23andMe files for bankruptcy as founder steps down to pursue buyout

23andMe, the prominent California-based genetic testing company, has filed for Chapter 11 bankruptcy protection in the United States. The move comes as the firm seeks to secure a buyer and address its financial and operational issues. Co-founder Anne Wojcicki has also stepped down as chief executive to focus her efforts on taking the company private, following two earlier failed attempts.

Founded in 2006, 23andMe revolutionised genetic testing for consumers, offering accessible home-testing kits that examine ancestry and health traits. Over the years, the business amassed more than 15 million customers and collaborated with pharmaceutical giants like GSK, which invested $300 million in the company in 2018. However, despite widespread adoption and ambitious drug development plans, the firm has faced significant challenges in achieving recurring revenue streams and profitability.

The company’s financial struggles began to mount following its public listing via a SPAC merger in 2021, which previously valued it at $3.5 billion. Since then, its valuation has plummeted to less than $25 million, with shares trading at just 75 cents. Early investors, including Sequoia Capital, have exited, while others, such as Singapore-based Zentree Investments, have increased their stakes, holding 13 percent as of recent filings.

Operational challenges have compounded 23andMe’s difficulties. A major restructuring in 2023 led to a 40 percent reduction in its workforce, while a data breach affecting half of its customer base resulted in a $30 million legal settlement. Regulators in multiple jurisdictions, including the UK’s Information Commissioner’s Office, have issued findings against the company, including a proposed £4.6 million fine for failing to safeguard personal data.

Bankruptcy proceedings aim to facilitate the sale of the company and resolve outstanding legal and lease liabilities. Financing of up to $35 million has been secured from JMB Capital Partners to maintain operations during the restructuring process. The company has vowed to prioritise transparency and safeguarding customer data as it seeks a viable buyer in an increasingly competitive market for genetic information services.

Despite its struggles, Anne Wojcicki expressed her belief in 23andMe’s mission, highlighting the impact of its research platform powered by 85 percent of customers who opted into data sharing. The company’s research has led to over 250 publications and enabled extensive drug discovery initiatives. Wojcicki’s resignation aims to ensure she can independently bid for the company, keeping alive her vision for 23andMe in the face of these setbacks.