Filed Pursuant to Rule 424(b)(3)
Registration Statement No. 333-257768
Prospectus Supplement No. 5
(to Prospectus dated July 15, 2021)
|
23andMe Holding Co.
280,940,853 Shares of Class A Common Stock
467,670 Shares of Class A Common Stock
Up to 25,065,665 Shares of Class A Common Stock Issuable Upon Exercise of Warrants
Up to 8,113,999 Warrants
__________________________
This prospectus supplement is being filed to update and supplement the information contained in the prospectus dated July 15, 2021 (the “Prospectus”), related to: (1) to the offer and sale from time to time by the selling securityholders named in the Prospectus (the “Selling Holders”) of up to: (i) 280,940,853 shares of our Class A Common Stock, par value $0.0001 per share (“Class A Common Stock”) and (ii) 8,113,999 warrants to purchase shares of Class A Common Stock originally issued in a private placement and (2) the issuance by us of up to (i) 25,065,665 shares of Class A Common Stock that may be issued upon exercise of warrants to purchase Class A Common Stock at an exercise price of $11.50 per share and (ii) 467,670 shares of Class A Common Stock reserved for issuance upon the exercise of outstanding options, with the information contained in our Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission (“SEC”) on November 10, 2021 (the “Quarterly Report”). Accordingly, we have attached the Quarterly Report to this prospectus supplement.
This prospectus supplement updates and supplements the information in the Prospectus and is not complete without, and may not be delivered or utilized except in combination with, the Prospectus, including any amendments or supplements thereto. This prospectus supplement should be read in conjunction with the Prospectus and if there is any inconsistency between the information in the Prospectus and this prospectus supplement, you should rely on the information in this prospectus supplement.
Our Class A Common Stock and public warrants are listed on The Nasdaq Global Select Market (“Nasdaq”), under the symbols “ME” and “MEUSW,” respectively. On November 9, 2021, the closing price of a share of Class A Common Stock was $11.93 and the closing price for our public warrants was $3.11.
__________________________
We are an “emerging growth company” under federal securities laws and are subject to reduced public company reporting requirements. Investing in our Class A Common Stock involves a high degree of risk. See the section entitled “Risk Factors” beginning on page 12 of the Prospectus and in any applicable prospectus supplement to read about factors you should consider before buying our securities.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
The date of this prospectus is November 10, 2021.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
☑ |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended September 30, 2021
or
☐ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from |
|
to |
|
Commission file number 001-39587
23ANDME HOLDING CO.
(Exact name of registrant as specified in its charter)
Delaware |
87-1240344 |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
|
|
223 N. Mathilda Avenue Sunnyvale, California |
94086 |
(Address of principal executive offices) |
(Zip Code) |
(650) 938-6300
(Registrant’s telephone number, including area code)
Not applicable
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
Class A common stock, $0.0001 par value per share |
ME |
The Nasdaq Global Select Market |
Redeemable warrants, each whole warrant exercisable for one share of Class A common stock |
MEUSW |
The Nasdaq Global Select Market |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer |
☐ |
Accelerated filer |
☐ |
Non-accelerated filer |
☒ |
Smaller reporting company |
☒ |
|
|
Emerging growth company |
☒ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No
As of October 31, 2021, there were 93,677,322 shares of Class A common stock, $0.0001 par value per share, and 313,759,355 shares of Class B common stock, $0.0001 par value per share, issued and outstanding.
23ANDME HOLDING CO.
TABLE OF CONTENTS
|
Page |
PART I. FINANCIAL INFORMATION |
|
Item 1. Financial Statements |
|
4 |
|
Condensed Consolidated Statements of Operations and Comprehensive Loss |
5 |
Condensed Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity |
6 |
8 |
|
9 |
|
|
|
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations |
30 |
Item 3. Quantitative and Qualitative Disclosures About Market Risk |
46 |
47 |
|
PART II. OTHER INFORMATION |
|
48 |
|
48 |
|
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds |
79 |
79 |
|
79 |
|
79 |
|
80 |
|
81 |
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This quarterly report on Form 10-Q (this "Form 10-Q"), including, without limitation, statements under the headings "Management's Discussion and Analysis of Financial Condition and Results of Operations," includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, (the "Securities Act") and Section 21E of the Securities Exchange Act of 1934, as amended, (the "Exchange Act"). Generally, statements that are not historical facts, including statements concerning 23andMe Holding Co.’s (the “Company,” “we,” “us,” or “our”) possible or assumed future actions, business strategies, events, or results of operations, are forward-looking statements. These forward-looking statements can be identified by the use of forward-looking terminology, including, without limitation, words like "believes," "estimates," "anticipates," "expects," "intends," "plans," "may," "will," "potential," "projects," "predicts," "continue," or "should," or, in each case, their negative or other variations or comparable terminology. There can be no assurance that actual results will not materially differ from expectations.
