23andMe's independent directors quit in clash with CEO over buyout plan

By Ciara Linnane

Co-Founder and CEO Anne Wojcicki has failed to offer an actionable plan to take the company private, directors say

DNA-testing company 23andMe Holding Co's independent directors resigned en masse late Tuesday as part of a dispute with the company's leader over her plan to take it private.

In a letter sent to co-Founder, Chief Executive and Chair of the board Anne Wojcicki, the directors said the decision comes after months of work that failed to result in an actionable plan that meets the interests of non-affiliated shareholders.

"We believe the Special Committee and the Board have provided ample time for you to submit such a proposal," said the letter. "That we have not seen any notable progress over the last 5 months leads us to believe no such proposal is forthcoming."

The directors said they opted to quit rather than have a "protracted and distracting difference of view with you as to the direction of the company."

Wojcicki had told the board in April that she was proposing to acquire the company in a potential go-private transaction, according to a regulatory filing from that time.

The executive indicated she was working with advisers and intended to begin speaking to potential partners and financing sources, the filing said.

Wojcicki further indicated that she wished to maintain control of the company and, therefore, "will not be willing to support any alternative transaction."

At the time, she controlled 49.99% of 23andMe's voting power, according to the Wall Street Journal.

The directors said they still support the company's mission and believe in the value of personalized health and wellness information. Wojcicki had sought to build out the company's core product of tracking individual genetic histories into telehealth and drug development.

But they said they also differed from Wojcicki on strategic direction.

The news is the latest blow to a company that once commanded a market cap of about $6 billion but closed Tuesday at 34 cents for a total valuation of $172.7 million. The stock was up 1 cent Wednesday at 35 cents.

The company went public in June 2021 in a SPAC deal, raising nearly $600 million as its stock shot 21% higher on its first day of trading.

But consumer demand for its DNA-testing kits dropped sharply over time and it became evident that consumers, once they have received their test results, have no further use for the product or company. That has made it difficult to create an aftermarket and grow sales.

In its most recent fiscal 2025 first quarter, the company had a loss of $69 million, narrower than the loss of $105 million posted in the year-earlier period. But revenue fell to $40 million from $61 million.

There were other upsets too. In December, 23andMe confirmed hackers accessed the personal data of about 6.9 million people - roughly half of its customers.

In August, the special committee determined that an offer from Wojcicki to acquire the shares she did not yet own for 40 cents in cash was insufficient, as it didn't offer a premium over the closing price on July 31, lacked committed financing and was conditional in nature, as Dow Jones Newswires reported at the time.

The stock (ME) has fallen 62% in the year to date, while the S&P 500 SPX has gained 18%.

-Ciara Linnane

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09-18-24 1121ET

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