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23andMe’s Collapse: Financial Woes, Layoffs, and Data Risks
Jared Dashevsky, MD
March 16, 2025 • Estimated Reading Time: 12 minutes
GRAND ROUNDS
23andMe’s Collapse: Financial Woes, Layoffs, and Data Risks
23andMe is in troubling waters.
A year ago, I wrote The Rise and Fall of 23andMe and ended on a cautiously optimistic note:
23andMe is “falling,” but there’s still hope that they may catch themselves and turn things around. I’m cautiously optimistic […]. With its vast genetic data repository and ongoing clinical trials, 23andMe stands at a critical juncture, with the possibility to revitalize its business model and continue impacting healthcare consumerism and personalized medicine.
Ah, naive optimism.
Over the past year, 23andMe’s financial health has only worsened. The company has been forced into massive layoffs, abandoned their therapeutics division, and is openly grappling with whether it can even continue operating.
It’s time to break down what’s happening.
In this article, I’ll highlight how bad things have gotten, what an exit strategy could look like, and what it all means for consumers (notice I didn’t say patients).
The Deets: Murky Waters for 23andMe
Finances bore me, but they’re the “vitals” of a company—so they’re important to check to at least get a sense of how the patient—I mean, company—is doing.
Based on 23andMe’s Q3 FY25 financial statement, the company would be in the ICU.
Revenue is artificially up: 23andMe pulled in $60.3M in Q3 FY25, which at first glance looks like a solid 35% YoY increase. But that’s entirely artificial—$19.3M of that came from a one-time research payment from GSK. Without that, revenue is in decline.
Consumer business is tanking: Their core DNA testing and telehealth business shrank, with a $6.4M drop in genetic testing revenue and a $1.5M drop in telehealth revenue. The market for DNA kits is saturated, and they still haven’t figured out how to replace that revenue.
Cash is burning fast: Cash reserves plunged from $216.5M (March 2024) to just $79.4M (December 2024). They burned $47.2M in the last quarter alone.
23andMe made some significant business changes last year to save money. First, they fired 40% of their workforce—which is the first thing everyone does in a crisis. But they also killed off their Therapeutics Division, the one part of the company I was actually excited about.
Why? It’s just too expensive. Here’s what I said in my previous newsletter:
…the drug discovery area is notoriously expensive, but 23andMe is uniquely positioned based on the troves of genetic data they have. They’re now running clinical trials, which are also notoriously expensive. However, the payout could be large if favorable clinical trial results are realized for these drugs they identified based on their genetic data sets.
Therapeutics was a long-term play, but cutting it signals a shift: they’re focused on short-term survival, not long-term innovation.
Back in August 2023, 23andMe’s telehealth platform, Lemonaid Health, launched a weight loss membership program, offering semaglutide (both brand-name and compounded) with clinical consultations. It doesn’t look like this move meaningfully boosted their telehealth revenue. But now that compounding pharmacies can no longer compound semaglutide, I’m sure the business model took a hit.
Anyway, the most damning part of the financial statement? The board of directors straight-up admits there’s “substantial doubt” about their ability to continue operations without raising new capital.
So, where does this leave 23andMe? Bleeding cash, shrinking revenue, and scrambling for an exit strategy.
23andMe’s Search for an Exit
In January 2025, 23andMe publicly announced that they’re exploring “strategic alternatives.” Said another way: They’re trying to find a way out before the ship sinks.
There are three possible exit strategies:
Go private (unlikely).
Sell the company (or parts of it) through M&A.
Bankruptcy (worst-case scenario).
CEO Anne Wojcicki has already tried taking the company private multiple times—most recently in March 2025—but each time, the board has unanimously shut her down (again).
A sale is their best bet.
But who would want 23andMe?
Private equity or biotech companies might be interested in their massive consumer genetic data repository for drug discovery. But if you look at their partnership with GSK you’d see it underperformed and, at least in the short term, was/is more of a financial drag than a goldmine.
And then there’s the worst-case scenario: bankruptcy.
Back in my 2025 healthcare predictions, I actually called this possibility. My thinking? Once compounding pharmacies stopped making GLP-1s (which they have), companies relying on them—like 23andMe’s Lemonaid Health—would start to unravel.
Their GLP-1 weight-loss program never really fit their mission. It always felt like a last-ditch revenue grab to stay competitive with telehealth companies. Now that compounded GLP-1s are off the table, that entire model is likely in trouble.
Dashevsky’s Dissection
So, 23andMe is on a sinking ship. If a private equity firm throws them a lifeline, what happens to the troves of consumer genetic data?
They’re allowed to have it. I’d encourage you to read this NEJM article on the topic, but I’ve summarized it below:
HIPAA Doesn’t Apply: 23andMe isn’t considered a covered entity under HIPAA, meaning genetic data collected through consumer testing isn’t protected the same way medical records are. Customers are “consumers,” not “patients.”
No Federal Law Prevents the Sale of Genetic Data: While laws like GINA prohibit employers and health insurers from misusing genetic data, they don’t stop companies like 23andMe from selling it.
Bankruptcy Courts Prioritize Creditors, Not Consumers: If 23andMe goes bankrupt, their most valuable asset is their trove of consumer genetic data. Federal courts, in an effort to pay off creditors, could approve a sale of this data to the highest bidder. Once that happens, customers lose control over where their genetic information goes.
State Privacy Laws Are Weak: Some states, like California and Illinois, have stronger privacy laws, but they only apply locally and have limited enforcement power. The FTC can only intervene if companies engage in deceptive practices (e.g., if 23andMe promised never to sell data and then did it anyway).
Their Privacy Policy Already Allows It: 23andMe’s own privacy statement explicitly reserves the right to transfer personal information in the event of a sale or bankruptcy. Even if a customer deletes their account, data used in research can’t be retracted, and the company may still retain genetic information for compliance reasons.
If 23andMe finds a buyer—whether it’s a biotech company, a private equity firm, or even a data broker—that buyer could gain access to millions of people’s DNA records. And if 23andMe collapses entirely? That data could be auctioned off in bankruptcy court.
Right now, there’s no federal law preventing this from happening. Once you hand over your genetic data, you don’t really own it anymore.
In summary, 23andMe is in financial free fall, facing declining revenue, a shrinking consumer base, and a cash burn rate that could force it into bankruptcy. Their last-ditch attempts to stay afloat—layoffs, shutting down therapeutics, and pivoting to GLP-1s—haven’t reversed their downward trajectory. With private equity or biotech firms as potential buyers, the company’s most valuable asset remains its vast trove of genetic data. Without strong federal privacy protections, consumers could soon find their DNA in the hands of an entirely new owner—whether they like it or not.
COMMUNITY POLL
23andMe is struggling—declining revenue, layoffs, and a potential sale. What do you think happens next? |
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