting with employees through initiatives like the Forward with Fortrea Interactive Employee Discussion Series.
Our people strategy is designed to grow and further evolve in alignment with the changing dynamics of the global workforce. Employee Listening and Engagement Since becoming an independent company, Fortrea has strengthened its commitment to employee listening and connection, placing a deliberate emphasis on building meaningful, in‑person relationships between our executive team and employees.
Fortrea has strategic relationships with a number of top technology vendors in the industry, including Advarra, Cognizant, Medidata and Veeva among others.
We continue to explore new data sources that enrich the breadth and depth of our geographic, therapeutic and site data sets. Fortrea has strategic relationships with a number of leading technology vendors in the industry, including Advarra, Cognizant, Medidata and Veeva among others.
In 2024, we established the China Chapter of the Board and created therapeutically focused site networks, starting with the Early Phase Oncology Network. We leverage data-driven approaches to target sites that align with our customers’ protocols, with a focus on accelerating patient recruitment, efficiently executing trials with high quality, and enhancing the site experience.
The Advisory Board aims to shape industry best practices and drive process improvement through the adoption of innovative technological solutions at Fortrea. We leverage data-driven approaches to target sites that align with our customers’ protocols, with a focus on accelerating patient recruitment, efficiently executing trials with high quality, and enhancing the site experience.
The oncology market remains an area of unmet medical need that receives significant investment in R&D. As part of our mission to drive value for customers, we will continue to try to capitalize on the expansion of opportunities in these important, growing therapeutic areas.
As part of our mission to drive value for customers, we continue to try to capitalize on the expansion of opportunities in these important, growing therapeutic areas. While Fortrea has significant expertise and experience in these scientific areas, we believe that there is ample opportunity for future growth.
Our expertise helps us deliver enhanced value to customers through a reduction in the cost and time to bring drugs and devices to market. We have significant expertise in several rapidly growing scientific areas including oncology, CNS and neurodegenerative disease, cardiovascular, renal, MASH, rare disease, cell and gene therapy, and several emerging therapeutic areas.
Our expertise helps us deliver enhanced value to customers through a reduction in the cost and time to bring drugs and devices to market.
Pursue “Ideal Scale” to Support the Research Requirements of Our Customers The landscape for clinical trials is evolving, both with changes to global business practices, and the commercialization strategies of our clients. While the number of novel therapies is increasing, the willingness of markets to approve, pay for and distribute therapies is changing.
Pursue Ideal Scale Combining Global Delivery with Agility and Customer Intimacy The landscape for clinical trials is evolving, both with changes to global business practices, and the commercialization strategies of our clients.
Fortrea supports many small and mid-size customers through contributing scientific, therapeutic, regulatory and operational expertise and insights to help shape their clinical development strategy and protocol design to achieve their goals. We provide expert full-service teams, data-driven site selection and patient-centric recruitment approaches to deliver their studies with agility and flexibility, underpinned by quality.
Fortrea supports many small and mid-size customers through contributing scientific, therapeutic, regulatory, commercial and operational expertise and insights to help shape their clinical development strategy and protocol design to achieve their goals. We offer seamless support across Clinical Pharmacology and Clinical Development, reducing white space between phases.
Through partnerships with leading players, Fortrea aims to bring together best-in-class technologies and leverage Fortrea’s process expertise to deliver integrated patient and site centric solutions that streamline the clinical trial experience, and to enable Fortrea’s digital transformation to drive agility and efficiency.
We bring together digital solutions with Fortrea’s operational expertise to support more connected patient and site centric solutions, digital health and DCT capabilities that streamline the clinical trial experience and to enable Fortrea’s digital transformation.
Our team of approximately 15,500 employees conducts operations in about 100 countries and stands behind our vision of powering customers to achieve their aspirations with innovation that combines the best people, science and technology. Workforce Demographics Our success is rooted in our sustained ability to attract, develop, and retain a highly specialized and skilled global workforce.
Our team of approximately 14,300 employees is able to conduct operations in approximately 100 countries and stands behind our purpose of delivering solutions that bring life-changing treatments to patients faster and creating lasting value for all stakeholders. Workforce Demographics Our success is rooted in our sustained ability to attract, develop, and retain a highly specialized and skilled global workforce.
As customers continue to reprioritize their R&D pipelines with biologics and advanced therapies, such as cell and gene therapies, additional complex clinical trial capabilities will also be required from CROs. We are built to handle the increased complexity and global demand that underpin these industry tailwinds. • Elevated Outsourcing Levels .
We are built to handle the increased complexity and global demand that underpin these industry tailwinds. • Elevated Outsourcing Levels .
CROs have successfully expanded the scope of services they are able to offer pharmaceutical, biotechnology, and medical device companies, increasing the addressable market that they serve. Examples include the expansion of decentralized trial (“DCT”) services, global logistics, and management of highly complex biologics and cell and gene therapy trials.
Over the medium to longer term we would anticipate the biotechnology funding environment to reflect more historical levels of solid investments. • Expanding Scope of Capabilities . CROs have successfully expanded the scope of services they are able to offer pharmaceutical, biotechnology, and medical device companies, increasing the addressable market that they serve.
The need for biopharmaceutical companies to expand the commercial potential of their products internationally has been a catalyst for the increasingly global nature of clinical trials. CROs that can capitalize on extensive datasets to inform decisions and increase efficiency in executing international clinical trials have benefited from these changing dynamics.
CROs that can capitalize on extensive datasets to inform decisions and increase efficiency in executing international clinical trials have benefited from these changing dynamics. With the continued growth of biologics and advanced therapies, such as cell and gene therapies, in R&D pipelines additional complex clinical trial capabilities will also be required from CROs.
This includes onboarding programs for new hires, functional and therapeutic training, soft skills and leadership programs and rotations, talent management, cross cultural training and required regulatory and compliance training. Fortrea provides a mix of learning options, including interactive online courses, workshops, mentoring programs, scenario based and on the job training.
Development Programs Fortrea provides employees with access to a comprehensive set of development programs spanning the employee lifecycle. These include new‑hire onboarding, job‑specific functional and therapeutic area training, leadership and professional skills development, cross‑cultural training, mentoring, talent management resources, and required regulatory and compliance training.
In 2024, biotechnology funding rebounded from the relative downturn in 2022-23 that followed historically high funding levels stemming from the COVID pandemic. Over the medium to longer term we expect the biotechnology funding environment to be strong. • Expanding Scope of Capabilities .
In 2024, biotechnology funding modestly improved from the relative downturn in 2022-23 that followed historically high funding levels stemming from the COVID pandemic. Biotech funding slowed in the first half of 2025 due to policy and macroeconomic headwinds but began to strengthen in the second half of the year.
In addition to Fortrea’s success in oncology, we plan to leverage our capabilities in science, innovation, and technology to successfully capture additional market share across high-growth therapeutic areas, such as CNS and neurodegenerative disease, cell and gene therapy, cardiovascular, renal, MASH, rare disease, and more.
In addition to Fortrea’s success in oncology, we plan to leverage our capabilities in science, innovation, and technology to successfully capture additional market share across high-growth therapeutic areas. 9 Table of Contents Site and Patient Centric Approach to Improve Delivery and Outcomes Fortrea establishes high-value site relationships to support scientific engagement and reduce the time and cost for our customers to develop products.
We are able to conduct trials in over 100 countries including all of the major pharmaceutical and biotechnology markets. Fortrea’s approximately 15,500 employees are strategically balanced throughout the world, with employee breakdown by region of: 28% in the Americas, 28% in EMEA, and 44% in Asia-Pacific.
Fortrea has the scale and expertise to advise, design and deliver our customers’ programs, projects and programs globally. We are able to conduct trials in approximately 100 countries including all of the major pharmaceutical and biotechnology markets.
Removed
Evaluate Ltd. 7 Table of Contents In addition to the growth in R&D expenditures, an increase in outsourcing has also supported the growth of the CRO sector.
Added
Our service offerings are supported by technological innovations, leveraging strategic relationships with leading technology vendors together with Fortrea’s operational expertise to support more connected patient and site centric solutions, digital health and decentralized clinical trial capabilities.
Removed
According to multiple industry investment sources, the CRO market is expected to grow more slowly in the short term, and return to a higher growth rate in the longer term.
Added
We are making focused investments in artificial intelligence (“AI”), machine learning (“ML”), other advanced technologies, and workflow automation and orchestration to drive speed, agility, quality and enhanced patient safety in clinical research.
Removed
We believe that we have the opportunity to optimize the clinical development process through identification of high performing investigator sites, accelerating recruitment and improving retention of patients in studies. Further, in 2024 we launched a leading integrated solution to increase participation in clinical trials from historically underrepresented populations.
Added
Phase IV, or post-approval trials, involves monitoring or verifying the risks and benefits of a drug product that has been approved and on the market. 7 Table of Contents The clinical development market is a large, attractive and growing market.
Removed
Growth Strategy Our growth strategy builds on Fortrea’s strong foundation and aligns with our customers’ priorities.
Added
Examples include the expansion of decentralized trial (“DCT”) services, global logistics, and management of highly complex biologics and cell and gene therapy trials. The need for biopharmaceutical companies to expand the commercial potential of their products internationally has been a catalyst for the increasingly global nature of clinical trials.
Removed
While Fortrea has significant expertise and experience in these scientific areas, we believe that there is ample opportunity for future growth. Support Sites to Solve the “Last Mile” Problems of Patient Recruitment and Trial Starts Fortrea establishes high-value site relationships to support scientific engagement and reduce the time and cost for our customers to develop products.

… 73 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

107 edited+46 added−44 removed186 unchanged
Biggest changeThis is primarily a result of the following factors: • our historical combined financial results reflect allocations of expenses for services historically provided by Labcorp, and may not fully reflect the increased costs associated with being an independent public company, including significant changes to our cost structure, management, financing arrangements, and business operations as a result of our Spin from Labcorp; 44 Table of Contents • our working capital and capital expenditure requirements historically have been satisfied as part of Labcorp’s corporate-wide capital access, capital allocation, and cash management programs; our debt structure and cost of debt and other capital may be significantly different from that reflected in our historical combined financial statements; and • the historical combined financial information may not fully reflect the effects of certain liabilities that have been incurred or assumed by us and may not fully reflect the effects of the assets that have been transferred to, and liabilities that have been assumed by, Labcorp.
Biggest changeThis is primarily a result of our historical combined financial results reflect allocations of expenses for services historically provided by Labcorp, and may not fully reflect the increased costs associated with being an independent public company, including significant changes to our cost structure, management, financing arrangements, and business operations as a result of our Spin from Labcorp.
For example, a partner may fail to make payments when due, default under their agreements with us, become insolvent or declare bankruptcy, or a vendor may determine that it will no longer deal with us as a customer.
For example, a customer or partner may fail to make payments when due, default under their agreements with us, become insolvent or declare bankruptcy, or a vendor may determine that it will no longer deal with us as a customer.
Our contracts may be delayed or terminated by our customers or reduced in scope for a variety of reasons beyond our control, including, but not limited to: • decisions to forego or terminate a particular trial; • budgetary limits, unanticipated trial costs or changing priorities; • actions by regulatory authorities; • production problems resulting in shortages of the candidate drug being tested; • failure of products being tested to satisfy safety requirements or efficacy criteria; • unexpected or undesired clinical results for products; • insufficient patient enrollment in a trial, competition for patients and/or insufficient principal investigator recruitment; • the customer’s decision to terminate or scale back the development or commercialization of a product or to end a particular project; • shift of business to a competitor or internal resources; or • product withdrawal following market launch.
Our contracts may be delayed or terminated by our customers or reduced in scope for a variety of reasons beyond our control, including, but not limited to: • decisions to forego or terminate a particular trial; • budgetary limits, unanticipated trial costs or changing priorities; • actions by governmental and/or regulatory authorities; • production problems resulting in shortages of the candidate drug being tested; • failure of products being tested to satisfy safety requirements or efficacy criteria; • unexpected or undesired clinical results for products; • insufficient patient enrollment in a trial, competition for patients and/or insufficient principal investigator recruitment; • the customer’s decision to terminate or scale back the development or commercialization of a product or to end a particular project; • shift of business to a competitor or internal resources; or • product withdrawal following market launch.
The market price of Fortrea common stock could fluctuate significantly due to a number of factors, many of which are beyond our control, including: • fluctuations in our quarterly or annual earnings results or those of other companies in our industry; • the financial projections we may provide to the public, any changes in those projections, or our failure to meet those projections; • failures of our results of operations to meet the estimates of securities analysts or the expectations of our stockholders, or changes by securities analysts in their estimates of our future earnings; • announcements by us or our customers, suppliers, or competitors; • changes in laws or regulations which adversely affect our industry or us; • general economic, industry, and stock market conditions; • future sales of our common stock by our stockholders; • future issuances of our common stock by us; • our ability or willingness to pay dividends in the future; and • the other factors described in these “Risk Factors” and other parts of this Annual Report on Form 10-K.
The market price of Fortrea common stock could fluctuate significantly due to a number of factors, many of which are beyond our control, including: • fluctuations in our quarterly or annual earnings results or those of other companies in our industry; • the financial projections we may provide to the public, any changes in those projections, or our failure to meet those projections; • failure of our results of operations to meet the estimates of securities analysts or the expectations of our stockholders, or changes by securities analysts in their estimates of our future earnings; • announcements by us or our customers, suppliers, or competitors; • changes in laws or regulations which adversely affect our industry or us; • general economic, industry, and stock market conditions; • future sales of our common stock by our stockholders; • future issuances of our common stock by us; • our ability or willingness to pay dividends in the future; and • the other factors described in these “Risk Factors” and other parts of this Annual Report on Form 10-K.
