Fortrea Holdings Inc.

Second quarter revenue was $678.2 million, down 4.5% year over year, primarily because of lower pass-through costs in clinical pharmacology and clinical development plus continued FSP headwinds. Adjusted EBITDA was $58.7 million versus $54.9 million in the prior-year quarter; adjusted basic EPS was $0.24 and adjusted diluted EPS was $0.23. Net loss was $13.2 million versus a net loss of $374.9 million a year ago, with the prior-year period affected by a noncash goodwill impairment charge. Bookings remained strong at $720.4 million, book-to-bill was 1.06x, trailing 12-month book-to-bill was 1.12x, and first-half 2026 net new business awards increased 19% year over year. For the full year 2026, Fortrea now expects revenue of $2.62 billion to $2.69 billion and adjusted EBITDA of $205 million to $220 million; management also expects positive free cash flow for the remainder of 2026 and for the full year.

Anshul Thakral framed the quarter as evidence that Fortrea is making steady progress on commercial, operational, and financial execution. He said demand is improving, particularly in biotech, and emphasized that the company’s strategy is focused on the 3 Rs: reach, relevance, and repeat. He also highlighted FIT and AI as long-term productivity tools, but stressed that their commercial impact will take time in a regulated industry. His tone was constructive and confident, while still describing the market and pricing environment as competitive.

Jill McConnell said Q2 exceeded expectations and highlighted ongoing improvement in adjusted EBITDA and bookings. She pointed to revenue of $678.2 million, adjusted EBITDA of $58.7 million, operating cash flow of $28.9 million, and free cash flow of $19.9 million. She also noted $18 million of new gross cost savings in the quarter, bringing year-to-date gross savings to $34 million, and $10 million of new net cost savings, bringing year-to-date net savings to $19 million. She said net accounts receivable and unbilled services were $654.4 million, customer DSOs were 20 days, liquidity was above $0.5 billion, and the company has paid down about 35% of its original debt since the spin.

Analysts focused on how long FSP drag may persist, what is driving margin improvement, and whether second-half margins should step up or moderate. Management said margin gains are coming from cost actions, higher-margin backlog burning into revenue, and tighter operational discipline, while also saying Q3 and Q4 should be viewed as relatively stable rather than sharply different. On competition and pricing, Thakral said the industry remains very competitive but pricing has returned to a more rational environment after earlier FSP irrationality. On AI, he said most RFPs now ask about AI capabilities and Fortrea’s roadmap is a positive differentiator, but it is too early for AI to be a primary driver of wins or major operating leverage.