Fortrea Holdings Inc.

Ladies and gentlemen, thank you for standing by. Welcome to Fortria fourth 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 star 11 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 like now to turn 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 fourth 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 CEO Tom Pike and our CFO Jill McConnell. The call is being webcasted, and the slides accompanying today's presentation have been posted to our 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 statements concerning forward-looking statements and risk factors in our press release and presentation that we posted on the website. Please note that any forward-looking statements represent our views as of today, March 11, 2024, 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 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 press release and earnings call presentation slides 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. Thank you for joining today's fourth quarter earnings call. Let me begin with a few comments on our progress in 2023 as well as talk about a couple of current events. I feel great about the progress we're making toward making Fortria attractive to all of its stakeholders. This time last year, we were a division of a division within a much larger parent and ended 2023 as a standalone company, demonstrating the ability to sell work at a level that we believe will achieve market growth rates at the same time as delivering on our commitments and improving our operations. We completed the spin from our parent company just before midnight on July 1st. This team completed the spin at an impressive speed, separating out a $3 billion enterprise while preparing it to go public in less than a year. As part of that process, we assembled a great leadership team, combining experienced leaders from the former parent and bringing in seasoned industry executives. At the same time, we recruited an outstanding board of directors. During the spin process, our team established a roadmap for independent operations in a way that protected our customers' data and assured ongoing projects. I'm proud to say that we did not lose any customers and no customer projects were disrupted because of spin-related activities. We created and launched a new brand, Fortria, and morphed our whole company from blue to green in a matter of just a few months. Since our debut as an independent company on July 1, the pace of our transformation has not slowed. This organization works hard and it makes decisions at a fast pace. It's a testament to our team around the world that we continue to hit critical milestones. Our commercial transformation is off to a great start, already delivering tangible results. We're pleased with our book to bill ratio for the fourth quarter of 1.3 times, bringing us to a book to bill of more than 1.27 times for our first six months as an independent organization. Given the lag between bookings and revenue, We expect the company to return to growth later this year. Looking specifically at the bookings in the fourth quarter, the awards span biotech, large pharma, and across our therapeutic areas, and it's an attractive mix. We continue to be strong in oncology and have also seen wins in other growing areas, such as the GLP-1 in phase one. We've been successful selling solutions across all of our clinical businesses, phase one through four, both full service and FSP. Our ability to deliver critical projects globally, forge strategic partnerships, and add value has positioned us as a key player in the industry. The fourth quarter momentum is carried through to this quarter. We're looking at a solid pipeline for Q1 if we execute well. We've made strong progress in exiting the transition service agreements, which we call TSAs, with our former parent company. By the end of the year, we had exited about 40% of our TSAs, with a few more added this quarter so far. To help us with the TSAs, we selected two leading global information technology and services providers as strategic partners. Cognizant will consolidate our infrastructure, hybrid cloud, and application support. We benefit from a deeply experienced partner who can help us solidify our position and move to a best-in-class technology, savvy global CRO. Accenture is both our managed security services partner and will help us transition to a new enterprise resource planning system. While we're exiting TSAs and building our infrastructure, we're also making selective investments in differentiation to drive our growth. We continue to make investments in our brand. We recently kicked off a new advertising campaign to raise awareness of our brand, as well as our impressive heritage of 30 years in drug development. We're raising our visibility at industry events, For instance, I'm going to be speaking at BIO in June. Another investment area is investigator site effectiveness. We established a site advisory board that currently represents over 440 sites across six countries and includes key pharma industry leaders. We're making progress on our technology and data strategies, which involve a complementary approach, partnering with industry leaders, and developing our own intellectual property where we add value. Recently announced, with Viva and Advara, an integrated patient and site-centric solution that streamlines the clinical trial experience. Fortria has been selectively using artificial intelligence and machine learning for years to improve our operational efficiency, from trip report review for CRAs to bed scheduling in our early development clinical research units. We're pushing further now, hiring dedicated AI experts who, among other things, are establishing an AI ML innovation studio to support our customers and accelerate our investments going forward. We'll soon be sharing more on this. In November, we announced a partnership with Medidata, where we're using Medidata AI to improve access to and participation of this diverse population groups in clinical studies. While this partnership addresses diversity as a critical requirement of today's research, it's not the only advance that we've made in this area. Our consulting team, for instance, has developed a comprehensive epidemiological plan template that leverages our expertise to support improvement in the development and delivery of diversity and inclusion plans. This is becoming an area of expertise for Fortrea that's in demand from large and small sponsors. Across Fortrea, we're executing our strategic plan and investing in differentiation with discipline and focus that you would expect from this seasoned leadership team that we've assembled. The changes we've made are already delivering results, most visibly in terms of new business. Earlier today, we announced another step forward in our journey. Last fall, we did a strategic review, which pointed to the importance of focusing our investments and innovation on phase one to four clinical research services, including consulting, which deepens our real-world evidence capabilities and brings market access experience, which is helpful to drug development. Looking at our enabling services segment, while good businesses, they were less aligned with that needed focus. Following that, I'm happy to report that we just signed a definitive agreement to divest our endpoint clinical and Fortrea patient access businesses to Arsenal Capital Partners, a private equity firm with market-leading companies in healthcare. This will help Fortrea management to focus on important phase one to four clinical services as we transform our company. It also helps improve our capital structure. As I commented in the press release from this morning with Arsenal, I'm confident that Endpoint for True Patient Access will be able to strengthen their market position, nurture top-tier talent, and invest in new capabilities and resources while delivering solutions that improve patients' lives, which is a mission we all share. Before I pass to Jill for a review of our financial performance, I do want to describe a gap expense in the fourth quarter that was incurred in connection with our ongoing work with the customer, which has been the subject of prior disclosure. For background, in 2022, a third-party vendor, which is not associated with Fortrea, made a programming error that, when discovered, limited the usefulness of data from two arms of a forearm trial. As we noted in January, our independent expert reviewer determined this was not the fault of Fortria or our processes. However, we incurred significant incremental expenses associated with this rare third-party error. As part of working with the customer, we wrote off certain receivables, discounted some work, and provided other considerations as part of a multi-party solution to facilitate ongoing trials. This amount will be reflected in GAAP earnings, but not in adjusted EBITDA due to its unusual nature. Jill, I'll hand over to you now for more detail on the numbers.