FTRE

MKT CAP $2.2BP/E —DIV YIELD —FCF YIELD 8.72%REV TTM $2.7B −2.1%NET INCOME −$85.2MNET DEBT $885.7M52W 8.87 – 24.06SEC XBRL · TTM TO Invalid Date

How FTRE rewrote its risk factors

10-K ITEM 1A · FY2024 → FY2025

Text kept

61%

of sentences unchanged

Added

118

new sentences

Dropped

122

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Length

−60

words, now 17,451

New in FY2025

These risks relate to, among other things, our business and the industry in which we operate or to the securities markets generally and ownership of our common stock.
Risks Relating to Our Business • Our business, financial condition, results of operations, or cash flows may be materially adversely affected if we do not generate a large number of net new business awards, or if net new business awards are delayed, terminated, reduced in scope, or fail to go to contract. • If we are unable to contract with suitable investigators and recruit and enroll patients for clinical trials, our business might suffer. • Our international operations could subject us to additional risks and expenses that could adversely impact our business or results of operations. • Our customer or therapeutic area concentrations may have a material adverse effect on our business, financial condition, results of operations or cash flows. • Our customers may experience insufficient funding to complete their clinical trials. • Our backlog might not be indicative of our future revenues, and we might not realize all of the anticipated future revenue reflected in our backlog. • An inability to attract and retain experienced and qualified personnel, including key management personnel and increased personnel costs, could adversely affect our business. • We depend on third parties to provide services critical to our business and depend on them to comply with applicable laws and regulations. • Our business is dependent upon access to data and an inability to access the necessary data from our data partners on commercially reasonable terms or at all could adversely affect our business. • If we are unable to maintain effective internal controls, our business, financial condition, results of operations, and cash flows could be materially adversely affected. • Our effective income tax rate may fluctuate, which could adversely affect our operations.
Risks Relating to Regulatory and Compliance Matters • Failure to comply with the regulations of pharmaceutical and medical device regulatory agencies could result in sanctions and/or remedies against us and have a material adverse effect on us. • Changes in government regulation or in practices relating to the pharmaceutical, biotechnology, or medical device industries could decrease the need for certain services that we provide. • Failure to comply with privacy and security laws and regulations could result in fines, penalties and damage to our reputation with customers and have a material adverse effect upon our business. • Failure to comply with federal, state, and foreign laws and regulations could result in substantial penalties and our business, financial condition, results of operations, cash flows, and prospects could be adversely affected. • Changes in and uncertainty regarding U.S. regulations, government policies, government funding decisions, trade policies or tariffs could have a material adverse effect upon our business.
Risks Relating to Strategic Transactions • A failure to identify and successfully close and integrate strategic acquisitions or close other strategic transactions could have a material adverse effect on our business objectives and our revenues and profitability.
Risks Relating to Technology and Cybersecurity • Failure to maintain the security of customer-related information or compliance with security requirements could damage our reputation with customers, cause us to incur substantial additional costs and become subject to litigation and enforcement actions. • Failure in our IT systems, including hardware and software failures, delays in the operation of computer and communications systems, and the failure to implement new systems or system enhancements may harm us. • Security breaches and unauthorized access to our data or our customers’ data could harm our reputation and adversely affect our business. • We use internally developed and licensed technology systems to manage various aspects of clinical trials, and failures of these systems, including errors in design, programming or validation, could adversely affect our business. • Failure to keep pace with rapid technological changes could adversely affect our business. • Issues in the development, deployment and/or use of AI may result in reputational harm, liability, regulatory action or adversely affect our business, financial condition or results of operations.
Risks Relating to Legal Matters • Failure to comply with the contractual requirements of our agreements with customers or third-party service providers could result in claims and/or remedies against us and have a material adverse effect on us and our reputation could be harmed. • Contract research services create liability risk. • We face risks arising from the restructuring of our operations. • Failure to obtain, maintain and enforce intellectual property rights could adversely affect us. • We are subject to continuing contingent liabilities as a result of the Spin which could materially and adversely affect our business, financial condition, results of operations, and cash flows. • Labcorp has indemnified us for certain liabilities, which may be insufficient to insure us against the full amount of such liabilities, or Labcorp's ability to satisfy its indemnification obligations could be impaired in the future.
Risks Relating to Financial Matters • We bear financial risk for contracts that, including for reasons beyond our control, may be underpriced, subject to cost overruns, delayed or terminated or reduced in scope. • Our revenues depend on the pharmaceutical, biotechnology, and medical device industries and the expenditures they make in R&D; any reductions or delays could materially and adversely affect our business, financial condition, results of operations, and cash flows. • Foreign currency fluctuations and our planned use of financial instruments to limit our exposure to currency fluctuations could expose us to risks and financial losses that may adversely affect our financial condition, liquidity and results of operations. • Costs associated with our debt and our debt covenants may limit cash flow available to invest in our business. • We may not be able to access the capital and credit markets on terms that are favorable to us or at all.
Risks Relating to Ownership of Our Common Stock • Our stockholder rights agreement could discourage, delay, or prevent a change in control over us and may affect the trading price of our common stock. • Anti-takeover provisions in our charter documents and Delaware law could discourage, delay or prevent a change in control or impact the trading price of our common stock.
