Fortrea Holdings Inc. reported fourth‑quarter 2025 revenue of $660.5 million, down 5.2% year‑over‑year and 5.5% quarter‑over‑quarter, and a full‑year revenue of $2.723 billion, a modest 1% increase from $2.696 billion in 2024. Adjusted EBITDA for the quarter was $54.0 million, slightly lower than the $56.0 million reported in Q4 2024, while full‑year adjusted EBITDA reached $189.9 million, matching the guidance range of $190 million to $220 million. The company’s book‑to‑bill ratio was 1.14× in the quarter and 1.02× year‑to‑date, supporting a backlog of $7.728 billion as of December 31, 2025.
The earnings miss was driven by a $0.09 adjusted diluted EPS, falling short of the consensus estimate of $0.16 by 83%. Revenue also missed the consensus estimate of $855 million by 22.75%. Management attributed the shortfall to lower pass‑through costs in its clinical pharmacology and development businesses and to headwinds in the FSP segment. The reintroduction of variable compensation contributed to a decline in adjusted EBITDA versus the prior year quarter, although cost‑saving initiatives partially offset this impact.
Fortrea’s full‑year GAAP net loss was heavily impacted by a $797.9 million goodwill impairment recognized in the first half of 2025. Despite the loss, the company delivered $153 million in gross cost savings and $93 million in net savings for the year, exceeding the $150 million gross and $90 million net targets set by management. These savings have helped to stabilize margins and support the company’s balance‑sheet strengthening strategy, which includes disciplined capital allocation and debt paydown.
Management guided for full‑year 2026 revenue of $2.550 billion to $2.650 billion and adjusted EBITDA of $190 million to $220 million, a range that aligns with the 2025 guidance. “Adjusted EBITDA of $189.9 million, in line with FY guidance,” said a company spokesperson. “Delivered >$150 million gross C >$90 million net FY savings, exceeding targets provided.” The guidance reflects confidence in continued operational improvement and margin expansion, even as the company navigates short‑term revenue headwinds.
Fortrea’s backlog remains robust, with the top ten customers accounting for 56.8% of revenue. The company’s focus on strengthening its balance sheet, coupled with a healthy backlog and ongoing cost‑saving initiatives, positions it to capitalize on early signs of market improvement. However, the revenue decline and EPS miss underscore the need for continued execution on its transformation strategy and careful management of variable compensation costs.
The quarter’s performance also highlights a 5.5% decline in revenue compared to Q4 2024’s $697.0 million, and a 3.7% drop in adjusted EBITDA from $56.0 million to $54.0 million. These figures illustrate the company’s current challenges in converting backlog into profitable growth, while the guidance signals management’s belief that the company can rebound as market conditions improve.
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