Bragar Eagel & Squire, P.C., a nationally recognized stockholder rights law firm, announces that a class action lawsuit has been filed against Catalent, Inc. (“Catalent” or the “Company”) (NYSE: LLAP) in the United States District Court for the District of New Jersey on behalf of all persons and entities who purchased or otherwise acquired Catalent securities between August 30, 2021 and October 31, 2022, both dates inclusive (the “Class Period”). Investors have until April 25, 2023 to apply to the Court to be appointed as lead plaintiff in the lawsuit.

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This case is about the rise and fall of a company that initially benefited from the COVID-19 pandemic (also referred to herein as “COVID-19,” “COVID,” or the “pandemic”). As a vaccine manufacturer, Catalent was one of the beneficiaries of COVID because it seemed well positioned to capitalize on the rapidly growing demand for vaccine production capacity. Indeed, Catalent almost doubled its business during the first year of the pandemic when the bulk of vaccines were administered. Catalent’s success during the early stages of the pandemic caused its stock price to soar to record highs. By mid-2021, when COVID-related work dropped off, Defendants engaged in accounting and channel stuffing schemes to pad the Company’s revenues. These schemes gave Catalent the appearance of continued growth, causing its stock price to reach new record highs. Meanwhile, to support these schemes and keep pace with its lofty growth targets, Catalent was cutting corners on safety and control procedures at key production facilities. By late 2022, Catalent reported significant sales declines and excess inventory throughout its supply chain. As a result, Catalent stock dropped to pre-COVID levels causing substantial losses to its investors as they learned that Catalent’s early-COVID revenues were never sustainable, and its Class Period revenues were the product of securities fraud.

By way of background, Catalent is a multinational corporation that manufactures and packages drugs into delivery devices fit for human consumption (i.e., pre-filled syringes, vials, pills, etc.) pursuant to long-term supply contracts with pharmaceutical companies. Catalent directly sells these products to pharmaceutical companies which later sell them through the supply chain to healthcare providers (i.e., hospitals, clinics, etc.), which administer them to patients, who are the end consumers.

Prior to the onset of the pandemic, Catalent’s quarterly revenue averaged approximately $669 million between April 2018 and March 2020. During the period that those revenues were reported to the market, Catalent stock had an average closing price of approximately $47.57 per share. In early 2020, Catalent took on numerous large-scale COVID projects, including filling vaccines into syringes for Moderna and AstraZeneca. Those projects catapulted the Company’s quarterly revenues to record highs, which averaged approximately $940 million between April 2020 and March 2021, a 40 percent jump over preCOVID revenues. Over the period when that revenue surge was reported to the market, Catalent stock had an average closing price of $102.42 per share.

By mid-2021, as the pandemic wore on, demand for Catalent’s COVID products decreased because vaccinations had already been administered to a large number of potential patients. For example, Centers for Disease Control and Prevention (“CDC”) data indicates that COVID vaccinations in the United States

reached an all-time high of 4.5 million doses on April 1, 2021, and averaged 1.5 million daily doses between December 14, 2020 and August 28, 2021. By comparison, CDC data indicates that average daily vaccinations in the United States were under 625,000 during the Class Period.

Despite this marked decline in the demand for COVID vaccines, Catalent continued to report growing revenues and assured investors that customer demand remained strong during the Class Period. The average quarterly revenue reported during the Class Period was $1.2 billion, an 80 percent increase over preCOVID-19 revenues and a 28 percent increase over its reported revenues for the first year of the pandemic. Unbeknownst to investors, Defendants artificially inflated these revenues through fraudulent accounting and channel stuffing schemes to mislead investors into believing that Catalent was generating

sustainable revenue growth. Defendants’ fraud caused Catalent stock to trade at a record high of $142.64 per share on September 9, 2021 and an average closing price of approximately $108.00 per share during the Class Period.

Statements made by Defendants throughout the Class Period were materially false and misleading when made because they misrepresented or failed to disclose the following adverse facts, which were known to Defendants or recklessly disregarded by them:

a. Catalent materially overstated its revenue and earnings by prematurely recognizing revenue in violation of U.S. Generally Accepted Accounting Principles (“GAAP”);

b. Catalent had material weaknesses in its internal control over financial reporting related to revenue recognition;

c. Catalent falsely represented demand for its products while it knowingly sold more product to its direct customers than could be sold to healthcare providers and end consumers;

d. Catalent disregarded regulatory rules at key production facilities in order to rapidly produce excess inventory that was used to pad the Company’s financial results through premature revenue recognition in violation of GAAP and/or stuffing its direct customers with this excess inventory; and

e. As a result of the foregoing, Defendants lacked a reasonable basis for their positive statements about the Company’s financial performance, outlook, and regulatory compliance during the Class Period.

Catalent’s misrepresentations were first revealed to the market on August 29, 2022, when the Company disclosed that demand for its COVID-related products was facing substantial headwinds. On this news, Catalent’s stock price declined by 7.4 percent to close at $92.28 per share on August 29, 2022.

Then, on September 20, 2022, a Washington Post report exposed that the release of COVID-19 vaccines produced by Catalent had been delayed by regulators because of improper sterilization at one of Catalent’s key facilities. On this news, Catalent’s stock price declined by 9.3 percent over two trading sessions, to close at $79.06 per share on September 22, 2022.

On November 1, 2022, Catalent revealed that its quarterly earnings had declined to zero and lowered its financial guidance, indicating falling demand. The Company also disclosed that regulatory issues at its key facilities were negatively impacting its financial results. On this news, Catalent’s stock price declined by 31.7 percent over two trading sessions, to close at $44.90 per share on November 2, 2022. All told, over the course of the Class period, Catalent stock fell from a high above $142.00 to close at $44.90 on November 2, 2022, a more than 68 percent decline.

On November 16, 2022, Catalent revealed that it was carrying approximately $400 million in excess inventory, further revealing that the Company had misrepresented demand for its products as well as its purported ability to predict future demand. On this news, Catalent’s stock price declined by 8.5 percent, over two trading sessions, to close at $42.07 per share on November 17, 2022.

Then, on December 8, 2022, GlassHouse Research published a report claiming that Catalent had been materially overstating its revenues by $568.2 million in violation of GAAP. The report detailed numerous red flags that were indicative of Catalent’s improper accounting practices. These red flags included the rapid increase in Catalent’s contract asset and inventory balances, declining customer deposits, executive turnover, and recent scrutiny of the Company’s revenue accounting by regulators. The report also described how Catalent’s direct customers were stuffed with excess inventory which “will take years to unwind.” On this news, Catalent’s stock price declined 3.6 percent to close at $45.54 per share on December 8, 2022.

As a result of Defendants’ wrongful acts and omissions, and the precipitous decline in the market value of Catalent securities, Plaintiff and other Class members have suffered significant losses and damages.

If you purchased or otherwise acquired Catalent shares and suffered a loss, are a long-term stockholder, have information, would like to learn more about these claims, or have any questions concerning this announcement or your rights or interests with respect to these matters, please contact Brandon Walker or Melissa Fortunato by email at investigations@bespc.com, telephone at (212) 355-4648, or by filling out this contact form. There is no cost or obligation to you.

About Bragar Eagel & Squire, P.C.:

Bragar Eagel & Squire, P.C. is a nationally recognized law firm with offices in New York, California, and South Carolina. The firm represents individual and institutional investors in commercial, securities, derivative, and other complex litigation in state and federal courts across the country. For more information about the firm, please visit www.bespc.com. Attorney advertising. Prior results do not guarantee similar outcomes.

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