The forward-looking statements contained in this Form 10-Q are based on our current expectations and beliefs concerning future developments and their potential effects on us. Future developments affecting us may not be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control), and other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, without limitation, those factors described under Part II, Item 1A: "Risk Factors." Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as may be required under applicable securities laws. These risks and others described under Part II, Item 1A: "Risk Factors" may not be exhaustive.
By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. We caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition, and liquidity, and developments in the industry in which we operate may differ materially from those made in or suggested by the forward-looking statements contained in this Form 10-Q. In addition, even if our results or operations, financial condition, and liquidity, and developments in the industry in which we operate are consistent with the forward-looking statements contained in this Form 10-Q, those results or developments may not be indicative of results or developments in subsequent periods.
3
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
23ANDME HOLDING CO.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
|
|
September 30, |
|
|
March 31, |
|
|
||
|
|
2021 |
|
|
2021 |
|
|
||
|
|
(Unaudited) |
|
|
|
|
|
||
ASSETS |
|
|
|
|
|
|
|
||
Current assets: |
|
|
|
|
|
|
|
||
Cash |
|
$ |
701,050 |
|
|
$ |
282,489 |
|
|
Restricted cash |
|
|
1,399 |
|
|
|
1,399 |
|
|
Accounts receivable, net (related party amounts of $25,000 and nil as of September 30, 2021 and March 31, 2021, respectively) |
|
|
26,707 |
|
|
|
2,481 |
|
|
Inventories |
|
|
17,732 |
|
|
|
6,239 |
|
|
Deferred cost of revenue |
|
|
5,526 |
|
|
|
5,482 |
|
|
Prepaid expenses and other current assets |
|
|
16,964 |
|
|
|
15,485 |
|
|
Total current assets |
|
|
769,378 |
|
|
|
313,575 |
|
|
Property and equipment, net |
|
|
53,749 |
|
|
|
60,884 |
|
|
Operating lease right-of-use assets |
|
|
58,312 |
|
|
|
63,122 |
|
|
Restricted cash, noncurrent |
|
|
6,974 |
|
|
|
6,974 |
|
|
Internal-use software, net |
|
|
7,818 |
|
|
|
6,889 |
|
|
Other assets |
|
|
6,809 |
|
|
|
654 |
|
|
Total assets |
|
$ |
903,040 |
|
|
$ |
452,098 |
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) |
|
|
|
|
|
|
|
||
Current liabilities: |
|
|
|
|
|
|
|
||
Accounts payable (related party amounts of nil and $4,422 as of September 30, 2021 and March 31, 2021, respectively) |
|
$ |
10,280 |
|
|
$ |
12,271 |
|
|
Accrued expenses and other current liabilities (related party amounts of $12,610 and $7,065 as of September 30, 2021 and March 31, 2021, respectively) |
|
|
29,541 |
|
|
|
31,953 |
|
|
Deferred revenue (related party amounts of $33,928 and $30,140 as of September 30, 2021 and March 31, 2021, respectively) |
|
|
67,681 |
|
|
|
71,255 |
|
|
Operating lease liabilities |
|
|
6,128 |
|
|
|
6,140 |
|
|
Total current liabilities |
|
|
113,630 |
|
|
|
121,619 |
|
|
Operating lease liabilities, noncurrent |
|
|
82,567 |
|
|
|
87,582 |
|
|
Other liabilities |
|
|
1,211 |
|
|
|
1,165 |
|
|
Warrant liabilities |
|
|
46,121 |
|
|
|
— |
|
|
Total liabilities |
|
$ |
243,529 |
|
|
$ |
210,366 |
|
|
Commitments and contingencies (Note 8) |
|
|
|
|
|
|
|
||
Redeemable convertible preferred stock |
|
|
|
|
|
|
|
||
