23andMe, Genetic Testing Company, Declares Bankruptcy

After turning down a takeover offer from its departing CEO, the US genetic testing business 23andMe has declared bankruptcy and is searching for a buyer. Late on 23 March, 23andMe, a company that charges less than $200 for a mail-back saliva test that can identify ancestry or specific genetic features linked to health, announced that it had "filed a voluntary petition for reorganisation" with a Missouri state bankruptcy court. Additionally, the Silicon Valley-based company stated that it plans to carry on with business as usual during the selling process. Furthermore, it stated that there would be no modifications made to the way consumer data is stored or protected.

23andMe Rejected Takeover Offer

According to the announcement, 23andMe declined a takeover approach from its CEO and co-founder, Anne Wojcicki, who has resigned but will continue to serve on the board of directors. Wojcicki wrote on X that she was upset by the brand's decision to reject her bid, but she nevertheless offered the business her entire support. Strategically, she claimed, she resigned as CEO in order to "be in the best position to pursue the company as an independent bidder." Despite the company's difficulties, Wojcicki, who co-founded 23andMe 19 years ago, highlighted her "unwavering" faith in its future. According to regulatory documents, 23andMe, which claims to have 15 million clients, has suffered a drop in sales in recent months and has also agreed to pay about $37.5 million to settle allegations relating to a 2023 data breach. Due to the challenges, 23andMe said in November that the company was firing around 200 employees, or 40% of its workforce. Additionally, it halted its research initiatives.

What will Happen to the Genetic Data Collected by the Company?

Although 23andMe's privacy regulations state that the genetic data may be sold to other companies, officials, including California Attorney General Rob Bonta, had expressed concerns about what would happen to the data. According to the enterprise, the bankruptcy procedure won't have an impact on how it handles, preserves, or maintains client data. When 23andMe went public in 2021 at a $3.5 billion valuation through a special-purpose acquisition vehicle (SPAC) led by billionaire Richard Branson, it attracted a lot of interest from investors. Due to a surge in demand for DNA testing kits, its market value reached a peak of about $6 billion later that year. However, since then, demand has decreased, harming 23andMe and its rival AncestryDNA, which is owned by Blackstone. The holiday season usually saw a spike in sales of the consumer kits, but 23andMe has had trouble keeping consumers because they would use the kits just once and find little incentive to buy more.

The market for ancestry testing kits may be nearing saturation, according to Bernstein analysts. Over the course of five months in 2023, hackers compromised the personal information of around 7 million 23andMe consumers, severely harming the company's reputation and making its growth issues worse. Customers who were worried about their privacy and the way DNA testing companies handled their data were alarmed by the incident. In a lawsuit pertaining to the breach, 23andMe ultimately consented to a $30 million settlement late last year. As part of what will be a significant restructure, the San Francisco-based company has also terminated the development of all medicines and fired off 200 people.