false000180459100018045912023-11-082023-11-08

 

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

__________________

FORM 8-K

__________________

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): November 8, 2023

 

__________________

23andMe Holding Co.

(Exact name of Registrant as Specified in Its Charter)

__________________

 

 

Delaware	001-39587	87-1240344
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

 

 

349 Oyster Point Boulevard

South San Francisco, California 94080

(Address of principal executive offices, including zip code)

Registrant’s telephone number, including area code: (650) 938-6300

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

	☐		Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
	☐		Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
	☐		Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
	☐		Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

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

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

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. ☐

 

 

 

 

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Item 2.02 Results of Operations and Financial Condition

On November 8, 2023, 23andMe Holding Co. (the “Company”) issued a press release announcing its financial results for the second fiscal quarter ended September 30, 2023. A copy of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.

The information set forth under this “Item 2.02. Results of Operations and Financial Condition” (including the exhibit thereto) shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be incorporated by reference in any filing made by the Company pursuant to the Securities Act of 1933, as amended, other than to the extent that such filing incorporates by reference any or all of such information by express reference thereto.

The website address set forth in this report is included as an inactive textual reference only. The information contained on the website referenced herein is not incorporated into this Current Report on Form 8-K.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits.

 

Exhibit No.	Description of Exhibit
99.1		23andMe Holding Co. Press Release, dated November 8, 2023
104		Cover Page Interactive Data File (embedded within Inline XBRL document)

 

 

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

			23ANDME HOLDING CO.
Date:	November 8, 2023	By:	/s/ Joseph Selsavage
			Name: Joseph Selsavage Interim Chief Financial and Accounting Officer

 

 

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EXHIBIT 99.1

 

23andMe Reports Second Quarter Fiscal 2024 Financial Results

Announced launch of new 23andMe+ Total Health™membership, signed new $20M non-exclusive data license with GSK, continued progress on improving product margin

 

SOUTH SAN FRANCISCO, Calif., November 8, 2023 -- 23andMe Holding Co. (Nasdaq: ME), a leading human genetics and biopharmaceutical company, reported its financial results for the second quarter of fiscal year 2024 (FY2024), which ended September 30, 2023.

Recent Highlights

Consumer

Therapeutics

 

Research

 

 

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“The Company recently hit multiple meaningful milestones with the launch of our HealthTracks tool for our 23andMe+ subscribers, the addition of multiple new health-focused reports and the recent launch of Total Health. We are executing on our vision of helping our customers improve their health in a personalized and actionable way,” said Anne Wojcicki, Co-Founder & CEO of 23andMe. “In Therapeutics, we recently presented encouraging Phase 1 data for 23ME-00610 at SITC, and are excited to be moving into the early efficacy portion of the development cycle. We continued to make progress on improving our margin profile and cash runway, and to position the business to thrive over both the medium and long term.”

Financial Results

Total revenue for FY24 Q2 was $50 million, compared to $76 million for the same period in the prior year, representing a decrease of 34%. The decrease was primarily driven by lower Research Services revenue as the GSK collaboration exclusive discovery term concluded in July 2023, providing one month of collaboration revenue in the quarter while the prior year period included a full quarter of collaboration revenue, as well as lower revenue from non-recurring payments from other partners in the same period in the prior year. The decrease was also attributable to lower Consumer Services revenue as we focused on driving improved margins through higher average selling prices and marketing efficiency, reducing advertising spend and price discounting, resulting in lower volumes of personal genome service (PGS) kit sales and telehealth orders. This was partially offset by growth in our subscription services revenue.

Revenue from Consumer Services, which includes PGS, telehealth and subscription services, represented approximately 97% of total revenue for the period. Research Services revenue accounted for approximately 3% of total revenue.

Operating expenses for FY24 Q2 were $101 million, compared to $106 million for the same period in the prior year. The improvement in operating expenses was primarily due to reductions in marketing advertising spend aimed to boost margin and advertising efficiency as noted previously. The improvement also reflects lower personnel-related expenses following the reductions in force in the prior and current fiscal quarter along with the disposition of Lemonaid Health Limited in the UK in August 2023, partially offset by continued investment in Therapeutics portfolio advancement and one-time expenses related to the workforce reduction and UK disposition.

