#USA #New York #Class Action #Pomerantz Law Firm #Fortrea Holdings

Class Action Lawsuit Filed Against Fortrea Holdings

Pomerantz LLP, a prominent law firm known for its work in securities class litigation, recently announced the initiation of a class action lawsuit against Fortrea Holdings, Inc. This legal challenge targets the company and its top executives, stemming from alleged violations of federal securities laws.

Background of the Case

The class action, lodged in the United States District Court for the Southern District of New York and assigned docket number 25-cv-04630, is intended for individuals and entities other than the defendants who purchased Fortrea securities between July 3, 2023, and February 28, 2025. The plaintiffs aim to recover damages attributed to the defendants' supposed breaches during this period, which they claim misrepresented the company’s business health and future prospects.

Potential plaintiffs have been encouraged to act quickly, as the deadline to request appointment as Lead Plaintiff is August 1, 2025. Those interested can access the complaint via Pomerantz Law Firm’s website or reach out directly to discuss the case further.

Overview of Fortrea Holdings

Fortrea Holdings operates as a global contract research organization (CRO), specializing in biopharmaceutical product and medical device development solutions. Fortrea emerged as an independent entity after being spun off from Labcorp in June 2023. The company promotes its capabilities, claiming substantial expertise and operational agility aimed at accelerating the delivery of life-changing therapies to patients.

In its post-spin framework, Fortrea pursued new contracts while also continuing to manage existing Pre-Spin Projects, which were to play a crucial role in its revenue model. The firm has emphasized its transition to a standalone operation by highlighting improvements in operational agility and financial flexibility. However, this transition raised some eyebrows concerning its actual benefits, especially given that it entered several transition services agreements (TSA) with Labcorp to facilitate the separation.

Allegations Against Fortrea

As articulated in the lawsuit, the defendants are accused of providing materially misleading statements regarding the company’s financial stability and operational capabilities. Crucially, it is alleged they inflated expectations about revenue contributions from Pre-Spin Projects and exaggerated the cost savings expected from exiting TSAs, leading to misguided confidence in Fortrea's projected adjusted EBITDA margins. This misrepresentation has raised significant concerns among investors about the sustainability of the post-spin business model.

The class action follows a series of negative reports, including one from investment bank Jefferies, which downgraded Fortrea’s stock recommendation amid concerns about vulnerabilities in its business model as a CRO. They cited pressures surrounding biotechnology funding and predicted that anticipated savings from TSA exits would not be as significant as previously suggested.

Moreover, as market analysts began to express skepticism, Fortrea's stock price faced substantial declines, reflecting the growing discontent among investors. Reports indicated that the anticipated revenues and profit margins would considerably miss earlier forecasts, reinforcing the claims presented in the class action lawsuit.

On March 3, 2025, Fortrea disclosed financial results for the fourth quarter of 2024, revealing that the revenues and adjusted EBITDA trajectories for 2025 diverged sharply from previous expectations. This revelation triggered further stock price declines, underscoring the serious financial implications of the allegations.

Additionally, on March 17, 2025, Fitch Ratings downgraded Fortrea’s credit outlook based on lower-than-expected projections for its EBITDA margins, compounding the legal and financial challenges the company faces following the allegations of securities violations.

Conclusion

The initiation of this class action lawsuit by Pomerantz Law Firm highlights significant concerns regarding Fortrea's corporate governance and the accuracy of its public disclosures. As the case unfolds, investors and stakeholders alike will be closely observing how Fortrea addresses these allegations and the potential implications for its future operations. Pomerantz Law Firm, recognized for advocating the rights of victims of securities fraud, continues to play a crucial role in representing shareholders seeking justice in the increasingly complex landscape of corporate legal challenges.