GeneDx Holdings faces class action after 49% stock crash on Fabric write-off

GeneDx Holdings Corp. shareholders filed a securities class action after the stock plunged 49% on a $31.2 million write-off tied to its Fabric Genomics acquisition.

"We're investigating whether GeneDx may have intentionally or recklessly misled investors about Fabric's real value to the company," Reed Kathrein, partner at Hagens Berman, said.

The company on May 4 reported Q1 2026 revenue that missed estimates for both its exome and genome testing lines. GeneDx cut its full-year revenue guidance to $475 million-$490 million from $540 million-$555 million, a reduction of about $65 million. The average reimbursement rate fell to about $3,300, roughly $200 below expectations. Adjusted gross margin declined to 69% from 74% in the prior quarter.

The impairment wiped out roughly 94% of the $36.5 million GeneDx paid for Fabric Genomics just over a year earlier. The class action seeks to represent investors who bought WGS common stock between April 16, 2025 and May 4, 2026. The lead plaintiff deadline is Aug. 3.

The lawsuit alleges GeneDx made false statements about Fabric's ability to generate recurring software-based revenue and create operational efficiencies. When the company announced the acquisition in April 2025, management said it would expand GeneDx's addressable market through multiple scalable revenue streams and transform static data into a recurring revenue-generating platform.

On the Q2 2025 earnings call, executives described Fabric as on track with revenue and gross margin plans, calling the collaboration "fantastic." The complaint contends those statements lacked a reasonable factual basis because defendants knew of significant problems with Fabric's viability.

The stock closed at $34.51 on May 5, down $33.42 from the prior session. The decline pushed GeneDx's market capitalization below $2 billion, according to exchange data.

Several law firms including Robbins LLP, Faruqi & Faruqi, and Levi & Korsinsky have announced investigations or filed similar claims. All representation is on a contingency fee basis.

The lawsuit adds legal risk to a company already facing operational headwinds from declining reimbursement rates and a failed acquisition. Investors will watch for any SEC inquiry and the court's decision on lead plaintiff by the Aug. 3 deadline.

This article is for informational purposes only and does not constitute investment advice.