Net loss for FY24 Q2 was $75 million, compared to a net loss of $66 million for the same period in the prior year.

 

Adjusted EBITDA (as defined below) for FY24 Q2 was a loss of $45 million, compared to a loss of $30 million for the same period in the prior year. The increase in adjusted EBITDA deficit was primarily due to lower Research Services gross profit as the GSK collaboration exclusive discovery term concluded in July 2023 and increasing Therapeutics expenses, partially offset by reductions in marketing advertising spend, as noted above. Please refer to the tables below for a reconciliation of U.S. GAAP to Non-U.S. GAAP financial measures.

Balance Sheet
23andMe ended September 30, 2023 with cash and cash equivalents of $256 million, compared to $387 million as of March 31, 2023.

FY2024 Financial Guidance

The Company is partially adjusting its full year guidance following Q2 FY2024 results. Revenue guidance for FY2024, which will end on March 31, 2024, is adjusted to be in the range of $240 million to $250 million, with net loss reaffirmed to be in the range of $345 million to $325 million. Full year Adjusted EBITDA deficit is reaffirmed to be in the range of $180 to $160 million for fiscal year 2024.

 

Within the existing lines of the PGS and telehealth Consumer businesses, the Company is prioritizing margin expansion and progressing toward cash flow profitability. These efforts include enhancements to existing services like the recently announced HealthTracks and Health Action Plan tools within 23andMe+ Premium, development of new services like the newly launched Total Health membership, and the reorganization of the Consumer & Research Services segment to streamline its expense profile, like the workforce reduction earlier in the year and the more recent disposition of the UK subsidiary in August.

 

 

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Similarly within Therapeutics, with the end of the exclusive discovery term under the GSK collaboration in July, the Company decided to narrow its discovery efforts to inflammation and immunology and development efforts in immuno-oncology to focus on areas that best align with its core strengths. The Company completed a workforce reduction in August to realign resources with the revamped structure and took the royalty option on three programs initiated together with GSK to reduce cash burn.

 

We expect these decisions to yield meaningful economic benefit in future periods as we continue building on the personalized, comprehensive health insights provided by services within the Consumer segment, like the newly launched Total Health membership, and continue to expand upon and realize the value of the database’s insights through licensing and other deals, like the recently announced extension of the GSK collaboration.

Conference Call Webcast Information

23andMe will host a conference call at 4:30 p.m. Eastern Time today, November 8, 2023, to discuss the financial results for Q2 FY2024 and report on business progress. The webcast can be accessed at https://investors.23andme.com/news-events/events-presentations. A webcast replay will be available at the same address.

 

About 23andMe
23andMe is a genetics-led consumer healthcare and therapeutics company empowering a healthier future. For more information, please visit investors.23andme.com.

Additional Information
This press release shall not constitute an offer to sell or a solicitation of an offer to buy any of the securities, nor shall there be any sale of these securities, in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.

 

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including, without limitation, statements regarding the future performance of 23andMe’s businesses in consumer genetics and therapeutics and the growth and potential of its proprietary research platform. All statements, other than statements of historical fact, included or incorporated in this press release, including statements regarding 23andMe’s strategy, financial position, funding for continued operations, cash reserves, projected costs, plans, potential future collaborations, database growth and objectives of management, are forward-looking statements. The words "believes," "anticipates," "estimates," "plans," "expects," "intends," "may," "could," "should," "potential," "likely," "projects," "predicts," "continue," "will," "schedule," and "would" or, in each case, their negative or other variations or comparable terminology, are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. These forward-looking statements are predictions based on 23andMe’s current expectations and projections about future events and various assumptions. 23andMe cannot guarantee that it will actually achieve the plans, intentions, or expectations disclosed in its forward-looking statements and you should not place undue reliance on 23andMe’s forward-looking statements. These forward-looking statements involve a number of risks, uncertainties (many of which are beyond the control of 23andMe), or other assumptions that may cause actual results or performance to differ materially from those expressed or implied by these forward-looking statements. The forward-looking statements contained herein are also subject generally to other risks and uncertainties that are described from time to time in the Company’s filings with the Securities and Exchange Commission, including under Item 1A, "Risk Factors" in the Company’s most recent Annual Report on Form 10-K, as filed with the Securities and Exchange Commission, and as revised and updated by our Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. The statements made herein are made as of the date of this press release and, except as may be required by law, 23andMe undertakes no obligation to update them, whether as a result of new information, developments, or otherwise.

