23andMe, the genetic testing giant that was once valued in the billions, is now working its way through an unexpected Chapter 11 bankruptcy. Yet on March 23, the company chose to file for protection in the Eastern District of Missouri. It was accompanied by eleven subsidiaries, including Lemonaid Health and LPRXOne. The company unfortunately is now in bankruptcy after a tough 1.5 years. Declining sales, increasing executive departures, and a major data breach have millions of customers and shareholders reeling.
That’s why 23andMe recently wrote its millions of past and present customers a big status update. Though their fate remains uncertain, they—the hospital company’s former employees—can potentially file claims as the company restructures in bankruptcy court. Customers impacted by the breach have until July 14 to file claims for damages suffered. The breach, disclosed to the public in October 2023, exposed sensitive personal information of close to seven million users. This digitized personal data included names, birth years, relationship labels, percentage of DNA shared with relatives, Ancestry reports, and self-reported locations.
The shortness of the company’s life has made its decline all the more hard-hitting. Following an ambitious but costly expansion into digital health and telemedicine, 23andMe acquired Lemonaid Health in 2021 for $400 million. This acquisition dramatically stretched the start-up’s financial resources. It failed to produce the level of growth that it needed to sustain its valuation.
The fallout from the data breach has made things even more difficult for 23andMe. A similar class action lawsuit has recently proposed a $30 million settlement. This settlement is now stalled due to the bankruptcy proceedings still underway. As the company navigates its restructuring process, customers are left uncertain over how they might be compensated for their potential losses resulting from their data breach.
23andMe’s financial problems have their roots in a few major developments. Declining sales, in addition to a leadership crisis where company executives have walked out of the doors in the last four months. These problems have resulted in a very dicey position for the company. It wasn’t that long ago that the company was a trailblazer in the world of genetic testing.
Meanwhile, 23andMe is continuing on its path through bankruptcy. It needs to once again build its customers’ trust and shore up its financial position. The commercial team’s focus remains on doing the best it can through this challenging time supporting its customers that were impacted by this disaster.