Genetic testing company 23andMe is facing significant challenges and has announced a major restructuring to survive, including cutting 40% of its workforce and halting therapy development.
The company, known for DNA testing and ancestry tracing, will eliminate 200 jobs as part of a cost-cutting measure expected to save $35 million. These job cuts will incur one-time costs of $12 million, including severance pay. CEO Anne Wojcicki stated these actions are “difficult but necessary” to focus on the company’s core consumer business and research partnerships.
23andMe’s financial situation has deteriorated dramatically. Revenue dropped from $50 million to $44 million between July and September, and the company’s share price has plummeted over 70% this year. The company has warned investors of “substantial doubt” about its ability to continue operating, with losses reducing from $75 million to $59 million.
The company’s troubles extend beyond financial challenges. In December 2023, 23andMe confirmed a significant data breach affecting approximately 6.9 million users. Hackers accessed personal information including family trees, birth years, and geographic locations, though DNA records were not compromised. The breach occurred when hackers used previously exposed email and password credentials to access accounts, then downloaded information from linked family trees.
This security incident prompted investigations by data watchdogs in the UK and Canada. The UK’s Information Commissioner’s Office emphasized the sensitivity of genetic information and the importance of public trust in such services.
Adding to the company’s challenges, seven of its eight independent board members resigned in September, citing unsatisfactory buyout negotiations with Wojcicki.
When 23andMe went public in 2021, it was valued at roughly $3.5 billion, with share prices peaking at $17.65. Currently, shares are trading at less than $5. The company, which has attracted high-profile customers like Snoop Dogg and Warren Buffett, is now struggling to maintain its market position.
The company is also considering options for its therapy development pipeline, including potentially licensing or selling these projects. This move reflects the company’s efforts to streamline operations and focus on its core business.
Despite these challenges, 23andMe remains a significant player in the ancestry-tracing industry, offering genetic testing with ancestry breakdowns and personalized health insights. However, the company’s future remains uncertain as it navigates financial constraints, security concerns, and significant organizational changes.
Wojcicki’s leadership will be crucial in determining whether 23andMe can successfully restructure and regain its former prominence in the genetic testing market.