 

Use of Non-GAAP Financial Measures

To supplement the 23andMe’s unaudited condensed consolidated statements of operations and unaudited condensed consolidated balance sheets, which are prepared in conformity with generally accepted accounting principles in the United States of America (GAAP), this press release also includes references to Adjusted EBITDA, a non-GAAP financial measure that is defined as net income (loss) before net interest

 

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income (expense), net other income (expense), income tax expenses (benefit), depreciation and amortization, impairment charges, stock-based compensation expense, and other items that are considered unusual or not representative of underlying trends of our business, including but not limited to: changes in fair value of warrant liabilities, litigation settlements, gains or losses on dispositions of subsidiaries, and transaction-related costs if applicable for the periods presented. 23andMe has provided a reconciliation of net loss, the most directly comparable GAAP financial measure, to Adjusted EBITDA at the end of this press release.

Adjusted EBITDA is a key measure used by 23andMe’s management and the board of directors to understand and evaluate operating performance and trends, to prepare and approve 23andMe’s annual budget and to develop short- and long-term operating plans. 23andMe provides Adjusted EBITDA because 23andMe believes it is frequently used by analysts, investors and other interested parties to evaluate companies in its industry and it facilitates comparisons on a consistent basis across reporting periods. Further, 23andMe believes it is helpful in highlighting trends in its operating results because it excludes items that are not indicative of 23andMe’s core operating performance. In particular, 23andMe believes that the exclusion of the items eliminated in calculating Adjusted EBITDA provides useful measures for period-to-period comparisons of 23andMe’s business. Accordingly, 23andMe believes that Adjusted EBITDA provides useful information in understanding and evaluating operating results in the same manner as 23andMe’s management and board of directors.

In evaluating Adjusted EBITDA, you should be aware that in the future 23andMe will incur expenses similar to the adjustments in this presentation. 23andMe’s presentation of Adjusted EBITDA should not be construed as an inference that future results will be unaffected by these expenses or any unusual or non-recurring items. Adjusted EBITDA should not be considered in isolation of, or as an alternative to, measures prepared in accordance with GAAP. Other companies, including companies in the same industry, may calculate similarly-titled non-GAAP financial measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of Adjusted EBITDA as a tool for comparison. There are a number of limitations related to the use of these non-GAAP financial measures rather than net loss, which is the most directly comparable financial measure calculated in accordance with GAAP. Some of the limitations of Adjusted EBITDA include (i) Adjusted EBITDA does not properly reflect capital commitments to be paid in the future, and (ii) although depreciation and amortization are non-cash charges, the underlying assets may need to be replaced and Adjusted EBITDA does not reflect these capital expenditures. When evaluating 23andMe’s performance, you should consider Adjusted EBITDA alongside other financial performance measures, including net loss and other GAAP results. Adjusted EBITDA is our best proxy for cash burn.

 

Contacts

Investor Relations Contact: investors@23andMe.com

Media Contact: press@23andMe.com

 

 

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23andMe Holding Co.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(In thousands, except share and per share data)

(Unaudited)

