Genetic-testing company 23andMe is laying off hundreds of workers as part of cost-reduction measures, a decision taken amid declining revenues.
“The company is reducing its overall headcount by over 200 employees, representing approximately 40 percent of the workforce,” 23andMe said in a Nov. 11 statement. “The business restructuring is expected to substantially reduce operating expenses and result in annualized cost savings of more than $35 million. The company expects to incur up to $12 million in costs and expenses primarily related to one-time severance, transition, and termination-related costs.”
23andMe is also “actively exploring” options to maximize the value of its therapeutics programs through asset sales, licensing agreements, and other transactions. While the corporation considers these measures, it intends to wind down ongoing clinical trials.
One of the company’s therapeutic programs uses an antibody to restore the immune system’s ability to kill cancer cells. Another program involves the use of an antibody that aims to restore anti-tumor immunity. The company is also involved in multiple other preclinical immunology and inflammation programs.
“We are taking these difficult but necessary actions as we restructure 23andMe and focus on the long-term success of our core consumer business and research partnerships,” said Anne Wojcicki, 23andMe CEO and co-founder. “We are fully committed to supporting the employees impacted by this transition.”
The company will continue to “pursue strategic opportunities” with regard to its clinical and preclinical stage programs, she said.
23andMe is one of the largest companies in the world that offers direct-to-customer genetic testing services. Founded in 2006, the business gained huge traction as many people were attracted to the idea of knowing more about their ancestry, health, and other things. The company went public in 2021.
The company has struggled financially over the past years and has seen its shares collapse in value. In the 15 quarters since the fourth quarter of 2020, 23andMe has reported positive net income in only one quarter.
For fiscal year 2024, 23andMe saw revenues of $220 million, down from $299 million from the previous fiscal year, a decline of 27 percent. The business attributed the fall to lower revenues from research services and consumer services.
The company suffered a net loss of $667 million for fiscal year 2024, more than double the $312 million loss from the previous fiscal year.
In the first quarter of fiscal year 2025, revenues dropped by 34 percent year over year. Net loss scaled down to $69 million from $105 million.
Shares of 23andMe have crashed this year, declining by more than 74 percent. Since late November 2020, shares have lost more than 97 percent of their value.
Share Acquisition Attempts
23andMe has also seen management-level issues in recent months over share acquisition efforts from its CEO. In April, it was revealed that Wojcicki intended to buy all outstanding shares of the company that she did not own.
At the time, Wojcicki owned more than 20 percent of the total outstanding shares, which gave her 49 percent voting power. 23andMe’s Special Committee said it would “carefully review” the offer when available.
Wojcicki submitted a preliminary, conditional, and nonbinding proposal in late July. In August, the Special Committee sent a letter to Wojcicki, dismissing the offer.
“We are disappointed with the proposal for multiple reasons, including because it provides no premium to the closing price per share on Wednesday, July 31, it lacks committed financing, and it is conditional in nature,” the committee said.
“Accordingly, we view your proposal as insufficient and not in the best interest of the non-affiliated shareholders. Therefore, we are not prepared to move forward under the terms provided.”
In mid-September, all seven independent directors of 23andMe’s board resigned from their posts. They pointed out that Wojcicki failed to submit “a fully financed, fully diligenced, actionable proposal” that would be beneficial to shareholders even after months of work.
Since there had been no “notable progress” on the matter, the directors concluded that no beneficial proposal would be forthcoming.
“It is also clear that we differ on the strategic direction for the company going forward. Because of that difference and because of your concentrated voting power, we believe that it is in the best interests of the company’s shareholders that we resign from the board rather than have a protracted and distracting difference of view with you as to the direction of the company,” they wrote.
