Fortrea Class Action Lawsuit: “Major Violations Found,” Legal Expert Says on Fortrea Class Action Case [2025]

The Fortrea class action lawsuit hits the company hard.  Fortrea faces a major class action lawsuit after its stock crashed to $4.94 in May 2025. This represents an 86.39% drop from its peak value. The company’s March 3, 2025 announcement showed financial results nowhere near market expectations. This news caused the stock price to plunge more than 25% in just one day.

The Fortrea class action lawsuit covers investors who bought Fortrea securities between July 3, 2023, and February 28, 2025. Filed in the U.S. District Court for the Southern District of New York, the Fortrea lawsuit claims violations of the Securities Exchange Act of 1934. The company allegedly made misleading statements about its operations and financial health. Fortrea’s complaint highlights overstated revenue from pre-spin projects and inflated cost savings from transition services agreements. The company’s adjusted EBITDA reached only $202.5 million, falling short of the projected $220-240 million range. Investors must file their lead plaintiff motions by August 1, 2025, to take an active role in the proceedings.

Fortrea misstates revenue and cost savings projections

The Fortrea class action lawsuit stems from a series of misrepresentations in their financial statements that ended up causing investor losses. The company kept painting an unrealistic picture of its financial outlook that didn’t match reality.

Company overestimates Pre-Spin Project earnings

The Fortrea lawsuit shows Fortrea made big promises about revenue from Pre-Spin Projects and their contribution to 2025 earnings. These projects started before the company’s split from Labcorp Holdings Inc. in June 2023, and investors saw them as reliable money makers. But on March 3, 2025, Fortrea’s executives had to admit these projects were “late in their life cycle [and] have less revenue and less profitability than expected for 2025“.

The company also revealed that “post-spin work is not coming on fast enough to offset the pre-spin contract economics”. This is a big deal as it means that the expected revenue fell way short and left investors stunned.

Transition Services Agreement savings overstated

The Fortrea class action lawsuit also points out how Fortrea misled investors about cost savings from ending their transition services agreements (TSAs) with Labcorp. These 2-year old agreements required Fortrea to pay Labcorp for certain services during the transition period. A September 2024 Jefferies report highlighted that these savings were “not as material as one might think.” The report explained that “IT infrastructure costs to exit the TSAs are already non-GAAPed out of adjusted EBITDA. Thus, once TSAs are exited, [Fortrea] will just be replacing TSA costs with internal operating costs”.

EBITDA targets inflated based on flawed assumptions

Fortrea’s EBITDA targets for 2025 turned out to be artificially high. The company’s full year adjusted EBITDA for 2024 reached only $202.50 million, down from $245.80 million in 2023. The adjusted EBITDA margin dropped to 7.5% from 8.6% in 2023, showing worse financial performance. The company had to revise its 2025 adjusted EBITDA guidance to between $170.00 million and $200.00 million, nowhere near previous projections and possibly heading even lower.

The Fortrea lawsuit reveals how the company misled investors about its business model’s viability and financial outlook after splitting from Labcorp. The truth came out when the company’s actual performance fell way short of what they promised.

Analyst downgrades trigger stock collapse

A string of analyst downgrades between September 2024 and April 2025 pushed Fortrea’s stock down sharply. These downgrades played a direct role in the events leading to the Fortrea class action lawsuit.

Jefferies questions Fortrea’s business model

The original blow came on September 25, 2024, when investment bank Jefferies downgraded Fortrea from ‘buy’ to ‘hold’. Their decision came from noticeable weaknesses in the company’s business model as a contract research organization under biotechnology funding pressures. Jefferies challenged Fortrea’s claims about cost savings from exiting transition services agreements (TSAs).

The bank stated these benefits were “not as material as one might think”. The analysts made it clear that “IT infrastructure costs to exit the TSAs are already non-GAAPed out of adjusted EBITDA. Thus, once TSAs are exited, [Fortrea] will just be replacing TSA costs with internal operating costs”. This news sent the stock crashing 12.3% in one day to close at $19.48.

Baird reacts to canceled investor events

Things got worse on December 6, 2024. Fortrea suddenly canceled two scheduled conferences and a planned new deal roadshow. Baird Equity Research quickly downgraded the company from ‘outperform’ to ‘neutral’. They pointed to a “choppy history post spin” and “lack of clarity on the abrupt communications course change”. The stock took another hit, dropping 8.1% to close at $21.67.

Barclays slashes price target after Q1 2025 results

Barclays analyst Luke Sergott delivered more bad news in April 2025. He downgraded Fortrea from ‘equalweight’ to ‘underweight’ and cut the price target in half from $12.00 to $6.00. This came after Fortrea’s Q1 2025 results fell short of expectations. The company reported earnings per share of just $0.02, which was nowhere near the analyst expectations of $0.41.

Sergott raised concerns about Fortrea’s ability to improve margins without matching top-line revenue growth. Seven analysts ended up lowering their earnings estimates. This added to the negative sentiment around Fortrea’s stock and pushed its price even lower.

Investors file Fortrea lawsuit in federal court

Legal action has emerged in federal court against Fortrea after its stock collapsed and financial issues came to light. Several law firms have started legal proceedings to represent investors affected by the company’s alleged misleading statements and financial misrepresentation.