		Three Months Ended September 30,								Six Months Ended September 30,
		2023				2022				2023				2022
Revenue		$	49,999			$	75,659			$	110,863			$	140,172
Cost of revenue			28,270				37,386				58,453				76,409
Gross profit			21,729				38,273				52,410				63,763
Operating expenses:
Research and development			54,588				52,598				116,917				104,607
Sales and marketing			18,328				24,835				40,986				58,269
General and administrative			25,290				28,881				76,030				58,524
Restructuring and other charges			2,654				—				6,871				—
Total operating expenses			100,860				106,314				240,804				221,400
Loss from operations			(79,131	)			(68,041	)			(188,394	)			(157,637	)
Other income (expense):
Interest income, net			3,752				1,392				8,059				1,637
Other income (expense), net			145				(687	)			477				(1,122	)
Loss before income taxes			(75,234	)			(67,336	)			(179,858	)			(157,122	)
Provision for (benefit from) income taxes			36				(1,271	)			36				(1,525	)
Net loss			(75,270	)			(66,065	)			(179,894	)			(155,597	)
Other comprehensive income, net of tax			954				829				620				1,453
Total comprehensive loss		$	(74,316	)		$	(65,236	)		$	(179,274	)		$	(154,144	)
Net loss per share of Class A and Class B common stock attributable to common stockholders:
Basic and diluted		$	(0.16	)		$	(0.15	)		$	(0.38	)		$	(0.35	)
Weighted-average shares used to compute net loss per share:
Basic and diluted			474,858,266				449,899,537				468,592,009				448,211,708

 

 

 

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23andMe Holding Co.

Condensed Consolidated Balance Sheets

(In thousands, except share and per share amounts)

 

		September 30,				March 31,
		2023				2023
		(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents		$	256,386			$	386,849
Restricted cash			1,399				1,399
Accounts receivable, net			1,501				1,897
Inventories			14,979				10,247
Deferred cost of revenue			5,782				5,376
Prepaid expenses and other current assets			17,948				19,224
Total current assets			297,995				424,992
Property and equipment, net			32,805				38,608
Operating lease right-of-use assets			52,549				56,078
Restricted cash, noncurrent			6,974				6,974
Internal-use software, net			18,971				15,661
Intangible assets, net			37,835				45,520
Goodwill			351,744				351,744
Other assets			2,357				3,021
Total assets		$	801,230			$	942,598
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	8,546			$	12,924
Accrued expenses and other current liabilities			44,686				66,430
Deferred revenue			40,283				62,521
Operating lease liabilities			8,086				7,541
Total current liabilities			101,601				149,416
Operating lease liabilities, noncurrent			72,963				77,763
Other liabilities			1,415				1,480
Total liabilities			175,979				228,659
Stockholders' equity
Preferred stock - par value $0.0001, 10,000,000 shares authorized as of September 30, 2023 and March 31, 2023; zero shares issued and outstanding as of September 30, 2023 and March 31, 2023			—				—
Common stock, par value $0.0001 - Class A shares, 1,140,000,000 shares authorized, 311,339,539 and 293,020,474 shares issued and outstanding as of September 30, 2023 and March 31, 2023, respectively; Class B shares, 350,000,000 shares authorized, 167,491,460 and 168,179,488 shares issued and outstanding as of September 30, 2023 and March 31, 2023, respectively			48				46
Additional paid-in capital			2,311,481				2,220,897
Accumulated other comprehensive loss			—				(620	)
Accumulated deficit			(1,686,278	)			(1,506,384	)
Total stockholders’ equity			625,251				713,939
Total liabilities and stockholders’ equity		$	801,230			$	942,598

 

 

 

 

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23andMe Holding Co.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

		Six Months Ended September 30,
		2023				2022
Cash flows from operating activities:
Net loss		$	(179,894	)		$	(155,597	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization			13,714				16,747
Amortization and impairment of internal-use software			2,514				2,078
Stock-based compensation expense			74,840				59,430
Loss (gain) on disposal of property and equipment			(5	)			4
Loss on disposition of Lemonaid Health Limited			2,026				—
Other operating activities			(504	)			—
Changes in operating assets and liabilities:
Accounts receivable, net			396				(49,502	)
Inventories			(4,733	)			(3,017	)
Deferred cost of revenue			(406	)			914
Prepaid expenses and other current assets			(2,433	)			4,899
Operating right-of-use assets			3,529				3,689
Other assets			664				(834	)
Accounts payable			(3,951	)			(26,968	)
Accrued expenses and other current liabilities			(5,674	)			(10,367	)
Deferred revenue			(22,237	)			18,984
Operating lease liabilities			(4,255	)			(4,426	)
Other liabilities			(65	)			(2,008	)
Net cash used in operating activities			(126,474	)			(145,974	)
Cash flows from investing activities:
Purchases of property and equipment			(715	)			(1,945	)
Proceeds from sale of property and equipment			5				2
Capitalized internal-use software costs			(4,758	)			(3,008	)
Net cash used in investing activities			(5,468	)			(4,951	)
Cash flows from financing activities:
Proceeds from exercise of stock options			473				3,944
Proceeds from issuance of common stock under employee stock purchase plan			1,411				3,238
Payments of deferred offering costs			(263	)			—
Payments for taxes related to net share settlement of equity awards			(142	)			—
Net cash provided by financing activities			1,479				7,182
Effect of exchange rates on cash and cash equivalents			—				1,452
Net decrease in cash, cash equivalents and restricted cash			(130,463	)			(142,291	)
Cash, cash equivalents and restricted cash—beginning of period			395,222				561,755
Cash, cash equivalents and restricted cash—end of period		$	264,759			$	419,464
Reconciliation of cash, cash equivalents, and restricted cash within the condensed consolidated balance sheets to the amounts shown in the condensed consolidated statements of cash flows above:
Cash and cash equivalents		$	256,386			$	410,891
Restricted cash, current			1,399				1,599
Restricted cash, noncurrent			6,974				6,974
Total cash, cash equivalents and restricted cash		$	264,759			$	419,464

