Deslande v. Fortrea Holdings Inc. — Entry #65

Case 1:25-cv-04630-KPF   Document 65-4   Filed 01/28/26   Page 1 of 3


                Exhibit D


                      Case 1:25-cv-04630-KPF                      Document 65-4                Filed 01/28/26           Page 2 of 3


                                           UNITED STATES
                               SECURITIES AND EXCHANGE COMMISSION
                                                               Washington, D.C. 20549

                                                                    FORM 10-Q

                 ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

                                                    For the quarterly period ended September 30, 2024
                                                                           OR

                 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

                                                      For the transition period from ______ to ______

                                                              Commission File Number 001-41704

                                                   FORTREA HOLDINGS INC.
                                                      (Exact name of registrant as specified in its charter)

                                  Delaware                                                                         92-2796441
                                                                                                                (I.R.S. Employer
        (State or other jurisdiction of incorporation or organization)                                         Identification No.)
                 8 Moore Drive Durham, North Carolina
                                                                                                                    27709
                   (Address of principal executive offices)                                                       (Zip Code)

                                             (Registrant's telephone number, including area code) (480)-295-7600


Securities registered pursuant to Section 12(b) of the Act.

Title of each class                                      Trading Symbol(s)                               Name of each exchange on which registered
Common Stock, $0.001 par value                            FTRE                                   The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of
Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such
files). Yes x No o


Table of Contents
                      Case 1:25-cv-04630-KPF                          Document 65-4             Filed 01/28/26            Page 3 of 3


Sale of Assets Relating to the Enabling Services Segment

      On March 9, 2024, the Company, together with its wholly-owned subsidiary, Fortrea Inc. (the “Seller”), entered into an Asset Purchase Agreement (the
“Purchase Agreement”) with Endeavor Buyer LLC, an affiliate of Arsenal Capital Partners, pursuant to which the Seller agreed to sell, and to cause its
affiliates to sell, certain assets relating to its Enabling Services Segment (the “Transaction”), including the sale of equity interests of Fortrea Patient Access
Inc. and its subsidiaries and Endpoint Clinical, Inc. and its subsidiaries. The final adjusted purchase price for the Transaction was $340.0, subject to
customary purchase price adjustments, with $295.0 paid at closing and $45.0 to be paid upon achievement of certain transition-related milestones, which
includes certain services provided through a Transition Services Agreement. The Transaction closed during the second quarter of 2024. The decision to sell
such assets relating to the Enabling Services Segment represented a strategic shift that had a significant effect on the Company's results and operations and
assets and liabilities for the periods presented. As a result, the Company has classified the assets related to the Enabling Services Segment as assets from
discontinued operations and liabilities from discontinued operations on the condensed consolidated balance sheet as of December 31, 2023. The operations of
the Enabling Services Segment have been classified as income or loss from discontinued operations on the condensed consolidated and combined statements
of operations for all periods presented.

Backlog and Net New Business

    Our backlog consists of anticipated future revenue from business awards that either have not started, or that are in process and have not been completed.
Our backlog also reflects any cancellation or adjustment activity related to these awards. The average duration of our contracts will fluctuate from period to
period based on the contracts comprising our backlog at any given time. The majority of our contracts contain early termination provisions that typically
require notice periods ranging from 30 to 90 days. We adjust backlog for foreign currency fluctuations and exclude from backlog amounts that have been
recognized as revenue in our statements of operations. Our backlog was $7.6 billion as of September 30, 2024.

     We do not believe that, as a sole measure, our backlog is a consistent indicator of future revenue because it has been, and likely will continue to be,
affected by a number of factors, including the variable size and duration of projects, many of which are performed over several years, and changes to the
scope of work during the course of projects. Additionally, projects may be canceled or delayed by the customer or regulatory authorities. We generally do not
have a contractual right to the full amount of the contract award reflected in our backlog. If a customer cancels a contract, we generally will be reimbursed
for the costs we have incurred. For a further discussion of the risks relating to our business, see the “Risk Factors” section of our Annual Report on Form 10-
K.

RESULTS OF CONTINUING OPERATIONS

    Three and Nine Months Ended September 30, 2024 compared with Three and Nine Months Ended September 30, 2023

    The following tables present the financial measures that management considers to be the most significant indicators of the Company's performance.

    Revenues
                                               Three Months Ended September 30,                            Nine Months Ended September 30,
                                                   2024                2023                Change             2024                2023              Change
Revenues                                   $              674.9   $           713.8             (5.4)% $        1,999.4    $        2,132.8               (6.3)%

    The Company’s revenues for the three months ended September 30, 2024 were $674.9, a decrease of 5.4% from revenues of $713.8 in the corresponding
period in 2023. The change in revenues was due to a decrease in organic revenues of 5.7%, partially offset by favorable foreign currency translation of 0.2%.
The Company defines organic growth as the change in revenues excluding the year over year impact of acquisitions, divestitures and currency. The 5.7%
decrease in organic revenues was primarily driven by decreased pass through costs and lower service revenues resulting from the quantity and burn rate of
new business wins pre-Spin, along with the mix of later stage and longer duration studies in our portfolio.


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