Fortrea Holdings Inc. (NASDAQ:FTRE) shares are trading lower after the company reported soft first-quarter FY24 results and cut its revenue outlook.

Revenue of $662.1 million missed the consensus of $754.6 million. As of March-end, the backlog stood at $7.4 billion, and the book-to-bill ratio for the quarter was 1.11x.

Adjusted EBITDA stood at $29.5 million, a decline from $41.7 million a year ago. Adjusted EPS of $(0.04) missed the street view of $0.01.

In the quarter, operating cash flow came in at $(25.6) million, and free cash flow was $(34.9) million. As of March-end, cash and cash equivalents stood at $92.8 million, and gross debt was $1.65 billion.

Tom Pike, chairman and CEO of Fortrea, said, "The demand for our services is good. Our business operations are sound even as we continue to knock down challenges related to the unique circumstances of our 2023 spin-out and before."

"We have made strong progress with the planned exits of our Transition Services Agreements with our former parent company, and our planned divestment of our Endpoint and Patient Access businesses is making good progress."

FY24 Outlook: The company cut the revenue guidance to $2.785 billion-$2.855 billion from $3.14 billion-$3.205 billion (vs. estimate of $3.08 billion).

Also, Fortrea trimmed adjusted EBITDA guidance to $240.0 million-$260.0 million from $280 million-$320 million.

In March, the company inked a deal to divest assets related to its Enabling Services segment, namely its Endpoint Clinical and Fortrea Patient Access businesses, to an affiliate of Arsenal Capital Partners.

The transaction is expected to close in the second quarter, subject to customary closing conditions and regulatory approvals.

Investors can gain exposure to the stock via Invesco S&P SmallCap Health Care ETF (NASDAQ:PSCH) and Vanguard S&P Small-Cap 600 Value ETF (NYSE:VIOV).

Price Action: FTRE shares are down 14% at $28.41 at the last check Monday.

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