Our contracts may be delayed or terminated by our customers or reduced in scope for a variety of reasons beyond our control, including, but not limited to: • decisions to forego or terminate a particular trial; • budgetary limits, unanticipated trial costs or changing priorities; • actions by governmental and/or regulatory authorities; • production problems resulting in shortages of the candidate drug being tested; • failure of products being tested to satisfy safety requirements or efficacy criteria; • unexpected or undesired clinical results for products; • insufficient patient enrollment in a trial, competition for patients and/or insufficient principal investigator recruitment; • the customer’s decision to terminate or scale back the development or commercialization of a product or to end a particular project; • shift of business to a competitor or internal resources; or • product withdrawal following market launch.
For the year ended December 31, 2025, our top ten customers based on revenue accounted for approximately 57% of our consolidated revenue and our top ten customers based on backlog accounted for approximately 54% of our total backlog.
For the year ended December 31, 2025, one customer accounted for approximately 18.1% of revenue.
Our backlog as of December 31, 2025 was $7.7 billion.
Access to data is foundational to any CRO.
In addition to leveraging our in-house data, Fortrea maintains relationships with a broad range of data providers that provide geographic, therapeutic and site datasets, to support our services.
With the continual evolution of data offerings and providers, we evaluate existing and new sources on an ongoing basis.
An inability to purchase or access the necessary data from third parties now, or in the future, on commercially reasonable terms or at all, could have a material adverse effect on our business, financial condition and results of operations.
If we are unable to maintain effective internal controls, our business, financial condition, results of operations, and cash flows could be materially adversely affected.
In addition, our independent registered public accounting firm is required to express an opinion as to the effectiveness of our internal controls over financial reporting.
Epidemics, pandemics, or widespread public health crisis and associated economic repercussions, may have an adverse impact on our business and results of operations.
Epidemics, pandemics, or widespread public health crises, and associated economic repercussions, had a significant impact on our business and operations in the case of COVID-19 and may have an adverse impact our business and operations in the future.
Such public health crises may have an adverse impact on our business and results of operations in a number of ways, including, but not limited to, the implementation of travel restrictions from U.S. and foreign governments; the shutdown of businesses in countries in which we operate; delays or challenges in patient enrollment and new clinical trial start-up; challenges in clinical site initiation due to difficulties in recruiting clinical site investigators and clinical site staff shortages; and the interruption of key clinical trial activities such as clinical trial site monitoring.
These adverse effects could impact study participants and clinical sites and limit our ability to efficiently provide clinical trial services.
In the past, we have been able to work with our customers to develop solutions to limit disruption to clinical trials while following required regulatory guidelines and maintaining quality to ensure the health and well-being of study participants, including alternative assessment methods such as virtual monitoring visits, but if we are unable to do so in the future, that could have an adverse impact on our business.
Despite our efforts to manage the impacts of COVID-19 or other future outbreaks, including epidemics, pandemics or widespread public health crisis to the Company, the ultimate impacts depend on the severity and duration of a pandemic, including the emergence and spread of variants, the continued availability and effectiveness of vaccines and treatments, and actions taken by governmental authorities and other third parties in response to the pandemic, each of which is uncertain, rapidly changing and difficult to predict.
Our effective tax rate and deferred income taxes could be impacted by changes in tax legislation globally, and due to economic and political conditions, tax rates in various jurisdictions may be subject to significant change.
We have cumulatively accrued $10.6 million for income taxes on a portion of the undistributed earnings of our non-U.S. subsidiaries that are not considered permanently reinvested.
Our future effective tax rates could be impacted by changes in the mix of earnings in countries with differing statutory tax rates, changes in the assessment regarding the realization of deferred tax assets, or changes in tax laws and regulations or their interpretation.
Certain countries in which we operate have adopted legislation, and other countries are in the process of introducing legislation to implement the minimum tax directive.
There was no additional top-up tax due under the Pillar Two Framework in 2025.
On July 4, 2025, new legislation commonly referred to as the One Big Beautiful Bill Act of 2025 (the “Tax Act”) was signed into law.
The Tax Act includes substantial changes to the U.S. federal tax code and broader fiscal policy for tax year 2025 and forward.
The Company has recorded any applicable impacts to its tax provision for the year ended December 31, 2025, which were not significant.
There are several provisions of the Tax Act that do not go into effect until future tax years but are also not expected to have a significant impact on tax positions as currently recorded.
Failure to comply with national, state, local or international environmental, health and safety (“EH&S”) laws and regulations, could result in fines and penalties and loss of licensure, and have a material adverse effect upon our business.
The implementation of new or existing EH&S laws, regulations, and industry and customer standards, and any changes to them, which we cannot predict and which have historically become more stringent over time, could increase our costs and require us to reassess our business priorities.
Administrative decisions, legal developments, or other governmental or judicial actions may influence the interpretation or enforcement of EH&S laws, regulations, and industry standards, and may thereby increase compliance or other costs, in the jurisdictions in which we operate.
Any of these risks or costs, and our ability to assess, prepare for, and fully comply with future EH&S laws or regulations, could have a material adverse effect on our business results, cash flows, financial condition, or prospects.
The current U.S. presidential administration may further impact the healthcare reform measures implemented under previous administrations and could impose other reform efforts, which could adversely affect our business.
Data (Use and Access) Act 2025 (“DUA”) included further obligations for companies and imposes increased penalties for marketing and cookie non-compliance of up to £17.5 million or 4% of global annual turnover.
We have established processes and frameworks to manage compliance with the GDPR and DUA.

