Consumers Warned As Genetic Testing Company Files for Bankruptcy

23andMe, the pioneering genetic testing company, has filed for Chapter 11 bankruptcy protection while simultaneously searching for a buyer as its co-founder steps down amid mounting financial troubles and data privacy concerns.

Quick Takes

23andMe has filed for Chapter 11 bankruptcy protection to facilitate the sale of the company for approximately $50 million.
Co-founder Anne Wojcicki resigned as CEO but plans to pursue acquiring the company as an independent bidder.
California Attorney General Rob Bonta issued an urgent consumer alert advising customers to consider deleting their genetic data.
The company recently settled a $30 million lawsuit related to a data breach affecting 6.9 million customers.
23andMe secured $35 million in debtor-in-possession financing to maintain operations during the bankruptcy process.

Bankruptcy Filing and Leadership Change

23andMe initiated voluntary Chapter 11 proceedings in the US Bankruptcy Court for the Eastern District of Missouri on Sunday. The genetic testing company listed assets and liabilities between $100 million and $500 million in its filing documents. Despite these financial challenges, the company has secured a $35 million debtor-in-possession financing commitment to support continued operations throughout the bankruptcy process, ensuring services remain uninterrupted for current customers.

In a significant leadership change, co-founder and CEO Anne Wojcicki has resigned from her position. According to Wojcicki, she stepped down so she “can be in the best position to pursue the company as an independent bidder.” Chief Financial Officer Joe Selsavage has been appointed as interim CEO to guide the company through this transitional period. The resignation comes after a challenging period that included a 40% reduction in workforce last November as part of cost-cutting measures.

Consumer Data Privacy Concerns

California Attorney General Rob Bonta has issued an urgent advisory to 23andMe customers following the bankruptcy announcement. The alert specifically addresses concerns about the “trove of sensitive consumer data 23andMe has amassed” over its years of operation. Bonta emphasized that California residents have robust privacy protections under state law that they should consider exercising in light of the company’s financial situation.

Under the Genetic Information Privacy Act (GIPA) and California Consumer Protection Act (CCPA), consumers have specific rights to request the deletion of their genetic data and biological samples. The Attorney General’s office provided detailed instructions for customers wishing to delete their information, including logging into accounts, downloading data if desired, and confirming deletion requests. Users can also revoke consent for research use of their genetic information through account settings.

Company Response and Future Outlook

Despite the bankruptcy filing and outside concerns, 23andMe has assured customers that there are no changes to how their data is stored, managed, or protected during this process. The company maintains its commitment to safeguarding customer information and transparency in data management practices. This assurance comes after the company recently settled a lawsuit for $30 million related to a data breach affecting 6.9 million customers, further highlighting the sensitivity surrounding the genetic information in its possession.

The bankruptcy proceedings are designed to facilitate the sale of the company in an orderly manner while maintaining business operations. With Wojcicki potentially returning as an independent bidder and the secured financing in place, 23andMe appears positioned to continue providing services throughout the restructuring process. However, the outcome remains uncertain as the company navigates its financial challenges while addressing mounting concerns about the future custody and protection of millions of customers’ genetic profiles.