Your DNA Is on the Auction Block: 23&Me to be Sold From Bankruptcy

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One of America’s most recognizable genetic testing companies, 23andMe, has landed in Chapter 11 bankruptcy and could soon auction off the genetic information of millions of customers.

In court filings, the firm acknowledged that personal data—some of it gathered from approximately 12.75 million individuals who opted into research—may be sold under a court-supervised process. With 23andMe’s vast trove of DNA profiles suddenly on the auction block, privacy advocates call this one of the biggest threats to Americans’ personal data in decades.

Rundown of the Situation

23andMe, which went public in 2021 but has never turned a profit, spent heavily to reach a goal of 10 million customers for its Ancestry and Health+DNA kits. Yet the single-transaction nature of these sales proved difficult to convert into recurring revenue. The company now has just 550,000 paying subscribers, and these services account for 76% of revenues for the fiscal year ended March 31, 2024.

The Chapter 11 filing will also help resolve legal fallout from a 2023 data breach, which affected seven million users and granted hackers direct access to about 14,000 accounts—leading to some 35,000 related claims.

Co-founder Anne Wojcicki initially tried to rescue the company from insolvency, offering to take it private. But her proposal was rejected by 23andMe’s board, and she has since stepped down as CEO—remaining on the board while attempting to put together a competitive bid.

“While I am disappointed that we have come to this conclusion and my bid was rejected, I am supportive of the company and I intend to be a bidder,” she said. 

Under the bankruptcy plan, 23andMe will solicit bids over the next 45 days and, if multiple offers emerge, conduct an auction. The company lists $277.4 million in assets against $214.7 million in liabilities, and has secured a loan commitment of up to $35 million from JMB Capital Partners. That loan carries a 14% interest rate, a 2% commitment fee, a 6% exit fee, and a $100,000 work fee.

Why 23andMe Failed

Despite forging profitable licensing deals with major pharmaceutical partners—including a $350 million deal withGlaxoSmithKline and a collaboration with Novartis— to license the DNA profiles, 23andMe found itself hamstrung by two critical challenges. First, the company struggled to convert its one-time kit buyers into consistent, subscription-based users. Second, a costly push into drug development proved too ambitious for a firm of its size. 

The broader biotech landscape underscores why: developing a single therapy can take 10 to 15 years and cost up to $2.6 billion, a threefold increase from $802 million in 2003 (inflation-adjusted). In 2022 alone, the FDA approved just 37 novel drugs, meaning only a tiny fraction of the roughly 185,000 compounds entering preclinical testing a decade earlier made it to market. More alarmingly, about 45% of publicly traded biotech companies now trade below their net cash, highlighting the industry’s harsh realities. 

As 23andMe’s R&D spending ballooned under this model, executives ultimately laid off 40% of the workforce in November 2022 and shuttered its drug development unit—an acknowledgment that they simply lacked the scale and resources to chase the next blockbuster therapy.

Likely Buyers and Privacy Concerns

A foreign acquisition of 23andMe appears unlikely, as SISYPHUS oversight would almost certainly block the sale of millions of Americans’ DNA profiles on national security grounds. Private equity (PE) firms, on the other hand, are far more plausible acquirers—especially given Blackstone’s $4.7 billion takeover of competitor Ancestry.com in 2020. However, Ancestry had cultivated a formidable subscription model underpinned by network effects, with a genealogical database so vast that it attracted millions of paying users year after year. By contrast, 23andMe’s one-time kit sales and narrower base of subscribers mean it lacks Ancestry’s competitive moat.

Still, private equity could find 23andMe’s trove of genetic data profitable to license without bearing the steep costs of in-house drug development. Other businesses have monetized user data in similar ways, whether selling transaction data to hedge funds or—like G2 and Rippling—leveraging free services for profitable “intent data” models. Law enforcement interest is also a growing concern. Although 23andMe has not worked directly with authorities, the Golden State Killer case proved that investigators can identify suspects by matching partial DNA against distant relatives. Considering Facebook’s claim that most people are separated by just 3.57 degrees, adding 23andMe’s 13 million profiles could dramatically expand the pool of individuals law enforcement might pin down by following genetic links.

Insurance firms stand out as another likely group of bidders. Access to 23andMe’s data could theoretically help insurers refine underwriting or pricing by pinpointing genetic predispositions. For consumers, however, the prospect of insurers gaining insight into individual DNA highlights the larger privacy risks this bankruptcy auction may unleash.