A better-than-expected third-quarter earnings report was the sugar powering Fortrea Holdings' (FTRE) share price higher on Monday. The contract researcher to the healthcare industry enjoyed a nearly 10% lift in its stock's value as a result, comparing very well to the slight (0.1%) dip of the S&P 500 index on the day.
Third quarter revenue up, adjusted net income down
Fortrea's revenue for the period came in at just over $776 million, which was comfortably above the $762 million it earned in the same quarter of 2022. On the other hand, its non-GAAP (adjusted) net income fell precipitously to a bit over $21 million ($0.24 per share) versus the more than $80 million it netted in the year-ago period.
Despite the bottom-line slide, both headline figures easily topped the average analyst expectations. Prognosticators tracking Fortrea stock were modeling only $753 million for revenue and a much lighter per-share, adjusted net income figure of $0.15.
The quarter was Fortrea's first as an independent, publicly traded company. Previously, it was under the umbrella of lab services company Labcorp. The spinoff was completed at the end of June.
The transformation is ongoing
In its earnings release, Fortrea said it was managing to do well despite some growing pains.
It quoted CEO Tom Pike as saying, "Our transformation continues, and we must make selective investments, exit transition services agreements with our former parent, and make the necessary changes to meet industry expectations of cost structure."
Fortrea proffered guidance for full-year 2023. It anticipates earning just under $3.08 billion to $3.13 billion in revenue. It is also modeling earnings before interest, taxes, depreciation, and amortization (EBITDA) of $255 million to $285 million. It did not provide a net income forecast.
