Fortrea (FTRE) investor relations material

Strategic direction and leadership

• Recent acquisition of Worldwide Clinical Trials' clinical pharmacology and bioanalytical business aligns with a strategy to expand clinical pharmacology capabilities and reduce reliance on third parties.

• About 25%-30% of senior leadership is new, reflecting a significant management transition and a focus on growth.

• The acquisition adds a 200-bed unit in San Antonio and a bioanalytical lab in Austin, enabling larger studies and internalizing key services.

• The company is now positioned to handle larger-scale studies and reduce capacity constraints, especially in the U.S.

• New leadership emphasizes flipping the chapter from post-spin volatility to executing on growth strategies.

Financial performance and margin outlook

• Targeting mid-teens EBITDA margins within 3-5 years, with recent progress shown by an 8.7% margin and raised revenue/EBITDA targets.

• Margin guidance for the second half is around 8%, impacted by planned investments in people and compensation.

• Sustainable improvements in SG&A and infrastructure are expected to support future operating leverage as service revenue grows.

• Higher margin clinical pharmacology and FSO are prioritized over lower margin FSP, with portfolio diversification expected to improve future margin mix.

• Operating leverage is anticipated to become more apparent with mid-single digit service revenue growth, as existing infrastructure can absorb growth.

Market environment and bookings

• Bookings increased nearly 20% in the first half, with a sequentially growing pipeline over the last four quarters.

• Demand environment is improving, with more RFPs and new client opportunities, including top 30 pharma and Chinese biotechs expanding globally.

• The company is gaining access to partnership refreshes and client segments previously unavailable, broadening its market reach.

• Pricing in the market is described as rational, and decision-making timelines are improving.

• Commercial strategies are taking hold, with a focus on growth rather than just rightsizing.