A class action lawsuit was filed against Maravai Lifesciences Holdings (MRVI) by Levi & Korsinsky on March 3, 2025. The plaintiffs (shareholders) alleged that they bought MRVI stock at artificially inflated prices between August 7, 2024 and February 24, 2025 (Class Period) and are now seeking compensation for their financial losses. Investors who bought Maravai Lifesciences stock during that period can click here to learn about joining the lawsuit.
Maravai is a life sciences company that offers critical products to other biotech, biopharma and life sciences companies to enable the development of novel vaccines, drug therapies, and diagnostics, and to support research on human diseases.
The company’s improper revenue recognition practices and inadequate internal controls are at the heart of the current complaint.
Maravai Lifesciences Holdings’ Misleading Claims
According to the lawsuit, Maravai and two of its senior officers (Individual Defendants) repeatedly made false and misleading public statements throughout the Class Period. Particularly, they are accused of omitting truthful information about the adequacy of Maravai’s internal controls over financial reporting related to revenue recognition, and ancillary issues, from SEC filings and related material.
For instance, during the Class Period, the company noted in its Q2FY24 quarterly report that management had evaluated the effectiveness of its disclosure controls and procedures and concluded that they were “effective at a reasonable assurance level as of June 30, 2024.”
Additionally, in a November 7 press release, Maravai disclosed its financial performance for Q3, along with a goodwill impairment charge of $154.2 million.
Lastly, in the quarterly report for Q3FY24, the company noted that it had conducted a test of its reporting units for analyzing potential goodwill impairment charges.
However, subsequent events (discussed below) revealed that Maravai misled investors about its revenues and financial performance owing to faulty reporting practices.
Plaintiffs’ Arguments
The plaintiffs maintain that the defendants deceived investors by lying and withholding critical information about the business practices and prospects during the Class Period. Importantly, the defendants are accused of misleading investors about the effectiveness of the company’s internal controls and procedures.
The information became clear before the market opened on February 25, 2025, when Maravai announced that it was delaying the release of its Q4 and full year Fiscal 2024 results. Moreover, Maravai revealed that it would delay the filing of its annual report (10-K) for the year ended December 31, 2024.
In connection with the delay, Maravai said that it had identified an error in recognizing revenues that led to incorrectly recording revenue of roughly $3.9 million in the last week of Q2FY24, instead of the first week of Q3FY24. The error occurred because revenue was recognized upon shipment, instead of being recorded upon receipt by the customer.
Furthermore, Maravai disclosed that it needed more time to finish assessing a potential non-cash impairment charge related to goodwill from its previous acquisition of Alphazyme LLC. Following the news, MRVI stock collapsed 21.7% on February 25.
To conclude, the defendants allegedly misled investors about the company’s flawed internal controls and revenue recognition techniques. Owing to these challenges, MRVI stock has lost 61.1% so far this year.
