Signage at 23andMe headquarters in Sunnyvale, California, U.S., on Wednesday, Jan. 27, 2021.
David Paul Morris | Bloomberg | Getty Images
23andMe on Tuesday reported declining revenue in its most recent quarter, a day after the company said it will cut 40% of its workforce and shutter its therapeutics business as part of a business restructuring plan.
The embattled genetics company reported $44.1 million in revenue for the fiscal second quarter, down from $50 million in the same period last year. 23andMe’s net loss narrowed to $59.1 million, or $2.32 per share, from $75.27 million, or $3.17 per share, a year ago.
23andMe said Monday that it’s eliminating more than 200 jobs, discontinuing all its therapeutics programs and winding down its ongoing clinical trials “as quickly as practical.” It’s evaluating strategic options such as asset sales and licensing agreements to “maximize the value” of the therapeutic programs, the release said.
“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,” 23andMe CEO Anne Wojcicki, said in the release Monday. “I want to thank our team for their hard work and dedication to our mission. We are fully committed to supporting the employees impacted by this transition.”
The company said Tuesday that it’s looking to potentially raise additional capital.
Shares of 23andMe closed up 2% on Tuesday. They’ve slumped about 75% this year after losing more than half their value in 2023, pushing the company’s market cap toward $100 million.
Wojcicki, who co-founded 23andMe in 2006, has been working to keep the company afloat after it faced the risk of being delisted from the Nasdaq. Shares were hovering below $1 until 23andMe announced a 1-for-20 reverse stock split in October.
In September, all seven of the company’s independent directors abruptly resigned from the board, writing in a letter that they disagreed with Wojcicki about the “strategic direction for the company.” Three new independent directors were appointed to the board in late October.
“We have fulfilled our obligations as a public company and regained compliance with the NASDAQ listing standards by reconstituting our board and executing a reverse stock split,” Wojcicki said during 23andMe’s earnings call Tuesday.
Wojcicki has repeatedly said she intends to take 23andMe private, though she didn’t address the plans Tuesday. In a September filing with the SEC, she said she would not consider third-party takeover proposals, and said the “best path forward” is for her to take the company private.
23andMe declined to comment.
WATCH: The rise and fall of 23andMe
Anne Wojcicki attends the WSJ Magazine Style & Tech Dinner in Atherton, California, on March 15, 2023.
Kelly Sullivan | Getty Images Entertainment | Getty Images
23andMe appointed three new independent directors to its board, the company announced Tuesday, one month after all seven of its previous directors abruptly resigned.
The new board members are Andre Fernandez, the former chief financial officer of WeWork; Jim Frankola, the former CFO of the enterprise cloud company Cloudera; and Mark Jensen, a tech advisor and former managing partner at Deloitte, according to a release. The only other board member is 23andMe’s co-founder and CEO Anne Wojcicki.
Fernandez, Frankola and Jensen will all serve on the board’s audit committee and compensation committee, the company said. Jensen will act as the lead independent director and chair of the compensation committee, while Fernandez will chair the audit committee.
“I am excited to welcome these three experienced directors to the 23andMe Board, and looking forward to working with them,” Wojcicki said in the release.
23andMe’s previous independent directors announced their resignation in a letter to Wojcicki in September, writing that they disagreed with her about the “strategic direction for the company.”
The genetic-testing company, once valued at $6 billion, has struggled since it went public in 2021 through a special purpose acquisition company, or SPAC. Shares were hovering below $1 until 23andMe announced a 1-for-20 reverse stock split of the Company’s Class A and Class B common stock earlier this month.
The company’s stock was trading around $5 on Tuesday morning.
To help 23andMe explore potential paths forward, the previous independent directors on the company’s board formed a special committee in late March. Wojcicki submitted a proposal to take the company private in July, but it was rejected by the special committee, in part because it lacked committed financing and did not provide a premium to the closing price of 40 cents per share at the time.
The directors gave Wojcicki the opportunity to submit a more suitable revised proposal, but they did not receive one, according to the September letter.
“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.
In the weeks following the board members’ departures, Wojcicki has repeatedly said she remains committed to taking the company private.
Once worth $6 billion, 23andMe has lost 98% of its value and is on the verge of being delisted from the Nasdaq after all of its independent board members resigned in September. So what happened?
Founded in 2006, 23andMe set out to revolutionize the once very exclusive genetic testing business with a direct-to-consumer model. Thanks to capital from high-profile backers and celebrity endorsements, the company was able to market its test kits at affordable prices.