and 78 more.

Gone since FY2024

Some of these risks relate principally to our Spin from Labcorp, while others relate principally to our business and the industry in which we operate or to the securities markets generally and ownership of our common stock.
Risks Relating to Our Business • Our business, financial condition, results of operations, or cash flows may be materially adversely affected if we do not generate a large number of net new business awards, or if net new business awards are delayed, terminated, reduced in scope, or fail to go to contract. • If we are unable to contract with suitable investigators and recruit and enroll patients for clinical trials, our business might suffer. • Our international operations could subject us to additional risks and expenses that could adversely impact our business or results of operations. • Our customer or therapeutic area concentrations may have a material adverse effect on our business, financial condition, results of operations or cash flows. • Our customers may experience insufficient funding to complete their clinical trials. • Our backlog might not be indicative of our future revenues, and we might not realize all of the anticipated future revenue reflected in our backlog. • We operate in a highly competitive industry. • An inability to attract and retain experienced and qualified personnel, including key management personnel and increased personnel costs, could adversely affect our business. • We depend on third parties to provide services critical to our business. • Our business is dependent upon access to data and an inability to access the necessary data from our data partners on commercially reasonable terms or at all could adversely affect our business. • If we are unable to achieve and maintain effective internal controls, our business, financial condition, results of operations, and cash flows could be materially adversely affected. • Our effective income tax rate may fluctuate, which could adversely affect our operations.
Risks Relating to Regulatory and Compliance Matters • Failure to comply with the regulations of pharmaceutical and medical device regulatory agencies could result in sanctions and/or remedies against us and have a material adverse effect on us. • Changes in government regulation or in practices relating to the pharmaceutical, biotechnology, or medical device industries could decrease the need for certain services that we provide. • Failure to comply with privacy and security laws and regulations could result in fines, penalties and damage to our reputation with customers and have a material adverse effect upon our business. • Failure to comply with federal, state, and foreign laws and regulations could result in substantial penalties and our business, financial condition, results of operations, cash flows, and prospects could be adversely affected.
Risks Relating to Strategic Transactions • A failure to identify and successfully close strategic transactions could have a material adverse effect on our business objectives and our revenues and profitability.
Risks Relating to Technology and Cybersecurity • Failure to maintain the security of customer-related information or compliance with security requirements could damage our reputation with customers, cause us to incur substantial additional costs and become subject to litigation and enforcement actions. • Failure in our IT systems, including hardware and software failures, delays in the operation of computer and communications systems, and the failure to implement new systems or system enhancements may harm us. • Security breaches and unauthorized access to our data or our customers’ data could harm our reputation and adversely affect our business. • We use internally developed and licensed technology systems to manage various aspects of clinical trials, and failures of these systems, including errors in design, programming or validation, could adversely affect our business. • Failure to keep pace with rapid technological changes, including in the development or use of artificial intelligence, could adversely affect our business.
Risks Relating to Legal Matters • Failure to comply with the contractual requirements of our agreements with customers or third-party service providers could result in claims and/or remedies against us and have a material adverse effect on us and our reputation could be harmed. • Contract research services create liability risk. • We face risks arising from the restructuring of our operations. • Failure to obtain, maintain and enforce intellectual property rights could adversely affect us. • Changes in tax rates, laws or regulations or exposure to additional tax liabilities may adversely impact our financial results. • We are subject to continuing contingent liabilities as a result of the Spin which could materially and adversely affect our business, financial condition, results of operations, and cash flows. • Labcorp has indemnified us for certain liabilities, which may be insufficient to insure us against the full amount of such liabilities, or Labcorp's ability to satisfy its indemnification obligations could be impaired in the future.
Risks Relating to Financial Matters • We bear financial risk for contracts that, including for reasons beyond our control, may be underpriced, subject to cost overruns, delayed or terminated or reduced in scope. • Our revenues depend on the pharmaceutical, biotechnology, and medical device industries. • Foreign currency fluctuations could have an adverse effect on our business. • Costs associated with our debt and debt covenants may limit cash flow available to invest in our business. • We may not be able to access the capital and credit markets on terms that are favorable or at all.
