Shares of former unicorn 23andMe plummet following new buyout offer

The founder of the small-cap genetic testing company 23andMe has offered to buy shareholders out. This is the second attempt in the last year to take 23andMe private. In the summer of 2024, shareholders were offered a price six times lower than the current one, but even after the publication of the new offer on Friday, February 21, the company’s stock plummeted.

23andMe’s shares collapsed 12% to $2.42 per share on Friday, following the publication of the buyout offer by company founder Anne Wojcicki to company shareholders. In it, she outlined the terms for the company’s delisting. In premarket trading today, February 24, the stock recovered slightly, rising nearly 3%.

Wojcicki, together with investment firm New Mountain Capital, has offered 23andMe shareholders to buy back their shares at $2.53 each, according to documents submitted to the U.S. SEC. This corresponds to an overall company valuation of approximately $74.7 million, notes CNBC. The current market capitalization of 23andMe is just under $65.0 million.

“We believe that our proposal provides compelling value and immediate liquidity to the company's public stockholders,” CNBC quoted a letter from Wojcicki and Matthew Holt, managing director and president of private equity at New Mountain Capital.

The deal will go through if it is approved by a special committee at 23andMe — established to explore alternative development strategies for the company — and if it secures the votes of a majority of shareholders not affiliated with Wojcicki.

The genetic testing firm 23andMe was founded in 2006 by entrepreneur Anne Wojcicki and geneticist Linda Avey, with early investors including Google cofounder Sergey Brin — who was Wojcicki’s husband at the time — Yuri Milner and Google ventures. The company’s DNA testing technology was named invention of the year by Time in 2008.

In 2021, 23andMe shares began trading on the Nasdaq, with the company’s market value peaking at $6 billion. However, the sale of genetic tests alone did not generate profits, prompting Wojcicki to expand the business by acquiring a telemedicine company. This, too, did not meet with success.

In 2023, 23andMe underwent three rounds of staff cuts, and in the summer of 2024, the first attempt to take the company private was made. At that time, the offer was set at $0.40 per share — six times lower than the current price and almost 20 times cheaper than the market value of 23andMe at that time. Ultimately, in September, all independent board members left the company, disagreeing with Wojcicki’s buyout plan, according to Reuters.

In November 2024, 23andMe announced a new restructuring plan, which included a 40% reduction in staff and the closure of all clinical and preclinical research programs. In January, it was reported that the company might be exploring the sale of its telemedicine business.

In its report for the last quarter of 2024, 23andMe announced year-over-year revenue growth of nearly 35% to $60.3 million, as well as a reduction in its net loss by more than 16 times — to $45.5 million — thanks to the recognition of one-time revenue from a contract with pharmaceutical giant GSK.

Analyst recommendations on the company are split evenly: there are two analysts covering it, with one rating it as a “buy” and the other as a “hold,” according to MarketWatch. The average target price is $8.40 per share, which implies upside of almost 250%.