Redeemable convertible preferred stock, $0.00001 par value per share, 10,000,000 and 209,512,070 shares authorized as of September 30, 2021 and March 31, 2021, respectively; nil and 209,181,855 shares issued and outstanding as of September 30, 2021 and March 31, 2021, respectively; aggregate liquidation preference of nil and $874,107 as of September 30, 2021 and March 31, 2021, respectively |
|
|
— |
|
|
|
837,351 |
|
|
Stockholders' equity (deficit) |
|
|
|
|
|
|
|
||
Common Stock - Class A shares, par value $0.0001, 93,409,227 and 20,713,076 shares issued and outstanding as of September 30, 2021 and March 31, 2021, respectively; Class B shares, par value $0.0001, 313,759,355 and 103,816,708 shares issued and outstanding as of September 30, 2021 and March 31, 2021, respectively |
|
|
41 |
|
|
|
— |
|
|
Additional paid-in capital |
|
|
1,695,258 |
|
|
|
381,619 |
|
|
Accumulated deficit |
|
|
(1,035,788 |
) |
|
|
(977,238 |
) |
|
Total stockholders’ equity (deficit) |
|
|
659,511 |
|
|
|
(595,619 |
) |
|
Total liabilities and stockholders’ equity (deficit) |
|
$ |
903,040 |
|
|
$ |
452,098 |
|
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4
23ANDME HOLDING CO.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited)
(in thousands, except share and per share data)
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
||||||||||
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
|
||||
Revenue (related party amounts of $10,002 and $9,840 for the three months ended September 30, 2021 and 2020, respectively, and $21,212 and $21,667 for the six months ended September 30, 2021 and 2020, respectively) |
|
$ |
55,204 |
|
|
$ |
51,804 |
|
|
$ |
114,443 |
|
|
$ |
99,861 |
|
|
Cost of revenue (related party amounts of $(184) and $(1,063) for the three months ended September 30, 2021 and 2020, respectively, and $264 and $(651) for the six months ended September 30, 2021 and 2020, respectively) |
|
|
27,276 |
|
|
|
27,209 |
|
|
|
55,818 |
|
|
|
52,773 |
|
|
Gross profit |
|
|
27,928 |
|
|
|
24,595 |
|
|
|
58,625 |
|
|
|
47,088 |
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Research and development (related party amounts of $5,864 and $4,631 for the three months ended September 30, 2021 and 2020, respectively, and $11,886 and $6,449 for the six months ended September 30, 2021 and 2020, respectively) |
|
|
44,523 |
|
|
|
38,205 |
|
|
|
88,755 |
|
|
|
72,575 |
|
|
Sales and marketing |
|
|
13,588 |
|
|
|
8,329 |
|
|
|
29,007 |
|
|
|
18,984 |
|
|
General and administrative |
|
|
16,264 |
|
|
|
14,315 |
|
|
|
28,860 |
|
|
|
28,505 |
|
|
Total operating expenses |
|
|
74,375 |
|
|
|
60,849 |
|
|
|
146,622 |
|
|
|
120,064 |
|
|
Loss from operations |
|
|
(46,447 |
) |
|
|
(36,254 |
) |
|
|
(87,997 |
) |
|
|
(72,976 |
) |
|
Other (expense) income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest income |
|
|
92 |
|
|
|
69 |
|
|
|
136 |
|
|
|
143 |
|
|
Change in fair value of warrant liabilities |
|
|
29,828 |
|
|
|
— |
|
|
|
29,294 |
|
|
|
— |
|
|
Other (expense) income, net |
|
|
3 |
|
|
|
(6 |
) |
|
|
17 |
|
|
|
872 |
|
|
Net and comprehensive loss |
|
$ |
(16,524 |
) |
|
$ |
(36,191 |
) |
|
$ |
(58,550 |
) |
|
$ |
(71,961 |
) |
|
Net loss per share of Class A and Class B common stock attributable to common stockholders, basic and diluted: |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic and diluted |
|
$ |
(0.04 |
) |
|
$ |
(0.38 |
) |
|
$ |
(0.20 |
) |
|
$ |
(0.76 |
) |
|
Weighted-average shares used to compute net loss per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic and diluted |
|
|
406,886,060 |
|
|
|
94,985,853 |
|
|
|
288,190,872 |
|
|
|
94,285,431 |
|
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
5
23ANDME HOLDING CO.
