Genetic testing company 23andMe has filed for Chapter 11 bankruptcy protection in the United States due to declining demand and financial losses stemming from a data breach in 2023. The company’s co-founder and CEO, Anne Wojcicki, has resigned amidst these challenges.
On Sunday, 23andMe, based in San Francisco, announced it plans to sell “substantially all of its assets” under a court-approved reorganization plan. The news sent the company’s shares plummeting by 50%, with stock prices falling to 88 cents in Monday’s trading. Wojcicki, who had made several unsuccessful attempts to acquire the company, stated her resignation was necessary to allow her to bid independently during the sale process. Despite stepping down, Wojcicki expressed her continued belief in the company’s future.
Concerns have been raised by officials, including California’s Attorney General Rob Bonta, about the handling of 23andMe’s vast genetic data collection. While the company’s privacy policy allows for the sale of this data to third parties, 23andMe assured customers that its bankruptcy process would not alter how it stores, manages, or safeguards personal data.
23andMe first gained attention when it went public through a special-purpose acquisition vehicle (SPAC) in 2021, at a valuation of $3.5 billion, boosted by a surge in interest in DNA testing kits. Its market value reached nearly $6 billion that same year but has since dwindled due to weakening demand for the kits. Many customers have used the kits only once and do not see the need to repurchase. Analysts from Bernstein Research noted that the market for ancestry DNA kits may be nearing saturation.
The company’s problems worsened in 2023, when hackers exposed the personal information of nearly seven million customers, leading to widespread concerns about data privacy. The breach also severely damaged the company’s reputation. In response, 23andMe settled a lawsuit for $30 million related to the breach.
23andMe was founded in 2006 with the aim of revolutionizing genetics and healthcare. It became widely recognized for its saliva-based DNA testing kits, which attracted millions of customers eager to explore their ancestry. The company later expanded into health research and drug development. However, recent years have been marked by difficulty, with the company filing for bankruptcy after months of turmoil. In September 2023, all of 23andMe’s independent directors resigned, a rare move, following acquisition talks with Wojcicki.
In November, 23andMe announced plans to lay off 40% of its workforce—over 200 employees—and close its therapeutics division. The company’s board also started exploring options for a potential sale. In addition to the breach, uncertainty about the company’s future has prompted some customers to delete their genetic data from the company’s platform. On the eve of the bankruptcy filing, Attorney General Bonta urged customers to consider deleting and destroying their data, referencing the company’s ongoing financial difficulties and the sensitive nature of the information it holds.
