TLDR
- 23andMe filed for Chapter 11 bankruptcy protection after failing to find a buyer
- CEO Anne Wojcicki has resigned but will remain on the board and plans to bid for the company
- The company was valued at $3.5 billion when it went public in 2021 but now has a market cap of only $25 million
- 23andMe will continue operating while seeking binding offers by May 7, 2025
- The filing follows a data breach that compromised millions of customers’ information
Financial Collapse
Once-celebrated DNA testing company 23andMe has filed for Chapter 11 bankruptcy protection. The filing occurred Sunday night in Missouri federal court.
The company’s stock plummeted by over 50% following the announcement. This dramatic fall continues a long decline for a company once valued at $6 billion.
23andMe’s financial disclosure reveals assets of $277.4 million against liabilities of $214.7 million. Court documents show the company has secured a commitment for up to $35 million in debtor-in-possession financing.
The financing comes from JMB Capital Partners. This loan, which requires court approval, carries a 14% interest rate along with various fees.
The company’s market capitalization has shrunk to approximately $25 million. This represents a staggering decline from its $3.5 billion valuation when it went public in 2021.
Leadership Changes
Co-founder Anne Wojcicki has resigned as CEO, effective immediately. She will continue to serve on the board of directors.
Joseph Selsavage, the company’s chief financial and accounting officer, has been appointed interim CEO. The leadership change marks a significant turning point for the company Wojcicki founded in 2006.
“We have had many successes but I equally take accountability for the challenges we have today,” Wojcicki wrote on X. Her statement acknowledged the company’s difficulties while expressing continued faith in its future.
Wojcicki plans to pursue acquiring the company as an independent bidder. This comes after her previous attempts to take the company private were rejected.
A special committee of independent directors had evaluated multiple proposals from Wojcicki. Her most recent offer was unanimously rejected earlier this month.
Restructuring Plans
The company will continue operating throughout the bankruptcy process. 23andMe stated there will be no changes to how it stores, protects, or manages customer data.
The bankruptcy filing establishes a deadline of May 7 for binding offers. This timeline was set by lenders as part of the bankruptcy terms.
“We expect the court-supervised process will advance our efforts to address the operational and financial challenges we face,” said Mark Jensen, chair of the Special Committee of the Board of Directors. These challenges include cost reductions and resolution of legal liabilities.
The Chapter 11 filing will also address legal troubles related to a recent data breach. That security incident compromised information on millions of customers.
Approximately 14,000 user accounts were directly accessed by hackers during the breach. The incident further damaged consumer trust in the company.
California Attorney General Rob Bonta recently urged residents to consider deleting their genetic data from 23andMe. This consumer alert highlighted ongoing privacy concerns surrounding the company’s genetic database.
If approved by the court, 23andMe will actively solicit qualified bids over a 45-day process. The company continues to market itself to potential investors despite its financial troubles.
The bankruptcy represents the latest chapter for the personalized DNA testing pioneer. 23andMe had struggled to generate recurring revenue from its popular at-home DNA testing kits.
The company’s attempts to develop viable research and therapeutics businesses failed to deliver sustainable growth. These challenges contributed to the stock’s consistent decline in recent years.
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