Overview

• Mercury Systems, a technology company that produces component modules and subsystems for the aerospace and defense industries, is facing a class action lawsuit alleging false and misleading statements and failure to disclose deteriorating business conditions.
• The lawsuit alleges that Mercury Systems used acquisitions and improper revenue recognition practices to mask its inability to grow organically.
• Specifically, the lawsuit points to Mercury Systems' acquisition of Physical Optics Corporation (POC), which allegedly caused POC to lose its small business accreditation and prevented it from winning contracts that made up a large portion of its historical business.
• The lawsuit further alleges that Mercury Systems had at least twenty programs that were not performing well and that its initiative to increase margins was not working and was in fact cutting into margins.
• On June 23, 2023, Mercury Systems announced a series of changes to leadership and its Board of Directors, including changes to the positions of President and CEO, the appointment of a new independent director, and the identification of a second new independent director and a permanent CFO.