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Tuesday, May 28, 2024

Fortrea’s earnings miss clips stock by nearly 15%

Durham-based Fortrea Holdings, which was spun off last year from LabCorp, saw its stock price fall by nearly 15% on Monday after its earnings results badly missed expectations due to some business not materializing as soon as expected.

The contract research organization reported revenue of $662.1 million, well below the consensus analyst estimate of $754.6 million.

It reported a net loss of 4 cents per share, compared to expectations of a 1 cent per share. profit.

“The demand for our services is good,” said CEO Tom Pike in a statement. “Our business operations are sound even as we continue to knock down challenges related to the unique circumstances of our 2023 spin out and before.”

Fortrea closed Monday at $28.11, down $4.92, or 14.9%. Earlier in the day, the shares traded as low as $26.63. Shares opened last June at about $30 after the LabCorp spinoff, and have traded between $25 and 41 over the past year.

Pike is a former CEO of Durham-based Quintiles who helped create the merger of that company and IMS Health in 2016, creating IQVIA. He was named CEO of Fortrea in January 2023.

The company revised its 2024 financial projects downward. For the full year 2024, the company is now targeting revenues in the range of $2.78 billion and $2.85 billion. The previous estimate was between $3.14 billion and $3.21 billion.

Its order backlog at the end of the first quarter was $7.4 billion, and its book-to-bill ratio for the quarter was 1.11x, less than its 1.2x target.

In March, the company agreed to sell the Endpoint Clinical and Fortrea Patient Access businesses to Arsenal Capital Partners for $345 million. Fortrea said that transaction is still on track.

The company has more than 18,000 employees working in more than 90 different countries.

 

Chris Roush
Chris Roush
Chris Roush is executive editor of Business North Carolina. He can be reached at croush@businessnc.com.

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