Alex Solem, upland game biologist with South Dakota Game, Fish and Parks, prepares a swab to collect river otter DNA samples from scat on Tuesday, September 28, 2021, on the Big Sioux River just south of Dell Rapids. River Otter Survey 008
California – Genetic testing company 23andMe, known for its saliva-based DNA testing kits, has filed for Chapter 11 bankruptcy protection, the company announced on Sunday. The move comes as the company seeks to facilitate the sale of its business and secure a way forward amid financial struggles. Founded in 2006, 23andMe gained widespread recognition for offering customers the ability to explore their ancestry and health information. However, the company has faced significant challenges in recent years, prompting the restructuring effort.
While 23andMe continues its operations under bankruptcy protection, the news has raised concerns over the handling of sensitive personal data accumulated from millions of users. The company has collected a vast trove of genetic data from customers, leading to fears about the security of this information, especially in the midst of its financial turmoil.
California Attorney General Rob Bonta issued a consumer alert warning that 23andMe’s data could be at risk during the sale process. Bonta reminded Californians of their rights to control their genetic data, including the ability to delete it, destroy test samples, and withdraw consent for their data to be used in research. He emphasized the importance of safeguarding privacy, especially given the sensitive nature of the genetic information involved.
In response, 23andMe assured customers that there would be no changes in how the company stores, manages, or protects their data. The company stated in a press release, “There are no changes to the way the Company stores, manages, or protects customer data.” The company also pledged to maintain transparency in its data management and privacy practices during the sale process.
Despite the bankruptcy filing, 23andMe’s troubles have been mounting. In November, the company announced it would reduce its workforce by 40%, eliminating over 200 jobs as part of its cost-cutting measures. The company also faced a significant setback in 2023 when a data breach exposed the personal information of 6.9 million customers, leading to a lawsuit and a $30 million settlement. As part of the settlement, 23andMe also agreed to provide three years of security monitoring for affected customers.
The company’s leadership is also in flux. Co-founder and CEO Anne Wojcicki has resigned following multiple unsuccessful takeover bids, although she has stated on social media platform X that her resignation would allow her to pursue an independent bid for the company. Wojcicki will be temporarily replaced by CFO Joe Selsavage.
23andMe has secured a debtor-in-possession (DIP) financing commitment of about $35 million to support its ongoing operations during the bankruptcy process. The company’s estimated liabilities range from $100 million to $500 million, but it has not disclosed any potential buyers or offers at this stage.
As 23andMe navigates its financial crisis, the focus will likely remain on how it handles customer data, a critical concern in an era where privacy and security are paramount. The outcome of this bankruptcy and potential sale will have significant implications for both the company’s future and the privacy of millions of its customers.