CONDENSED CONSOLIDATED STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)
(Unaudited)
(in thousands, except share and per share data)
|
|
Redeemable Convertible |
|
|
Common Stock |
|
|
Additional |
|
|
Accumulated |
|
|
Total |
|
|||||||||||||
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Deficit |
|
|
(Deficit) |
|
|||||||
Balance as of March 31, 2021 |
|
|
91,198,378 |
|
|
$ |
837,351 |
|
|
|
54,292,140 |
|
|
$ |
— |
|
|
$ |
381,619 |
|
|
$ |
(977,238 |
) |
|
$ |
(595,619 |
) |
Recapitalization |
|
|
117,983,477 |
|
|
|
— |
|
|
|
70,237,644 |
|
|
|
12 |
|
|
|
(12 |
) |
|
|
— |
|
|
|
— |
|
Balance as of March 31, 2021 |
|
|
209,181,855 |
|
|
|
837,351 |
|
|
|
124,529,784 |
|
|
|
12 |
|
|
|
381,607 |
|
|
|
(977,238 |
) |
|
|
(595,619 |
) |
Preferred stock conversion |
|
|
(209,181,855 |
) |
|
|
(837,351 |
) |
|
|
209,181,855 |
|
|
|
21 |
|
|
|
837,330 |
|
|
|
— |
|
|
|
837,351 |
|
Issuance of common stock upon Merger (net of transaction costs of $33,726) |
|
|
— |
|
|
|
— |
|
|
|
46,901,747 |
|
|
|
5 |
|
|
|
200,574 |
|
|
|
— |
|
|
|
200,579 |
|
Issuance of PIPE shares (related party amount of $25,000) |
|
|
— |
|
|
|
— |
|
|
|
25,000,000 |
|
|
|
3 |
|
|
|
249,997 |
|
|
|
— |
|
|
|
250,000 |
|
Issuance of common stock upon exercise of stock options |
|
|
— |
|
|
|
— |
|
|
|
818,479 |
|
|
|
— |
|
|
|
2,553 |
|
|
|
— |
|
|
|
2,553 |
|
Stock-based compensation expense |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
9,704 |
|
|
|
— |
|
|
|
9,704 |
|
Net Loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(42,026 |
) |
|
|
(42,026 |
) |
Balance as of June 30, 2021 |
|
|
— |
|
|
$ |
— |
|
|
|
406,431,865 |
|
|
$ |
41 |
|
|
$ |
1,681,765 |
|
|
$ |
(1,019,264 |
) |
|
$ |
662,542 |
|
Issuance of common stock upon exercise of stock options |
|
|
— |
|
|
|
— |
|
|
|
736,717 |
|
|
|
— |
|
|
|
2,905 |
|
|
|
— |
|
|
|
2,905 |
|
Stock-based compensation expense |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
10,588 |
|
|
|
— |
|
|
|
10,588 |
|
Net Loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(16,524 |
) |
|
|
(16,524 |
) |
Balance as of September 30, 2021 |
|
|
— |
|
|
$ |
— |
|
|
|
407,168,582 |
|
|
$ |
41 |
|
|
$ |
1,695,258 |
|
|
$ |
(1,035,788 |
) |
|
$ |
659,511 |
|
6
|
|
Redeemable Convertible |
|
|
Common Stock |
|
|
Additional |
|
|
Accumulated |
|
|
Total |
|
|||||||||||||
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Deficit |
|
|
Deficit |
|
|||||||
Balance as of March 31, 2020 |
|
|
86,443,341 |
|
|
$ |
755,083 |
|
|
|
44,318,298 |
|
|
$ |
— |
|
|
$ |
172,736 |
|
|
$ |
(793,619 |
) |
|
$ |
(620,883 |
) |
Recapitalization |
|
|
111,831,592 |
|
|
|
— |
|
|
|
57,334,501 |
|
|
|
9 |
|
|
|
(9 |
) |
|
|
— |
|
|
|
— |
|
Balance as of March 31, 2020 |
|
|
198,274,933 |
|
|
|
755,083 |
|
|
|
101,652,799 |
|
|
|
9 |
|
|
|
172,727 |
|
|
|
(793,619 |
) |
|
|
(620,883 |
) |
Issuance of common stock upon exercise of stock options |
|
|
— |
|
|
|
— |
|
|
|
676,618 |
|
|
|
— |
|
|
|
1,139 |
|
|
|
— |
|
|
|
1,139 |
|
Vesting of early exercised stock options |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
4,241 |
|
|
|
— |
|
|
|
4,241 |
|
Stock-based compensation expense |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
11,454 |
|
|
|
— |
|
|
|
11,454 |
|
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
(35,770 |
) |
|
|
(35,770 |
) |
|
Balance as of June 30, 2020 |
|
|
198,274,933 |
|
|
$ |
755,083 |
|
|
|
102,329,417 |
|
|
$ |
9 |
|
|
$ |
189,561 |
|
|
$ |
(829,389 |
) |
|
$ |
(639,819 |
) |
Issuance of common stock upon exercise of stock options |
|
|
— |
|
|
|
— |
|
|
|
437,913 |
|
|
|
— |
|
|
|
827 |
|
|
|
— |
|
|
|
827 |
|
Issuance of common stock related to early exercise of stock options |
|
|
— |
|
|
|
— |
|
|
|
6,881,095 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Vesting of early exercised stock options |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
4,241 |
|
|
|
— |
|
|
|
4,241 |
|