 

 

 

 

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23andMe Holding Co.

Total Company and Segment Information and Reconciliation of Non-GAAP Financial Measures

(In thousands)

(Unaudited)

 

The Company’s revenue and Adjusted EBITDA by segment and for the total Company is as follows:

 

		Three Months Ended September 30,								Six Months Ended September 30,
		2023				2022				2023				2022
Segment Revenue: (1)
Consumer and Research Services		$	49,999			$	75,659			$	110,863			$	140,172
Total revenue		$	49,999			$	75,659			$	110,863			$	140,172
Segment Adjusted EBITDA:
Consumer and Research Services Adjusted EBITDA		$	(6,673	)		$	2,324			$	(12,275	)		$	(14,673	)
Therapeutics Adjusted EBITDA			(26,224	)			(18,663	)			(57,363	)			(37,128	)
Unallocated Corporate (2)			(12,156	)			(13,316	)			(25,215	)			(27,568	)
Total Adjusted EBITDA		$	(45,053	)		$	(29,655	)		$	(94,853	)		$	(79,369	)
Reconciliation of net loss to Adjusted EBITDA:
Net loss		$	(75,270	)		$	(66,065	)		$	(179,894	)		$	(155,597	)
Adjustments:
Interest income, net			(3,752	)			(1,392	)			(8,059	)			(1,637	)
Other (income) expense, net			(145	)			687				(477	)			1,122
Provision for (benefit from) income taxes			36				(1,271	)			36				(1,525	)
Depreciation and amortization			4,474				5,152				8,951				10,256
Amortization of acquired intangible assets			3,638				4,267				7,277				8,582
Stock-based compensation expense			23,741				28,967				74,840				59,430
Loss on disposition of Lemonaid Health Limited and transaction-related costs			2,127				—				2,375				—
Litigation settlement cost			98				—				98				—
Total Adjusted EBITDA		$	(45,053	)		$	(29,655	)		$	(94,853	)		$	(79,369	)

 

 

 

 

 

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23andMe Holding Co.

Reconciliation of GAAP Net Loss Outlook to Non-GAAP Adjusted EBITDA Outlook

(in thousands)

(Unaudited)

 

		Outlook for the Year Ending March 31, 2024
		as of November 8, 2023
		Low				High
Reconciliation of estimated net loss to adjusted EBITDA:
GAAP Net Loss outlook		$	(345,000	)		$	(325,000	)
Adjustments:
Estimated interest (income) expense, net			(12,174	)			(12,174	)
Estimated other (income) expenses, net			(441	)			(441	)
Estimated depreciation and amortization			18,369				18,369
Estimated amortization of acquired intangible assets			11,449				11,449
Estimated stock-based compensation expense			145,324				145,324
Estimated loss on disposition of Lemonaid Health Limited and transaction-related costs			2,375				2,375
Estimated litigation settlement cost			98				98
Non-GAAP adjusted EBITDA outlook		$	(180,000	)		$	(160,000	)

 

 

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