23andMe Bankruptcy: What happened?

​The recent bankruptcy filing of 23andMe has raised numerous questions about the company's trajectory and the factors that led to its downfall. While the official narrative cites declining demand for DNA testing kits and a significant data breach as primary reasons, a closer examination suggests a series of missteps and warning signs that may have been overlooked.​

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Early Indicators of Trouble

In October 2024, 23andMe executed a 1-for-20 reverse stock split, a maneuver often interpreted as a desperate attempt to prop up a faltering stock price and avoid delisting from NASDAQ. This action hinted at underlying financial instability and a disconnect between the company's public valuation and its actual performance.

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A 3-Year Financial Slide

Let’s talk numbers:

• Revenue dropped by over 50% in just one year, from $299M in 2023 to $145M in 2024.
• They posted three consecutive years of losses, including a staggering $667M net loss in 2023.
• Even in 2024, with cost-cutting measures in place, they still lost $182M—hardly a sign of a turnaround.
• Accounts payable stood at $7.8M, despite other liabilities being wiped. Translation? Vendors were waiting in line to get paid.

The chart tells a sobering story: after a brief uptick in revenue, both top-line growth and bottom-line performance cratered. The company wasn’t just burning cash—it was accelerating into a nosedive.

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Trade Payment Behavior

Further analysis of 23andMe's financial health reveals troubling patterns in their trade payment data as of March 26, 2025:​

• Total Balance: $665,000 across 11 active trade lines.​
• Past Due Amount: $460,800 (69% of total balance) overdue by 30 days.​
• Current Balance: Only $204,000 is current, indicating that the majority of obligations are delinquent.​
• Recent High Credit: $932,000, suggesting operations near their credit limit.​
• Past-Due Payments: Over 1,700, totaling $1.7 million, with 83 marked as "severely late."​

These figures indicate a systemic cash flow problem, with the company struggling to meet its financial obligations. The concentration of delinquencies within the 1–30 day range suggests either the onset of financial distress or strategic deferment of payments to conserve cash. Such patterns are often precursors to more severe financial difficulties.

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Stock Performance

The company's stock performance further reflects its financial instability:

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Massive Workforce Reductions

By November 2024, the company announced layoffs affecting approximately 40% of its workforce, totaling over 200 employees. This drastic reduction not only signaled severe financial distress but also raised concerns about the company's ability to maintain its operations and fulfill commitments to customers.

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Data Breach and Privacy Concerns

Compounding these issues was a significant data breach in 2023, where hackers accessed sensitive information from about 7 million users. The breach exposed vulnerabilities in 23andMe's data security measures and led to costly lawsuits and fines.

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Leadership and Strategic Missteps

CEO Anne Wojcicki's attempts to take the company private in early 2024 were met with resistance, culminating in the resignation of all seven independent board members by September 2024. This internal turmoil suggested deep-seated disagreements over the company's strategic direction and governance.

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Regulatory Scrutiny and Legal Challenges

The Spanish Data Protection Agency initiated an investigation into 23andMe's handling of genetic data, reflecting broader regulatory concerns about privacy and data security. Additionally, the company's updated terms of service, perceived by some as limiting users' legal recourse, attracted criticism and legal challenges.

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The Bottom Line

The bankruptcy of 23andMe appears to be the culmination of a series of strategic errors, operational missteps, and a failure to adequately address emerging challenges. The warning signs were present: financial maneuvers indicating instability, significant layoffs, data security breaches, leadership disputes, and regulatory scrutiny. These factors collectively suggest that the company's downfall was not solely due to market dynamics but also to internal decisions and oversight failures.​

Were you impacted by the 23andMe bankruptcy? If so, check out our guide on what to do when your customer goes bankrupt.

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