For example, our Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws: • authorize the issuance of “blank check” preferred stock that could be issued by our board of directors to thwart a takeover attempt; • until the annual meeting of stockholders to be held in 2028, provide for the division of our board of directors into three classes serving staggered three-year terms, with one class being elected each year, which may tend to discourage a third party from making a tender offer or otherwise attempting to obtain control of us because it generally makes it more difficult for stockholders to replace a majority of our board of directors; • not permit cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates; • provide that vacancies on our board of directors, including newly-created directorships, may be filled only by a majority vote of directors then in office; • prohibit stockholders from nominating director candidates for inclusion in proxy material; • prohibit stockholders from calling special meetings of stockholders; • prohibit stockholder action by written consent, thereby requiring all actions to be taken at a meeting of the stockholders; • establish advance notice requirements for nominations for election to our board of directors or for proposing matters that can be acted upon by stockholders at stockholder meetings; and 47 Table of Contents • until the annual meeting of stockholders to be held in 2028, require the approval of holders of at least seventy-five percent (75%) of the outstanding shares of our common stock, voting together as a single class, to amend certain provisions of our Amended and Restated Bylaws and certain provisions of our Amended and Restated Certificate of Incorporation.
For example, our Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws: • authorize the issuance of “blank check” preferred stock that could be issued by our board of directors to thwart a takeover attempt; 49 Table of Contents • until the annual meeting of stockholders to be held in 2028, provide for the division of our board of directors into three classes serving staggered three-year terms, with one class being elected each year, which may tend to discourage a third-party from making a tender offer or otherwise attempting to obtain control of us because it generally makes it more difficult for stockholders to replace a majority of our board of directors; • not permit cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates; • provide that vacancies on our board of directors, including newly-created directorships, may be filled only by a majority vote of directors then in office; • prohibit stockholders from nominating director candidates for inclusion in proxy material; • prohibit stockholders from calling special meetings of stockholders; • prohibit stockholder action by written consent, thereby requiring all actions to be taken at a meeting of the stockholders; • establish advance notice requirements for nominations for election to our board of directors or for proposing matters that can be acted upon by stockholders at stockholder meetings; and • until the annual meeting of stockholders to be held in 2028, require the approval of holders of at least seventy-five percent (75%) of the outstanding shares of our common stock, voting together as a single class, to amend certain provisions of our Amended and Restated Bylaws and certain provisions of our Amended and Restated Certificate of Incorporation.
In addition, a partner or vendor could be adversely affected by any of the liquidity or other risks that are described above as factors that could result in material adverse impacts on us, including but not limited to delayed access or loss of access to uninsured deposits or loss of the ability to draw on existing credit facilities involving a troubled or failed financial institution.
In addition, a customer, partner, or vendor could be adversely affected by any of the liquidity or other risks that are described above as factors that could result in material adverse impacts on us, including but not limited to delayed access or loss of access to uninsured deposits or loss of the ability to draw on existing credit facilities involving a troubled or failed financial institution.
Potential fines and penalties in the event of a violation of the GDPR could have a material adverse effect on our business and operations. In addition, similar data protection regulations addressing access, use, disclosure and transfer of personal data have been enacted or updated in regions where we do business, including in Asia, Latin America, and Europe.
Potential fines and penalties in the event of a violation of the GDPR and/or DUA could have a material adverse effect on our business and operations. In addition, similar data protection regulations addressing access, use, disclosure and transfer of personal data have been enacted or updated in regions where we do business, including in Asia, Latin America, and Europe.
As a result, factors associated with international operations, including changes in foreign currency exchange rates and our hedging activities, could significantly affect our results of operations, financial condition and cash flows. Our debt and debt covenant requirements may limit cash flow available to invest in the ongoing needs of our business.
As a result, factors associated with international operations, including changes in foreign currency exchange rates and our hedging activities, could significantly affect our results of operations, financial condition and cash flows. Costs associated with our debt and our debt covenant requirements may limit cash flow available to invest in the ongoing needs of our business.
We expect to make changes to our business practices and to incur additional costs associated with compliance with these evolving and complex regulations. In addition to data protection laws and regulations, government agencies are considering (or are adopting) other laws, regulations and guidelines that impact the processing of personal information.
We expect to make changes to our business practices and to incur additional costs associated with compliance with these evolving and complex regulations. In addition to data protection laws and regulations, government agencies have or are considering (or are adopting) other laws, regulations and guidelines that impact the processing of personal information.
Restructuring presents significant potential risks of events occurring that could adversely affect us, including: • actual or perceived disruption of service or reduction in service standards to clients; • the failure to preserve important relationships and to resolve conflicts that may arise; • loss of sales as we reduce or eliminate staffing on non-core services; • diversion of management attention from ongoing business activities; and • the failure to maintain employee morale and retain key employees. 40 Table of Contents Further, any such restructuring would result in charges that, if material, could have a material adverse effect on our financial condition and our results of operations.
Restructuring presents significant potential risks of events occurring that could adversely affect us, including: • actual or perceived disruption of service or reduction in service standards to clients; • the failure to preserve important relationships and to resolve conflicts that may arise; • loss of sales as we reduce or eliminate staffing on non-core services; • diversion of management attention from ongoing business activities; and • the failure to maintain employee morale and retain key employees. 42 Table of Contents Further, any such restructuring would result in charges that, if material, could have a material adverse effect on our financial condition and our results of operations.
The historical combined financial information we have included in this annual report does not necessarily reflect what our financial condition, results of operations, or cash flows would have been as an independent public company during the periods presented and is not necessarily indicative of our future financial condition, future results of operations, or future cash flows.
The historical combined financial information we have included in this annual report does not necessarily reflect what our results of operations or cash flows would have been as an independent public company during the periods presented and is not necessarily indicative of our future results of operations or future cash flows.
If we are unable to achieve and maintain effective internal controls, our business, financial condition, results of operations, and cash flows could be materially adversely affected. As a public company, we are required to maintain internal controls over financial reporting and to report any material weaknesses in such internal controls.
If we are unable to maintain effective internal controls, our business, financial condition, results of operations, and cash flows could be materially adversely affected. As a public company, we are required to maintain internal controls over financial reporting and to report any material weaknesses in such internal controls.
For example, we could incur damages under state laws, including pursuant to an action brought by a private party for the wrongful use or disclosure of health information or other personal information. 33 Table of Contents In the past few years, numerous U.S. states—including California, Virginia, Colorado, Connecticut, Delaware, Indiana, Iowa, Kentucky, Maryland, Minnesota, Montana, Nebraska, New Hampshire, New Jersey, Oregon, Rhode Island, Tennessee and Texas—have enacted or proposed comprehensive privacy laws, reflecting a trend toward more stringent privacy legislation in the U.S.
For example, we could incur damages under state laws, including pursuant to an action brought by a private party for the wrongful use or disclosure of health information or other personal information. 34 Table of Contents In the past few years, numerous U.S. states—including California, Virginia, Colorado, Connecticut, Delaware, Indiana, Iowa, Kentucky, Maryland, Minnesota, Montana, Nebraska, New Hampshire, New Jersey, Oregon, Rhode Island, Tennessee and Texas—have enacted or proposed comprehensive privacy laws, reflecting a trend toward more stringent privacy legislation in the U.S.
Any partner or vendor bankruptcy or insolvency, or the failure of any partner to make payments when due, or any breach or default by a partner or vendor, or the loss of any significant vendor relationships, could result in material losses to us and may have a material adverse impact on our business.
Any customer, partner or vendor bankruptcy or insolvency, or the failure of any customer or partner to make payments when due, or any breach or default by a customer, partner or vendor, or the loss of any significant vendor relationships, could result in material losses to us and may have a material adverse impact on our business.
Our historical combined financial information is not necessarily indicative of our future financial condition, results of operations, or cash flows nor does it reflect what our financial condition, results of operations, or cash flows would have been as an independent public company during the periods presented.
Our historical combined financial information is not necessarily indicative of our future results of operations or cash flows, nor does it reflect what our results of operations or cash flows would have been as an independent public company during the periods presented.
We may become subject in the ordinary course of business to material legal actions related to, among other things, commercial and contract disputes, data and privacy issues, professional liability, employee-related matters, and intellectual property disputes.
We have and may become subject in the ordinary course of business to material legal actions related to, among other things, commercial and contract disputes, data and privacy issues, professional liability, employee-related matters, and intellectual property disputes.
If we are unable to use generative AI, it could make our business less efficient and result in competitive disadvantages. 34 Table of Contents Failure to comply with federal, state, and foreign laws and regulations, including healthcare fraud and abuse laws, anti-corruption laws and regulations, trade sanction laws and regulations, and privacy and security laws and regulations, could result in substantial penalties and our business, financial condition, results of operations, cash flows, and prospects could be adversely affected.
If we are unable to use generative AI, it could make our business less efficient and result in competitive disadvantages. 35 Table of Contents Failure to comply with federal, state, and foreign laws and regulations, including healthcare fraud and abuse laws, anti-corruption laws and regulations, trade sanction laws and regulations, and privacy and security laws and regulations, could result in substantial penalties and our business, financial condition, results of operations, cash flows, and prospects could be adversely affected.
The loss of, or reduction in, services that we can provide to existing or potential customers may have a material adverse effect on our business, operations, or financial condition. 28 Table of Contents Our business is dependent upon access to data and an inability to access the necessary data from our data partners on commercially reasonable terms or at all could adversely affect our business.
The loss of, or reduction in, services that we can provide to existing or potential customers may have a material adverse effect on our business, operations, or financial condition. 30 Table of Contents Our business is dependent upon access to data and an inability to access the necessary data from our data partners on commercially reasonable terms or at all could adversely affect our business.
In addition, we might not realize the full benefits of our backlog. 24 Table of Contents In the event of termination, our contracts often provide for fees for winding down projects, which include both fees incurred and actual and non-cancellable expenditures and may include a fee to cover a percentage of the remaining professional fees on the project.
In addition, we might not realize the full benefits of our backlog. 26 Table of Contents In the event of termination, our contracts often provide for fees for winding down projects, which include both fees incurred and actual and non-cancellable expenditures and may include a fee to cover a percentage of the remaining professional fees on the project.
Also, we may incur substantial additional costs and become subject to litigation and enforcement actions if we fail to comply with legal requirements affecting our workforce and labor practices, including laws and regulations related to wage and hour practices, Office of Federal Contract Compliance Programs compliance, and unlawful workplace harassment and discrimination. 45 Table of Contents Failure to establish and maintain effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act could materially and adversely affect us.
Also, we may incur substantial additional costs and become subject to litigation and enforcement actions if we fail to comply with legal requirements affecting our workforce and labor practices, including laws and regulations related to wage and hour practices, Office of Federal Contract Compliance Programs compliance, and unlawful workplace harassment and discrimination. 47 Table of Contents Failure to maintain effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act could materially and adversely affect us.
In these circumstances, we may incur substantial costs and expend resources without compensation from our customer due to their lack of funds, bankruptcy or other negative financial circumstances. 26 Table of Contents Our backlog might not be indicative of our future revenues, and we might not realize all of the anticipated future revenue reflected in our backlog.
In these circumstances, we may incur substantial costs and expend resources without compensation from our customer due to their lack of funds, bankruptcy or other negative financial circumstances. 28 Table of Contents Our backlog might not be indicative of our future revenues, and we might not realize all of the anticipated future revenue reflected in our backlog.
We continue to monitor the effects of the IRA and other regulatory developments on our financial condition, operating results, and income tax rate. We have cumulatively accrued $3.6 million for income taxes on a portion of the undistributed earnings of our non-U.S. subsidiaries that are not considered permanently reinvested.
We continue to monitor the effects of the IRA and other regulatory developments on our financial condition, operating results, and income tax rate. We have cumulatively accrued $10.6 million for income taxes on a portion of the undistributed earnings of our non-U.S. subsidiaries that are not considered permanently reinvested.
Our inability to identify appropriate partners or reach mutually satisfactory arrangements could adversely affect our business and operations. 25 Table of Contents Embedded and functional outsourcing services associated with our FSP delivery models could subject us to employment liability, which may cause adverse effects on our business.
Our inability to identify appropriate partners or reach mutually satisfactory arrangements could adversely affect our business and operations. 27 Table of Contents Embedded and functional outsourcing services associated with our FSP delivery models could subject us to employment liability, which may cause adverse effects on our business.
Our backlog as of December 31, 2024 was $7.7 billion. Although an increase in backlog will generally result in an increase in revenues over time, an increase in backlog at a particular point in time does not necessarily correspond directly to an increase in revenues during any particular period, or at all.
Our backlog as of December 31, 2025 was $7.7 billion. Although an increase in backlog will generally result in an increase in revenues over time, an increase in backlog at a particular point in time does not necessarily correspond directly to an increase in revenues during any particular period, or at all.
Current or future acquisitions or other strategic transactions, if any, or any related integration efforts may not be successful, and we cannot provide assurance that our business will not be adversely affected by any future strategic transactions, including with respect to revenues and profitability.
Current or future acquisitions or other strategic transactions, if any, or any related integration, divestiture or transition efforts may not be successful, and we cannot provide assurance that our business will not be adversely affected by any future strategic transactions, including with respect to revenues and profitability.
These competitive pressures may affect the attractiveness or profitability of our services and could adversely affect our financial results. 27 Table of Contents An inability to attract and retain experienced and qualified personnel, including key management personnel, and increased personnel costs, could adversely affect our business.
These competitive pressures may affect the attractiveness or profitability of our services and could adversely affect our financial results. 29 Table of Contents An inability to attract and retain experienced and qualified personnel, including key management personnel, and increased personnel costs, could adversely affect our business.
There is no guarantee that shares of our common stock will appreciate in value. 48 Table of Contents Securities or industry analysts may not publish favorable research about our business and our stock price and trading volume could decline.
There is no guarantee that shares of our common stock will appreciate in value. 50 Table of Contents Securities or industry analysts may not publish favorable research about our business and our stock price and trading volume could decline.
