By G. Mudalige, Jadetimes Staff
G. Mudalige is a Jadetimes news reporter covering Technology & Innovation
DNA-testing giant 23andMe, known for its consumer-friendly genetic testing services, has announced a significant downsizing of its workforce, laying off 40% of its employees, or around 200 jobs, as it seeks to stabilize its finances and restructure operations. This substantial cut reflects the company's struggle to maintain its footing in an increasingly competitive market and addresses financial challenges that have led to steep declines in revenue and share value. As part of this restructuring, 23andMe will also halt the development of therapies it had been working on, a decision signaling a shift away from its broader ambitions in personalized medicine to focus on its core consumer and research services.
The layoffs, while challenging, are expected to bring annual savings of approximately $35 million, despite one-time costs of $12 million related to severance packages. The move follows an announcement earlier this week in which 23andMe warned investors of "substantial doubt" regarding its ability to continue operating. During the July to September period, the company's revenue fell to $44 million from $50 million the previous year, further dampening investor confidence. In tandem with revenue decline, the company’s share price has plummeted over 70% this year, leaving it trading at under $5—a sharp contrast to its 2021 Nasdaq listing valuation of $3.5 billion and a peak share price of $17.65. These figures underscore the formidable challenges facing 23andMe as it seeks to regain investor trust and rebuild momentum.
Adding to the financial turmoil, 23andMe has also been grappling with the repercussions of a significant data breach. In late 2023, the company revealed that hackers had managed to access the personal information of approximately 6.9 million users, a breach that damaged public trust in the company. While the hackers did not access genetic data directly, they obtained sensitive personal information, including family trees, birth years, and geographic locations. This breach raised serious concerns over data security, with the UK’s Information Commissioner’s Office calling for a full investigation and underlining the importance of trust in handling genetic data, which remains constant over a lifetime and requires rigorous protection.
The breach occurred through email and password credentials leaked in other data compromises, which hackers then used to access not only individual accounts but also data connected through family trees, affecting users linked to breached accounts. This event led to heightened scrutiny from data watchdogs in the UK and Canada, placing additional regulatory pressure on the company. Compounding these setbacks, seven of 23andMe’s eight board members resigned in September after failing to reach a buyout agreement with CEO and co-founder Anne Wojcicki, raising questions about the company’s governance and strategic direction.
In response, 23andMe is contemplating options for the therapies it had in development, considering either licensing or selling these assets. This redirection underscores the company’s focus on streamlining and prioritizing its core services, particularly consumer genetic testing and research partnerships. Despite these setbacks, 23andMe remains a key player in the genetic testing industry, offering services that provide ancestry breakdowns and personalized health insights. The firm’s high-profile clientele includes notable figures like rapper Snoop Dogg and investor Warren Buffett, exemplifying its broad appeal across demographics.
23andMe’s current challenges reveal the volatile nature of tech-driven consumer services reliant on personal data, especially when security issues arise. By focusing on restructuring, optimizing its core business, and addressing security vulnerabilities, the company aims to restore its financial health and regain public trust. The path forward for 23andMe may hinge on its ability to adapt to heightened data protection standards and evolving market demands while reinforcing its foundational strengths in genetic testing.
