23andMe Files for Chapter 11 Bankruptcy Amid Disruptions
23andMe, the genetics testing company, has entered Chapter 11 bankruptcy proceedings in the United States as of Sunday. This move comes in light of a significant fall in the company’s market value and declining demand for its products, largely influenced by a substantial data breach that occurred in 2023.
Bankruptcy Proceedings and Leadership Changes
The Chapter 11 bankruptcy filing took place in the U.S. Bankruptcy Court located in the Eastern District of Missouri. The company announced plans to continue its operations during this process. They are seeking the court’s approval to initiate the sale of all assets, which will be open to bids for a period of 45 days if granted.
On the same day, Anne Wojcicki, the 51-year-old co-founder and CEO of 23andMe, stepped down from her executive role but will remain on the board of directors. Wojcicki founded the company in 2006 and has played a pivotal role in its development.
Interim Leadership and Future Plans
The interim CEO of 23andMe is currently Joe Selsavage, who also holds positions as the Chief Financial and Accounting Officer. In her resignation announcement, Wojcicki expressed her disappointment regarding the bankruptcy situation and disclosed that the company had previously turned down offers for a private acquisition. Her recent financial maneuvers included proposals to acquire 23andMe in July 2024, buying out shares at $2.53 each earlier in February.
“We have had many successes, but we consider accountability as well for the challenges we have today,” Wojcicki stated in a post on X.
Market Valuation and Consumer Demand Decline
Initially valued at $3.5 billion in 2021, 23andMe’s market capitalization surged to $6 billion before experiencing a downturn to approximately $23 million at present. The decline in sales has been pronounced, particularly for its saliva-based ancestry testing kits, which many customers use only once. This lack of recurrent demand has contributed significantly to the financial struggles of the company.
Impact of Data Breach and Privacy Concerns
A major setback for 23andMe was the data breach in 2023 that compromised the data of nearly 7 million users, effectively halving the company’s existing customer base. In September 2023, the firm agreed to pay a settlement of $30 million related to lawsuits stemming from this security failure. As a result of ongoing concerns about data privacy, California Attorney General Rob Bonta issued a warning to customers regarding the potential removal of genetic data due to the company’s financial instability.
Company Restructuring Efforts
This financial turmoil has prompted significant internal changes, including the resignation of all independent board members in September 2023 over differences in strategic direction with Wojcicki. Additionally, in an effort to manage expenses, 23andMe cut approximately 40% of its workforce, laying off over 200 employees.
Looking Ahead
Despite these challenges, Wojcicki’s continued involvement on the board suggests a commitment to guiding the company through its current difficulties. With over 15 million customers and extensive research publications to its name, the future of 23andMe remains to be seen as it navigates this tumultuous period.