Failure to comply with national, state, local or international environmental, health and safety laws and regulations, could result in fines and penalties and loss of licensure, and have a material adverse effect upon our business.
Failure to comply with national, state, local or international environmental, health and safety (“EH&S”) laws and regulations, could result in fines and penalties and loss of licensure, and have a material adverse effect upon our business.
However, there can be no assurance that the indemnity will be sufficient to insure us against the full amount of such liabilities, or that Labcorp's ability to satisfy its indemnification obligations will not be impaired in the future. Pursuant to the separation and distribution agreement, Labcorp agreed to indemnify us for certain liabilities.
However, there can be no assurance that the indemnity will be sufficient to insure us against the full amount of such liabilities, or that Labcorp's ability to satisfy its indemnification obligations will not be impaired in the future. 43 Table of Contents Pursuant to the separation and distribution agreement, Labcorp agreed to indemnify us for certain liabilities.
Any default under the agreements governing our debt and the remedies sought by the holders of such debt could render us unable to pay principal and interest on our debt. We may not be able to access the capital and credit markets on terms that are favorable to us, or at all.
Any default under the agreements governing our debt and the remedies sought by the holders of such debt could render us unable to pay principal and interest on our debt. 45 Table of Contents We may not be able to access the capital and credit markets on terms that are favorable to us, or at all.
We cannot assure you that the measures we have taken to date, or any measures we may take in the future, will be sufficient to avoid potential future material weaknesses and the existence of future material weaknesses in our internal control over financial reporting could have a material adverse effect on our business or our reputation.
We cannot assure you that the measures we have taken to date to remediate past material weaknesses in our internal controls, or any measures we may take in the future, will be sufficient to avoid potential future material weaknesses and the existence of future material weaknesses in our internal control over financial reporting could have a material adverse effect on our business or our reputation.
Risks Relating to Our Business • Our business, financial condition, results of operations, or cash flows may be materially adversely affected if we do not generate a large number of net new business awards, or if net new business awards are delayed, terminated, reduced in scope, or fail to go to contract. • If we are unable to contract with suitable investigators and recruit and enroll patients for clinical trials, our business might suffer. • Our international operations could subject us to additional risks and expenses that could adversely impact our business or results of operations. • Our customer or therapeutic area concentrations may have a material adverse effect on our business, financial condition, results of operations or cash flows. • Our customers may experience insufficient funding to complete their clinical trials. • Our backlog might not be indicative of our future revenues, and we might not realize all of the anticipated future revenue reflected in our backlog. • We operate in a highly competitive industry. • An inability to attract and retain experienced and qualified personnel, including key management personnel and increased personnel costs, could adversely affect our business. • We depend on third parties to provide services critical to our business. • Our business is dependent upon access to data and an inability to access the necessary data from our data partners on commercially reasonable terms or at all could adversely affect our business. • If we are unable to achieve and maintain effective internal controls, our business, financial condition, results of operations, and cash flows could be materially adversely affected. • Our effective income tax rate may fluctuate, which could adversely affect our operations.
Risks Relating to Our Business • Our business, financial condition, results of operations, or cash flows may be materially adversely affected if we do not generate a large number of net new business awards, or if net new business awards are delayed, terminated, reduced in scope, or fail to go to contract. • If we are unable to contract with suitable investigators and recruit and enroll patients for clinical trials, our business might suffer. • Our international operations could subject us to additional risks and expenses that could adversely impact our business or results of operations. • Our customer or therapeutic area concentrations may have a material adverse effect on our business, financial condition, results of operations or cash flows. • Our customers may experience insufficient funding to complete their clinical trials. • Our backlog might not be indicative of our future revenues, and we might not realize all of the anticipated future revenue reflected in our backlog. • An inability to attract and retain experienced and qualified personnel, including key management personnel and increased personnel costs, could adversely affect our business. • We depend on third parties to provide services critical to our business and depend on them to comply with applicable laws and regulations. • Our business is dependent upon access to data and an inability to access the necessary data from our data partners on commercially reasonable terms or at all could adversely affect our business. • If we are unable to maintain effective internal controls, our business, financial condition, results of operations, and cash flows could be materially adversely affected. • Our effective income tax rate may fluctuate, which could adversely affect our operations.
Furthermore, the successful closing and integration of a strategic acquisition entails numerous risks, including, among others: • failure to obtain regulatory clearance, including due to antitrust concerns; • loss of key customers or employees; • difficulty in consolidating redundant facilities and infrastructure and in standardizing information and other systems; • unidentified regulatory problems; • failure to maintain the quality of services that such companies have historically provided; • unanticipated costs and other liabilities; 35 Table of Contents • potential liabilities related to litigation including the acquired companies; • potential periodic impairment of goodwill and intangible assets acquired; • coordination of geographically separated facilities and workforces; and • the potential disruption of the ongoing business and diversion of management's resources.
Furthermore, the successful closing and integration of strategic transactions entails numerous risks, including, among others: • failure to obtain regulatory clearance, including due to antitrust concerns; • loss of key customers or employees; • difficulty in consolidating redundant facilities and infrastructure and in standardizing information and other systems; • unidentified regulatory problems; • failure to maintain the quality of services that such companies have historically provided; • unanticipated costs and other liabilities; • potential liabilities related to litigation including the acquired companies; • potential periodic impairment of goodwill and intangible assets acquired; • coordination of geographically separated facilities and workforces; and • the potential disruption of the ongoing business and diversion of management's resources.
Risks Relating to Legal Matters • Failure to comply with the contractual requirements of our agreements with customers or third-party service providers could result in claims and/or remedies against us and have a material adverse effect on us and our reputation could be harmed. • Contract research services create liability risk. • We face risks arising from the restructuring of our operations. • Failure to obtain, maintain and enforce intellectual property rights could adversely affect us. • Changes in tax rates, laws or regulations or exposure to additional tax liabilities may adversely impact our financial results. • We are subject to continuing contingent liabilities as a result of the Spin which could materially and adversely affect our business, financial condition, results of operations, and cash flows. • Labcorp has indemnified us for certain liabilities, which may be insufficient to insure us against the full amount of such liabilities, or Labcorp's ability to satisfy its indemnification obligations could be impaired in the future.
Risks Relating to Legal Matters • Failure to comply with the contractual requirements of our agreements with customers or third-party service providers could result in claims and/or remedies against us and have a material adverse effect on us and our reputation could be harmed. • Contract research services create liability risk. • We face risks arising from the restructuring of our operations. • Failure to obtain, maintain and enforce intellectual property rights could adversely affect us. • We are subject to continuing contingent liabilities as a result of the Spin which could materially and adversely affect our business, financial condition, results of operations, and cash flows. • Labcorp has indemnified us for certain liabilities, which may be insufficient to insure us against the full amount of such liabilities, or Labcorp's ability to satisfy its indemnification obligations could be impaired in the future.
A compromise in our processes or systems, or those processes and systems provided to us by third-party service providers and vendors, could adversely affect our reputation with our customers and others, as well as our results of operations, financial condition and liquidity.
Any material compromise in our processes or systems, or those processes and systems provided to us by third-party service providers and vendors, could adversely affect our reputation with our customers and others, as well as our results of operations, financial condition and liquidity.
The capital and credit markets may experience extreme volatility or disruptions that may lead to uncertainty and liquidity issues for both borrowers and investors. As noted above, we have incurred indebtedness as of December 31, 2024, in an aggregate principal amount of approximately $1,142.0 million, which consists of borrowings under senior secured term loan facilities and senior secured notes.
The capital and credit markets may experience extreme volatility or disruptions that may lead to uncertainty and liquidity issues for both borrowers and investors. As noted above, we have incurred indebtedness as of December 31, 2025, in an aggregate principal amount of approximately $1,066.3 million, which consists of borrowings under senior secured term loan facilities and senior secured notes.
Risks Relating to Our Common Stock • Anti-takeover provisions in our charter documents and Delaware law could discourage, delay or prevent a change in control or impact the trading price of our common stock. 23 Table of Contents Risks Relating to Our Business If we do not generate a large number of net new business awards, or if net new business awards are delayed, terminated, reduced in scope, or fail to go to contract, our business, financial condition, results of operations, or cash flows may be materially adversely affected.
Risks Relating to Ownership of Our Common Stock • Our stockholder rights agreement could discourage, delay, or prevent a change in control over us and may affect the trading price of our common stock. • Anti-takeover provisions in our charter documents and Delaware law could discourage, delay or prevent a change in control or impact the trading price of our common stock. 25 Table of Contents Risks Relating to Our Business If we do not generate a large number of net new business awards, or if net new business awards are delayed, terminated, reduced in scope, or fail to go to contract, our business, financial condition, results of operations, or cash flows may be materially adversely affected.
Risks Relating to General Matters General or macro-economic factors in the U.S. and globally may have a material adverse effect upon us, and a significant deterioration in the economy could negatively impact our services, cash collections, profitability and the availability and cost of credit.
Risks Relating to General Matters General or macro-economic factors in the U.S. and globally may have a material adverse effect upon us, and a significant deterioration in the economy, or in the pharmaceutical, biotechnology and medical device industries, in particular, could negatively impact our services, cash collections, profitability and the availability and cost of credit.
An inability to purchase or access the necessary data (from Labcorp pursuant to the Patient and Site Data Agreement or from other third parties) now, or in the future, on commercially reasonable terms or at all, could have a material adverse effect on our business, financial condition and results of operations.
An inability to purchase or access the necessary data from third parties now, or in the future, on commercially reasonable terms or at all, could have a material adverse effect on our business, financial condition and results of operations.
From time to time, we have adopted restructuring plans to improve our operating efficiency through various means such as reduction of overcapacity, elimination of non-billable support roles or other realignment of resources.
We face risks arising from the restructuring of our operations. From time to time, we have adopted restructuring plans to improve our operating efficiency through various means such as reduction of overcapacity, elimination of non-billable support roles or other realignment of resources.
Risks Relating to Regulatory and Compliance Matters • Failure to comply with the regulations of pharmaceutical and medical device regulatory agencies could result in sanctions and/or remedies against us and have a material adverse effect on us. • Changes in government regulation or in practices relating to the pharmaceutical, biotechnology, or medical device industries could decrease the need for certain services that we provide. • Failure to comply with privacy and security laws and regulations could result in fines, penalties and damage to our reputation with customers and have a material adverse effect upon our business. • Failure to comply with federal, state, and foreign laws and regulations could result in substantial penalties and our business, financial condition, results of operations, cash flows, and prospects could be adversely affected. 22 Table of Contents Risks Relating to Strategic Transactions • A failure to identify and successfully close strategic transactions could have a material adverse effect on our business objectives and our revenues and profitability.
Risks Relating to Regulatory and Compliance Matters • Failure to comply with the regulations of pharmaceutical and medical device regulatory agencies could result in sanctions and/or remedies against us and have a material adverse effect on us. • Changes in government regulation or in practices relating to the pharmaceutical, biotechnology, or medical device industries could decrease the need for certain services that we provide. • Failure to comply with privacy and security laws and regulations could result in fines, penalties and damage to our reputation with customers and have a material adverse effect upon our business. • Failure to comply with federal, state, and foreign laws and regulations could result in substantial penalties and our business, financial condition, results of operations, cash flows, and prospects could be adversely affected. • Changes in and uncertainty regarding U.S. regulations, government policies, government funding decisions, trade policies or tariffs could have a material adverse effect upon our business. 24 Table of Contents Risks Relating to Strategic Transactions • A failure to identify and successfully close and integrate strategic acquisitions or close other strategic transactions could have a material adverse effect on our business objectives and our revenues and profitability.
Risks Relating to Technology and Cybersecurity • Failure to maintain the security of customer-related information or compliance with security requirements could damage our reputation with customers, cause us to incur substantial additional costs and become subject to litigation and enforcement actions. • Failure in our IT systems, including hardware and software failures, delays in the operation of computer and communications systems, and the failure to implement new systems or system enhancements may harm us. • Security breaches and unauthorized access to our data or our customers’ data could harm our reputation and adversely affect our business. • We use internally developed and licensed technology systems to manage various aspects of clinical trials, and failures of these systems, including errors in design, programming or validation, could adversely affect our business. • Failure to keep pace with rapid technological changes, including in the development or use of artificial intelligence, could adversely affect our business.
Risks Relating to Technology and Cybersecurity • Failure to maintain the security of customer-related information or compliance with security requirements could damage our reputation with customers, cause us to incur substantial additional costs and become subject to litigation and enforcement actions. • Failure in our IT systems, including hardware and software failures, delays in the operation of computer and communications systems, and the failure to implement new systems or system enhancements may harm us. • Security breaches and unauthorized access to our data or our customers’ data could harm our reputation and adversely affect our business. • We use internally developed and licensed technology systems to manage various aspects of clinical trials, and failures of these systems, including errors in design, programming or validation, could adversely affect our business. • Failure to keep pace with rapid technological changes could adversely affect our business. • Issues in the development, deployment and/or use of AI may result in reputational harm, liability, regulatory action or adversely affect our business, financial condition or results of operations.
In contracting to work on drug development trials and studies, we face a range of potential liabilities, including: • Errors or omissions that create harm to clinical trial participants during a trial or to consumers of a drug after the trial is completed and regulatory approval of the drug has been granted; • General risks associated with clinical pharmacology facilities and mobile clinical services, including negative consequences from specimen collection and processing, the administration of drugs to clinical trial participants, or the professional malpractice of clinical pharmacology physicians, clinical pharmacology staff or mobile clinical services staff; and • Errors and omissions during a trial or study that may undermine the usefulness of a trial or study, or data from the trial or study or that may delay the entry of a drug to the market. 39 Table of Contents We contract with investigators to conduct, and in our clinical research units we directly conduct, the clinical trials to test new drugs on clinical trial participants.
