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What Went Wrong For 23andme
23andMe struggled in 2024. But it hasn't given up yet.
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- 23andMe faced major hurdles in 2024, including a $30 million settlement related to compromised data.
- 23andMe is now restructuring its business operations to reduce costs and streamline operations.
- A 23andMe spokesperson said the company is "consistently focused on maintaining the privacy of our customers."
23andMe CEO Anne Wojcicki sounded optimistic about the company's future during an earnings call in February last year.
She said the biotech company, which offers direct-to-consumer genetic testing, made strides with its new preventive care membership service, signed a $20 million research agreement with biopharma company GSK, and saw "repeated engagement" by its customers, among other triumphs.
Then the rest of the year happened.
Here's a breakdown of what went wrong for 23andMe.
CEO Anne Wojcicki proposed making 23andMe a private company but faced pushback23andMe cofounder Anne Wojcicki said she intends to take the company private.
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Despite operating for nearly two decades without profit, 23andMe went public in 2021 and reached a $6 billion valuation. The company's stocks were priced at $11.13 a share, but they've fallen significantly since then. The stock price has dropped 98% over the past several years. It stood at $3.84 on January 10.
Wojcicki proposed that 23andMe revert to a private company in a July 2024 SEC filing, saying she believed the company would "be best equipped to execute against this mission as a private entity, allowing us to remove certain public company costs and distractions."
However, a special committee formed by 23andMe's board of directors rejected the proposal five days later.
"We are disappointed with the proposal for multiple reasons, including because it provides no premium to the closing price per share on Wednesday, July 31st, it lacks committed financing, and it is conditional in nature," the special committee's letter to Wojcicki said. "Accordingly, we view your proposal as insufficient and not in the best interest of the non-affiliated shareholders."
The special committee said it would review a revised proposal, but a September letter indicated that members had not received a "fully financed, fully diligence, actionable proposal."
A 23andMe spokesperson told Business Insider that Wojcicki still intends to take the company private.
23andMe agreed to a $30 million settlement in a class-action lawsuit23andMe agreed to settle a class-action lawsuit in 2024.
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Privacy concerns have dogged 23andMe for years, but in 2023, worry became a reality for users when their data was compromised. That October, hackers said they accessed certain users' names, birth details, ethnicities, and photos.
23andMe confirmed in December that data for almost 7 million users was accessed. A data breach notification filed in January 2024 said it took the company five months to realize hackers had accessed the data.
Affected users filed a class-action lawsuit against 23andMe this March, which led to the company agreeing to pay the $30 million settlement in September 2024.
The entirety of 23andMe's independent board of directors resigned in a letterFormer independent directors of 23andMe's board resigned in a letter published in September.
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One week after the company agreed to settle the class-action lawsuit, all seven independent directors on 23andMe's board resigned in a letter addressed to Wojcicki.
"While we continue to wholeheartedly support the Company's mission and believe deeply in the value of the personalized health and wellness offering that you have articulated, it is also clear that we differ on the strategic direction for the Company going forward," the letter said.
The letter also referenced Wojcicki's revised proposal to take the 23andMe private, saying members of the special committee and board had "not seen any notable progress over the last 5 months."
"The Special Committee is therefore unwilling to consider further extensions, and the Board agrees with the Special Committee's determination," the letter said.
The sudden resignation spurred headlines in the media about 23andMe's unsteady footing. The company sought to address this imbalance by appointing three new independent directors to its board in October 2024.
"The new independent directors look forward to working closely with Anne Wojcicki and the Company's management team to best position 23andMe for the future," Jensen said in a press release.
23andMe's reputation with consumers stalled in late 2024 over 'third-party takeover proposals'CEO Anne Wojcicki said she's no longer "considering third-party takeover proposals" of 23andMe.
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Some consumers grew concerned in September 2024 when an SEC filing said Wojcicki "would be open to considering third-party takeover proposals for the Company."
The remarks prompted consumers to reckon with the potential consequences, which The Atlantic reported could include the sale of their personal genetic data.
Wojcicki walked back her remark in a separate filing.
"Accordingly, in order to update my prior statement and avoid any confusion in the market, I am no longer open to considering third-party takeover proposals for the Issuer," she said in the filing.
A 23andMe spokesperson told BI that Wojcicki "has publicly shared she intends to take the company private, and is not open to considering third-party takeover proposals."
The statement added: "Anne has demonstrated an unwavering commitment to the company's mission and values, and to its customers, pledging to maintain 23andMe's strong security and privacy policies, including following the intended completion of the acquisition she is pursuing."
23andMe lays off 40% of its workforce and discontinues its therapeutics programs23andMe said in November that it would reduce its staff by 40%.
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23andMe made a decisive pivot in November 2024 as it continued to chase stable footing. The company reduced its staff by over 200 employees.
"The business restructuring is expected to substantially reduce operating expenses and result in annualized cost savings of more than $35 million," the company said in a press release.
23andMe also said it will discontinue its therapeutics programs and "wind down" ongoing clinical trials.
"In parallel with the discontinuation of its therapeutics division, the Company is actively exploring all strategic options for a limited time to maximize the value of its therapeutics programs, including licensing agreements, asset sales, or other transactions," the company said.
23andMe published its most recent second-quarter financial results in November. The company said it earned $44 million in total revenue, a 12% decrease from the $50 million recorded in the same period the previous year. Operating expenses reached $84 million, a 17% decrease from the $101 million recorded for the same period in 2023.
23andMe said it had 'substantial doubt' the company could survive without more funding23andMe expressed concern over its longevity in a November SEC filing.
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In a November 2024 SEC filing, 23andMe expressed concern over its longevity. The company said it would need additional liquidity to fund its financial commitments and expenditures.
"The Company has determined that, as of the filing date of this report, there is substantial doubt about the Company's ability to continue as a going concern," 23andMe said.
The filing also said that as of September 2024, the company "had an accumulated deficit of $2.3 billion and cash and cash equivalents of $126.6 million."
A 23andMe spokesperson said the company is committed to its consumers and enforcing ethical business practicesA 23andMe spokesperson said the company is committed to consumer privacy.
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A spokesperson for 23andMe told Business Insider that it has privacy protections for its customers, and doesn't share data with third parties without consent. Customers can opt into its Research program, but it requires them to consent before joining.
"Roughly 80% of 23andMe customers consent to participate in our research program, which has generated more than 270 peer-reviewed publications uncovering hundreds of new genetic insights into disease," a statement said.
The spokesperson said 23andMe is subject to state and federal consumer privacy and genetic privacy laws similar to HIPAA. However, the company's protocols "offer a more appropriate framework to protect our data than privacy and security program requirements in HIPAA."
"We are committed to protecting customer data and are consistently focused on maintaining the privacy of our customers. That will not change," the statement said.
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