By Bhanvi Satija, Anusha Shah and Surbhi Misra
(Reuters) -23andMe on Sunday filed for bankruptcy in the U.S. after struggling with weak demand for its ancestry testing kits and a 2023 data breach that damaged its reputation.
The company’s shares fell 50% to 88 cents in Monday trading after co-founder Anne Wojcicki, who made multiple failed takeover bids, resigned as CEO. 23andMe did not say whether there are other interested bidders. It will continue to operate during the sale process, having secured $35 million in financing over the weekend.
Officials, including California Attorney General Rob Bonta, had questioned what would happen to the genetic data collected by 23andMe, though the company’s privacy policies say that the data could be sold to other firms. The company said the bankruptcy process will not affect how it stores, manages or protects customer data.
23andMe garnered lots of attention from investors when it was first taken public via a special-purpose acquisition vehicle (SPAC) run by billionaire Richard Branson at a $3.5 billion valuation in 2021. Its market value peaked later that year at nearly $6 billion due to booming interest in DNA testing kits but demand has waned since, hurting 23andMe and its Blackstone-owned rival AncestryDNA.
Sales of the consumer kits frequently picked up during the holiday season, but 23andMe has struggled to retain customers mainly because people would use the kits once and see little reason to order another one. Bernstein analysts have said that the market for ancestry testing kits might be close to tapped out.
In 2023, hackers exposed the personal data of nearly 7 million 23andMe customers over a five-month period, dealing a major blow to the company’s reputation and compounding its growth problems. The breach raised alarm among customers concerned about their privacy and how DNA-testing firms handle their data.
23andMe eventually agreed late last year to a $30 million settlement in a lawsuit related to the breach.
The San Francisco-based firm has also laid off 200 employees and stopped the development of all therapies as part of what will be a major overhaul.
Wojcicki has been pushing for a buyout since last April, but has been rebuffed by 23andMe’s board. She reportedly used her contacts, including ex-husband and Google co-founder Sergey Brin, to help drive initial investments. She will be replaced by Chief Financial Officer Joe Selsavage on an interim basis.
Wojcicki said, in a post on X on Monday, that she intends to make another bid, without giving details. Her last offer of 41 cents per share valued 23andMe at about $11 million.
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