In contracting to work on drug development trials and studies, we face a range of potential liabilities, including: • Errors or omissions that create harm to clinical trial participants during a trial or to consumers of a drug after the trial is completed and regulatory approval of the drug has been granted; • General risks associated with clinical pharmacology facilities and mobile clinical services, including negative consequences from specimen collection and processing, the administration of drugs to clinical trial participants, or the professional malpractice of clinical pharmacology physicians, clinical pharmacology staff or mobile clinical services staff; and • Errors and omissions during a trial or study that may undermine the usefulness of a trial or study, or data from the trial or study or that may delay the entry of a drug to the market.
We have an aggregate principal amount of indebtedness of approximately $1,142.0 million, which consists of borrowings under senior secured term loan facilities and senior secured notes.
We have an aggregate principal amount of indebtedness of approximately $1,066.3 million, which consists of borrowings under senior secured term loan facilities and senior secured notes.
Beginning with this Annual Report on Form 10-K, the applicable sections of Section 404 of the Sarbanes-Oxley Act require annual management assessments of the effectiveness of our internal control over financial reporting and a report by our independent registered public accounting firm on the effectiveness of internal control over financial reporting.
The applicable sections of Section 404 of the Sarbanes-Oxley Act require annual management assessments of the effectiveness of our internal control over financial reporting and a report by our independent registered public accounting firm on the effectiveness of internal control over financial reporting.
For example, it could: • require us to dedicate a substantial portion of our cash flow from operations to the payment of debt service, reducing the availability of our cash flow to fund working capital, capital expenditures, acquisitions, and other general corporate purposes; • increase our vulnerability to adverse economic or industry conditions; • limit our ability to access debt markets and obtain additional financing in the future to enable us to react to changes in our business; or • place us at a competitive disadvantage compared to businesses in our industry that have less debt. 43 Table of Contents As a result of the debt we have incurred, it may be difficult for the Company to incur additional debt should the business require it.
For example, it could: • require us to dedicate a substantial portion of our cash flow from operations to the payment of debt service, reducing the availability of our cash flow to fund working capital, capital expenditures, acquisitions, and other general corporate purposes; • increase our vulnerability to adverse economic or industry conditions; • limit our ability to access debt markets and obtain additional financing in the future to enable us to react to changes in our business; or • place us at a competitive disadvantage compared to businesses in our industry that have less debt.
In addition, beginning with this Annual Report on Form 10-K, our independent registered public accounting firm is required to express an opinion as to the effectiveness of our internal controls over financial reporting. These reporting and other obligations place significant demands on our management and administrative and operational resources, including our accounting and IT resources.
In addition, our independent registered public accounting firm is required to express an opinion as to the effectiveness of our internal controls over financial reporting. These reporting and other obligations place significant demands on our management and administrative and operational resources, including our accounting and IT resources.
Such a transfer could result in delays in the ability to deliver products and services to customers. Additionally, significant delays in the planned delivery of system deployments, enhancements or improvements, and inadequate performance of the systems once they are completed could damage our reputation.
Such a transfer could result in delays in the ability to deliver products and services to customers. Additionally, significant delays in the planned delivery of system deployments, enhancements or improvements, and inadequate performance of the systems once they are completed could damage our reputation. Failure of our IT systems could adversely affect our business, profitability and financial condition.
For example, we entered into a Cooperation Agreement, dated February 21, 2025 (the “Cooperation Agreement”), with Starboard Value LP (“Starboard”), an activist investor, and certain of its affiliates, regarding certain changes to the composition of our board, including the appointment of an independent director, Erin Russell, and an option for Starboard to appoint an additional Starboard employee to our board, subject to the terms and conditions set out in the Cooperation Agreement.
For example, we entered into a Cooperation Agreement, dated February 21, 2025 (the “Cooperation Agreement”), with Starboard Value LP (“Starboard”), an activist investor, and certain of its affiliates, regarding certain changes to the composition of our board, including the appointment of an independent director, Erin Russell.
Changes in regulations such as a relaxation in regulatory requirements or the introduction of simplified approval procedures, or an increase in regulatory requirements that we have difficulty satisfying or that make our services less competitive, could eliminate or substantially reduce the demand for our services.
We assist pharmaceutical, biotechnology and medical device companies in navigating the regulatory approval process. Changes in regulations such as a relaxation in regulatory requirements or the introduction of simplified approval procedures, or an increase in regulatory requirements that we have difficulty satisfying or that make our services less competitive, could eliminate or substantially reduce the demand for our services.
Some of these risks relate principally to our Spin from Labcorp, while others relate principally to our business and the industry in which we operate or to the securities markets generally and ownership of our common stock. If any of the following risks actually occur, our business, financial condition, results of operations, or cash flows could be negatively affected.
These risks relate to, among other things, our business and the industry in which we operate or to the securities markets generally and ownership of our common stock. If any of the following risks actually occur, our business, financial condition, results of operations, or cash flows could be negatively affected.
However, we may not be able to identify acquisition targets or other strategic arrangements that are attractive to us or that will have a meaningful impact on our operating results or to conduct other strategic transactions on terms that are acceptable to Fortrea, or at all.
However, we may not be able to identify acquisition targets or other strategic arrangements that are attractive to us or that will have a meaningful impact on our operating results or to conduct other strategic transactions on terms that are acceptable to Fortrea, or at all, and we may not be able to realize the benefits of strategic transactions we have completed in the past or that we may complete in the future.
Governments have passed and are likely to pass additional laws regulating generative AI. Our use of this technology could result in additional compliance costs, regulatory investigations and actions, and lawsuits.
Governments have passed and are likely to pass additional laws regulating generative AI, such as the EU Artificial Intelligence Act 2024. Our use of this technology could result in additional compliance costs, regulatory investigations and actions, and lawsuits.
We also have available $450.0 million under a senior secured revolving credit facility as of the year ended December 31, 2024.
We also have available $447.7 million under a senior secured revolving credit facility as of the year ended December 31, 2025.
Risks Relating to Legal Matters Failure to comply with the contractual requirements of our agreements with customers or third-party service providers could result in claims and/or remedies against us and have a material adverse effect on us and our reputation could be harmed.
Any of the foregoing could adversely affect our business, financial condition or results of operations. 40 Table of Contents Risks Relating to Legal Matters Failure to comply with the contractual requirements of our agreements with customers or third-party service providers could result in claims and/or remedies against us and have a material adverse effect on us and our reputation could be harmed.
If competitors acquire or introduce superior technologies or services and we cannot procure or develop these technologies or services or enhance ours in a timely manner to remain competitive, our competitive position, and in turn our business, results of operations, financial condition and/or cash flows may be materially adversely affected. 38 Table of Contents Issues in the development and/or use of AI may result in reputational harm, liability or adversely affect our business, financial condition or results of operations.
If competitors acquire or introduce superior technologies or services and we cannot procure or develop these technologies or services or enhance ours in a timely manner to remain competitive, our competitive position, and in turn our business, results of operations, financial condition and/or cash flows may be materially adversely affected.
We also have borrowing capacity in the form of a $450.0 million senior secured revolving credit facility, from which we have borrowed and repaid $826.5 million during the year ended December 31, 2024, and an accounts receivable securitization program from which $300.0 million of receivables were sold for net proceeds of $297.9 million during the year ended December 31, 2024.
We also have borrowing capacity in the form of a $450.0 million senior secured revolving credit facility, of which $447.7 million is available for borrowing as of December 31, 2025, and from which we have borrowed and repaid $453.9 million during the year ended December 31, 2025, and an accounts receivable securitization program from which $300.0 million of receivables were sold as of December 31, 2025.
Further, the OECD issued administrative guidance providing transition and safe harbor rules that could delay the impact of the minimum tax directive. We will continue to monitor the implementation of the Framework by the countries in which we operate.
Further, the OECD issued administrative guidance providing transition and safe harbor rules that could delay the impact of the minimum tax directive. We will continue to monitor the implementation of the Framework by the countries in which we operate. There was no additional top-up tax due under the Pillar Two Framework in 2025.
This will increase the riskiness of our business and of an investment in our common stock. Any failure to meet required payments on our debt, or failure to comply with any covenants in the instruments governing our debt, could result in an event of default under the terms of those instruments and a downgrade to our credit ratings.
Any failure to meet required payments on our debt, or failure to comply with any covenants in the instruments governing our debt, could result in an event of default under the terms of those instruments and a downgrade to our credit ratings. A downgrade in our credit ratings could increase our borrowing costs for incremental debt.
Data Protection Act 2018, respectively, which include a range of compliance obligations for subject companies and imposes penalties for noncompliance of up to the greater of €20 million or 4% of worldwide revenue. We have established processes and frameworks to manage compliance with the GDPR.
Data Protection Act 2018, respectively, which include a range of compliance obligations for subject companies and imposes penalties for noncompliance of up to the greater of €20 million or 4% of worldwide revenue. The U.K.
A downgrade in our credit ratings could increase our borrowing costs for incremental debt. In the event of a default, the holders of our debt could elect to declare all the amounts outstanding under such instruments to be due and payable.
In the event of a default, the holders of our debt could elect to declare all the amounts outstanding under such instruments to be due and payable.
These changes may adversely impact our effective tax rate and harm our financial position and results of operations. We are subject to examination by the IRS and other domestic and foreign tax authorities and government bodies. We regularly assess the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of our income tax and other tax reserves.
We are subject to examination by the IRS and other domestic and foreign tax authorities and government bodies. We regularly assess the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of our income tax and other tax reserves.
Cancellations may occur for a variety of reasons, including: • failure of products to satisfy safety requirements; • unexpected or undesired results of the products; • insufficient clinical trial subject enrollment; • insufficient investigator recruitment; • a customer's decision to terminate the development of a product or to end a particular study; and • our failure to perform our duties properly under the contract. 42 Table of Contents We bear the financial risk if these contracts are underpriced or if contract costs exceed estimates.
Cancellations may occur for a variety of reasons, including: • failure of products to satisfy safety requirements; • unexpected or undesired results of the products; • insufficient clinical trial subject enrollment; • insufficient investigator recruitment; • a customer's decision to terminate the development of a product or to end a particular study; and • our failure to perform our duties properly under the contract.
Legal actions could result in substantial monetary damages as well as damage to our reputation with customers, which could have a material adverse effect upon our business. We face risks arising from the restructuring of our operations.
Legal actions could result in substantial monetary damages as well as damage to our reputation with customers, which could have a material adverse effect upon our business.
These companies are also reliant on reimbursement for their products from government programs and commercial payers. Accordingly, economic factors and industry trends affecting our customers in these industries may also affect us.
In some instances, these companies are reliant on their ability to raise capital in order to fund their R&D projects. These companies are also reliant on reimbursement for their products from government programs and commercial payers. Accordingly, economic factors and industry trends affecting our customers in these industries may also affect us.
Risks Relating to Financial Matters • We bear financial risk for contracts that, including for reasons beyond our control, may be underpriced, subject to cost overruns, delayed or terminated or reduced in scope. • Our revenues depend on the pharmaceutical, biotechnology, and medical device industries. • Foreign currency fluctuations could have an adverse effect on our business. • Costs associated with our debt and debt covenants may limit cash flow available to invest in our business. • We may not be able to access the capital and credit markets on terms that are favorable or at all.
Risks Relating to Financial Matters • We bear financial risk for contracts that, including for reasons beyond our control, may be underpriced, subject to cost overruns, delayed or terminated or reduced in scope. • Our revenues depend on the pharmaceutical, biotechnology, and medical device industries and the expenditures they make in R&D; any reductions or delays could materially and adversely affect our business, financial condition, results of operations, and cash flows. • Foreign currency fluctuations and our planned use of financial instruments to limit our exposure to currency fluctuations could expose us to risks and financial losses that may adversely affect our financial condition, liquidity and results of operations. • Costs associated with our debt and our debt covenants may limit cash flow available to invest in our business. • We may not be able to access the capital and credit markets on terms that are favorable to us or at all.
Any deterioration in the macro-economic economy or financial services industry could lead to losses or defaults by our partners or vendors, which in turn, could have a material adverse effect on our current and/or projected business operations and results of operations and financial condition.
In addition, uncertainty in the credit markets could reduce the availability of credit and impact our ability to meet our financing needs in the future. 46 Table of Contents Any deterioration in the macro-economic economy or financial services industry could lead to losses or defaults by our customers, partners or vendors, which in turn, could have a material adverse effect on our current and/or projected business operations and results of operations and financial condition.
If we are unable to achieve and maintain effective internal controls, our business, financial condition, results of operations, and cash flows could be materially adversely affected.
If we are unable to maintain effective internal controls, our business, financial condition, results of operations, and cash flows could be materially adversely affected. Our brand, products or solutions may not be favorably received by our customers.
Foreign currency fluctuations could have an adverse effect on our business and our planned use of financial instruments to limit our exposure to currency fluctuations could expose us to risks and financial losses that may adversely affect our financial condition, liquidity and results of operations.
Foreign currency fluctuations could have an adverse effect on our business and our planned use of financial instruments to limit our exposure to currency fluctuations could expose us to risks and financial losses that may adversely affect our financial condition, liquidity and results of operations. 44 Table of Contents We have business and operations outside the U.S. and derive a significant portion of our revenues from international operations.
To that end, we have information security procedures and other safeguards in place which we update in response to threat information from public and private sector sources and public announcements of attempted or successful breaches at other companies.
It is critical that the data processed by these systems remains secure. To that end, we have information security policies, practices and other safeguards in place which we update in response to threat information from public and private sector sources and public announcements of attempted or successful breaches at other companies.
If these companies were to reduce the number of R&D projects they conduct or outsource, whether through the inability to raise capital, reductions in reimbursement from governmental programs or commercial payers, industry trends, economic conditions or otherwise, we could be materially adversely affected.
