Genetic Testing Giant 23andMe Explores Strategic Alternatives Amid Financial Struggles
A Second Chance at Revival
Embattled genetic testing company 23andMe has announced that it is exploring strategic alternatives for the second time, which may include a sale of the company or its assets, a restructuring, or a business combination. This move comes as the company’s stock, which plummeted 82% in value last year, fell an additional 10% in extended trading.
Third-Quarter Results Paint a Grim Picture
The announcement coincided with the release of 23andMe’s third-quarter results, which revealed a decline in revenue in the company’s consumer services business. The revenue dropped 8% to $39.6 million from $42.9 million in the same period last year. The company has acknowledged that it will need additional liquidity to fund its operations and is seeking to raise capital.
Uncertainty Looms Over Company’s Future
In a stark admission, 23andMe stated that there is substantial doubt about the company’s ability to continue as a going concern. This uncertainty has led to a significant decline in the company’s value, which now stands at less than $100 million, down from a peak of $6 billion.
A Turbulent Past
In March, 23andMe’s independent directors formed a special committee to evaluate the company’s potential paths forward. CEO Anne Wojcicki submitted a proposal to take the company private in July, but it was rejected due to lack of committed financing and no premium to the closing share price at the time. The independent directors subsequently resigned from 23andMe’s board, citing disagreements with Wojcicki about the company’s strategic direction.
New Leadership and Restructuring Efforts
Wojcicki has since appointed three new independent directors to its board, and 23andMe has announced plans to cut 40% of its workforce and shutter its therapeutics business as part of a restructuring plan. The special committee will oversee the search for strategic alternatives again, with Moelis & Company serving as its financial advisor and Goodwin Procter as its legal advisor.
No Guarantees of a Deal
While Wojcicki has expressed her desire to take the company private, it remains unclear if she will submit another proposal to do so. The committee has emphasized that there is no guarantee that a deal will take place. As 23andMe navigates these uncertain times, one thing is clear: the company’s future hangs in the balance.
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