Fortrea (FTRE) Morgan Stanley 22nd Annual Global Healthcare Conference summary

Key accomplishments and business transformation

• Achieved strong bookings in the first year as a public company, with notable commercial transformation and team building.

• Progressed in separating from the former parent, migrating over a thousand servers and hundreds of applications.

• Developed targeted strategies by therapeutic area, securing three significant large pharma partnerships in Q2, including one full-service deal expected to benefit 2025.

• Paid down about $500 million in debt, reducing risk for investors and customers.

Customer mix, pipeline, and bookings dynamics

• Maintains a balanced 50/50 mix between large pharma and biotech, with backlog mirroring this split.

• Biotech contracting is less predictable due to board and regulatory involvement, while large pharma offers more consistent processes.

• Majority of biotech business is with commercial-stage firms; pre-commercial work is carefully vetted for funding.

• No recent uptick in cancellations; pipeline remains strong but timing of biotech bookings is less predictable.

Revenue forecasting and operational measures

• Enhanced forecasting discipline with weekly pipeline reviews and scenario planning to improve predictability and conversion.

• Focused on reprioritizing and intervening in sales processes to achieve higher conversion rates.

• Book-to-bill target of 1.2 for H2, with Q4 expected to be stronger than Q3; improvement driven by phase one clinic projects and operational productivity.