The biotechnology company 23andMe was founded in 2006 with the goal of increasing access to direct-to-consumer genetic testing for ancestry tracking and genetic-based health assessment. It had its fair share of success and criticism. Nevertheless, in March 2025, it filed for Chapter 11 bankruptcy and its co-founder Anne Wojcicki resigned from her post as chief executive.
23andMe Bankruptcy in a Nutshell: Causes and Customer Impact
Filing for Bankruptcy
A Chapter 11 bankruptcy is a provision under the United States Bankruptcy Code that allows businesses and certain individuals to reorganize their debts while continuing operations. This legal process enables the debtor to restructure financial obligations under court supervision to become solvent while maintaining business activities.
23andMe has faced declining consumer demand and challenges in generating recurring revenue or achieving stable and sustainable income-generating activities. Specifically, despite partnerships and a substantial customer base, data for March 2025 showed that its valuation plummeted from about USD 3.5 billion to under USD 50 million.
Nevertheless, as explained in its official statement to investors, the company initiated voluntary Chapter 11 proceedings to conduct a value-maximizing sale process and resolve liabilities while under the supervision of a court. It expects to continue business operations in the ordinary course throughout the process of selling all of its assets.
Declining Revenues
The company has faced declining demand and challenges in generating recurring revenue due to several key factors. One of which is market saturation. The market for direct-to-consumer DNA testing has become saturated as many individuals interested in genetic insights have already purchased kits. Attracting new customers is difficult.
Growing apprehensions about data privacy and the security of genetic information deterred existing and potential customers. 23andMe was involved in a high-profile data breach in 2023. The incident involved hackers stealing the personal data of 7 million people. Several existing customers attempted to delete their data and accounts.
Another issue with 23andMe is the absence of a sustainable business model for recurring income. Its primary revenue came from one-time sales of DNA testing kits. It attempted to monetize the genetic data of its customers through partnerships with pharmaceutical companies. This faced criticisms and did not generate significant revenue.
Impact on Customers
23andMe noted that there would be no changes to customer data management and access. It assured its stakeholders that it remains committed to maintaining transparency around customer data privacy. Potential buyers would be required to comply with laws and specific regulations pertaining to data privacy and customer data handling.
Technology columnist Geoff Fowler of The Washington Post made and published a quick video on 25 March 2025 urging existing customers to delete their data from the 23andMe website as soon as possible. He explained that their genetic and personal data would be transferred to the successful buyer and could be used for whatever purpose.
California Attorney General Rob Bonta and Connecticut Attorney General William Tong issued unusual privacy alerts about the company. Both reminded their constituents of the significance of personal data protection and advised them to consider directing 23andMe to delete their genetic data and destroy biological samples held by the company.
FURTHER READINGS AND REFERENCES
- 23 March 2025. “23andMe Initiates Voluntary Chapter 11 Process to Maximize Stakeholder Value Through Court-Supervised Sale Process.” 23andMe. Available online
- Fowler, G. 25 March 2025. “Delete Your Data From 23andMe Right Now.” The Washington Post. Available online
- Helmore, E. 5 December 2023. “Genetic Testing Firm 23andMe Admits Hackers Accessed DNA Data of 7m Users.” The Guardian. Available online
- Office of the Attorney General. 21 March 2025. “Attorney General Bonta Urgently Issues Consumer Alert for 23andMe Customers.” State of California Department of Justice, Office of the Attorney General. Available online
- The Office of Attorney General William Tong. 24 March 2025. “Attorney General Tong Issues Consumer Alert Regarding 23andMe Bankruptcy.” Office of the Attorney General Connecticut. Available online