10:33 AM EDT, 05/13/2024 (MT Newswires) -- Fortrea ( FTRE ) lowered its full-year revenue outlook on Monday as the clinical development and patient access solution provider's first-quarter results missed market expectations.

The company now anticipates revenue to come in between $2.79 billion and $2.86 billion for the 2024 financial year, compared with its previous projections of $3.14 billion to $3.21 billion. The consensus on Capital IQ is for $3.08 billion.

"This adjustment reflects lower study start-up due to the therapeutic mix and certain biotech programs, our lower-than-anticipated first-quarter book-to-bill and lower recent pass-through trends," Chief Financial Officer Jill McConnell said during a conference call, according to a Capital IQ transcript. "As a result of these headwinds, we now expect to have overall revenue growth broadly flat versus 2023, although the second half is targeted to be modestly positive at around 3%."

Shares of Fortea, which separated from Laboratory Corp. of America (LH) in 2023, plunged 13% in Monday's trading session.

For the three months through March 31, the company posted an adjusted loss of $0.04 per share versus earnings of $0.33 last year, while the Street expected it to breakeven. Revenue fell to $662.1 million from $693.9 million, trailing analysts' $754.6 million estimate.

Revenue from clinical services decreased 4.6% on a yearly basis as lower service fee revenue more than offset higher pass-through revenue, according to McConnell. The reduced quantity of new business wins before the company's spin off, along with mix shift, contributed to the lower service fee revenue, she said on the call.

Adjusted earnings before interest, taxes, depreciation and amortization slipped to $29.5 million from $41.7 million in the same quarter of 2023, while adjusted EBITDA margin slid to 4.5% from 6%, McConnell told analysts. Total costs rose to $699.4 million from $685.2 million.

"The continued spin year headwinds of lower full-service clinical sales, elevated infrastructure costs, and the resources associated with the transition services agreement have continued to weigh on our results," McConnell said. "We expected the elevated costs, and we are making progress on exiting the (transition services agreement) and working to mitigate other headwinds."

In March, the company agreed to sell its enabling services division to Arsenal Capital Partners for up to $345 million. The sale of the business, which includes the endpoint clinical and Fortrea ( FTRE ) patient access operations, is expected to complete in the ongoing quarter, Fortrea ( FTRE ) said in March.

Price: 28.22, Change: -4.81, Percent Change: -14.56