Genomic testing company 23andMe (ME.O) has filed for bankruptcy in the United States. The move follows weak demand for its ancestry testing kits and a damaging 2023 data breach.
The company’s shares plummeted 50% to 88 cents on Monday after co-founder Anne Wojcicki resigned as CEO. Despite her multiple failed takeover attempts, she still plans to bid for the company.
A Struggling Business Model
23andMe initially attracted strong investor interest after going public through a special-purpose acquisition vehicle (SPAC) run by billionaire Richard Branson. The company debuted in 2021 at a $3.5 billion valuation, peaking at nearly $6 billion later that year.
However, demand for DNA testing kits declined as most customers used them only once. Analysts believe the ancestry testing market may have reached its limit.
Bernstein analysts noted, “People would use the kits once and see little reason to order another one.”
Figure 1: Visitors explore the 23andMe booth at the RootsTech genealogy event in Salt Lake City, Utah, USA, on February 28, 2019. (REUTERS/George Frey/File Photo)
The 2023 Data Breach and Its Fallout
A massive data breach in 2023 worsened 23andMe’s troubles. Hackers exposed the personal data of nearly 7 million customers over five months.
The breach raised concerns about how DNA-testing companies handle sensitive genetic data.
California Attorney General Rob Bonta urged customers to delete their data, warning that 23andMe’s financial distress could put privacy at risk.
“Once that data is out there, then, even if you requested your account to be deleted, they can’t find your information because it no longer has your name attached,” said Anya Prince, a professor of law at the University of Iowa.
23andMe eventually settled a lawsuit related to the breach for $30 million.
What Happens to Customers’ Data?
The bankruptcy process means 23andMe will likely sell its assets, including customer data. The company has secured $35 million in financing to continue operations during the sale.
Any buyer must comply with privacy laws, but concerns remain over how the data will be handled.
Harvard law professor I. Glenn Cohen stated, “Customers can’t protect their data from being accessed, sold, or transferred as part of that transaction.”
23andMe has existing deals with pharmaceutical and biotech companies, including British drugmaker GSK (GSK.L). Most of these agreements remain undisclosed.
Wojcicki’s Exit and Leadership Changes
Anne Wojcicki, who helped drive initial investments using her connections, has stepped down as CEO. Chief Financial Officer Joe Selsavage will take over as interim CEO.
Despite leaving, Wojcicki remains interested in acquiring the company. She posted on X, “I intend to make another bid,” but did not provide details.
Her previous offer valued 23andMe at just $11 million—far below its peak valuation.
How to Delete Your Data
If you are concerned about your privacy, you can delete your genetic data.
California Attorney General Rob Bonta provided these steps:
- Log into your 23andMe account.
- Go to “Settings” in your profile.
- Scroll to “23andMe Data” and click “View.”
- Download your data before proceeding.
- Scroll to “Delete Data.”
- Click “Permanently Delete Data.”
- Confirm your request via the email 23andMe will send you.
Deleting your account does not guarantee complete removal of your data. The company retains certain details for compliance with legal obligations.
What’s Next for 23andMe?
23andMe listed its assets and liabilities between $100 million and $500 million. The company has laid off 200 employees and halted therapy development.
It will now seek a buyer who aligns with its mission and data privacy commitments. However, customer concerns remain as the future of their genetic information hangs in the balance.
