The well-known U.S. direct-to-consumer genetic testing company 23andMe has filed for bankruptcy protection to allow a court-supervised sale of the business to take place.
Co-founder and CEO Anne Wojcicki has stepped down with immediate effect, although the company will continue to operate during the sale process according to a press statement released from 23andMe.
The company went public in 2021 by merging with VG Acquisitions, a special-purpose acquisitions company formed by Richard Branson’s Virgin Group. It had a market cap of more than $6 billion at the time, but its value has dropped significantly in recent years to under $50 million prior to this week’s bankruptcy protection filing.
One of the reasons for the drop in value is that after paying for a one-time DNA testing kit, most customers had no reason to return to 23andMe for repeat business leading to a lack of repeat revenue.
In contrast, competitor Ancestry.com appears to be doing better, although did cut some staff last year. This is likely because it has a more diversified business model, with a focus on genealogy services, meaning it does not just rely on one-time genetic testing revenue.
23andMe’s decision to offer health risk predictions may also have hurt the company, due to concerns about the efficacy of such tests and the ethics of direct-to-consumer genetic health testing.
A large data breach in 2023 led to almost seven million of 23andMe’s customers’ data being stolen by hackers using a technique known as “credential stuffing.” This led to a drop in customer confidence in the firm and a lawsuit, which resulted in a $30 million payout in September 2024.
The entire board except Wojcicki also resigned in September last year, leaving the CEO as the remaining board member. They cited a lack of an appropriate buyout offer from Wojcicki as the reason for their resignations.
Writing in a resignation letter sent to the CEO, they said: “After months of work, we have yet to receive from you a fully financed, fully diligenced, actionable proposal that is in the best interests of the non-affiliated shareholders. We believe the Special Committee and the Board have provided ample time for you to submit such a proposal.”
Despite making a second offer to take the company private a month ago for 41 cents per share, Wojcicki’s offer was rejected by a special committee of independent directors, ultimately leading to the start of bankruptcy proceedings.
The fall of 23andMe will understandably concern customers who may be worried about what will happen to their sensitive genetic information. California Attorney General Rob Bonta issued an alert for customers of 23andMe to inform them of how to request that their data and samples be deleted from the 23andMe database.
In a post on the social media platform X, Wojcicki commented: “While I am disappointed that we have come to this conclusion and my bid was rejected, I am supportive of the company, and I intend to be a bidder. I have resigned as CEO of the company so I can be in the best position to pursue the company as an independent bidder.”
