Fortrea Raises 2026 Guidance as Q3 Adjusted EBITDA Rises 14%

Fortrea Inc. (Nasdaq: FTRE) raised the midpoints of its full-year 2026 revenue and adjusted EBITDA outlook after third-quarter profitability improved despite a modest decline in revenue. The clinical research services company also completed a $45 million early-phase services acquisition in October, expanding its clinical pharmacology capacity and bioanalytical capabilities.

Revenue for the quarter ended September 30 fell 1.4% year over year to $691.5 million from $701.3 million. Adjusted EBITDA increased 14.4% to $58.0 million, while adjusted EBITDA margin expanded by 120 basis points to 8.4% from 7.2%.

Fortrea recorded GAAP net income of $0.6 million, or $0.01 per diluted share, compared with a net loss of $15.9 million, or $0.17 per diluted share, a year earlier. Adjusted net income rose to $27.9 million from $11.7 million, and adjusted diluted earnings per share increased to $0.28 from $0.12.

For the first nine months of 2026, revenue totaled $2.01 billion and adjusted EBITDA was $163.7 million. The year-to-date adjusted EBITDA margin reached 8.2%, compared with 6.6% in the corresponding 2025 period.

Guidance ranges narrowed

Fortrea now expects full-year 2026 revenue of $2.665 billion to $2.690 billion, compared with its previous range of $2.620 billion to $2.690 billion. The company forecast adjusted EBITDA of $210 million to $218 million, narrowing its prior range of $205 million to $220 million. The revised ranges raise the midpoints of both measures.

The company reported a quarterly book-to-bill ratio of 1.12 times, matching its trailing-12-month level. Fortrea also said biotech revenue had grown for two consecutive quarters, though the presentation did not provide additional revenue details by customer type.

Ending backlog was $7.32 billion, down 4.3% from $7.64 billion a year earlier. During the quarter, Fortrea reduced reported backlog by $558 million following a detailed contract review that incorporated updated estimates of project scope and study-delivery requirements, including inactive trials. The company said the adjustment did not affect historical results, its current or previous 2026 guidance, or near-term revenue estimates.

Pass-through cost revenue was $267 million, representing 39% of quarterly revenue, compared with $280 million and 40% in the third quarter of 2025.

Early-phase acquisition expands capacity

Fortrea completed its acquisition of Worldwide Clinical Trials’ Early Phase Services division on October 19 for approximately $45 million in cash. The company expects the transaction to be accretive to adjusted EBITDA in 2027.

The acquired operations include a 200-bed clinical research unit in San Antonio, Texas, as well as a 60,000-square-foot GLP-compliant bioanalytical laboratory in Austin and a biospecimen storage facility in Pflugerville. The transaction increases Fortrea’s global clinical research capacity to more than 570 beds.

Management said the acquisition combines clinical pharmacology, bioanalytical and CLIA safety-laboratory capabilities, reducing operational handoffs and supporting larger and more complex studies. Fortrea also expects the expanded platform to create opportunities to work with clients from early-phase research through later stages of clinical development.

Cash flow, leverage and risks

Operating cash flow was $60.8 million in the third quarter. After $8.3 million of capital expenditure, non-GAAP free cash flow totaled $52.5 million. Year-to-date free cash flow was $47.4 million.

At September 30, Fortrea had gross debt of $1.07 billion, cash and cash equivalents of $220.6 million and net debt of $845.7 million. Net leverage was 3.9 times trailing-12-month adjusted EBITDA, while available liquidity totaled $668.3 million.

Fortrea cautioned that its outlook remains subject to risks including customer cancellations or contract changes, underpriced projects, cost overruns, delays in change orders and the possibility that backlog may not convert into revenue as expected. Other uncertainties include reliance on third parties, pharmaceutical and biotechnology industry conditions, regulation and government funding, international operations, currency movements, technology implementation and the realization of anticipated benefits from the early-phase acquisition.