23andMe, which specializes in DNA genetic testing, is exploring a possible sale of its telehealth business, Lemonaid Health, reports Business Insider. Investors have reacted positively to the news, prompting the stock to jump more than 7% in premarket trading today, Tuesday, January 21.
Details
23andMe is considering selling Lemonaid Health, an online telehealth service it acquired in 2021 for $400 million, Business Insider reported on the evening of Friday, January 17, citing unnamed sources. How serious these intentions are remains unclear, however, as 23andMe has not responded to Business Insider’s requests for comment.
Still, buoyed by the news, 23andMe stock climbed 2.2% in after-hours trading on Friday. U.S. markets were closed yesterday, Monday, January 20, but it gained another 7% in premarket trading today.
Over the last 12 months, 23andMe is down almost 73%. According to MarketWatch, the lone analyst who covers the company has a “buy” recommendation with a target price of $8.40 per share, 2.3 times the last closing price.
About 23andMe
The company was founded in 2006 by entrepreneur Anne Wojcicki and geneticist Linda Avey. The startup’s first investor was Google cofounder (and Wojcicki’s then-husband) Sergey Brin, with later investments from Yuri Milner and Google Ventures. The company sold genetic tests, but their expensiveness limited top-line growth. Nevertheless, Wojcicki took the company public in 2021, with its valuation peaking at $6 billion. Yet profitability remained elusive, prompting Wojcicki to expand the business. This is when 23andMe acquired Lemonaid Health to enter the healthcare services market. Lemonaid offers virtual consultations for men’s and women’s physical and mental health, including weight loss and GLP-1 medications more recently.
Diversification did little to improve 23andMe’s financial performance, and losses continued to mount, with its market capitalization also falling. Wojcicki initiated three rounds of layoffs in 2023. In 2024, she attempted to take the company private but failed to secure board approval for her buyout plan. In November, 23andMe announced a new restructuring plan involving a 40% workforce reduction and the discontinuation of all clinical and preclinical research programs. In its most recent earnings report (for the fiscal-2025 second quarter, which ended September 30, 2024), the company posted $44 million in revenue, down 12% year over year, and a net loss of $59 million, down 21%.
