23andMe, the genetics testing company once valued at $6 billion, has filed for Chapter 11 bankruptcy protection in the US.
The move comes just months after the firm laid off nearly half its workforce and settled a lawsuit involving the personal data of around seven million customers.
Founded in 2006, 23andMe gained early attention for offering direct-to-consumer DNA testing kits and for its backing by high-profile investors.
But amid declining demand, legal challenges, and cybersecurity concerns, the company is now attempting to sell itself under court supervision.
Seven million affected in data breach
The bankruptcy follows a series of setbacks, most notably a large-scale data breach in 2023 that exposed sensitive user data, including ancestry information and, in some cases, personal details such as full names, locations, and birth years.
In September 2024, the company reached a settlement in a lawsuit that accused it of failing to adequately protect user privacy.
The settlement covered nearly seven million affected customers.
The breach triggered regulatory scrutiny and consumer distrust.
On Friday, the California Attorney General issued a consumer alert warning users about 23andMe’s “reported financial distress”, and urged them to delete their personal data from the platform.
The advisory comes amid concerns over how customer data might be handled during bankruptcy proceedings or a potential sale.
CEO Anne Wojcicki resigns
As part of the restructuring, co-founder and CEO Anne Wojcicki stepped down with immediate effect.
Joe Selsavage, the firm’s current Chief Financial Officer, has taken over as interim CEO.
Wojcicki, who co-founded the company nearly two decades ago, will remain on the board of directors.
No successor has been named permanently as the company works through its Chapter 11 filing and explores potential buyers.
The company, based in Sunnyvale, California, has stated that operations will continue without disruption during the sale process. It also confirmed there will be no changes to how it stores, manages, or protects user data.
200 jobs cut in November
In November 2024, 23andMe cut approximately 200 jobs, representing 40% of its workforce, in an attempt to reduce costs and remain afloat.
The job cuts followed repeated warnings about the firm’s financial position and its declining revenue from consumer genetic testing services.
These cost-cutting measures, however, were not enough to offset the damage caused by the cybersecurity breach and resulting litigation.
Industry analysts had been closely watching the company’s viability since the breach and layoff announcements, citing a loss of consumer confidence and heightened regulatory pressure.
The sale raises privacy concerns
The decision to file for bankruptcy and initiate a court-supervised sale has prompted concerns over the fate of sensitive genetic data, particularly in the context of 23andMe’s already tarnished reputation for privacy practices.
Although the company reiterated that customer data remains secure and unchanged in its handling, privacy advocates and state authorities have flagged potential risks associated with third-party acquisitions.
23andMe was previously backed by major investors and entered the public markets in 2021 through a SPAC deal.
However, declining user interest in at-home genetic testing and increasing data security concerns have since caused its market value to collapse.
At the time of filing, 23andMe had not announced any potential buyers.
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