Unlike competitors like Ancestry.com, 23andMe sought to leverage its database for drug discovery. The company went public in 2021 and was valued around $3.5 billion. The funding allowed 23andMe to develop its drug research team and spearhead partnerships with pharmaceutical companies.
“We’re really at a point in time where I’m ready to explode,” 23andMe CEO Anne Wojcicki told CNBC in 2021. “There’s huge opportunities in therapeutics and huge opportunities in our consumer business.”
Shortly after debuting on the Nasdaq, rising interest rates made it more difficult to raise funding, and sales began to fall. The company introduced a premium subscription product in 2020 that it hoped would make up for the lack of recurring revenue from its test kits, but that strategy failed to pan out. The company reported a $312 million net loss in the 2023 fiscal year, and by September 2023, 23andMe’s share price slid below $1.
Besides the financial concerns surrounding 23andMe, privacy concerns around the company’s genetic database have also ramped up. In October 2023, hackers accessed the information of nearly 7 million customers.
Asked by CNBC what would happen to 23andMe’s database if the company is sold or taken private, a company spokesperson said that Wojcicki has publicly shared that she intends to take the company private and is not open to considering third-party takeover proposals.
“Anne also expressed her strong commitment to customer privacy, and pledged to maintain the company’s current privacy policy, including following the intended completion of the acquisition she is pursuing,” the spokesperson said in an email.
Wojcicki submitted a proposal to take the company private in July, but it was rejected by a special committee formed by the company’s directors because the proposal did not provide a premium to the closing price of 40 cents per share at the time.
When 23andMe’s independent directors resigned in September, they cited frustration with Wojcicki’s “strategic differences” in her vision for the company.
Now, 23andMe faces a Nov. 4 deadline to keep its share price above $1 and locate new board members in order to remain listed on the Nasdaq. Watch the video above to learn more.
Anne Wojcicki, co-founder and chief executive officer of 23andme Inc., during the South by Southwest (SXSW) festival in Austin, Texas, US, on Friday, March 10, 2023.
Jordan Vonderhaar | Bloomberg | Getty Images
All seven independent directors of 23andMe resigned from the company’s board Tuesday, a move that CEO Anne Wojcicki said left her “surprised and disappointed,” according to a memo to employees.
Wojcicki, who co-founded 23andMe in 2006, said she remains committed to taking the company private.
The genetic-testing company went public in 2021 through a special purpose acquisition company (SPAC), and the share price has been mostly in freefall since then, dropping more than 95% from its high. The directors formed a special committee in late March to explore potential paths forward.
Wojcicki submitted a proposal to take the company private in July, but it was rejected by the special committee, in part because it didn’t provide a premium to the closing price of 40 cents per share at the time.
In a letter to Wojcicki on Tuesday, the directors said they had yet to see a “fully financed, fully diligenced, actionable proposal that is in the best interests of the non-affiliated shareholders.” The directors said they disagree with Wojcicki about the “strategic direction for the company,” so they decided to resign effective immediately.
“That we have not seen any notable progress over the last 5 months leads us to believe no such proposal is forthcoming,” they wrote. “The Special Committee is therefore unwilling to consider further extensions, and the Board agrees with the Special Committee’s determination.”
Wojcicki wrote in the employee memo, which was viewed by CNBC, that she still sees taking 23andMe private as its “best opportunity for long term success.” The company will begin a search for new independent directors to join the board, she added.
Far from its onetime valuation of $3.5 billion, 23andMe now has a market cap of under $200 million. The shares closed at 34 cents on Tuesday.
Here’s Wojcicki’s full memo:
Team 23,
We wanted to let you know that the 23andMe Board issued a press release this afternoon stating that all of the independent directors have resigned from the Board, effective immediately.
I am surprised and disappointed by the decision of the directors to resign.
I have been committed to the mission of 23andMe for the last 18 years and believe strongly in the potential for genetic information to transform healthcare and the therapeutic discovery process. I remain committed to our customers, my employees and to our stockholders to achieve our goals. I continue to believe that we will be better positioned to achieve our mission and goals outside of the short term pressures of the public markets and that taking 23andMe private will be the best opportunity for long term success.
We will immediately begin identifying independent directors to join the board. I want to thank the directors for their service to the company and its stockholders.
I don’t have additional information to share at this time, but we will update as we can at Thursday’s Feisty.
Anne
WATCH: 23andMe CEO files to take company private