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23andMe Cuts 40% of Staff, Shutters Drug Development Ahead of Q2 Print
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23andMe Cuts 40% of Staff, Shutters Drug Development Ahead of Q2 Print

Story Highlights

23andMe announced workforce reduction and discontinued its therapeutic programs to refocus on the consumer business and pharma partnerships. The company is set to release its Q2 FY25 results this morning.

23andMe (ME) announced a 40% staff reduction and the shuttering of its drug development business, ahead of its Q2 FY25 print. The genetic testing company is laying off roughly 200 people and shutting down human trials for two of its lead drug candidates. 23andMe CEO Anne Wojcicki said the company will try to sell the drug development arm to streamline operations.

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The company will instead focus on licensing its genetics data to pharmaceutical companies, helping them develop their own drugs. This is the fifth consecutive round of layoffs since 2023, following which, 23andMe will be a much leaner company with only 300 employees. The company’s latest restructuring efforts are expected to save $35 million in costs annually.

23andMe’s Woes Continue to Soar

While announcing the measures, Wojcicki stated that 23andMe needs to take these “difficult but necessary” steps to refocus on its consumer business and research partnerships. The company’s core consumer operations continue to report losses. Additionally, its DNA testing business has limited upward potential as its test kits are used for a single time, resulting in no recurring revenues. Meanwhile, its subscription sales business is also slow, with subscribers apparently declining year-over-year.

Wojcicki, who is also a majority owner of the business, made failed attempts in July to take the company private. The board of directors did not think the offer of $0.40 per share was fair enough. Soon after, seven board members resigned, leaving Wojcicki as the sole director of the company. However, she recently appointed three new directors to the board.

What to Expect from ME’s Q2 FY25 Results

23andMe is slated to release its second quarter Fiscal 2025 results before the markets open today. The Street expects the company to post a loss of $3.15 per share, a bit lower compared to last year’s figure of $3.20 per share. Revenues are pegged at $36.41 million, down 27.7% year-over-year.

Options Traders Anticipate a Major Move

Using TipRanks’ Options tool, we can see what options traders are expecting from the stock immediately after its earnings report. The expected earnings move is determined by calculating the at-the-money straddle of the options closest to expiration after the earnings announcement. If this sounds complicated, don’t worry as the Options tool does this for you.

Indeed, it currently says that options traders are expecting an 18.44% move in either direction in ME stock.

Is 23andMe Stock Worth Buying?

Currently, on TipRanks, only one analyst has given a Hold recommendation on ME stock in the past three months. Also, the average 23andMe Holding price target of $8.40 implies 82.2% upside potential from current levels. Year-to-date, ME shares have lost 74.8%.

See more ME analyst ratings

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