If these companies were to reduce the number of R&D projects they conduct or outsource, whether through the inability to raise capital, reductions in reimbursement from governmental programs or commercial payers, industry trends, economic conditions or otherwise, or the failure for the industry to grow at the pace that has been projected, our business, financial condition, results of operations, and cash flows could be materially adversely affected.
In addition, we may incur costs in one currency related to our services or products for which we are paid in a different currency. To reduce our exposure to currency exchange fluctuations, we may from time to time enter into, for these or other purposes, financial swaps, or hedging arrangements, with various financial counterparties.
To reduce our exposure to currency exchange fluctuations, we may from time to time enter into, for these or other purposes, financial swaps, or hedging arrangements, with various financial counterparties.
To date, various jurisdictions have enacted, or are in the process of enacting, legislation on these rules, and the OECD continues to release additional guidance.
To date, various jurisdictions have enacted, or are in the process of enacting, legislation on these rules, and the OECD continues to release additional guidance. Certain countries in which we operate have adopted legislation, and other countries are in the process of introducing legislation to implement the minimum tax directive.
Sustained system failures or interruption of our systems in one or more of our operations could disrupt our ability to perform operations. A failure of the network or data-gathering procedures could impede the processing of data, delivery of services and day-to-day management of the business or could result in the corruption or loss of data.
A failure of the network or data-gathering procedures could impede the processing of data, delivery of services and day-to-day management of the business or could result in the corruption or loss of data.
The ultimate impact depends on the severity and duration of a pandemic, including the emergence and spread of variants, the continued availability and effectiveness of vaccines and treatments, and actions taken by governmental authorities and other third parties in response to the pandemic, each of which is uncertain, rapidly changing and difficult to predict.
Despite our efforts to manage the impacts of COVID-19 or other future outbreaks, including epidemics, pandemics or widespread public health crisis to the Company, the ultimate impacts depend on the severity and duration of a pandemic, including the emergence and spread of variants, the continued availability and effectiveness of vaccines and treatments, and actions taken by governmental authorities and other third parties in response to the pandemic, each of which is uncertain, rapidly changing and difficult to predict.
We cannot provide assurance that our internal control over financial reporting will be effective in the future or that a material weakness will not be discovered with respect to a prior period for which we had previously believed that internal controls were effective, and in the past (as discussed in Item 9A to this Annual Report on Form 10-K), we have identified material weaknesses in our internal controls, which have since been remediated.
We cannot provide assurance that our internal control over financial reporting will be effective in the future or that a material weakness will not be discovered with respect to a prior period for which we had previously believed that internal controls were effective.
Risks Relating to Regulatory and Compliance Matters Failure to comply with the regulations of pharmaceutical and medical device regulatory agencies, such as the FDA, the MHRA in the U.K., the EMA in the European Union, the NMPA in China, and the PMDA in Japan, could result in sanctions and/or remedies against us and have a material adverse effect on us.
If our reserves are not sufficient to cover these contingencies, such inadequacy could materially adversely affect our business, prospects, financial condition, operating results, and cash flows. 32 Table of Contents Risks Relating to Regulatory and Compliance Matters Failure to comply with the regulations of pharmaceutical and medical device regulatory agencies, such as the FDA, the MHRA in the U.K., the EMA in the European Union, the NMPA in China, and the PMDA in Japan, could result in sanctions and/or remedies against us and have a material adverse effect on us.
Such underpricing or significant cost overruns could have an adverse effect on our business, results of operations, financial condition and cash flows.
We bear the financial risk if these contracts are underpriced or if contract costs exceed estimates. Such underpricing or significant cost overruns could have an adverse effect on our business, results of operations, financial condition and cash flows.
Similarly, any potential gains from strategic transactions, such as cost savings or other operational efficiencies may also not be realized. Even if we are able to successfully integrate the operations of businesses that we may acquire in the future, we may not be able to realize the benefits that we expect from such acquisitions.
Even if we are able to successfully integrate the operations of businesses that we may acquire in the future, we may not be able to realize the benefits that we expect from such acquisitions.
Our operations and success depend on the efficient and uninterrupted operation of our IT systems. Despite measures we have taken to ensure the availability of our IT systems, the potential threat of physical or electronic break-ins, computer viruses or similar disruptions still exists.
Despite measures we have taken to ensure the availability of our IT systems, the potential threat of physical or electronic break-ins, computer viruses or similar disruptions still exists. Sustained system failures or interruption of our systems in one or more of our operations could disrupt our ability to perform operations.

… 117 more changes not shown on this page.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

5 edited+0 added−1 removed6 unchanged
Biggest changeBoth channels combined deliver the entire Cybersecurity Program, which includes key items such as: Cybersecurity risk management program, including, but not limited to, the following: • Risk assessment activities/analyses • Risk Committee oversight, documentation, escalation • Reporting of risk issues deemed material to our Audit Committee of the Board of Directors Global Cybersecurity services, including, but not limited to, the following: • 24x7 Security Operations and Incident Response • Identity Access Management support and governance • Security Architecture oversight and guidance • Governance, Risk and Compliance (“GRC”) functions such as third-party risk management, cybersecurity policies, training, and awareness • Annual and independent penetration testing and vulnerability scanning activities conducted by trusted third parties Third party risk management, including, but not limited to, the following: • Periodic third-party reviews and assessments measuring cybersecurity services capability and maturity.
Biggest changeBoth channels combined deliver the entire Cybersecurity Program, which includes key items such as: Cybersecurity risk management program, including, but not limited to, the following: • Risk assessment activities/analyses • Risk Committee oversight, documentation, escalation • Reporting of risk issues deemed material to our Audit Committee of the Board of Directors Global Cybersecurity services, including, but not limited to, the following: • 24x7 Security Operations and Incident Response • Identity Access Management support and governance • Security Architecture oversight and guidance • Governance, Risk and Compliance (“GRC”) functions such as third-party risk management, cybersecurity policies, training, and awareness • Independent penetration testing and vulnerability scanning activities conducted by trusted third parties External cybersecurity reviews and assessments performed by third-party risk management, including, but not limited to, the following: • Periodic reviews and assessments measuring cybersecurity services capability and maturity Cybersecurity risks are identified and documented by our cybersecurity team leadership, presented, and reviewed with the Fortrea Cybersecurity Risk Management Committee (the “Risk Committee”) as noted in the Governance of Cybersecurity section below.
The underlying controls utilized by these programs are based on industry recognized best practices and standards for cybersecurity and information technology which include the National Institute of Standards and Technology (NIST) Cybersecurity Framework (CSF) and the International Organization for Standardization (ISO) 27001:2022 Information Security Management Systems Requirements. 49 Table of Contents The Cybersecurity Risk Management Program is administered through two primary channels: (i) Fortrea led cybersecurity services and capabilities, and (ii) trusted third-party partners delivering cybersecurity services overseen by our Cybersecurity leadership team.
The underlying controls utilized by these programs are based on industry recognized best practices and standards for cybersecurity and information technology which include the National Institute of Standards and Technology (NIST) Cybersecurity Framework (CSF) and the International Organization for Standardization (ISO) 27001:2022 Information Security Management Systems Requirements. 51 Table of Contents The Cybersecurity Risk Management Program is administered through two primary channels: (i) Fortrea led cybersecurity services and capabilities, and (ii) trusted third-party partners delivering cybersecurity services overseen by our Cybersecurity leadership team.
We regularly review and update our cybersecurity insurance coverage to align with the evolving nature of cyber threats and industry standards. Fortrea will continue to leverage our internal audit department to provide independent reviews and recommendations to enhance Fortrea’s ability to manage risks effectively, as well as pursue external certifications.
We regularly review and update our cybersecurity insurance coverage to align with the evolving nature of cyber threats and industry standards. Fortrea leverages our internal audit department to provide independent reviews and recommendations to enhance Fortrea’s ability to manage risks effectively, as well as pursue external certifications.
The CISO is responsible for reporting on the state of cybersecurity to the Audit Committee on a quarterly basis, including those risks deemed material by the Risk Committee. 50 Table of Contents Our CISO has more than 25 years of experience building and leading cybersecurity programs for global healthcare and retail companies.
The CISO is responsible for reporting on the state of cybersecurity to the Audit Committee on a quarterly basis, including those risks deemed material by the Risk Committee. 52 Table of Contents Our CISO has more than 30 years of experience building and leading cybersecurity programs for global healthcare and retail companies.
Cybersecurity risks deemed material are then formally agreed upon as items to be reported by the Chief Information Security Officer (“CISO”) to the Audit Committee.
The Risk Committee, in conjunction with business stakeholders as required, evaluates risks which are presented to them to determine materiality. Cybersecurity risks deemed material are then formally agreed upon as items to be reported by the Chief Information Security Officer (“CISO”) to the Audit Committee.
Removed
Cybersecurity risks are identified and documented by our cybersecurity team leadership, presented, and reviewed with the Fortrea Cybersecurity Risk Management Committee (the “Risk Committee”) as noted in the Governance of Cybersecurity section below. The Risk Committee, in conjunction with business stakeholders as required, evaluates risks which are presented to them to determine materiality.

Item 2. Properties

Properties — owned and leased real estate

3 edited+0 added−0 removed2 unchanged
Biggest changeLocation Square Footage Nature of Occupancy Leeds, United Kingdom 71,577 Leased Bangalore, India 160,295 Leased Dallas, United States 58,806 Leased Daytona Beach, United States 163,410 Leased Durham, United States 39,822 Leased Madison, United States 48,609 Leased Tokyo, Japan 15,275 Leased Pune, India 41,229 Leased Shanghai, China 27,988 Leased All of our primary facilities have been built or improved for the purpose of providing clinical development services.
Biggest changeLocation Square Footage Nature of Occupancy Durham, United States 163,410 Leased Leeds, United Kingdom 68,286 Leased Dallas, United States 58,806 Leased Bangalore, India 56,092 Leased Madison, United States 48,609 Leased Pune, India 41,229 Leased Daytona Beach, United States 39,822 Leased Shanghai, China 27,988 Leased Tokyo, Japan 15,275 Leased All of our primary facilities have been built or improved for the purpose of providing clinical development services.
We lease approximately 900,000 square feet of general office and pharmacology clinic space with leases generally expiring through 2030. Our most significant leases are located in India, the United States, China, Japan, and the United Kingdom. The table below summarizes certain information as to principal operating and administrative facilities as of December 31, 2024.
Our most significant leases are located in India, the United States, China, Japan, and the United Kingdom. The table below summarizes certain information as to principal operating and administrative facilities as of December 31, 2025.
ITEM 2. PROPERTIES Our Company's corporate headquarters are located in Durham, North Carolina. As of December 31, 2024, all of our facilities are leased, and include 73 operating facilities located in 41 countries. Most of our facilities consist solely of office space.
ITEM 2. PROPERTIES Our Company's corporate headquarters are located in Durham, North Carolina. As of December 31, 2025, all of our facilities are leased, and include 62 operating facilities located in 42 countries. Most of our facilities consist solely of office space. We lease approximately 740,000 square feet of general office and pharmacology clinic space with leases expiring through 2042.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

3 edited+4 added−0 removed9 unchanged
Biggest changeFor the year ended December 31, 2024, the Company recorded legal expenses of $2.2 million related to the settlement of legal matters initiated prior to the spin. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 52 Table of Contents PART II
Biggest changeThere were no related reductions of revenue during the year ended December 31, 2025, as the agreed-upon amount had been satisfied. For the years ended December 31, 2025, 2024 and 2023, the Company recorded legal expenses of $1.9 million, $2.2 million and $— million, respectively, related to the settlement of legal matters initiated prior to the spin. ITEM 4.
When loss contingencies are not both probable and estimable, we do not establish reserves. 51 Table of Contents We believe that we are in compliance in all material respects with all statutes, regulations, and other requirements applicable to our clinical development services.
When loss contingencies are not both probable and estimable, we do not establish reserves. 53 Table of Contents We believe that we are in compliance in all material respects with all statutes, regulations, and other requirements applicable to our clinical development services.
Based on currently available information, we do not expect that any pending or threatened claim or legal action, either individually or in the aggregate, will have a material adverse effect on the business, our financial condition, results of operations, and/or our cash flows.
Based on currently available information, we do not expect that any pending or threatened claim or legal action, either individually or in the aggregate, will have a material adverse effect on the business, our financial condition, results of operations, and/or our cash flows. On June 2, 2025, a purported shareholder class action complaint captioned Lucas Deslande v.
Added
Fortrea Holdings Inc., et al. , No 1:25-sv-04630 was filed in the U.S. District Court for the Southern District of New York, naming the Company and certain of its current and former officers as defendants. The complaint alleges that defendants made omissions and misrepresentations to investors that they claim violated certain securities laws.
Added
The Construction Industry Laborers Pension Fund and City of Pontiac Reestablished General Employees Retirement System were appointed as lead plaintiffs on September 3, 2025, and the lead plaintiffs filed an amended complaint on November 10, 2025. The Company filed a motion to dismiss the amended complaint on January 28, 2026.
Added
The Company believes it has valid defenses to the claims alleged and intends to vigorously defend itself, but there is no guarantee that the Company will prevail. The case is at a very early stage and the Company is unable to estimate the possible loss or range of loss, if any, associated with this action.
Added
MINE SAFETY DISCLOSURES Not applicable. 54 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

4 edited+0 added−0 removed5 unchanged
Biggest changeITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information The Company's common stock, par value $0.001 per share, or Common Stock, trades on the Nasdaq Stock Market LLC (“Nasdaq”) under the symbol “FTRE.” Holders On February 27, 2025, there were approximately 1,628 stockholders of record as reported by our transfer agent.
Biggest changeITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information The Company's common stock, par value $0.001 per share, or Common Stock, trades on the Nasdaq Stock Market LLC (“Nasdaq”) under the symbol “FTRE.” Holders On February 24, 2026, there were approximately 1,584 stockholders of record as reported by our transfer agent.
