23andMe’s Tumultuous Year: Data Breach Settlement, Privatization Plans, and Restructuring Efforts

23andMe Faces Turbulent Year Amid Data Breach Settlement and Privatization Efforts

Genetic testing company 23andMe has encountered significant challenges in 2024, including a $30 million settlement due to a data breach and extensive restructuring efforts. The company has emphasized its commitment to customer privacy amid these hurdles.

CEO Anne Wojcicki has proposed taking 23andMe private, citing the need to eliminate public company costs. The proposal comes as the company has struggled financially since going public in 2021. However, a special committee rejected the proposal due to lack of premium and financing. Wojcicki remains determined to pursue privatization despite this setback.

In September 2024, 23andMe reached a $30 million settlement in a class-action lawsuit following a data breach that affected nearly 7 million users. The breach, which occurred earlier in the year, raised concerns about the company’s data security practices.

Following the settlement, all seven independent directors of 23andMe’s board resigned, citing disagreements over the company’s strategic direction. Three new independent directors were appointed in October 2024.

Consumers expressed concerns when Wojcicki initially showed openness to third-party takeover proposals. Worries about the potential sale of personal genetic data prompted Wojcicki to retract this stance to reassure customers.

In November 2024, 23andMe announced a 40% workforce reduction and the discontinuation of its therapeutics programs and clinical trials. Financial results revealed decreased revenue and operating expenses.

An SEC filing expressed “substantial doubt” about the company’s ability to continue without additional funding. As of September 2024, 23andMe reported an accumulated deficit and limited cash reserves.

Despite these challenges, a 23andMe spokesperson has assured customers of the company’s commitment to privacy protections and consent-based data sharing. The company reports a high participation rate in its Research program and maintains its adherence to privacy laws.

As 23andMe navigates these turbulent times, the genetic testing industry watches closely to see how the company will address its financial and operational challenges while maintaining consumer trust.