23andMe, the prominent DNA-testing firm, is facing substantial challenges and has announced plans to cut 40% of its workforce, amounting to approximately 200 positions. The decision comes as the company aims to restructure operations to prioritize its core consumer business and research partnerships, following a decline in popularity and market value.
The decision to lay off employees and halt development of various therapies is a part of a larger strategy led by CEO Anne Wojcicki to revive the company’s fortunes. Over the past year, 23andMe has witnessed its stock price decrease by more than 70%, prompting urgent action to minimize expenditures and refocus efforts. The company is anticipating one-off costs of approximately $12 million, primarily due to severance payments, but expects to save around $35 million through these drastic measures.
However, the operational setbacks at 23andMe extend beyond layoffs. The firm faced a significant security breach last December when hackers accessed personal details of about 6.9 million users, exposing information such as family trees and birth years, although DNA records were unaffected. This breach has further affected customer trust in the company, which has catered to a diverse clientele, including celebrities like Snoop Dogg and influential investors like Warren Buffett.
As part of the re-evaluation process, 23andMe is also contemplating the future of its therapeutic development pipeline, with options potentially including licensing or selling these initiatives. Despite the hurdles, the company aims to concentrate on its roots in the genetic testing market, which includes ancestry breakdown and personalized health insights, in hopes of stabilizing and eventually revitalizing its brand.
