Pomerantz Law Firm Files Class Action Against Fortrea Holdings for Securities Violations

Class Action Lawsuit Filed Against Fortrea Holdings

On July 27, 2025, Pomerantz LLP, a prominent law firm recognized for its work in securities class action cases, announced the initiation of a class action lawsuit against Fortrea Holdings, Inc. (NASDAQ: FTRE) and certain of its executives. This lawsuit was filed in the United States District Court for the Southern District of New York, under case number 25-cv-04630. The lawsuit arises from claims affecting individuals and entities that acquired Fortrea securities during the class period from July 3, 2023, to February 28, 2025. The plaintiffs seek to recover damages attributed to alleged violations of federal securities laws, specifically under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, alongside Rule 10b-5.

If you are among the investors who purchased Fortrea's securities during this time frame, the deadline to apply for lead plaintiff status in the class action is August 1, 2025. Interested parties can retrieve a copy of the class action complaint by visiting www.pomerantzlaw.com. For further inquiries regarding the lawsuit, prospective participants are encouraged to contact Danielle Peyton, either by phone at 646-581-9980 extension 7980 or toll-free at 888-4-POMLAW, or via email at [email protected]. When reaching out through email, including your contact details and the number of shares acquired is advisable.

Background on Fortrea Holdings

Fortrea operates as a global contract research organization (CRO), offering a spectrum of solutions geared toward the development of biopharmaceutical products and medical devices for clients in the pharmaceutical, biotechnology, and medical device sectors. The company prides itself on its expansive capabilities, claiming to possess the requisite scale and expertise to manage various global projects and programs effectively. Notably, Fortrea has emphasized long-term contract agreements that provide significant visibility into its expected revenues.

Previously, Fortrea was part of Labcorp Holdings Inc., a substantial life sciences and healthcare enterprise. In June 2023, Labcorp completed a strategic spin-off of Fortrea as an independent publicly traded entity, which it bills as an initiative that enables a sharper focus and enhanced operational flexibility. Fortrea asserted that its independence empowers it to expedite customer partnerships, enhancing its capability to deliver critical therapies to patients more swiftly.

Following the spin-off, Fortrea and Labcorp entered various transition services agreements (TSAs) which required Fortrea to pay Labcorp for transitional services, including IT, finance, and other essential functions during a designated transition period. However, following the completion of the spin-off, Fortrea indicated that it had prepped comprehensive exit strategies from these TSAs aimed at reducing costs and improving its profit margins through investments in its own infrastructure.

Financial Projections and Misstatements

In March 2024, the company targeted an adjusted EBITDA margin of around 13% for the fiscal year 2025. This forecast was subsequently revised downward to between 11% and 12% in August 2024; however, Fortrea highlighted that even this adjusted figure marked a substantial progression compared to the previous fiscal year.

The allegations included in the class action claim that during the class period, the defendants disseminated materially misleading information concerning Fortrea’s operational status and projections. Specific misstatements included an overestimation of revenue expectations from ongoing projects, inflated assertions regarding anticipated cost savings associated with exiting TSAs, and resulting overstatements of the company's future financial viability.

Notably, the investment bank Jefferies issued a downgrade of Fortrea from buy to hold on September 25, 2024, citing concerns about the sustainability of the company's business model within the CRO landscape, particularly as it grappled with tightening funding in the biotechnology sector. This downgrade purportedly catalyzed a 12.29% decline in Fortrea’s stock price.

Later, following significant business changes and internal challenges, Fortrea's stock slipped further after major analysts expressed doubts about its financial trajectory. By March 3, 2025, the company disclosed that its projected revenue and adjusted EBITDA trajectories for 2025 fell short of earlier expectations due to the challenging nature of its Pre-Spin projects.

As a consequence of the disclosures, Fortrea's stock plummeted by over 25%, causing considerable losses for shareholders. Subsequently, on March 17, 2025, Fitch Ratings downgraded Fortrea, projecting significantly lower EBITDA margins than the company had previously anticipated.

Overall, the class action against Fortrea Holdings underscores the complex landscape of securities law and the ongoing commitment of firms like Pomerantz LLP to represent investors’ interests against perceived corporate mismanagement and financial misconduct. Investors diligently monitoring their holdings in rapidly evolving sectors like CROs must remain vigilant.

For additional updates regarding this class action lawsuit and related matters, you can visit Pomerantz LLP's official website.