Stock-based compensation expense |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
10,964 |
|
|
|
— |
|
|
|
10,964 |
|
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(36,191 |
) |
|
|
(36,191 |
) |
Balance as of September 30, 2020 |
|
|
198,274,933 |
|
|
$ |
755,083 |
|
|
|
109,648,425 |
|
|
$ |
9 |
|
|
$ |
205,593 |
|
|
$ |
(865,580 |
) |
|
$ |
(659,978 |
) |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
7
23ANDME HOLDING CO.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
|
|
Six Months Ended September 30, |
|
|
|||||
|
|
2021 |
|
|
2020 |
|
|
||
Cash flows from operating activities: |
|
|
|
|
|
|
|
||
Net loss |
|
$ |
(58,550 |
) |
|
$ |
(71,961 |
) |
|
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
|
||
Depreciation and amortization |
|
|
8,402 |
|
|
|
9,621 |
|
|
Amortization and impairment of internal-use software |
|
|
1,106 |
|
|
|
1,078 |
|
|
Stock-based compensation expense |
|
|
20,064 |
|
|
|
22,227 |
|
|
Changes in fair value of warrant liabilities |
|
|
(29,294 |
) |
|
|
— |
|
|
Loss (gain) on disposal of property and equipment |
|
|
42 |
|
|
|
(5 |
) |
|
Gain on lease termination |
|
|
(15 |
) |
|
|
(876 |
) |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
||
Accounts receivable (related party amounts of $(25,000) and $(25,000) for the six months ended September 30, 2021 and 2020, respectively) |
|
|
(24,226 |
) |
|
|
(20,242 |
) |
|
Inventories |
|
|
(11,494 |
) |
|
|
1,651 |
|
|
Deferred cost of revenue |
|
|
(44 |
) |
|
|
1,772 |
|
|
Prepaid expenses and other current assets |
|
|
(5,360 |
) |
|
|
5,208 |
|
|
Operating lease right-of-use assets |
|
|
3,496 |
|
|
|
6,742 |
|
|
Other assets |
|
|
(654 |
) |
|
|
389 |
|
|
Accounts payable (related party amounts of $(4,422) and $(1,617) for the six months ended September 30, 2021 and 2020, respectively) |
|
|
(997 |
) |
|
|
(4,201 |
) |
|
Accrued expenses and other current liabilities (related party amounts of $5,545 and $(790) for the six months ended September 30, 2021 and 2020, respectively) |
|
|
(2,276 |
) |
|
|
(1,061 |
) |
|
Deferred revenue (related party amounts of $3,788 and $3,333 for the six months ended September 30, 2021 and 2020, respectively) |
|
|
(3,574 |
) |
|
|
(7,934 |
) |
|
Operating lease liabilities |
|
|
(3,696 |
) |
|
|
(4,870 |
) |
|
Other liabilities |
|
|
45 |
|
|
|
43 |
|
|
Net cash used in operating activities |
|
|
(107,025 |
) |
|
|
(62,419 |
) |
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
||
Purchases of property and equipment |
|
|
(1,810 |
) |
|
|
(3,627 |
) |
|
Prepayments for intangible assets |
|
|
(5,500 |
) |
|
|
— |
|
|
Proceeds from sale of property and equipment |
|
|
1 |
|
|
|
612 |
|
|
Capitalized internal-use software costs |
|
|
(1,807 |
) |
|
|
(1,988 |
) |
|
Net cash used in investing activities |
|
|
(9,116 |
) |
|
|
(5,003 |
) |
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
||
Proceeds from exercise of stock options (related party amounts of nil and $34,710 for the six months ended September 30, 2021 and 2020, respectively) |
|
|
5,624 |
|
|
|
36,587 |
|
|
Payments of deferred offering costs |
|
|
(30,642 |
) |
|
|
— |
|
|
Proceeds from issuance of common stock upon Merger |
|
|
309,720 |
|
|
|
— |
|
|
Proceeds from PIPE (related party amounts of $25,000 and nil for the six months ended September 30, 2021 and 2020, respectively) |
|
|
250,000 |
|
|
|
— |
|
|
Net cash provided by financing activities |
|
|
534,702 |
|
|
|
36,587 |
|
|
Net increase (decrease) in cash and restricted cash |
|
|
418,561 |
|
|
|
(30,835 |
) |
|
Cash and restricted cash—beginning of period |
|
|
290,862 |
|
|
|
216,316 |
|
|
Cash and restricted cash—end of period |
|
|
709,423 |
|
|
|
185,481 |
|
|
Supplemental disclosures of non-cash investing and financing activities: |
|
|
|
|
|
|
|
||
Purchases of property and equipment during the period included in accounts payable and accrued expenses |
|
|
34 |
|
|
|
78 |
|
|