Risks Relating to General Matters • We are subject to a wide range of factors that impact global businesses like ours, including, among other things, macroeconomic trends, labor matters, adverse weather factors or other natural disasters, and damage or disruption to our facilities. • Failure to establish and maintain effective internal control over financial reporting could materially and adversely affect us.
Risks Relating to Our Common Stock • Anti-takeover provisions in our charter documents and Delaware law could discourage, delay or prevent a change in control or impact the trading price of our common stock.
Our contracts may be delayed or terminated by our customers or reduced in scope for a variety of reasons beyond our control, including, but not limited to: • decisions to forego or terminate a particular trial; • budgetary limits, unanticipated trial costs or changing priorities; • actions by regulatory authorities; • production problems resulting in shortages of the candidate drug being tested; • failure of products being tested to satisfy safety requirements or efficacy criteria; • unexpected or undesired clinical results for products; • insufficient patient enrollment in a trial, competition for patients and/or insufficient principal investigator recruitment; • the customer’s decision to terminate or scale back the development or commercialization of a product or to end a particular project; • shift of business to a competitor or internal resources; or • product withdrawal following market launch.
For the year ended December 31, 2024, our top ten customers based on revenue accounted for approximately 53% of our consolidated revenue and our top ten customers based on backlog accounted for approximately 51% of our total backlog.
For the year ended December 31, 2024, two customers accounted for approximately 14.3% and 10.5% of revenue.
Our backlog as of December 31, 2024 was $7.7 billion.
Access to data is foundational to any CRO, and through our unique relationship with Labcorp we have access to large datasets relevant to clinical trials under a patient and site data agreement (the “Patient and Site Data Agreement”).
This Patient and Site Data Agreement is set to expire as of June 30, 2025, if not renewed.
In addition, we source data from a number of third parties to support our services.
An inability to purchase or access the necessary data (from Labcorp pursuant to the Patient and Site Data Agreement or from other third parties) now, or in the future, on commercially reasonable terms or at all, could have a material adverse effect on our business, financial condition and results of operations.
If we are unable to achieve and maintain effective internal controls, our business, financial condition, results of operations, and cash flows could be materially adversely affected.
In addition, beginning with this Annual Report on Form 10-K, our independent registered public accounting firm is required to express an opinion as to the effectiveness of our internal controls over financial reporting.
We were previously dependent on Labcorp’s systems to provide financial reporting and other financial and accounting information for periods prior to the Spin and through the period ending December 31, 2024.
To fully separate ourselves from our Former Parent, we have (i) replaced / upgraded our systems, including our IT and enterprise resource planning systems, (ii) implemented additional financial, IT, and management controls, (iii) implemented new reporting systems and procedures, and (iv) hired additional management, IT, accounting, finance, legal, human resources, and other administrative staff and third-party service providers.
As reported in our Form 10-Q for the quarter ended March 31, 2024, as filed with the SEC on May 24, 2024, management identified material weaknesses in our internal controls over financial reporting that existed because the company did not have sufficient resources which in turn led to an inability to effectively perform certain control activities and fulfill our internal control and accounting responsibilities.
Management has devoted substantial resources to the implementation of remediation efforts, as described most recently in the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2024.
During the fourth quarter of 2024, the Company successfully completed the testing and evaluation necessary to conclude that, as of December 31, 2024, the previously identified material weaknesses have been remediated.
We may not improve upon the brand recognition associated with Labcorp and its historical or associated brands with customers, sites, suppliers, employees and candidates.
We might not be able to engage in certain transactions and equity issuances until July 1, 2025.
Our ability to engage in certain transactions could be limited or restricted as a result of the Spin under the terms of the tax matters agreement entered into with Labcorp and in order to preserve, for U.S. federal income tax purposes, the qualification of the Spin and certain related transactions under Sections 355 and 368(a)(1)(D) of the Internal Revenue Code (the “Code”).
