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23andMe (ME0.00%), the company that popularized consumer genetic testing, announced Tuesday that it is once again exploring “strategic alternatives,” which could include a potential sale of the company or a restructuring.
The announcement came alongside the release of the company’s third-quarter results, revealing an 8% decline in consumer services revenue to $39.6 million, down from $42.9 million in the same period last year.
In a press release on Tuesday, the company said it needs additional liquidity to fund its operations and that “management has determined that there is substantial doubt about the Company’s ability to continue as a going concern.”
Following the news, 23andMe’s stock — which already fell 82% last year — dropped another 10% in after-hours trading and was briefly halted.
Founded in 2006 by Anne Wojcicki, Paul Cusenza, and Linda Avey, 23andMe set out to make genetic testing more widely accessible via a direct-to-consumer model. The company quickly grew its customer base by offering affordable DNA test kits, with support from high-profile investors including Google (GOOGL0.00%) co-founder Sergey Brin. Wojcicki and Brin married in 2007 and divorced in 2015.
23andMe’s at-home kits allowed customers to exchange a saliva sample for insights into their genome relating to things such as their possible ancestry, health, and food preferences. The company amassed 1 million customers in 2015; 23anMe now says it has 15 million customers worldwide.
In 2021, the company went public through a special purpose acquisition company (SPAC) merger and was valued at around $3.5 billion. The company also expanded into other business, including drug discovery and more recently weight loss.
However, 23andMe’s financial situation started to sour shortly after it went public, as sales of its flagship test kits already began to decline — along with those of its competitors. By the 2023 fiscal year, 23andMe reported a net loss of $312 million. The company’s individual share price is down 98% since 2021 to about $4, after a reverse stock split on October 16, 2024.
Privacy concerns compounded its financial struggles. In October 2023, hackers breached 23andMe’s systems, accessing the personal information of nearly 7 million customers. This resulted in a $30 million settlement.
In addition to financial and operational difficulties, 23andMe has experienced significant turmoil within its leadership. On Sept. 17, seven members of the board sent Wojcicki, who also serves as the board’s chair, a letter announcing their immediate resignations.
The board had grown dissatisfied with the direction Wojcicki was taking the company. Despite already controlling 49.75% of the voting rights, Wojcicki wanted to increase her influence further by taking the company private.
The company stated on Tuesday that exploring strategic alternatives does not guarantee any agreements or transactions will be reached.