The Fall of a Genetic Pioneer: 23andMe’s Files for Bankruptcy

Posted Today

In a stunning reversal of fortune, genetic testing company 23andMe has filed for bankruptcy protection and announced plans to sell itself, marking the end of an era for a business that once revolutionized consumer DNA testing. 

Image credit: 23andMe

The company that once graced Oprah Winfrey’s coveted favorite things list has experienced a dramatic downfall, with shares plummeting 46% to just 96 cents following the announcement.

The bankruptcy filing coincides with co-founder Anne Wojcicki’s resignation as CEO after her multiple attempts to buy back the company were rejected by the board. Chief Financial Officer Joe Selsavage will step in as interim leader while the company navigates its uncertain future.

23andMe’s troubles stem from a perfect storm of challenges. A devastating data breach in 2023 exposed nearly 7 million customers’ personal information, shattering consumer trust in a business where privacy is paramount. This breach resulted in a $30 million settlement and irreparably damaged the company’s reputation.

Beyond security issues, 23andMe faced declining interest in its core DNA testing products. The market for ancestry kits reached saturation as early enthusiasts had already purchased them, while potential new customers grew increasingly wary about privacy concerns. This pattern of declining sales paralleled competitor AncestryDNA, suggesting a broader industry slowdown rather than just company-specific issues.

The bankruptcy represents a shocking decline for a company that went public via SPAC at a $3.5 billion valuation in 2021, backed by billionaire Richard Branson. At its peak that same year, 23andMe was valued at $6 billion. Today, it’s worth approximately $50 million—a staggering more than 99% decrease.

For the broader genetic testing industry, 23andMe’s collapse serves as a cautionary tale about the challenges of building sustainable business models around one-time purchases and the critical importance of data security. Other companies in this space must now reckon with similar market constraints, potentially spurring consolidation or pivots toward subscription-based models.

Despite securing $35 million in emergency financing, 23andMe faces an uphill battle. The company reported assets and liabilities between $100-500 million, highlighting the significant gap it must overcome. Meanwhile, Wojcicki has expressed intent to make another acquisition bid, though her previous offer valued the company at just $11 million.

The ripple effects of this bankruptcy may extend beyond genetic testing into adjacent fields like personalized medicine and biotech startups that rely on consumer genetic data, potentially chilling investment in these sectors as the market reassesses risks and revenue potential in consumer genomics.

Written by Vytautas Valinskas

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