DNA testing firm 23andMe files for bankruptcy as demand dries up

By Anusha Shah, Surbhi Misra and Bhanvi Satija

(Reuters) -23andMe on Sunday filed for bankruptcy in the U.S. after struggling with weak demand for its ancestry testing kits that once featured in Oprah Winfrey's annual list of favorite things, and following a 2023 data breach that damaged its reputation.

The company's market value peaked in 2021 at nearly $6 billion amid booming interest in DNA testing kits but demand has waned in recent years, hurting firms such as 23andMe and its Blackstone-owned rival AncestryDNA.

Sales of the consumer kits frequently picked up during 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.

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 company's shares fell 50% to 88 cents in trading Monday after co-founder Anne Wojcicki, who made multiple failed takeover bids, resigned as CEO. She will be replaced by Chief Financial Officer Joe Selsavage on an interim basis.

The San Francisco-based firm has also laid off 200 employees and stopped 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.

The company 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.

She intends to make another bid, Wojcicki said in a post on X on Monday, without giving details. Her last offer of 41 cents per share valued 23andMe at about $11 million, below its current value of $50 million, and a far cry from its peak.

Bernstein analysts have said that the market for ancestry testing kits, which is limited to high-income people that can afford to pay for such tests out-of-pocket, might be close to tapped out.

In 2021, billionaire Richard Branson's SPAC took 23andMe public at a $3.5 billion valuation.

On Sunday, it listed assets and estimated liabilities between $100 million and $500 million.

(Reporting by Anusha Shah, Shubham Kalia, Surbhi Misra and Bhanvi Satija in Bengaluru; Editing by Mrigank Dhaniwala, Savio D'Souza and Shounak Dasgupta)