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Neptune Wellness Solutions Inc. Class Action Lawsuit

Company Name
Neptune Wellness Solutions Inc.
Stock Symbol
NEPT
Class Period
July 24, 2019 to February 16, 2021
Motion Deadline
May 15, 2021
Court
Eastern District of New York
33 days left to seek lead plaintiff status

Case Summary

The Neptune Wellness Solutions Inc. class action lawsuit charges Neptune Wellness and certain of its executives with violations of the Securities Exchange Act of 1934 and seeks to represent purchasers or acquirers of Neptune Wellness securities between July 24, 2019 and February 16, 2021, inclusive (the “Class Period”).  The Neptune Wellness class action lawsuit was commenced on March 16, 2021 in the Eastern District of New York and is captioned Gong v. Neptune Wellness Solutions Inc., No. 21-cv-01386.

Neptune Wellness operates as an integrated health and wellness company.  Neptune Wellness offers turnkey product development and supply chain solutions to businesses and government customers in various health and wellness verticals, such as legal cannabis and hemp, nutraceuticals, and white label consumer packaged goods.  On May 9, 2019, Neptune Wellness announced that it had signed a definitive agreement to acquire the assets of SugarLeaf Labs, LLC and Forest Remedies LLC (collectively, “SugarLeaf”), a registered North Carolina-based commercial hemp company providing extraction services and formulated products (the “SugarLeaf Acquisition”).  On July 24, 2019, Neptune Wellness announced the closing of the SugarLeaf Acquisition.

The Neptune Wellness class action lawsuit alleges that, throughout the Class Period, defendants made false and/or misleading statements and/or failed to disclose that: (i) the cost of Neptune Wellness’s integration of the assets and operations acquired in the SugarLeaf Acquisition would be larger than Neptune Wellness had acknowledged, placing significant strain on Neptune Wellness’s capital reserves; (ii) accordingly, it was reasonably foreseeable that Neptune Wellness would need to conduct additional stock offerings to raise more capital; and (iii) as a result, Neptune Wellness’s public statements were materially false and misleading at all relevant times.

On February 15, 2021, Neptune Wellness announced a net loss of nearly CA$73.8 million in Neptune Wellness’s third quarter of fiscal year 2021, down 63.81% and over 1,000% year-over-year, respectively.  Neptune Wellness attributed the net loss, in part, to an almost CA$35.6 million impairment of goodwill and an approximately CA$2.1 million impairment of “property, plant and equipment and right-of-use assets related to the acquisition of SugarLeaf in July 2019,” as well as accelerated amortization of CA$13.95 million “also related to the SugarLeaf acquisition.”  Additionally, Neptune Wellness disclosed that its “[g]ross margin declined to a loss of 268.3%,” which included a non-cash CA$7.39 million “write-down of inventory and deposits to reflect their net realizable value.”  On this news, Neptune Wellness’s stock price fell more than 30%.

Then, on February 17, 2021, Neptune Wellness announced the termination of an “at-the-market” offering conducted by Neptune Wellness, selling 9,570,735 of its common shares and raising approximately $18.6 million in gross proceeds.  Just minutes later, Neptune Wellness issued a second announcement that Neptune Wellness was conducting a $55 million registered direct offering.  On this news, Neptune Wellness’s stock price fell more than 10%, further damaging investors.

The Private Securities Litigation Reform Act of 1995 permits any investor who purchased Neptune Wellness securities during the Class Period to seek appointment as lead plaintiff in the Neptune Wellness class action lawsuit.  A lead plaintiff is generally the movant with the greatest financial interest in the relief sought by the putative class who is also typical and adequate of the putative class.  A lead plaintiff acts on behalf of all other class members in directing the Neptune Wellness class action lawsuit.  The lead plaintiff can select a law firm of its choice to litigate the Neptune Wellness class action lawsuit.  An investor’s ability to share in any potential future recovery of the Neptune Wellness action lawsuit is not dependent upon serving as lead plaintiff.  If you wish to serve as lead plaintiff of the Neptune Wellness class action lawsuit or have questions concerning your rights regarding the Neptune Wellness class action lawsuit, please provide your information here or contact counsel, Michael Albert of Robbins Geller, at 800/449-4900 or 619/231-1058 or via e-mail at malbert@rgrdlaw.com.  Lead plaintiff motions for the Neptune Wellness class action lawsuit must be filed with the court no later than May 17, 2021.

Robbins Geller Rudman & Dowd LLP is one of the world’s leading law firms representing investors in securities class action litigation.  With 200 lawyers in 9 offices, Robbins Geller has obtained many of the largest securities class action recoveries in history.  For eight consecutive years, ISS Securities Class Action Services has ranked the Firm in its annual SCAS Top 50 Report as one of the top law firms in the world in both amount recovered for shareholders and total number of class action settlements.  Robbins Geller attorneys have helped shape the securities laws and have recovered tens of billions of dollars on behalf of aggrieved victims.  Beyond securing financial recoveries for defrauded investors, Robbins Geller also specializes in implementing corporate governance reforms, helping to improve the financial markets for investors worldwide.  Robbins Geller attorneys are consistently recognized by courts, professional organizations and the media as leading lawyers in the industry.

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