Even if these transactions otherwise qualify for tax-free treatment to Labcorp’s stockholders under Section 355 of the Code, they may result in corporate-level taxable gain to Labcorp if there is a 50% or greater change in ownership, by vote or value, of shares of our stock, Labcorp’s stock or the stock of a successor of either occurring as part of a plan or series of related transactions that includes the Spin.
Any acquisitions or issuances of our stock or Labcorp’s stock within two years of the Spin are generally presumed to be part of such a plan, although it may be possible to rebut that presumption.
Under the tax matters agreement that we entered into with Labcorp, we are required to comply with the representations and undertakings made in the Internal Revenue Service (“IRS”) ruling that Labcorp received in connection with the Spin and in materials submitted to the IRS in connection therewith and to the tax advisors in connection with the opinions Labcorp received regarding the intended tax treatment of the Spin and certain related transactions.
The tax matters agreement also restricts our ability to take or fail to take any action if such action or failure to act could adversely affect the intended tax treatment.
In particular, except in specific circumstances, until July 1, 2025, we are restricted from, among other things, (i) entering into any transaction pursuant to which all or a portion of our equity would be acquired, whether by merger or otherwise, and (ii) ceasing to actively conduct certain businesses or activities.
These restrictions limit our ability to pursue certain transactions that we may believe to be in the best interests of our stockholders or that might increase the value of our businesses.
Epidemics, pandemics, or widespread public health crisis, such as COVID-19, and associated economic repercussions have adversely impacted our business and results of operations, and may do so in the future.
Pandemics, including the COVID-19 pandemic, and associated economic repercussions have significantly impacted our business and our operations.
Other epidemics, pandemics, or widespread public health crises may impact our business and operations in the future.
The possibility of epidemics or pandemics, including the spread of variants, could continue to adversely impact our business and results of operations in a number of ways, including, but not limited to: • delays or difficulties in commencing new and operating ongoing clinical trials, including intermittent challenges accessing investigative sites, delays in enrolling patients, delays in obtaining approvals from regulatory authorities, and difficulty obtaining necessary pharmaceutical and other products and supplies; • restrictions on the ability of our field teams to visit healthcare providers and difficulty securing appropriate personal protective equipment and testing and other tools required for client-facing engagements and visits to sites/healthcare providers; • diversion of healthcare resources away from the conduct of clinical trials, including the diversion of hospitals serving as our clinical trial sites and hospital staff supporting the conduct of our clinical trials, as well as the reduction of our customers’ operating budgets; • interruption of key clinical trial activities, such as clinical trial site data monitoring, due to social distancing requirements, quarantine and isolation protocols or interruption of clinical trial subject visits and study procedures, which may impact the collection and integrity of study data and ability to measure clinical trial endpoints; • business disruptions at our customers; • limitations on our employee resources, including because of quarantine and isolation protocols, sickness of employees or their families or the desire of employees to avoid contact with large groups of people; • continued disruptions to our supply chain; • diversion of management resources to focus on mitigating the impacts of pandemics; • increased cybersecurity risks due to the number of employees that are working remotely in regions impacted by stay-at-home orders, increased levels of remote access creating additional opportunities for cybercriminals to exploit vulnerabilities and employees that may be more susceptible to phishing and social engineering attempts; • increased cyber-attacks, such as phishing attacks by threat actors using the attention placed on a pandemic as a method for targeting our personnel; and • strained technological resources due to the number of remote users.
The ultimate impact depends on the severity and duration of a pandemic, including the emergence and spread of variants, the continued availability and effectiveness of vaccines and treatments, and actions taken by governmental authorities and other third parties in response to the pandemic, each of which is uncertain, rapidly changing and difficult to predict.
Our effective tax rate and deferred income taxes could be impacted by changes in tax legislation globally.
We have cumulatively accrued $3.6 million for income taxes on a portion of the undistributed earnings of our non-U.S. subsidiaries that are not considered permanently reinvested.

and 82 more.

Sentence-level comparison of Item 1A in the two most recent 10-Ks (FY2024 ↗, FY2025 ↗). A reworded sentence counts as one dropped and one added, so heavy edits read as low “kept”. Headings and page furniture are stripped; nothing is summarised by a model.

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