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Fortrea Overstates Sales Nearly Ten Percent in First Year as Standalone Company

Contract research firm isn’t even sure when it was spun off its former parent company.

June 3, 2024

Fortrea Holdings Inc (FTRE), a contract research organization serving the biopharmaceutical product and medical device industries, has misstated its financials for every period it has been a standalone publicly traded company.

The company blamed a lack of resources for the errors which include:

—A goodwill impairment charge as a result of an incorrect carrying value used in the company’s impairment calculation
—A reduction in revenue due to the misstatement in the amount of the ultimate resolution of a customer matter
—An understatement of expense accruals allocated from Fortrea’s former parent prior to spin
—An understatement of depreciation expense associated with certain projects that were not depreciated in a timely manner

The errors resulted in Fortrea:

—Overstating revenue $266.5 million, or 9.37% in 2023
—Overstating operating income $31.1 million, or 97.18% in 2023

Fortrea also restated its 2022 cash flows after overstating operating cash flow $4.8 million, or 5.8%.

Notably, in its latest quarterly filing, Fortrea says its spin off from Labcorp (LH) occurred on June 30, 2023.

However, Labcorp issued a news release announcing the spin actually occurred three days later on July 3rd.

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