Genetic testing company 23andMe seeks Chapter 11 bankruptcy protection
DNA testing company 23andMe has recently initiated Chapter 11 bankruptcy proceedings to facilitate its sale. Co-founder Anne Wojcicki has decided to step down from her position to pursue an external bid for the company’s assets. The bankruptcy filing in the US Bankruptcy Court for the Eastern District of Missouri aims to maximize the business’s value by selling its assets under a Chapter 11 plan. This plan involves actively seeking qualified bids over a 45-day period.
According to the bankruptcy filing, 23andMe has estimated assets between $100 million and $500 million, along with estimated liabilities in the same range. To ensure the company’s financial stability in the coming months, private equity firm JMB Capital Partners has committed up to $35 million in debtor-in-possession financing. Despite the changes in leadership, Ms. Wojcicki will continue to serve as a member of the board. Joseph Selsavage, the company’s chief financial and accounting officer, will take on the role of interim chief executive.
Chair and special committee member Mark Jensen expressed the board’s decision, stating that a court-supervised sale process is the most viable option to maximize the company’s value. This process is expected to address operational and financial challenges, including cost reductions and the resolution of legal and leasehold liabilities. The committee believes in the value of the company’s assets and employees, hoping that the sale will allow their mission of enabling people to access, comprehend, and benefit from the human genome to continue serving customers and patients. They expressed gratitude to the employees for their dedication to the company’s mission, emphasizing their commitment to supporting them throughout the process.
In recent years, 23andMe has faced significant financial and reputational struggles, most notably following a data breach in 2023 that compromised the information of nearly 7 million individuals, leading to a decline in revenue as customers sought to delete their DNA data from the company’s records. As a result, the company downsized its workforce by approximately 40 percent and halted the development of therapies. To settle a lawsuit related to the breach, 23andMe agreed to pay $30 million and undergo three years of security monitoring.
Despite Ms. Wojcicki’s past efforts to acquire the company being rejected by the board, she proposed bids to purchase all outstanding shares of 23andMe, which were also turned down. Her most recent offer, a significant reduction from the initial bid, was rejected following her PE partner’s withdrawal. This decision ultimately led to the company filing for Chapter 11 bankruptcy to sell its assets amidst declining demand.
As the company navigates its restructuring process and seeks potential buyers, a renewed focus on safeguarding customer data and upholding data privacy remains a critical consideration. By prioritizing transparency and data security, 23andMe aims to navigate this challenging period and emerge stronger as it continues its mission to revolutionize the accessibility of genetic information for individuals.
