23andMe Reports $235.2M Net Loss Amid Chapter 11 Bankruptcy Proceedings

23andMe Holding Co. (MEHCQ) Faces Financial Uncertainty Amid Chapter 11 Proceedings

23andMe Holding Co. is navigating a challenging financial landscape, as highlighted in its recent 10-K filing for the fiscal year ended March 31, 2025. The company, known for its direct-to-consumer genetic testing services, reported a net loss from continuing operations of $235.2 million, compared to a net loss of $566.9 million in the prior fiscal year. Total revenue decreased by 14% to $189.9 million, driven by lower PGS kit sales and telehealth service revenue, partially offset by growth in PGS membership revenue and research services revenue. These financial results are further complicated by the company's voluntary Chapter 11 bankruptcy filing on March 23, 2025, which has led to significant operating disruptions and a decrease in both revenue and customer numbers.

The company's financial performance has been significantly impacted by the Chapter 11 proceedings, as well as a previously disclosed cyber incident. As of March 31, 2025, 23andMe had approximately 14.4 million PGS customers, a 5% decrease compared to the 15.1 million customers in the prior year. The number of 23andMe+ Premium members remained relatively stable at approximately 564,000. Operating expenses decreased by 50% to $340.6 million, primarily due to a goodwill impairment charge in the prior year and cost-cutting measures, including a reduction in force and the closure of its Therapeutics operating segment. However, restructuring and other charges increased significantly to $61.4 million, reflecting costs associated with the workforce reduction and lease abandonment.

Strategically, 23andMe has discontinued its Therapeutics operating segment to focus on its core consumer and research services. The company has entered into an Asset Purchase Agreement with Regeneron Pharmaceuticals, Inc. for the sale of substantially all of its assets, excluding its telehealth services business, for $256.0 million in cash, subject to Bankruptcy Court approval and other customary conditions. If the Transaction with Regeneron is not consummated, the Debtors will seek authorization of the Bankruptcy Court to consummate the transactions contemplated by the bid of TTAM Research Institute. The company is also winding down its telehealth services business operated by Lemonaid Health, Inc.

Operationally, 23andMe faces several challenges, including a decline in the personal genetics market, increased competition in the telehealth sector, and the need to maintain customer trust following the cyber incident. The company is focused on expanding its membership base, enhancing its research platform, and maximizing collaborations to drive future growth. As of March 31, 2025, 23andMe employed 265 individuals, all of whom were based in the United States. Management continues to believe there is substantial doubt about the company's ability to continue as a going concern within one year after the date of issuance of the consolidated financial statements.