23andMe files for bankruptcy amid data breach and related lawsuits

Genetic testing company 23andMe has filed for Chapter 11 bankruptcy following a series of financial setbacks, including declining sales, a high-profile data breach, and related lawsuits. The company made the filing over the weekend, aiming to facilitate a sale process and maximize business value. Despite the bankruptcy, 23andMe has stated that it will continue operations during the proceedings.

According to Reuters, the filing triggered a sharp decline in the company’s stock, which plummeted by 46% on Monday. The downturn follows years of financial struggles for the company, which once boasted a valuation of $3.5 billion when it went public in 2021. At its peak, 23andMe had a market capitalization of $6 billion.

Adding to the turbulence, co-founder and CEO Anne Wojcicki resigned amid the crisis. Wojcicki, who held 49% of the company’s voting stock, had been advocating for a buyout since April 2023, but 23andMe’s board repeatedly rejected her proposals. She publicly expressed disappointment over the board’s refusal to accept her bids and confirmed that she intends to make another offer, though she did not disclose specific details. Previously, she had offered to acquire the company at 41 cents per share, valuing it at approximately $11 million—significantly below its current estimated value of $50 million.

The company’s financial troubles were exacerbated by a significant data breach in 2023, which compromised the personal information of roughly 7 million customers. The breach occurred between April 29 and September 27, during which unauthorized individuals accessed user accounts through a method known as credential stuffing—utilizing credentials obtained from other data breaches to infiltrate accounts where users had reused passwords.

The exposed data included sensitive information such as raw genotype data, health reports, and personal details like names, birth years, and ancestry information. The breach resulted in a $30 million settlement and was followed by mass layoffs, with 200 employees being let go last year. The incident also forced 23andMe to scale back certain operations.

In a statement following her resignation, Wojcicki acknowledged the company’s challenges but reaffirmed her commitment to its future. "We have had many successes, but I equally take accountability for the challenges we have today," she wrote in a post on X. "There is no doubt that the challenges faced by 23andMe through an evolving business model have been real, but my belief in the company and its future is unwavering."