Many of these companies are also used by our compensation committee for purposes of compensation benchmarking. The graph assumes that $100.00 was invested on July 1, 2023 (first day of trading activity) and all dividends and other distributions were reinvested through the last trading day of fiscal 2024. Past performance is not necessarily indicative of future performance.
Many of these companies are also used by our compensation committee for purposes of compensation benchmarking. The graph assumes that $100.00 was invested on July 1, 2023 (first day of trading activity) and all dividends and other distributions were reinvested through the last trading day of fiscal 2025. Past performance is not necessarily indicative of future performance.
Common Stock Performance The following graph compares the cumulative total stockholder return of Fortrea’s Common Stock with that of the Nasdaq Health Care Index, the S&P 1500 Health Care Index and our peer group (“Peer Group”) as set forth below, for the period from July 1, 2023 (the effective date of the registration of FTRE Common Stock) to December 31, 2024.
Common Stock Performance The following graph compares the cumulative total stockholder return of Fortrea’s Common Stock with that of the Nasdaq Health Care Index, the S&P 1500 Health Care Index and our peer group (“Peer Group”) as set forth below, for the period from July 1, 2023 (the effective date of the registration of FTRE Common Stock) to December 31, 2025.
They do not necessarily reflect management’s opinion that these indices and our Peer Group are an appropriate measure of the relative performance of the stock involved, and they are not intended to forecast or be indicative of possible future performance of our common stock. 53 Table of Contents ITEM 6. [ RESERVED ]
They do not necessarily reflect management’s opinion that these indices and our Peer Group are an appropriate measure of the relative performance of the stock involved, and they are not intended to forecast or be indicative of possible future performance of our common stock. 55 Table of Contents ITEM 6. [ RESERVED ]

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

62 edited+21 added−27 removed60 unchanged
Biggest changeRestructuring and Other Charges Years Ended December 31, 2024 2023 2022 2024/2023 change 2023/2022 change Restructuring and other charges $ 50.1 $ 21.2 $ 25.9 136.3 % (18.1 %) 58 Table of Contents During the years ended December 31, 2024, 2023 and 2022, the Company recorded net restructuring charges of $50.1, $21.2, and $25.9, respectively, which are reflected within Restructuring and other charges in the consolidated and combined statements of operations.
Biggest changeAmortization Expense Years Ended December 31, 2025 2024 change Amortization of intangibles and other assets $ 58.3 $ 60.8 (4.1) % The decrease in amortization of intangibles and other assets in 2025, as compared to 2024, was due to certain intangible assets reaching the end of their useful lives during the first quarter of 2025. 59 Table of Contents Restructuring and Other Charges Years Ended December 31, 2025 2024 change Restructuring and other charges $ 44.1 $ 50.1 (12.0 %) During the years ended December 31, 2025 and 2024, the Company recorded net restructuring charges of $44.1 and $50.1, respectively, which are reflected within Restructuring and other charges in the consolidated and combined statements of operations.
The Company assesses goodwill for impairment at least annually or whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. 64 Table of Contents The annual impairment test for goodwill includes an option to perform a qualitative assessment of whether it is more likely than not that a reporting unit's fair value is less than its carrying value.
The Company assesses goodwill for impairment at least annually or whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. 65 Table of Contents The annual impairment test for goodwill includes an option to perform a qualitative assessment of whether it is more likely than not that a reporting unit's fair value is less than its carrying value.
These contracts generally take the form of fixed-price, fee-for-service or software-as-a-service arrangements subject to pricing adjustments based on changes in scope. 62 Table of Contents Fixed-price contracts are typically recognized as revenue over time based on a proportional-performance basis, using either input or output methods that are specific to the service provided.
These contracts generally take the form of fixed-price, fee-for-service or software-as-a-service arrangements subject to pricing adjustments based on changes in scope. 63 Table of Contents Fixed-price contracts are typically recognized as revenue over time based on a proportional-performance basis, using either input or output methods that are specific to the service provided.
The analysis requires the Company to make significant estimates and, as such, changes in facts and circumstances could result in material changes in the allowance for credit losses. 63 Table of Contents Income Taxes Prior to the Spin, the Company was included in the combined U.S. federal, state, and foreign income tax returns of Labcorp, where eligible.
The analysis requires the Company to make significant estimates and, as such, changes in facts and circumstances could result in material changes in the allowance for credit losses. 64 Table of Contents Income Taxes Prior to the Spin, the Company was included in the combined U.S. federal, state, and foreign income tax returns of Labcorp, where eligible.
The Company is not currently under tax examination by the Internal Revenue Service (“IRS”) as a separate taxpayer. We are no longer subject to U.S. state income tax audits prior to 2018. There are ongoing foreign income tax audits in various jurisdictions ranging from 2018 - 2022.
The Company is not currently under tax examination by the Internal Revenue Service (“IRS”) as a separate taxpayer. We are no longer subject to U.S. state income tax audits prior to 2017. We are subject to ongoing foreign income tax audits as a separate taxpayer in various jurisdictions ranging from 2018 - 2022.
For more information about risks related to our backlog see “Risk Factors—Risks Relating to Our Business—Our backlog might not be indicative of our future revenues, and we might not realize all of the anticipated future revenue reflected in our backlog.” The following Management’s Discussion and Analysis of Financial Condition and Results of Operations is intended to help you understand our results of operations for the years ended December 31, 2024, 2023 and 2022.
For more information about risks related to our backlog see “Risk Factors—Risks Relating to Our Business—Our backlog might not be indicative of our future revenues, and we might not realize all of the anticipated future revenue reflected in our backlog.” The following Management’s Discussion and Analysis of Financial Condition and Results of Operations is intended to help you understand our results of operations for the years ended December 31, 2025 and 2024.
We adjust backlog for foreign currency fluctuations and exclude from backlog amounts that have been recognized as revenue in our statements of operations. Our backlog was $7.7 billion as of December 31, 2024.
We adjust backlog for foreign currency fluctuations and exclude from backlog amounts that have been recognized as revenue in our statements of operations. Our backlog was $7.7 billion as of December 31, 2025.
Prior to the spin-off (the “Spin” or “the Separation”), Fortrea existed and functioned as part of Labcorp Holdings Inc., which we refer to in this discussion and analysis as “Labcorp” or “Former Parent.” The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our audited consolidated and combined financial statements and corresponding notes and other financial information included elsewhere in this Annual Report on Form 10-K.
Prior to the spin-off which was completed on June 30, 2023 (the “Spin” or “the Separation”), Fortrea existed and functioned as part of Labcorp Holdings Inc., which we refer to in this discussion and analysis as “Labcorp” or “Former Parent.” The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our audited consolidated and combined financial statements and corresponding notes and other financial information included elsewhere in this Annual Report on Form 10-K.
We have also entered into a senior secured revolving credit facility, which consists of a five-year facility in the principal amount of up to $450.0 as further discussed in Note 11, “Debt” to our consolidated and combined financial statements.
We also have access to a senior secured revolving credit facility, which consists of a five-year facility in the principal amount of up to $450.0 as further discussed in Note 11, “Debt” to our consolidated and combined financial statements.
The Organization for Economic Cooperation and Development has introduced new global minimum tax regulations, known as Pillar Two, that came into effect beginning on January 1, 2024. We will continue to monitor this development and its potential impact on our future tax rate.
The Organization for Economic Co-operation and Development (the "OECD") has introduced new global minimum tax regulations, known as Pillar Two, that came into effect beginning on January 1, 2024. We will continue to monitor this development and its potential impact on our future tax rate.
Cash Flows for the Year’s Ended December 31, 2024, 2023 and 2022 The cash flows related to discontinued operations have not been segregated and are included in the consolidated and combined statements of cash flows and the discussion of the cash flow activity.
Cash Flows for the Year’s Ended December 31, 2025 and 2024 The cash flows related to discontinued operations have not been segregated and are included in the consolidated and combined statements of cash flows and the discussion of the cash flow activity.
Results of Continuing Operations for the years ended December 31, 2024, 2023 and 2022 The following tables present the financial measures that management considers to be the most significant indicators of the Company's performance.
Results of Continuing Operations for the years ended December 31, 2025 and 2024 The following tables present the financial measures that management considers to be the most significant indicators of the Company's performance.
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. 66 Table of Contents
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.
Although the Company believes that the current assumptions and estimates used in its goodwill analysis are reasonable, supportable, and appropriate, continued efforts to maintain or improve the performance of these businesses could be impacted by unfavorable or unforeseen changes which could impact the existing assumptions used in the impairment analysis.
Although we believe that the current assumptions and estimates used in our goodwill impairment analysis are reasonable, supportable, and appropriate, continued efforts to maintain or improve the performance of these businesses could be impacted by unfavorable or unforeseen changes which could impact the existing assumptions used in the impairment analysis.
Incremental Independent Public Company Expenses The consolidated and combined statements of operations include costs for certain centralized functions and programs provided and administered by Labcorp that were allocated to us in the periods presented prior to the Spin.
The consolidated and combined statements of operations include costs for certain centralized functions and programs provided and administered by Labcorp that were allocated to us in the periods presented prior to the Spin.
With what we believe is a distinctive market offering, Fortrea meets growing global demand for clinical development services. 54 Table of Contents Our team of approximately 15,500 employees conducts operations in approximately 100 countries and delivers comprehensive phase I – IV clinical trial management, clinical pharmacology, and consulting services for our customers.
With what we believe is a distinctive market offering, Fortrea meets growing global demand for clinical development services. 56 Table of Contents Our team of approximately 14,300 employees is able to conduct operations in approximately 100 countries and delivers comprehensive phase I – IV clinical trial management, clinical pharmacology, and consulting services for our customers.
A significant increase in the discount rate, decrease in the revenue and terminal growth rates, decreased operating margin or substantial reductions in end markets and volume assumptions could have a negative impact on the estimated fair value of the reporting units.
The Company will continue to monitor the financial performance of and assumptions for its reporting units. A significant increase in the discount rate, decrease in the revenue and terminal growth rates, decreased operating margin or substantial reductions in end markets and volume assumptions could have a negative impact on the estimated fair value of the reporting units.
The operations of the Enabling Services Segment have been classified as income or loss from discontinued operations on the consolidated and combined statements of operations for all periods presented. Backlog Our backlog consists of anticipated future revenue from business awards that either have not started, or that are in process and have not been completed.
As a result, the operations of the Enabling Services Segment have been classified as loss from discontinued operations on the consolidated and combined statements of operations. 57 Table of Contents Backlog Our backlog consists of anticipated future revenue from business awards that either have not started, or that are in process and have not been completed.
Cash and cash equivalents consist of highly liquid instruments, such as commercial paper, time deposits, and other money market instruments, which have maturities when purchased of three months or less. Cash Flows from Operating Activities During the year ended December 31, 2024, the Company's operations provided $262.8 of cash as compared to $168.4 in 2023, an increase of $94.4.
Cash and cash equivalents consist of highly liquid instruments, such as commercial paper, time deposits, and other money market instruments, which have maturities when purchased of three months or less. Cash Flows from Operating Activities During the year ended December 31, 2025, the Company's operations provided $113.5 of cash as compared to $262.8 in 2024, a decrease of $149.3.
Under the market-based fair value methodology, judgment is required in evaluating market multiples and recent transactions. Management believes that the assumptions used for its impairment tests are representative of those that would be used by market participants performing similar valuations of the reporting units. 65 Table of Contents Management performed its annual goodwill impairment testing as of October 1, 2024.
Under the market-based fair value methodology, judgment is required in evaluating market multiples and recent transactions. Management believes that the assumptions used for its impairment tests are representative of those that would be used by market participants performing similar valuations of the reporting units.
Various factors could reasonably be expected to unfavorably impact existing assumptions: primarily delays or lower demand resulting in lower contract bookings and the related delay or reduction in revenue, increases in customer termination activity or increases in operating costs.
Various factors could reasonably be expected to unfavorably impact existing assumptions: primarily delays in new customer bookings and the related delay in revenue from new customers, increases in customer termination activity or increases in operating costs.
For volume based contracts the contract value is entirely variable and revenue is recognized as the specific product or service is completed. For services billed based on time and materials, revenue is recognized using the right to invoice practical expedient. Software-as-a-service (“SaaS”) arrangements represent a single obligation to provide continuous access to a hosted software platform.
For services billed based on time and materials, revenue is recognized using the right to invoice practical expedient. Software-as-a-service (“SaaS”) arrangements represent a single obligation to provide continuous access to a hosted software platform.
Cash Flows from Investing Activities Net cash provided by investing activities for the year ended December 31, 2024 was $251.6 as compared to net cash used for investing activities of $(31.8) for the year ended December 31, 2023.
Cash Flows from Investing Activities Net cash provided by investing activities for the year ended December 31, 2025 was $14.4 as compared to $251.6 for the year ended December 31, 2024.
Depreciation Expense Years Ended December 31, 2024 2023 2022 2024/2023 change 2023/2022 change Depreciation expense $ 24.5 $ 28.6 $ 23.0 (14.3 %) 24.3 % The decrease in depreciation expense for 2024, as compared to 2023, was due to a decrease in depreciable property, plant and equipment, primarily IT assets.
Depreciation Expense Years Ended December 31, 2025 2024 change Depreciation expense $ 19.7 $ 24.5 (19.6 %) The decrease in depreciation expense for 2025, as compared to 2024, was due to a decrease in depreciable property, plant and equipment, primarily IT assets.
