Key Highlights

  • Adjusted diluted EPS of USD 0.28 beat the consensus estimate of USD 0.22, while GAAP diluted EPS was USD 0.01.
  • Revenue of USD 691.5 million topped the consensus estimate of USD 671.57 million but fell from USD 701.3 million.
  • Backlog was cut by USD 558 million to USD 7,316 million, while the book-to-bill ratio held at 1.12x.
  • Narrowed 2026 guidance lifted midpoints: Revenue of USD 2,665 to 2,690 million, adjusted EBITDA of USD 210 to 218 million.

Fortrea Holdings Inc. (NASDAQ:FTRE) reported third quarter 2026 adjusted Diluted Earnings per Share of USD 0.28, above a consensus estimate of USD 0.22 and up from USD 0.12 a year earlier. Revenue of USD 691.5 million exceeded a consensus estimate of USD 671.57 million, though it was 1.4% below the USD 701.3 million of the prior year quarter and 2.0% above the second quarter. GAAP Net Income was USD 0.6 million, or USD 0.01 per diluted share, compared with a net loss of USD 15.9 million, or USD 0.17 per share, a year ago.

Why the Backlog Was Reduced

During the quarter the company reviewed the contracts in its backlog and lowered the balance by USD 558 million to reflect the cumulative effect of estimated scope and study delivery requirements, including trials that have become inactive. Backlog, as adjusted, stood at USD 7,316 million. The chief financial officer said the change does not affect reported financial results, 2026 guidance or near term revenue planning, and was not part of the reported net book-to-bill figure. Cancellations in the period were within normal bounds albeit slightly elevated.

Net new Business awards were USD 773 million, a book-to-bill ratio of 1.12x compared with 1.06x in the second quarter and 1.13x in the third quarter of 2025. Revenue represented backlog conversion of 8.9%, a 30 basis point acceleration from the second quarter.

Margins, Cash Flow and Guidance

Adjusted EBITDA was USD 58.0 million versus USD 50.7 million, a 14.4% increase, and the adjusted Margin was 8.4% compared with 7.2% a year earlier. Chief Executive Officer Anshul Thakral described the quarter as continued progress on a return to growth strategy. Cash provided by operations was USD 60.8 million and free cash flow was USD 52.5 million, with net Days Sales Outstanding at 15 days versus 33 days a year earlier.

Gross Debt was USD 1.066 billion and net debt was USD 845.7 million, a net Leverage Ratio of 3.9x that improved by 1.4 turns over twelve months. Available Liquidity was about USD 668 million with no revolver borrowings. The company narrowed 2026 guidance to revenue of USD 2,665 million to USD 2,690 million and adjusted EBITDA of USD 210 million to USD 218 million, raising both midpoints.

Items to Follow After the Reset

The October 19 closing of the Early Phase Services Acquisition from Worldwide Clinical Trials adds clinical pharmacology capacity, takes the bed count above 570 and affects net leverage by about 0.25 turn, according to the chief financial officer. Backlog conversion of 8.9%, the 1.12x trailing twelve month book-to-bill ratio and net leverage of 3.9x are measurable markers. Management also highlighted a mid teens adjusted EBITDA margin objective, positive fourth quarter free cash flow, and a fireside chat at the Jefferies Global Healthcare Conference in London on November 17.