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Genetics-testing company 23andMe has warned there is “substantial doubt” over its continued survival unless it raises new funds, as the once much-hyped Silicon Valley group reported new declines in revenues.
The California-based group’s chief financial officer Joe Selsavage said on Tuesday that it “will need additional liquidity to fund its necessary expenditures and financial commitments” for the next year.
In its latest filings, it added that “there is substantial doubt about the company’s ability to continue as a going concern”.
The guidance came as 23andMe reported revenues of $44mn in the three months to September, down from $50mn in the same period last year, amid slowing demand for its signature “spit kits”. It is the company’s seventh consecutive year-on-year decline in quarterly revenues.
The once high-flying start-up is in crisis. Over the past two years, it has been buffeted by mass job cuts, disputes with investors, doubts over its business model and growing concern over who owns its vast database of genetic data. The group has never reported a net profit, and has plunged in value from a peak of $5.8bn in February 2021 to less than $150mn.
Shares in 23andMe jumped 7 per cent in early trading after the company announced late on Monday that it had cut 40 per cent of its workforce, or more than 200 people, as part of a restructuring plan intended to deliver annualised cost savings of $35mn. Shares are still down more than 70 per cent since the start of 2024.
The restructuring will also halt all efforts to develop new medicines — ending founder and chief executive Anne Wojcicki’s long-held ambition to turn 23andMe into a drug development company in its own right.
The company will instead focus exclusively on selling genetic tests to consumers and marketing the resulting data to external drug developers. “Becoming more sustainable has been a top priority,” Wojcicki said in a call with shareholders on Tuesday.
Wojcicki has been trying to take the company private at just 40 cents per share, a fraction of the $10-a-share price it floated at in 2021.
That move helped to trigger the resignation of 23andMe’s entire board in September, having complained that Wojcicki had been unable to make a “fully financed proposal” to take the company private.
23andMe rushed to appoint three new independent directors last month, including former WeWork chief financial officer Andre Fernandez, in order to fulfil the governance requirements of its listing.
The company also completed a reverse stock split in October — in effect boosting the price of individual shares by reducing the number in issue — seeking to push its shares above the Nasdaq’s $1 minimum price.
Wojcicki said that 23andMe’s main priority for growth was in boosting its subscription business, which made up 21 per cent of revenues in the three months to September.
This side of the business has previously grown more slowly than hoped. 23andMe projected in 2021 that it would have 2.9mn paid subscribers by the end of March 2024. Instead, it reported just 562,000 in March, down from 640,000 in 2023.