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United States securities and exchange commission logo
July 21, 2022
Steven Schoch
Chief Financial and Accounting Officer
23andMe Holding Co.
349 Oyster Point Boulevard
South San Francisco, California 94080
Re: 23andMe Holding Co.
Form 10-K for
Fiscal Year Ended March 31, 2022
Filed May 27, 2022
File No. 001-39587
Dear Mr. Schoch:
We have limited our review of your filing to the financial
statements and related
disclosures and have the following comments. In some of our comments, we
may ask you to
provide us with information so we may better understand your disclosure.
Please respond to these comments within ten business days by
providing the requested
information or advise us as soon as possible when you will respond. If
you do not believe our
comments apply to your facts and circumstances, please tell us why in
your response.
After reviewing your
response to these comments, we may have additional comments.
Form 10-K for Fiscal Year Ended March 31, 2022
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Adjusted EBITDA, page 100
1. We note that your CODM
evaluates your reportable segments using Adjusted EBITDA.
Please provide a
discussion and analysis of Adjusted EBITDA at the segment level. In
this regard, we note
that the Consumer & Research Services Adjusted EBITDA
recognized earnings of
$12.8 million for fiscal year 2021 but losses of $30.1 million for
fiscal year 2022. Refer
to Item 303(b) of Regulation S-K and Section 501.12 of the
Financial Reporting
Codification for guidance.
Critical Accounting Policies and Estimates, page 103
2. We note that you
recognized $351.7 million of goodwill in connection with your
acquisition of Lemonaid
Health, which is 38.4% of total stockholders equity as of March
31, 2022. We further
note that your Consumer & Research Services segment, which
Steven Schoch
FirstName LastNameSteven Schoch
23andMe Holding Co.
Comapany
July Name23andMe Holding Co.
21, 2022
July 21,
Page 2 2022 Page 2
FirstName LastName
includes Lemonaid Health recognized Adjusted EBITDA loss of $30.1
million for fiscal
year 2022. As such, please tell us your consideration for disclosing
and discussing
impairment testing for goodwill as a critical accounting policy and
estimate, including the
following discussion points:
The date you are testing goodwill for impairment.
The level at which you are testing the goodwill (e.g., the
Lemonaid/telehealth level or
the Consumer & Research Services level).
The percentage by which the estimated fair value exceeds the
carrying value.
The methodologies used to estimate the fair value of the reporting
unit and/or
operating segment, including the material judgments, assumptions
and estimates.
A discussion of the degree of uncertainty associated with the key
assumptions and the
potential impact changes in the key assumptions would have on
your impairment
analysis.
A discussion of the potential events and/or changes in
circumstances that could
reasonably be expected to occur and negatively affect the key
assumptions and result
in a material impairment charge.
Refer to Item 303(b)(3) of Regulation S-K and Section 501.14 of the
Financial Reporting
Codification for guidance.
2. Summary of Significant Accounting Policies
Revenue Recognition, page 121
3. Please revise your disclosures to provide the information required by
ASC 606-10-50-12
through 50-12A for the performance obligations for your PGS and
research services along
with the disclosures required by ASC 606-10-50-13 through 50-15 for
those contracts
with multiple performance obligations, how you determined the
transaction price and the
significant judgments made in estimating the transaction price as it
relates to variable
consideration in accordance with ASC 606-10-50-17 and 50-20, and when
the
performance obligations are satisfied in accordance with ASC
606-10-50-18 through 50-
19.
4. For your telehealth revenue streams, please revise your disclosures to
provide information
regarding how you determined the transaction price and the significant
judgments made in
estimating the transaction price as it relates to variable
consideration in accordance with
ASC 606-10-50-17 and 50-20.
Item 9A. Controls and Procedures
Disclosure Controls and Procedures, page 159
5. We note that you have concluded that your disclosure controls and
procedures are
effective as of March 31, 2022, even though you have identified a
material weakness in
your internal controls over financial reporting. Given the overlap
between disclosure
controls and procedures and internal controls over financial
reporting, please tell us the
factors you considered to support your conclusion that your disclosure
controls and
procedures were effective.
Steven Schoch
23andMe Holding Co.
July 21, 2022
Page 3
In closing, we remind you that the company and its management are
responsible for the
accuracy and adequacy of their disclosures, notwithstanding any review,
comments, action or
absence of action by the staff.
You may contact Tracey Houser at 202-551-3736 or Al Pavot at
202-551-3738 with any
questions.
FirstName LastNameSteven Schoch Sincerely,
Comapany Name23andMe Holding Co.
Division of
Corporation Finance
July 21, 2022 Page 3 Office of Life
Sciences
FirstName LastName