Stock-based compensation capitalized for internal-use software costs |
|
|
437 |
|
|
|
312 |
|
|
Reclassification of deferred offering costs |
|
|
3,971 |
|
|
— |
|
|
|
Vesting of related party early exercised stock options |
|
— |
|
|
|
8,482 |
|
|
|
Assumption of merger warrants liability |
|
|
75,415 |
|
|
— |
|
|
|
Conversion of redeemable convertible preferred stock to common stock |
|
|
837,351 |
|
|
— |
|
|
|
Reconciliation of cash and restricted cash within the consolidated balance sheets to the amounts shown in the consolidated statements of cash flows above: |
|
|
|
|
|
|
|
||
Cash |
|
|
701,050 |
|
|
|
177,108 |
|
|
Restricted cash, current |
|
|
1,399 |
|
|
|
1,399 |
|
|
Restricted cash, noncurrent |
|
|
6,974 |
|
|
|
6,974 |
|
|
Total cash and restricted cash |
|
$ |
709,423 |
|
|
$ |
185,481 |
|
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
8
Notes to Condensed Consolidated Financial Statements (Unaudited)
1. Organization and Description of Business
23andMe Holding Co. (the “Company”) is dedicated to helping people access, understand, and benefit from the human genome. The Company pioneered direct-to-consumer genetic testing through its Personal Genome Service® (“PGS”) products and services. Customers receive reports that provide them with information on their genetic health risks, their ancestry, and their traits, based on genetic testing of a saliva sample they send to the Company in an easy-to-use “spit kit” provided by the Company. Customers have the option to participate in the Company’s research programs. The Company analyzes consenting customers’ genotypic and phenotypic data to discover new insights into genetics. The Company uses these insights to generate new PGS reports, and, through its therapeutics business and collaborations with pharmaceutical companies, nonprofit institutions and universities, to discover and advance new therapies for unmet medical needs. 23andMe, Inc., the Company's accounting predecessor, was incorporated in Delaware in 2006. The Company is headquartered in Sunnyvale, California.
On June 16, 2021 (the “Closing Date”), the Company consummated the transactions (the “Merger”) contemplated by the Agreement and Plan of Merger, dated February 4, 2021, as amended on February 13, 2021 and March 25, 2021, by and among VG Acquisition Corp., a blank check company incorporated as a Cayman Islands exempted company in 2020 (“VGAC”), Chrome Merger Sub, Inc., a Delaware corporation and wholly owned direct subsidiary of VGAC (the “Merger Sub”), and 23andMe, Inc. (the “Merger Agreement”). In connection with the Merger, VGAC changed its jurisdiction of incorporation from the Cayman Islands to the State of Delaware and changed its name to 23andMe Holding Co. (the “Domestication”). On the Closing Date, Merger Sub merged with and into 23andMe, Inc., with 23andMe, Inc. being the surviving corporation and a wholly owned subsidiary of the Company (together with the Merger and the Domestication, the “Business Combination”).
The transaction was accounted for as a reverse recapitalization with 23andMe, Inc. being the accounting acquirer and VGAC as the acquired company for accounting purposes. Accordingly, all historical financial information presented in the unaudited condensed consolidated financial statements represents the accounts of 23andMe, Inc. and its wholly owned subsidiary. The shares and net loss per common share prior to the Merger have been retroactively restated as shares reflecting the exchange ratio established in the Merger (each outstanding share of 23andMe, Inc. Class A common stock was exchanged for 2.293698169 shares of the Company’s Class A common stock, and each outstanding share of 23andMe, Inc. Class B common stock, including all shares of 23andMe, Inc. preferred stock (which were converted to shares of 23andMe, Inc. Class B common stock immediately prior to the Merger), was exchanged for 2.293698169 shares of the Company’s Class B common stock).