In summary the Company’s cash flows were as follows: Years ended December 31, 2024 2023 2022 Net cash provided by operating activities $ 262.8 $ 168.4 $ 82.7 Net cash provided by (used for) investing activities 251.6 (31.8) (54.0) Net cash used for financing activities (497.8) (140.8) (6.3) Effect of exchange rate on changes in cash and cash equivalents (6.7) 2.4 (6.6) Net change in cash and cash equivalents $ 9.9 $ (1.8) $ 15.8 Cash and Cash Equivalents Cash and cash equivalents at December 31, 2024, 2023 and 2022 totaled $118.5, $108.6 and $110.4, respectively.
In summary the Company’s cash flows were as follows: Years ended December 31, 2025 2024 Net cash provided by operating activities $ 113.5 $ 262.8 Net cash provided by (used for) investing activities 14.4 251.6 Net cash used for financing activities (76.3) (497.8) Effect of exchange rate on changes in cash and cash equivalents 4.5 (6.7) Net change in cash and cash equivalents $ 56.1 $ 9.9 Cash and Cash Equivalents Cash and cash equivalents at December 31, 2025 and 2024 totaled $174.6 and $118.5, respectively.
We may also access capital markets through the issuance of debt or equity, which we may use in connection with the acquisition of complementary businesses or other significant assets, or for other strategic opportunities, or general corporate purposes.
From time to time, we routinely evaluate strategic opportunities, including potential acquisitions, joint ventures or investments in complementary businesses. We may also access capital markets through the issuance of debt or equity, which we may use in connection with the acquisition of complementary businesses or other significant assets, for other strategic opportunities, or general corporate purposes.
The change in revenues was due to a decrease in organic revenues of 5.2%, partially offset by favorable foreign currency translation of 0.1%. The Company defines organic growth as the change in revenues excluding the year over year impact of acquisitions, divestitures and currency.
The change in revenues was due to an increase in organic revenues of 0.8%, and favorable foreign currency translation of 0.2%. The Company defines organic growth as the change in revenues excluding the year over year impact of acquisitions, divestitures and currency.
Direct Costs, Exclusive of Depreciation and Amortization Years Ended December 31, 2024 2023 2022 2024/2023 change 2023/2022 change Direct costs $ 2,162.2 $ 2,251.9 $ 2,112.6 (4.0) % 6.6 % Direct costs as a % of revenues 80.2 % 79.2 % 74.5 % Direct costs consist primarily of payroll and related benefits for project-related employees, reimbursable expenses (pass through costs), transition services agreement costs, information technology costs, and other direct costs.
Direct Costs, Exclusive of Depreciation and Amortization Years Ended December 31, 2025 2024 change Direct costs $ 2,219.6 $ 2,162.2 2.7 % Direct costs as a % of revenues 81.5 % 80.2 % 58 Table of Contents Direct costs consist primarily of payroll and related benefits for project-related employees, reimbursable expenses (pass through costs), transition services agreement costs, information technology costs, and other direct costs.
Selling, General and Administrative Expenses, Exclusive of Depreciation and Amortization Years Ended December 31, 2024 2023 2022 2024/2023 change 2023/2022 change Selling, general and administrative expenses $ 560.7 $ 448.1 $ 416.1 25.1 % 7.7 % Selling, general and administrative expenses consist primarily of administrative payroll and related benefit charges, transition services agreement costs, information technology costs, other facility charges, advertising and promotional expenses, and administrative travel.
Selling, General and Administrative Expenses, Exclusive of Depreciation and Amortization Years Ended December 31, 2025 2024 change Selling, general and administrative expenses $ 456.4 $ 560.7 (18.6 %) Selling, general and administrative expenses consist primarily of administrative payroll and related benefit charges, transition services agreement costs, information technology costs, other facility charges, advertising and promotional expenses, administrative travel and credit loss provisions.
Interest Expense Years Ended December 31, 2024 2023 2022 2024/2023 change 2023/2022 change Interest expense $ 123.8 $ 69.7 $ 0.2 77.6 % nm 1 The increase in interest expense for year ended December 31, 2024, as compared with the corresponding period in 2023, is primarily due to the higher overall debt balance, and the write-off of $12.2 of debt issuance costs associated with the pay down of debt in the quarter ended June 30, 2024, including the pay down of $70.2 on term loan A and $412.5 on term loan B.
Interest Expense Years Ended December 31, 2025 2024 change Interest expense $ 91.4 $ 123.8 (26.2) % The decrease in interest expense for year ended December 31, 2025, as compared with the corresponding period in 2024, is primarily due to the pay down of $70.2 on term loan A and $412.5 on term loan B, and the write-off of $12.2 of debt issuance costs associated with the pay down, which occurred during the six months ended June 30, 2024.
Such expenditures are expected to be funded by cash flow from operations. 61 Table of Contents Net cash used for investing activities for the year ended December 31, 2023 was $(31.8) as compared to net cash used for investing activities of $(54.0) for the year ended December 31, 2022.
Such expenditures are expected to be funded by cash flow from operations. 62 Table of Contents Cash Flows from Financing Activities Net cash used for financing activities for the year ended December 31, 2025 was $76.3 compared to cash used for financing activities of $497.8 for the year ended December 31, 2024.
Direct costs decreased 4.0% in 2024 as compared with 2023 and increased as a percentage of revenues to 80.2% in 2024 as compared to 79.2% in 2023.
Direct costs increased 2.7% in 2025, as compared with 2024, and increased as a percentage of revenues to 81.5% in 2025, as compared to 80.2% in 2024.
Under this program, Fortrea Inc. conveys receivable balances to a wholly-owned, bankruptcy-remote special purpose entity, which in turn, may sell receivables to a third-party financial institution in exchange for cash. We have sold $300.0 of receivables with net proceeds of $297.9 under the Receivables Facility.
On May 6, 2024, we entered into a three-year $300.0 accounts receivable securitization program (the “Receivables Facility”). Under this program, Fortrea Inc. conveys receivable balances to a wholly-owned, bankruptcy-remote special purpose entity, which in turn, may sell receivables to a third-party financial institution in exchange for cash.
The effective tax rate for the year ended December 31, 2024 was lower than the Company’s statutory tax rate primarily due to an increase in the valuation allowance, non-deductible employee benefits, foreign earnings taxed at rates higher than the U.S. statutory rate and U.S. tax on foreign income inclusions, partially offset by the U.S.
The effective tax rate for the year ended December 31, 2025 was lower than our statutory tax rate primarily due to goodwill impairment with no tax benefit, an increase in the valuation allowance, non-deductible employee benefits, withholding taxes on 2025 non-U.S. earnings that are not permanently reinvested and foreign earnings taxed at rates higher than the U.S. rate, partially offset by R&D credits and certain state tax benefits.
Revenues Years Ended December 31, 2024 2023 2022 2024/2023 change 2023/2022 change Revenues $ 2,696.4 $ 2,842.5 $ 2,837.0 (5.1) % 0.2 % 56 Table of Contents The Company’s revenues for the year ended December 31, 2024, were $2,696.4, a decrease of 5.1% over revenues of $2,842.5 in the corresponding period in 2023.
Revenues Years Ended December 31, 2025 2024 change Revenues $ 2,723.4 $ 2,696.4 1.0 % The Company’s revenues for the year ended December 31, 2025, were $2,723.4, an increase of 1.0% over revenues of $2,696.4 in the corresponding period in 2024.
Capital expenditures in 2024 were 0.9% of revenues, primarily in connection with projects to support growth in the Company's core businesses. The Company intends to continue to pursue selective investments in key therapeutic areas, business areas and geographies to drive growth and to improve efficiency of the Company's operations.
The Company intends to continue to pursue selective investments in key therapeutic areas, business areas and geographies to drive growth and to improve efficiency of the Company's operations.
This increase in cash flows from operating activities was primarily due to cash from accounts receivable, including the sale of receivables under the Receivables Facility, offset by the decrease in net income and higher use of cash for prepaid expenses.
This decrease in cash flows from operating activities was primarily due to decreases in cash received from accounts receivable, driven by the sale of receivables under the Receivables Facility during 2024, and an increase in cash used for accounts payable.
Estimated proceeds of $285.2, resulted in a loss on disposal of $19.6, subject to further adjustment based on customary purchase price adjustments. The decision to sell such assets relating to the Enabling Services Segment represented a strategic shift that had a significant effect on the Company's results and operations and assets and liabilities for the periods presented.
The decision to sell such assets relating to the Enabling Services Segment represented a strategic shift that had a significant effect on the Company's results and operations for the periods presented.
Foreign Exchange Gain (Loss) Years Ended December 31, 2024 2023 2022 2024/2023 change 2023/2022 change Foreign exchange gain (loss) $ (10.6) $ 0.3 $ (2.0) nm 115.0% The change in foreign exchange gain (loss) for the year ended December 31, 2024, as compared to the year ended December 31, 2023, changed primarily due to the relative weakening of the U.S.
Foreign Exchange (Loss) Gain Years Ended December 31, 2025 2024 change Foreign exchange (loss) gain $ (26.9) $ (10.6) (153.8 %) The change in foreign exchange (loss) gain for the year ended December 31, 2025, as compared to the year ended December 31, 2024, was primarily due to the fluctuations in the U.S.
Critical Accounting Policies and Estimates We have chosen accounting policies that management believes are appropriate to accurately and fairly report our operating results and financial position in conformity with U.S. GAAP. We apply these accounting policies in a consistent manner. The Company’s critical accounting policies arise in conjunction with revenue recognition, business combinations, income taxes, and goodwill and indefinite-lived assets.
We apply these accounting policies in a consistent manner. The Company’s critical accounting policies arise in conjunction with revenue recognition, business combinations, income taxes, goodwill, and indefinite-lived assets.
During the years ended December 31, 2024 and 2023, reductions of approximately $61 and $60, respectively, in revenue related to performance obligations partially satisfied in previous periods. During the year ended December 31, 2022, revenue of approximately $72 was recognized from performance obligations that were partially satisfied in a previous period.
During the years ended December 31, 2025 and 2024, reductions of approximately $16 and $61, respectively, were recognized in revenue related to performance obligations partially satisfied in previous periods. The 2025 adjustment was primarily driven by changes in estimated effort to complete customer contract obligations.
The Company elected to perform a quantitative assessment on its two reporting units, Clinical Development and Clinical Pharmacology. Based upon the results of the quantitative assessment, the Company concluded that the fair values of each of its reporting units were greater than the carrying values.
Based on the results of the qualitative assessment, the Company concluded that the fair values of each of its reporting units were greater than the carrying values, resulting in no impairment.
Income Tax Expense Years Ended December 31, 2024 2023 2022 Income tax (benefit) expense $ (3.5) $ 1.2 $ 41.1 Income tax (benefit) expense as a % of income before tax 1.3 % (3.8 %) 22.0 % For the year ended December 31, 2024, the Company’s effective tax rate was 1.3% compared to (3.8)% for the year ended December 31, 2023.
This decrease was partially offset by income related to services provided under Transition Services Agreements. 60 Table of Contents Income Tax Expense (Benefit) Years Ended December 31, 2025 2024 Income tax expense (benefit) $ 3.2 $ (3.5) Income tax expense (benefit) as a % of income before tax (0.3) % 1.3 % For the year ended December 31, 2025, our effective tax rate was (0.3)% compared to 1.3% for the year ended December 31, 2024.
Accordingly, there can be no assurance that the estimates and assumptions made for the purposes of the goodwill impairment and intangible asset analysis will prove to be accurate predictions of future performance. The Company will continue to monitor the financial performance of and assumptions for its reporting units.
Accordingly, there can be no assurance that the estimates and assumptions made for the purposes of the goodwill impairment analysis will prove to be accurate predictions of future performance. It is possible that our conclusions regarding impairment or recoverability of goodwill in any reporting unit could change in future periods.
Cash Flows from Financing Activities Net cash used for financing activities for the year ended December 31, 2024 was $497.8 compared to cash used for financing activities of $140.8 for the year ended December 31, 2023. Cash used for financing activities for December 31, 2024 was primarily related to principal payments on the term loan A and term loan B.
Cash used for financing activities for the year ended December 31, 2025 was primarily related to the repurchase of a portion of the 7.50% Senior secured notes due 2030 as described above . Cash used for financing activities for the year ended December 31, 2024 was primarily related to principal payments on the term loan A and term loan B.
The actual costs of services represented by these allocations may vary significantly from the amounts allocated to us in the accompanying financial statements. 55 Table of Contents Sale of Assets Relating to the Enabling Services Segment On March 9, 2024, the Company, together with its wholly-owned subsidiary, Fortrea Inc.
Sale of Assets Relating to the Enabling Services Segment On March 9, 2024, the Company, together with its wholly-owned subsidiary, Fortrea Inc.
The $283.4 increase in net cash provided by (used for) investing activities for the year ended December 31, 2024, was primarily due to $276.6 of net proceeds from the sale of the Enabling Services Segment and a year over year decrease in capital expenditures. Capital expenditures were $25.5 and $40.3 for the years ended December 31, 2024 and 2023, respectively.
The $237.2 decrease in net cash provided by investing activities for the year ended December 31, 2025, was primarily due to $276.6 of net proceeds from the sale of the Enabling Services Segment during the year ended December 31, 2024 offset by receipt of the first and second milestone payments related to the sale during the year ended December 31, 2025.
The $22.2 decrease in net cash used for investing activities was primarily due to a year over year decrease in capital expenditures. Capital expenditures were $40.3 and $54.4 for the years ended December 31, 2023 and 2022, respectively. Capital expenditures in 2023 were 1.4% of revenues, primarily in connection with projects to support growth in the Company's core businesses.
Capital expenditures were $25.2 and $25.5 for the years ended December 31, 2025 and 2024, respectively. Capital expenditures in 2025 and 2024 were 0.9% of revenues, primarily in connection with projects to support growth in the Company's core businesses.
For a period following the Separation, however, some of these functions have been provided by Labcorp under the Transition Services Agreement.
