Fortrea Holdings Inc.

On September 25, 2024, the investment bank Jefferies downgraded Fortrea from buy to hold, citing perceived weaknesses in the Company’s business model as a contract research organization (“CRO”) amid pressure on biotechnology funding and that the cost savings Fortrea expects to achieve by existing transition services agreements (“TSAs”) are “not as material as one might think.”

On this news, Fortrea’s stock price fell $2.73, or 12.3%, to close at $19.48 per share on September 25, 2024, thereby injuring investors.

Then, on December 6, 2024, Baird Equity Research stated that “[g]iven our ongoing concerns around the sector, [Fortrea’s] choppy history post spin, and lack of clarity on the abrupt communications course change, we cannot recommend an actionable investment (buy or sell)[.]”

On this news, Fortrea’s stock price fell $1.90, or 8.1%, to close at $21.67 per share on December 6, 2024.

Then, on March 3, 2025, before the market opened, Fortrea announced financial results for the fourth quarter and full year 2024, revealing the Company had missed its previously announced guidance for revenue and adjusted EBITDA for the full year 2024. The Company’s financial results revealed full year adjusted EBITDA of $202.5 million, well below the Company’s previously announced guidance of $220 million to $240 million. The Company also revealed full year revenue of $2.696 billion, which missed previously announced guidance of $2.7 billion to $2.725 billion. The Company further revealed financial guidance for the full year 2025, which projected declines in revenue and adjusted EBITDA, with revenues of $2.450 billion to $2.550 billion and adjusted EBITDA in the range of $170 million to $200 million. Thomas Pike (“Pike”), the Company’s then-Chief Executive Officer (“CEO”), explained that “full-service work for projects from the pre-spin period,” “have less revenue and less profitability” and “post-spin work is not coming on fast enough to offset the pre-spin contract economics.” Pike further revealed “this older versus newer mix issue will continue to negatively impact our financial performance during 2025.”

On this news, Fortrea shares fell $3.47, or 25.1%, to close at $10.38 per share on March 3, 2025, thereby injuring investors further.

The complaint filed in this class action alleges that throughout the Class Period, Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, Defendants failed to disclose to investors that: (1) Fortrea overestimated the amount of revenue the Pre-Spin Projects were likely to contribute to the Company’s 2025 earnings; (2) Fortrea overstated the cost savings it would likely achieve by exiting the TSAs; (3) as a result, the Company’s previously announced EBITDA targets for 2025 were inflated; (4) accordingly, the viability of the Company’s post-Spin-Off business model, as well as its business and/or financial prospects, were overstated; and (5) as a result, Defendants’ positive statements about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis at all relevant times.