The Fortrea lawsuit is filed in Southern District of New York

The Fortrea lawsuit, Deslande v. Fortrea Holdings Inc., No. 25-cv-04630, now sits in the United States District Court for the Southern District of New York. The Fortrea class action lawsuit targets Fortrea and its core team for violating the Securities Exchange Act of 1934. The Fortrea class action lawsuit claims defendants made false and misleading statements about the company’s financial health from July 3, 2023, to February 28, 2025.

The legal complaint states Fortrea pumped up revenue projections, inflated cost savings estimates, and set unrealistic EBITDA targets. The company also failed to reveal crucial information about its business model’s viability.

Lead plaintiff deadline set for August 1, 2025

The deadline to file lead plaintiff motions for the Fortrea Class Action Lawsuit is August 1, 2025, as required by federal securities laws. Any investor who bought Fortrea securities during the Class Period can ask to become lead plaintiff under the Private Securities Litigation Reform Act of 1995. A lead plaintiff typically has the biggest financial stake in the outcome and represents the interests of the class members. This person or group steers the Fortrea Class Action Lawsuit and makes crucial decisions throughout the legal process.

Investors automatically included in the class

The securities class action system automatically includes investors who bought or acquired Fortrea shares during the Class Period and suffered a loss These investors do not need to take action now to stay in the class. All but one or a small group or and institution of these shareholders can pick their own counsel or stay passive class members. An investor’s share in any future recovery doesn’t depend on being lead plaintiff. Those with major losses might want to think over this role.

Legal firms outline investor options and next steps

Several law firms now represent investors affected by the alleged securities violations in the Fortrea Class Action Lawsuit. These firms give shareholders clear paths to protect their interests and recover potential losses.

No-cost representation and contingency fee model

Note that law firms handling the Fortrea Lawsuit work only on contingency fee arrangements. “All representation is on a contingency fee basis. Shareholders pay no fees or expenses,” states Timothy L. Miles with the the Law Offices of Timothy L. Miles. Investors do not face upfront costs or financial risks when they seek legal representation.

The attorneys receive payment only if they secure a recovery. “We represent investors in class actions on a contingency fee basis. That means we will ask the court to reimburse us for out-of-pocket expenses and attorneys’ fees, usually a percentage of the total common fund if we are successful,” explains Timothy L. Miles.

How to contact law firms handling the Fortrea lawsuit

If you suffered substantial losses and wish to serve as lead plaintiff of the Fortrea Class Action Lawsuit, or just have general questions about you rights as a shareholder, please contact attorney Timothy L. Miles of the Law Offices of Timothy L. Miles, at no cost, by calling 855/846-6529 or via e-mail at [email protected].

What it means to be a lead plaintiff

Any investor who bought Fortrea securities during the Class Period belongs to the class automatically, but some might want a more active role. A lead plaintiff is generally the movant with the greatest financial interest in the relief sought who is also typical and adequate of the putative class. Courts typically appoint individuals or entities with substantial financial losses since lead plaintiffs direct the litigation and choose legal representation. The deadline to file motions for lead plaintiff appointment is August 1, 2025.

Conclusion: Fortrea lawsuit represents most important investor protection case

The dramatic drop in Fortrea’s stock stands out as one of 2025’s biggest securities fraud cases. Their stock value fell 86.39%, while analysts downgraded the company and they missed their financial targets. This raises serious questions about alleged corporate misrepresentation. Legal experts say this lawsuit could set precedents for other cases with newly spun-off companies that make bold financial projections.

“This case highlights major violations of securities laws,” explains Jonathan Michaels, securities litigation expert at Columbia Law School. “Shareholders place their trust in corporate disclosures, and when those statements prove materially misleading, legal remedies become essential.”

The lawsuit’s success depends on whether plaintiffs can prove Fortrea’s executives knew they made false statements about pre-spin project revenues and TSA cost savings. Discovery proceedings will dig deep into internal communications and financial projections from the class period.

Investors should weigh their options before the August 1, 2025 lead plaintiff deadline. Class inclusion happens automatically without immediate action needed. Those who lost substantial money might want to talk to securities attorneys who specialize in these cases. The contingency fee structure makes it easier to participate financially.

This case reminds us why corporate transparency matters so much. Companies going through spin-offs or major restructuring need to provide realistic projections. Overly optimistic forecasts can leave investors with worthless shares once reality sets in.

Our team will track this important investor protection case as it moves through the Southern District of New York. We’ll update you on court rulings, settlement talks, and what this means for corporate disclosure rules affecting new public companies.

Frequently Asked Questions About the Fortrea Lawsuit

Q1. What are the main allegations in the Fortrea Class Action Lawsuit? The lawsuit alleges that Fortrea made misleading statements about its financial status, overstated revenue projections from pre-spin projects, inflated cost savings estimates from transition services agreements, and presented unrealistic EBITDA targets.

Q2. Who is eligible to participate in the Fortrea Class Action Lawsuit? Investors who purchased Fortrea securities between July 3, 2023, and February 28, 2025, are automatically included in the class action lawsuit.

Q3. What is the deadline for filing a lead plaintiff motion in the Fortrea case? The deadline for filing a lead plaintiff motion in the Fortrea Class Action Lawsuit is August 1, 2025.

Q4. How much has Fortrea’s stock value declined since its peak? Fortrea’s stock has plummeted 86.39% from its peak to a 52-week low of $4.94 in May 2025.

Q5. What are the financial arrangements for investors seeking legal representation in this case? Law firms handling the Fortrea Lawsuit such as Timothy L. Miles operate on a contingency fee basis, meaning investors face no upfront costs. Attorneys only receive payment if they secure a recovery for the class.