The Fortrea lawsuit is a federal securities class action accusing the contract research organization and two top executives of misleading investors about the strength of its business after spinning off from Labcorp and about its 2025 financial outlook. Filed on June 2, 2025, in the U.S. District Court for the Southern District of New York, the case is captioned Deslande v. Fortrea Holdings Inc., case number 1:25-cv-04630, and is awaiting a ruling on the defendants’ motion to dismiss.1CourtListener. Deslande v. Fortrea Holdings Inc.2PR Newswire. FTRE Investor Alert: Fortrea Holdings Inc.
What Investors Say Fortrea Misled Them About
The complaint brings claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 against Fortrea Holdings Inc., former CEO Thomas Pike, and CFO Jill McConnell.3Holzer Law. Deslande v. Fortrea Holdings Inc. Complaint It alleges that public statements by the company and its executives during the class period painted an unrealistic picture of Fortrea’s finances in four related ways.
First, Fortrea allegedly overstated how much revenue its inherited pre-spin projects, contracts carried over from the Labcorp era, would produce in 2025. The company later acknowledged those projects were winding down faster than expected and generating lower revenue and thinner margins than forecast.4PR Newswire. FTRE Stockholder Alert: Robbins LLP
Second, the complaint says Fortrea inflated the savings it would realize by exiting the transition services agreements it had with Labcorp after the spinoff. In reality, according to the complaint, the costs shifted from TSA fees to internal operating expenses rather than disappearing.5Saxena White. Deslande v. Fortrea Holdings Inc. Complaint
Third, because of those two overstatements, the company’s publicly announced 2025 EBITDA targets were allegedly unreachable from the start.6PR Newswire. Fortrea Holdings Inc. Class Action
Fourth, more broadly, the complaint alleges Fortrea misrepresented how well its stand-alone business model was working and concealed that new post-spin contract wins were not coming in fast enough to replace the shrinking legacy book.7Robbins LLP. Fortrea Holdings Inc.
The March 2025 Disclosure That Triggered the Suit
The complaint centers on March 3, 2025. That day, Fortrea reported fourth-quarter 2024 results and revised its 2025 outlook sharply downward. CEO Thomas Pike acknowledged that revenue from legacy pre-spin contracts was coming in well below forecasts and that newer business was not ramping quickly enough to close the gap. The company effectively abandoned a previously affirmed EBITDA margin target of about 13%, and management conceded that earlier growth and profitability assumptions had been too optimistic.8ZLK. Fortrea FTRE Securities Class Action Lawsuit Update
Fortrea stock fell 25% on the news, dropping $3.47 to close at $10.38.4PR Newswire. FTRE Stockholder Alert: Robbins LLP The shares had been under pressure before that. In September 2024 they fell about 12% after a Jefferies analyst downgraded the company over concerns about the TSA cost-savings narrative, and in December 2024 they dropped roughly 8% after Fortrea canceled investor conferences and drew another downgrade.5Saxena White. Deslande v. Fortrea Holdings Inc. Complaint
Two weeks after the March 2025 disclosure, Fitch Ratings downgraded Fortrea’s credit rating and projected 2025 EBITDA margins of just 7% to 8%, a revenue decline of more than 7% for the year, and negative free cash flow through at least 2026.9Fitch Ratings. Fitch Downgrades Fortrea IDR to B
Who Is Covered by the Class Period
Named plaintiff Lucas Deslande filed on behalf of all investors who bought Fortrea common stock between July 3, 2023, the first day the shares traded on the Nasdaq under the ticker FTRE, and February 28, 2025, the last trading day before the corrective disclosure.10Newsfile Corp. FTRE Class Notice After the August 1, 2025, deadline for lead plaintiff motions, several institutional investors competed for the role. The City of Pontiac Reestablished General Employees’ Retirement System and the Construction Industry Laborers Pension Fund were ultimately designated as lead plaintiffs.11PACER Monitor. Deslande v. Fortrea Holdings Inc. et al.
No class has been certified yet. Certification is a separate ruling that typically comes later in a securities case, and until it happens no one outside the named plaintiffs is formally in the case.
Where the Case Stands Now
Lead plaintiffs filed an amended class action complaint, and the defendants moved to dismiss. As of the last docket entry on April 9, 2026, the defendants had filed their reply brief in support of that motion, so the issue is fully briefed and awaiting a ruling by U.S. District Judge Katherine Polk Failla.11PACER Monitor. Deslande v. Fortrea Holdings Inc. et al.1CourtListener. Deslande v. Fortrea Holdings Inc. If the motion is denied, the case moves into discovery and then to class certification. If it is granted, the lead plaintiffs may be permitted to amend, or the case may end.
Why the Labcorp Spinoff Matters to the Claims
Fortrea’s origin is central to the lawsuit. The company was created to house Labcorp’s clinical development and commercialization services business. Labcorp announced the separation in July 2022, incorporated Fortrea Holdings as a Delaware corporation in January 2023, and completed the distribution on June 30, 2023.12SEC. Fortrea Holdings Inc. Form 10-12B/A Shares began trading on July 3, 2023, and Fortrea paid Labcorp approximately $1.6 billion in cash as part of the deal.13Labcorp. Labcorp Completes Spin of Fortrea
Fortrea operates as a contract research organization, running Phase I through Phase IV clinical trials for pharmaceutical and biotech clients. The complaint alleges that from day one as a public company, management overstated both the revenue the inherited project backlog would generate and the savings the business would pocket by unwinding its operational ties to Labcorp. Those two threads are what tie the class period, the March 2025 disclosure, and the price drop together in a single fraud theory.
The company has not conceded the allegations. Its position is set out in the pending motion to dismiss, and whether the case moves forward will turn on how Judge Failla rules on that motion.