23andMe, the genetic testing company, is implementing a significant restructuring plan that will involve laying off 40% of its workforce, which translates to over 200 employees, as it aims to reduce its operational costs.
On Monday, 23andMe announced its decision to discontinue its therapeutics division and to quickly wind down its ongoing clinical trials. The firm is currently exploring various strategic options for its drug development assets, which notably include research related to potential cancer treatments.
CEO and co-founder Anne Wojcicki expressed in a statement that these tough but necessary measures are being taken to ensure the long-term success of the company’s primary consumer business and its research partnerships.
This restructuring comes at a challenging time for 23andMe, which is based in California. The company has faced numerous setbacks, including a notable data breach, multiple rounds of layoffs, and significant financial losses that have led to a decline in its stock value over recent years.
Recently, in September, all of 23andMe’s independent board directors resigned, a rare situation that arose after prolonged discussions with Wojcicki regarding her efforts to take the company private. The departing directors expressed that they had not received a satisfactory proposal from her and noted a “clear” divergence in vision for the company’s future.
Wojcicki conveyed her surprise and disappointment over the directors’ resignations but reiterated her belief that privatization would benefit 23andMe in the long run by shielding it from the immediate pressures of the public market.
After a month where Wojcicki served as the only board member, the company reinstated governance by naming three new independent directors at the end of October.
Since going public in 2021, 23andMe has struggled to establish a viable business model, as most consumers purchase its saliva testing kits only once. The company reported a staggering net loss of $667 million during its last fiscal year, more than double the previous year’s loss of $312 million.
In the fiscal year’s second quarter earnings report released Tuesday, 23andMe again reported a loss, though it was less severe than in earlier quarters. The net loss for this period amounted to $59.1 million, a slight improvement from $75.3 million lost in the same quarter the year before.
Revenue for the second quarter reached $44.1 million, down from $50 million the year prior. The decline has been attributed to a drop in sales of testing kits, decreased telehealth orders, and lower research revenue, although these losses were partially countered by an increase in membership services.
The company expects that the layoffs and restructuring measures announced will lead to operational savings of over $35 million annually. However, 23andMe anticipates incurring costs of up to $12 million due to one-time severance and related expenses.
As of the end of the quarter, 23andMe reported having $127 million in cash and cash equivalents, down from $216 million as of March 31, 2024.
Furthermore, last month, the company executed a reverse stock split at a ratio of 1-for-20. Following these developments, shares fell nearly 4% on Tuesday to approximately $4.43.