Prior to the Business Combination, VGAC’s units, public shares, and public warrants were listed on the New York Stock Exchange under the symbols “VGAC.U,” “VGAC,” and “VGAC WS,” respectively. On June 17, 2021, the Company's Class A common stock and public warrants began trading on The Nasdaq Global Select Market (“Nasdaq”), under the symbols “ME” and “MEUSW,” respectively. See Note 3, "Recapitalization" for additional details.
2. Summary of Significant Accounting Policies
Basis of Presentation
The Company’s unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and include the accounts of the Company and its wholly owned subsidiary. All intercompany accounts and transactions have been eliminated in consolidation.
There have been no changes to the Company's significant accounting policies described in the audited consolidated financial statements for the year ended March 31, 2021, that have had a material impact on these condensed consolidated financial statements and related notes.
9
Unaudited Interim Condensed Consolidated Financial Information
The accompanying interim condensed consolidated financial statements as of September 30, 2021 and for the three and six months ended September 30, 2021 and 2020 and accompanying notes, are unaudited. These unaudited interim condensed consolidated financial statements (the "condensed consolidated financial statements") have been prepared in accordance with GAAP applicable to interim financial statements. These financial statements are presented in accordance with the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) and do not include all disclosures normally required in annual consolidated financial statements prepared in accordance with GAAP. As such, the information included herein should be read in conjunction with the consolidated financial statements and accompanying notes as of and for the year ended March 31, 2021 (the “audited consolidated financial statements”) that was included in the Company’s Current Report on Form 8-K filed with the SEC on June 21, 2021. In management’s opinion, the unaudited interim condensed consolidated financial statements have been prepared on the same basis as the annual financial statements, which include only normal recurring adjustments, necessary for a fair statement of the Company’s financial position as of September 30, 2021 and its condensed consolidated results of operations and cash flows for the three and six months ended September 30, 2021 and 2020. The results of operations for the three and six months ended September 30, 2021 are not necessarily indicative of the results expected for the year ending March 31, 2022 or any other future interim or annual periods.
As a result of the Merger, prior period share and per share amounts presented in the accompanying condensed consolidated financial statements and these related notes have been retroactively converted.
Fiscal Year
The Company’s fiscal year ends on March 31. References to fiscal year 2022 and 2021, refer to the fiscal years ending and ended March 31, 2022 and 2021, respectively.
Use of Estimates
The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates, judgments, and assumptions that affect the reported amounts of assets and liabilities and the related disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period and the accompanying notes. Significant items subject to such estimates and assumptions include, but are not limited to the determination of standalone selling price for various performance obligations; the estimated expected benefit period for the rate and recognition pattern of breakage revenue for purchases where a saliva collection kit (“Kit”) is never returned for processing; the fair value of financial assets and liabilities; the capitalization and estimated useful life of internal use software; the useful life of long-lived assets; the timing and costs associated with asset retirement obligations; the incremental borrowing rate for operating leases; the fair value of private warrants; stock-based compensation including the determination of the fair value of the Company’s common stock and stock options prior to the Closing Date; and the valuation of deferred tax assets and uncertain tax positions. The Company bases these estimates on historical and anticipated results, trends, and various other assumptions that it believes are reasonable under the circumstances, including assumptions as to future events. Actual results could differ from these estimates, and such differences could be material to the condensed consolidated financial statements.
The coronavirus (“COVID-19”) pandemic has created significant global economic uncertainty and resulted in the slowdown of economic activity. COVID-19 has disrupted the Company’s general business operations since March 2020 and the Company expects that such disruption will continue for an unknown period. As the Company continues to closely monitor the COVID-19 pandemic, its top priority remains protecting the health and safety of the Company’s employees. Safety guidelines and procedures, including social distancing and enhanced cleaning, have been developed for on-site employees and these policies are regularly monitored. The Company is not aware of any specific event or circumstance that would require revisions to estimates, updates to judgments, or adjustments to the carrying value of assets or liabilities. These estimates may change, as new events occur and additional information is obtained, and will be recognized in the condensed consolidated financial statements as soon as they become known. Actual results could differ from those estimates and any such differences may be material to the condensed consolidated financial statements.
Concentration of Supplier Risk
Certain of the raw materials, components and equipment associated with the deoxyribonucleic acid (“DNA”) microarrays and Kits used by the Company in the delivery of its services are available only from third-party suppliers. The Company also relies on a third-party laboratory service for the processing of its customer samples. Shortages and slowdowns could occur in these essential materials, components, equipment, and laboratory services due to an interruption of supply or increased demand in the industry. If the Company were unable to procure certain materials, components, equipment, or laboratory services at acceptable prices, it would be required to reduce its laboratory operations, which could have a material adverse effect on its results of operations.
