Anne Wojcicki has developed a fully funded plan to bring 23AndMe Private into private funds. Then it crashed.
23AndMe CEO Anne Wojcicki has been trying to privatize DNA testing companies for the past year, making it clear along the way that she would object to any deals to sell the business to others. Wojcicki later softened her opposition, but that didn't stop her from trying to buy the company she co-founded. Wojcicki's series of new proposals have failed to win the company's board of directors over the past month. Now, 23AndMe is ready to sell its assets under bankruptcy protection.
Chapter 11 Submitted Sunday file submitted with a C-Suite reshuffle. Wojcicki resigned from the position of CEO, although she will remain on the board. Chief Financial and Accounting Officer Joe Selsavage takes the additional responsibility of serving as interim CEO.
23andme’s main way to make money is to sell genetic testing services to consumers. The company has also struck a strike with pharmaceutical companies that use unidentified genetic data to help its drug discovery efforts, but the product has never been a big part of the company's business. In the nine months ended December 31, 2024, 23AndMe reported total revenue of $144.7 million, down nearly 7% from the same period in the previous fiscal year. For the fiscal year ended March 31, 2024, revenue was US$219.6 million, down 27% from the previous fiscal year. In its financial report, the company attributed the decline in revenue to the decline in sales of its testing kit.
When 23andMe was published in the 2021 SPAC merger, its shares were traded at $10 per share. The company's share price has been falling over the past 12 months. The bankruptcy filing comes nearly a year after 23andMe announced that Wojcicki was considering privatizing the company by purchasing a stake in the company she did not own yet.
23AndMe Board of Directors forms a special committee to review Wojcicki's proposal. The board's duty was to act in the best interest of all shareholders, rejecting her offer of 40 cents per share. While it is possible that another company is willing to give more, it doesn't matter. Wojcicki has a greater voting right to Class B shares than Class A shares, and she can prevent such transactions. The board told Wojcicki that her proposal did not provide premiums to shareholders and did not commit to financing.
In September last year, seven members of the 23AndMe board resigned due to disagreements with Wojcicki in the direction of the company, making her the only remaining board member. In October, the company appointed three new directors to recomply with Nasdaq's requirement that most of the company's boards be independent directors.
The three new directors, also the newly appointed special committee, announced the exploration of strategic alternatives in late January. These alternatives include the possible sale of 23andMe, business portfolio or company assets. This time, Wojcicki said she would not object to a deal.
“Based on interim developments since that statement, I am revising my statement to show my willingness to consider third-party takeover recommendations for the company or other strategic alternatives that may be in the best interest of the company,” she said in the regulatory filing.
Although Wojcicki is open to new discoveries selling 23andMe to another company, her interest in buying it has not disappeared. On February 20, Wojcicki and New Mountain Capital sent an unbinding proposal to the Special Committee to purchase all outstanding shares not owned by Wojcicki or her branch at $2.54 per share. Johor Bahru will fully fund the proposed deal; the investment company and Wojcicki are also willing to finance the operations of 23AndMe by ending the potential deal. The proposal is not subject to any financing contingency. But it quickly collapsed.
On February 28, Johor Bahru told Wojcicki that the company is no longer interested in becoming part of a potential 23AndMe acquisition, according to regulatory filings. Wojcicki is still committed to buying the company and has made another non-binding proposal, this time at 41 cents per share. The March 2 proposal will be fully funded by Wojcicki. Four days later, she issued a revised proposal that added $2.53 per share to the right value, which is cash spending to achieve revenue milestones in the next three fiscal years.
On March 10, Wojcicki was committed to further sweetening by providing 23AndMe with an additional $20 million to fund its operating capital. But there are signs that minority shareholders are not in line with Wojcicki's plan. Zentree Investments purchased more 23AndMe stock to increase its ownership stake to 13% of the company's Class A shares. Zentree said in a regulatory filing on March 17 related to the deal that it wants to ensure that minority investors make their voices.
“We try to prevent the sale of the company at unreasonable prices and advocate for more prudent management of the company's costs,” the company said in a document related to stock purchases. “In addition, we call on equal rights for Class A and Class B shares. We urge management to act in the best interests of all shareholders and to resolve any conflict of interest between management and investors.”
Bankruptcy, case No. 25-40976, was filed in the U.S. Bankruptcy Court in the Eastern District of Missouri. During the bankruptcy proceedings, 23andMe said it would continue its business under the supervision of the court. The company said it has received a commitment from JMB Capital Partners to ask debtors to raise up to $35 million in financing to support its business.
23AndMe said it would require the court to begin the process of selling all its assets under Chapter 11 of the Bankruptcy Act. According to court approval, the plan is to collect qualified bids within 45 days. If multiple qualified bids are received, 23AndMe will auction these assets. 23AndMe said that any buyer must comply with laws regarding the processing of customer data. The transaction will still be approved by regulatory authorities.
Bankruptcy auctions usually lead to fire sales prices for company assets. In 23AndMe's bankruptcy filing, the company said its assets were between $100 million and $500 million. Its liabilities are estimated to be $100 million and $500 million. Creditors include Labcorp's Los Angeles-based subsidiary, the National Institute of Genetics; the marketing company Jellyfish; and the California Blue Shield.
In addition to appointing interim CEO of Selsavage, the board has appointed Matt Kvarda, managing director of consulting firm Alvarez & Marsal, as chief restructuring officer. The board also added a new member. Thomas Walper, a former partner in the financial restructuring business of Munger, Tolles & Olson, was appointed to the board of directors and the special committee as an independent director.
23andMe's shares closed at 73 cents on Monday, down 59.2% from Friday's closing price.
Image: blackjack3d, by Getty Image
