In a significant move to stabilize its operations, 23andMe has announced the layoff of 200 employees, representing a staggering 40 percent of its workforce. This decision, described by CEO Anne Wojcicki as “difficult but necessary,” comes as the genetic testing company undergoes a major restructuring to refocus on its core consumer business and research partnerships.
Understanding the layoffs
The layoffs are part of a broader strategy to streamline operations and cut costs. Wojcicki emphasized that these changes are essential for the long-term success of the company.
In addition to workforce reductions, 23andMe has also decided to discontinue its therapeutic development programs. Instead, the company is exploring alternatives such as licensing agreements and asset sales. This strategic pivot is expected to save the company approximately $35 million, which is crucial given its recent financial challenges.
Financial turmoil and leadership challenges
Once valued at $6 billion, 23andMe has faced a series of setbacks that have severely impacted its market position. The company has struggled with leadership disputes, a significant data breach in 2023, and complications surrounding a proposed merger. The situation worsened in September when the entire board of directors resigned after Wojcicki failed to present a satisfactory plan to take the company private.
These issues have contributed to a sharp decline in share prices, prompting the company to take drastic measures to regain stability. The fallout from the data breach, which affected nearly 7 million customers, has also added to the financial strain. As part of a settlement for a class-action lawsuit, 23andMe may be required to pay affected customers up to $10,000 each, totaling $30 million.
The impact of the data breach
The data breach, which compromised sensitive information such as birth years, ancestry reports and raw genotypes, has left many customers concerned about their privacy and security. The repercussions of this breach have not only affected customer trust but have also led to significant financial liabilities for the company.
Future prospects for 23andMe
Despite the challenges, Wojcicki remains committed to restoring 23andMe to financial health. As of Nov. 12, the company’s share price saw a slight increase of 6 percent, rising to $4.87. Wojcicki is also actively seeking to replace the board members to bring fresh leadership to the company.
The restructuring efforts at 23andMe highlight the ongoing challenges faced by companies in the rapidly evolving genetic testing industry. As the company navigates through layoffs, program discontinuations and financial instability, its future remains uncertain. However, with a focus on core business operations and a commitment to customer security, 23andMe aims to regain its footing in the market.