10
A single supplier accounted for 100% of the Company’s total purchases of microarrays and a separate single supplier accounted for 100% of the Company’s total purchases of Kits for the three and six months ended September 30, 2021 and 2020. One laboratory service provider accounted for 100% of the Company’s processing of customer samples for the three and six months ended September 30, 2021 and 2020.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to a concentration of credit risk include cash and accounts receivable. The Company maintains its cash with high-quality financial institutions in the United States, the composition and maturities of which are regularly monitored by the Company. The Company’s revenue and accounts receivable are derived primarily from the United States. See Revenue Recognition within Note 2, “Summary of Significant Accounting Policies,” for additional information regarding geographical disaggregation of revenue. The Company grants credit to its customers in the normal course of business, performs ongoing credit evaluations of its customers, and does not require collateral. The Company regularly monitors the aging of accounts receivable balances.
Significant customer information is as follows:
|
|
September 30, |
|
|
March 31, |
|
||
|
|
2021 |
|
|
2021 |
|
||
Percentage of accounts receivable: |
|
|
|
|
|
|
||
Customer B |
|
|
94 |
% |
|
|
0 |
% |
Customer C |
|
|
5 |
% |
|
|
35 |
% |
Customer D |
|
|
0 |
% |
|
|
40 |
% |
|
|
Three Months Ended September 30, |
|
|
Six Months Ended September 30, |
|
||||||||||
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
||||
Percentage of revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Customer C |
|
|
27 |
% |
|
|
13 |
% |
|
|
20 |
% |
|
|
13 |
% |
Customer B |
|
|
18 |
% |
|
|
19 |
% |
|
|
19 |
% |
|
|
22 |
% |
Revenue Recognition
The Company generates revenue from its Consumer & Research Services segment, which includes revenue from PGS and research services, and its Therapeutics segment. In accordance with Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”), revenue is recognized when a customer obtains control of promised goods or services. The amount of revenue recognized reflects the consideration that the Company expects to receive in exchange for these goods or services.
The Company sells through multiple channels, including direct to consumer via the Company’s website and through online retailers. If the customer does not return the Kit, services cannot be completed by the Company, potentially resulting in unexercised rights (“breakage”) revenue. To estimate breakage, the Company applies the practical expedient available under ASC 606 to assess its customer contracts on a portfolio basis as opposed to individual customer contracts, due to the similarity of customer characteristics, at the sales channel level. The Company recognizes the breakage amounts as revenue, proportionate to the pattern of revenue recognition of the returning kits in these respective sales channel portfolios. The Company estimates breakage for the portion of Kits not expected to be returned using an analysis of historical data and considers other factors that could influence customer Kit return behavior. The Company updates its breakage rate estimate periodically and, if necessary, adjusts the deferred revenue balance accordingly. If actual return patterns vary from the estimate, actual breakage revenue may differ from the amounts recorded. The Company recognized breakage revenue from unreturned Kits of $4.1 million and $4.0 million for the three months ended September 30, 2021 and 2020, respectively, and $8.6 million and $8.5 million for the six months ended September 30, 2021 and 2020, respectively.
Fees paid to certain sales channel partners include, in part, compensation for obtaining PGS contracts. Such contracts have an amortization period of one year or less, and the Company has applied the practical expedient to recognize these costs as sales and marketing expenses when incurred. These costs were $0.8 million and $1.3 million for the three months ended September 30, 2021 and 2020, respectively, and $3.9 million and $2.0 million for the six months ended September 30, 2021 and 2020, respectively.
11
Disaggregation of Revenue
The following table presents revenue by category:
|
|
Three Months Ended September 30, |
|
|
Six Months Ended September 30, |
|
||||||||||||||||||||||||||
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
||||||||||||||||||||
|
|
Amount |
|
|
% of Revenue |
|
|
Amount |
|
|
% of Revenue |
|
|
Amount |
|
|
% of Revenue |
|
|
Amount |
|
|
% of Revenue |
|
||||||||
|
|
(in thousands, except percentages) |
|
|
(in thousands, except percentages) |
|
||||||||||||||||||||||||||
Consumer services |
|
$ |
44,488 |
|
|
|
81 |
% |
|
$ |
40,556 |
|
|
|
78 |
% |
|
$ |
92,338 |
|
|
|
81 |
% |
|
$ |
75,287 |
|
|
|
75 |
% |
Research services |
|
|
10,716 |
|
|
|
19 |
% |
|
|
11,248 |
|
|
|
22 |
% |
|
|
22,105 |
|
|
|||||||||||