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23andMe considers splitting up company to revive stock price

Anne Wojcicki, co-founder and CEO of 23andMe, speaks on stage during TechCrunch Disrupt SF 2017 at Pier 48 on September 19, 2017 in San Francisco, California.

Steve Jennings

Shares of 23andMe closed down 13% on Thursday, a day after the genetic testing company reported poor third-quarter financial results and discussed splitting it in two to help boost its stock price.

23andme posted revenue of $45 million for the quarter, down from $67 million for the same period last year. The company said its net loss for the quarter was $278 million, or 58 cents per share, which was wider than the net loss of $92 million, or 20 cents per share, reported during the quarter. of the previous year.

The stock closed around 63 cents on Thursday.

In November, 23andMe received a deficiency letter from Nasdaq’s listing qualifications department giving the company 180 days to return its stock price above $1, according to a filing with the Securities and Exchange Commission. UNITED STATES. If 23andMe does not comply, it will be delisted from the exchange.

During 23andMe’s quarterly call with investors, co-founder and CEO Anne Wojcicki said the company is considering splitting its consumer and therapeutic businesses to help broaden its investor base.

“We haven’t made any final decisions on what we’re going to do, but it [are] certainly opportunities and things that we’re exploring with the possibility of therapeutic products being consumer agnostic,” she said.

Founded in 2006, 23andMe exploded in popularity thanks to its at-home DNA testing kits that give consumers insight into their ancestry and genetic profile. The five-piece CNBC Disruptor 50 company went public in 2021 via a merger with a special purpose acquisition company, a deal that valued 23andMe at around $3.5 billion..

Wojcicki, former wife of Google founder Sergey Brin, briefly achieved billionaire status after the IPO, landing on Forbes’ lists of “Power Women” and “America’s Self-made Women.”

But 23andMe struggled to generate consistent recurring revenue since consumers only needed to take its DNA test once to receive their results. The company launched new therapeutic and research activities, but its stock price fell more than 95% from its peak.

For its full 2024 fiscal year, 23andMe said it expects to report revenue between $215 million and $220 million, down from the $240 million to $250 million range the company had fixed for the last quarter.

23andMe is also grappling with growing legal issues, as it faces more than 30 class-action lawsuits following a data breach disclosed late last year. Hackers accessed sensitive information such as names, ancestry reports, birth years and more from 6.9 million people, a spokesperson confirmed to TechCrunch.

Chief Financial Officer Joe Selsavage said the company has incurred $2.7 million in expenses related to the data breach to date.

“We now require two-factor authentication from all of our customers, and we realized that our business is really built on the trust of our customers,” Selsavage said during the earnings conference call.

Citi analysts said pending class action lawsuits, as well as “ongoing headline and reputation risk,” have made them cautious about 23andMe’s prospects, according to a note released Thursday. They lowered their price target for the stock from 90 cents to 85 cents.

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