Fortrea Holdings Inc.

Good morning and thank you for standing by. Welcome to the Fortree second quarter 2023 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press 411 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Hema Nguva, Head of Investor Relations and Corporate Development. Please go ahead.

Good morning, and thank you for joining Fortria's second quarter 2023 earnings conference call. I am Hema Nguva, Head of Investor Relations and Corporate Development at Fortria. On the call with me today are our CEO, Tom Pike, and our CFO, Jill McConnell. The call is being webcasted, and the slides accompanying today's presentations have been posted to the investor relations page of our website, fortier.com. During this call, we'll make certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are subject to significant risks and uncertainties that could cause actual results to differ materially from our current expectations. We strongly encourage you to review the reports we filed with the SEC regarding these risks and uncertainties. In particular, those that are described in the cautionary statement concerning forward-looking statements and risk factors in our Form 10 this morning press release and presentation that we posted on the website. Please note that any forward-looking statements represent our views as of today, August 14, 2023, and that we assume no obligation to update the forward-looking statements even if estimates change. During this call, we'll also be referring to certain non-GAAP financial measures. These non-GAAP measures are not superior to or replacement for the comparable GAAP measures, but we believe these measures help investors gain a more complete understanding of results. Reconciliation of such non-GAAP financial measures to the most directly comparable GAAP measures is available in the earnings press release and earnings call presentation slide provided in connection with today's call. With that, I'd like to turn it over to our CEO, Tom Pike. Tom?

Thank you, Hema. Good morning, everyone. Let's get right down to business. In July of 2022, LabCorp announced it would spin off its clinical services and patient access services business unit, from its global laboratory businesses. Now named Fortrea, this business represented about half of the revenues of LabCorp's previous drug development segment and spans primarily clinical development phases one through four. Fortrea's capabilities have an impressive heritage that goes back more than 30 years through the CRO pioneer Covance and acquisitions like Chiltern. This business grew at about 15% compound annual growth rate from 2010 through 2022. At the same time, the business was nested in a much larger organization with a central lab and diagnostic labs and has not operated as a standalone unit before. Therefore, there was a tremendous effort required to prepare for a successful spin, which was completed quickly in under a year. This fast-paced approach to a spin is often referred to as a lift-and-shift approach, really no substantive business improvements. Over the past 12 months, the people here have been navigating what I've come to call the spin year. During this 12-month period, some customers took a wait-and-see approach with us before awarding new business. I think some wanted to see who was staying, who was going, or if there would be some other disruption. I'm not aware of the spin costing Portria any existing customers. The major issue in the spin year was a slowdown in new RFP opportunities, probably compounded by a softer biotech environment and lack of larger new customers. We have been referring to the situation as our mix issue publicly. Headline book-to-bill numbers were okay and consistent with industry and prior company practices, but the mix of sales, including new business versus renewals, was not sufficient to meet even average industry growth rates for some quarters. Jill, our CFO, is going to walk you through the results of what I hope is the last quarter of the spin year. It's important to note that we were an independent company for only a minute, literally, so this is detailed reporting about a discontinued segment of the prior parent company including corporate allocations, one-time and new recurring SPIN costs, and more. Jill, over to you.