23andMe, a leading genetic testing company, has officially filed for Chapter 11 bankruptcy protection as part of its ongoing efforts to cut costs and restructure its operations. The announcement came on Sunday, revealing the company's intention to sell “substantially all of its assets” through a court-approved reorganization plan. This significant move underscores the financial struggles the company has faced in recent months.
In a surprising turn of events, Anne Wojcicki, the co-founder and CEO of 23andMe, has resigned effective immediately, although she will remain on the company's board. This resignation follows a recent decision by a board committee to reject a nonbinding acquisition proposal from Wojcicki herself. The company's stock has plummeted in value, dropping below $1 in premarket trading on Monday, reflecting the challenges that 23andMe has encountered since going public in 2021.
The voluntary bankruptcy filing marks the culmination of several months of turmoil for the company. 23andMe has struggled significantly to establish a profitable business model since its initial public offering (IPO). Last September, in an unprecedented move, all of the company's independent directors resigned amid negotiations with Wojcicki, who had been attempting to take the company private.
In November, the company announced plans to lay off 40% of its workforce, resulting in the loss of over 200 jobs, and to discontinue its therapeutics division. In January, the board's special committee disclosed that it was exploring strategic alternatives, including the possibility of a sale.
Board Chair Mark Jensen stated in a recent announcement that the company has concluded that a court-supervised sale is “the best path forward to maximize the value of the business.” He emphasized that this strategy is expected to aid in efforts to cut costs while also addressing legal and leasehold liabilities. Jensen further reassured stakeholders, stating, “We are committed to continuing to safeguard customer data and being transparent about the management of user data going forward, and data privacy will be an important consideration in any potential transaction.”
Despite the financial challenges, 23andMe plans to continue operating its business throughout the bankruptcy process. The company has secured $35 million in debtor-in-possession financing from JMB Capital Partners, which will help maintain operations as it navigates this restructuring phase.
As 23andMe moves forward, the genetic testing industry will be closely watching the outcomes of this bankruptcy filing and the potential sale of its assets, which could reshape the company’s future and its role in the market.