For a period following the Separation, however, some of these functions were provided by Labcorp under the Transition Services Agreement. The actual costs of services represented by these allocations may vary significantly from the amounts allocated to us in the accompanying financial statements.
We believe our existing cash and cash flows generated from operations, plus existing credit facilities, will be sufficient to cover the needs of our current and planned operations for at least the next 12 months. From time to time, we routinely evaluate strategic opportunities, including potential acquisitions, joint ventures or investments in complementary businesses.
The amended Receivables Facility is scheduled to terminate on February 23, 2029, unless terminated earlier pursuant to its terms. We believe our existing cash and cash flows generated from operations, plus existing credit facilities, will be sufficient to cover the needs of our current and planned operations for at least the next 12 months.
GAAP earnings of its foreign subsidiaries as these earnings will not be indefinitely reinvested outside the United States. Goodwill The Company has recorded $1,710.4 and $1,739.4 of goodwill as of December 31, 2024 and 2023, respectively.
Goodwill The Company has recorded $960.0 and $1,710.4 of goodwill as of December 31, 2025 and 2024, respectively.
Dollar against the British Pound and the Euro, and the allocation of hedging losses from the Former Parent hedging program for 2023. 1 Not meaningful 59 Table of Contents Other, net Years Ended December 31, 2024 2023 2022 2024/2023 change 2023/2022 change Other, Net $ 21.3 $ 6.9 $ 2.1 208.7 % 228.6 % The increase in other, net for the year ended December 31, 2024, as compared to year ended December 31, 2023, is primarily related to the recognition of a contingent consideration payment on a sale of a facility to a third party and income related to services provided under Transition Services Agreements.
Other, net Years Ended December 31, 2025 2024 change Other, net $ 7.9 $ 21.3 (62.9 %) The decrease in other, net for the year ended December 31, 2025, as compared to year ended December 31, 2024, was primarily related to a change in the estimated amount of the contingent consideration payment on a sale of a facility to a third-party.
Liquidity, Capital Resources and Financial Position The Company manages cash flow to fund and invest in operational growth, capital expenditures, and credit facility repayments. In connection with the Spin, we incurred indebtedness in an aggregate principal amount of $1,640.0, which consists of borrowings under senior secured term loan facilities and senior secured notes.
In connection with the Spin, we incurred indebtedness in an aggregate principal amount of $1,640.0, which consisted of borrowings under senior secured term loan facilities and senior secured notes. During the fourth quarter of 2025, we completed a tender offer to repurchase $75.7 of the Company’s outstanding 7.50% Senior secured notes due 2030.
The increase was primarily due to an increase in professional fees and other costs to support the exit of the Transition Services Agreement with Labcorp and personnel and information technology costs as a stand-alone company. 57 Table of Contents Selling, general and administrative expenses increased 7.7% in 2023 compared to 2022.
Selling, general and administrative expenses decreased 18.6% in 2025, as compared to 2024. The decrease was primarily due to lower transition service agreement and information technology costs. This decrease was partially offset by an increase in costs to support the establishment of our corporate functions as a stand-alone company as well as the reintroduction of variable compensation.
Information regarding the net transfer is provided in Note 2, “Summary of Significant Accounting Policies ” and Note 19, “Transactions with Former Parent ” to the audited consolidated and combined financial statements. Off-Balance Sheet Arrangements The Company does not have any off-balance sheet financing other than short term operating leases and letters of credit.
Off-Balance Sheet Arrangements The Company does not have any off-balance sheet financing other than short term operating leases and letters of credit. Critical Accounting Policies and Estimates We have chosen accounting policies that management believes are appropriate to accurately and fairly report our operating results and financial position in conformity with U.S. GAAP.
The determination of the amount of deferred tax liability that would be recorded for these earnings if they were not indefinitely reinvested is not practicable at this time. In 2024, management has recorded a deferred tax liability related to applicable foreign withholding taxes on approximately $95.3 of undistributed 2024 U.S.
In 2025, management has recorded a deferred tax liability related to applicable foreign withholding taxes on approximately $133.5 of undistributed U.S. GAAP earnings and profits of its foreign subsidiaries as the Company does not intend to reinvest these earnings outside the United States.
The increase in organic revenues was primarily driven by an increase in pass through costs offset by the mix and quantity of new business wins prior to the Spin and by the impact of a prior year FSP cancellation.
The 0.8% increase in organic revenues was primarily driven by an increase in revenue in our clinical pharmacology business, including higher pass through costs.
The Company concluded that the fair value was less than carrying value for one of its acquired technology related assets and recorded an asset impairment.
Based upon the results of the quantitative assessment as of March 31, 2025, the Company concluded that the fair value of the Clinical Development reporting unit was less than its carrying value and recorded a goodwill impairment of $488.8.
During the year ended December 31, 2024, we paid down $70.2 on term loan A, and $412.5 on term loan B, respectively. 60 Table of Contents On May 6, 2024, we entered into a three-year $300.0 accounts receivable securitization program (the “Receivables Facility”).
The tender offer complied with relevant provisions of the indenture governing the Notes relating to the Company’s requirement to repurchase a portion of the outstanding Notes following Fortrea’s sale of assets relating to its Enabling Services Segment. During the year ended December 31, 2024, we paid down $70.2 on term loan A, and $412.5 on term loan B, respectively.
Substantially all of these adjustments were associated with changes in scope or price for full service clinical studies. The gross and net amounts of revenue recognized solely from changes in estimates were not material. Fee-for-service contracts are typically priced based on transaction volume or time and materials.
The 2024 adjustment was driven by both changes in estimated effort to complete customer contract obligations and changes in scope or price. Fee-for-service contracts are typically priced based on transaction volume or time and materials. For volume based contracts the contract value is entirely variable, and revenue is recognized as the specific product or service is completed.
The effective tax rate for the year ended December 31, 2022 was higher than the Company’s statutory tax rate primarily due to foreign earnings taxed at rates higher than the U.S. statutory rate, U.S. taxes on foreign income inclusions and state taxes, partially offset by benefits for permanently non-deductible items, employee benefits, the U.S. R&D credit and certain state benefits.
The fluctuation in the effective tax rate for the year-to-date period was primarily due to goodwill impairment with no tax benefit, increased withholding taxes on 2025 non-U.S. earnings that are not permanently reinvested and increased non-deductible employee benefits offset by a reduction in the charge for valuation allowance.
The decrease in direct costs was primarily due to lower pass through costs as well as cost efficiencies gained from restructuring actions, which has better aligned our resource levels and geographic footprint with project requirements. These declines were partially offset by an increase in stock compensation and professional fees.
The increase in direct costs was primarily due to an increase in pass through costs, stock compensation and direct study related expenses, the reintroduction of variable compensation, and lower research and development tax credits. This increase was partially offset by lower headcount and personnel costs, including the benefit of restructuring actions.
Removed
Subsequent Event Credit Agreement Amendment On February 28, 2025, the Company entered into an amendment (the “Second Credit Amendment”) to modify a financial covenant to provide the Company with additional flexibility under the Company’s credit agreement dated as of June 30, 2023 and as amended on May 3, 2024 (the “Existing Credit Agreement”), by and among the Company, certain subsidiaries of the Company and Goldman Sachs Bank USA (as administrative agent and collateral agent), governing the Company’s existing senior credit facility.
Added
The first milestone payment in the amount of $20.0 was received in the first quarter of 2025. The second and final milestone payment in the amount of $25.0 was received in the third quarter of 2025. The Transaction resulted in a loss on disposal of $19.6.
Removed
The Second Credit Amendment increased the Company’s maximum quarterly Total Leverage Ratio (as defined in the Existing Credit Agreement) from 5.30:1.00 to 6.00:1.00 for the fiscal quarters ending on September 30, 2025 through June 30, 2026, decreasing to 5.75:1.00 for the fiscal quarter ending on September 30, 2026, further decreasing to 5.50:1.00 for the fiscal quarter ending on December 31, 2026, and reverting to 5.30:1.00 thereafter.
Added
For a comparison of our results of operations for the fiscal years ended December 31, 2024 and 2023, see “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, filed with the SEC on March 3, 2025.
Removed
In consideration of this adjustment, the Company paid a fee to consenting lenders and has agreed during the covenant adjustment period to certain additional limitations with respect to investments, restricted payments and liens.
Added
This increase was partially offset by lower clinical development revenues resulting primarily from the mix of complex and longer duration studies in our portfolio as well as lower functional service provider revenue, which more than offset revenue from net new business, including higher pass through costs as projects progress through their lifecycle.
Removed
As a result, the Company has classified the assets related to the Enabling Services Segment as assets from discontinued operations and liabilities from discontinued operations on the consolidated balance sheet as of December 31, 2023.
Added
Goodwill and Other Asset Impairments Years Ended December 31, 2025 2024 change Goodwill and other asset impairments $ 797.9 $ — nm 1 Goodwill impairment for 2025 was $797.9. The impairment was specific to the Clinical Development reporting unit. There were no goodwill and other asset impairments for the year 2024.
Removed
The 5.2% decrease in organic revenues was driven by decreased pass through costs and lower service revenues resulting from the lower quantity of new business wins prior to the Spin, along with the slower backlog burn rate and the mix of mature and longer duration studies in our portfolio.
Added
These charges are associated with Company actions to streamline its operations and eliminate redundant positions, including $3.2 and $4.8 of impairment of facility related assets during 2025 and 2024, respectively.
Removed
The decrease was partially offset by an increase in revenue from clinical pharmacology services. The Company’s revenues for the year ended December 31, 2023, were $2,842.5, an increase of 0.2% over revenues of $2,837.0 in the corresponding period in 2022. The increase in revenues was due to organic growth of 0.1% and favorable foreign currency translation of 0.1%.
Added
Dollar against the British Pound and the Euro.
Removed
Direct costs increased 6.6% in 2023 as compared with 2022 and increased as a percentage of revenues to 79.2% in 2023 as compared to 74.5% in 2022.
Added
In 2025, we did not accrue any top-up tax under the Pillar Two Framework as the effective tax rates for all our non-US jurisdictions exceeded 16%. On July 4, 2025, new legislation commonly referred to as the One Big Beautiful Bill Act of 2025 (the “Tax Act”) was signed into law.
Removed
The increase in direct costs was primarily due to higher pass through costs, transition services agreement costs and personnel costs partially offset by the removal of Former Parent corporate allocations and carve-out adjustments Fortrea received prior to the Spin.
Added
The Tax Act includes substantial changes to the U.S. federal tax code and broader fiscal policy for tax year 2025 and forward. We have recorded any applicable impacts to its tax provision for the year ended December 31, 2025, which were not significant.
Removed
Selling, general and administrative expenses increased 25.1% in 2024 compared to 2023.
Added
There are several provisions of the Tax Act that do not go into effect until future tax years but are also not expected to have a significant impact on tax positions as currently recorded. Liquidity, Capital Resources and Financial Position We manage cash flow to fund and invest in operational growth, capital expenditures, and credit facility repayments.

… 30 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

6 edited+0 added−0 removed9 unchanged
Biggest changeExcluding the impacts from any outstanding or future hedging transactions, a hypothetical change of 10% in average exchange rates used to translate all foreign currencies to USD would have impacted operating income (loss) for the years ended 2024, 2023 and 2022 by approximately $2.7, $(0.6) and $(3.6), respectively.
Biggest changeExcluding the impacts from any outstanding or future hedging transactions, a hypothetical change of 10% in average exchange rates used to translate all foreign currencies to USD would have impacted operating (loss) income for the years ended 2025 and 2024 by approximately $1.2 and $2.7, respectively.
We expect to regularly assess market risks and to establish policies and business practices to protect against the adverse effects of these exposures. See Note 11, “Debt” to the consolidated and combined financial statements. 67 Table of Contents
We expect to regularly assess market risks and to establish policies and business practices to protect against the adverse effects of these exposures. See Note 11, “Debt” to the consolidated and combined financial statements. 68 Table of Contents
We entered into a variable-to-fixed interest rate swap with respect to some of our floating rate debt in August 2023. At December 31, 2024, we had $572.0 outstanding related to our variable rate debt.
We entered into a variable-to-fixed interest rate swap with respect to some of our floating rate debt in August 2023. At December 31, 2025, we had $572.0 outstanding related to our variable rate debt.
Our financial statements are reported in USD and, accordingly, fluctuations in exchange rates will affect the translation of revenues and expenses denominated in foreign currencies into USD for purposes of reporting our consolidated and combined financial results. In the years ended December 31, 2024, 2023 and 2022, the most significant currency exchange rate exposure was the Euro.
Our financial statements are reported in USD and, accordingly, fluctuations in exchange rates will affect the translation of revenues and expenses denominated in foreign currencies into USD for purposes of reporting our consolidated and combined financial results. In the years ended December 31, 2025 and 2024, the most significant currency exchange rate exposure was the Euro.
Gross accumulated currency translation adjustments recorded as a separate component of stockholders’ equity were $(69.3), $59.3 and $(126.1) at December 31, 2024, 2023 and 2022, respectively. We do not have significant operations in countries in which the economy is considered to be highly inflationary. We earn revenue from service contracts over a period of several months to many years.
Gross accumulated currency translation adjustments recorded as a separate component of stockholders’ equity were $112.2 and $(69.3) at December 31, 2025 and 2024, respectively. We do not have significant operations in countries in which the economy is considered to be highly inflationary. We earn revenue from service contracts over a period of several months to many years.
Foreign Currency Exchange Rates Approximately 16.6%, 18.0% and 19.4% of our revenues for the years ended December 31, 2024, 2023 and 2022, respectively, were denominated in currencies other than the U.S. dollar (“USD”).
Foreign Currency Exchange Rates Approximately 15.5% and 16.6% of our revenues for the years ended December 31, 2025 and 2024, respectively, were denominated in currencies other than the U.S. dollar (“USD”).

Other FTRE 10-K year-over-year comparisons