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Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
____________________________________________
(Mark One)
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 2024
OR
o 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)
____________________________________________
Delaware87-1240344
(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 classTrading Symbol(s)Name of each exchange on which registered
Class A common stock, $0.0001 par value per shareME
The NASDAQ Capital 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 x    No o
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 x    No o
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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 fileroAccelerated filerx
Non-accelerated fileroSmaller reporting companyo
Emerging growth company o
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. o
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o    No x
As of January 31, 2025, there were 19,721,802 shares of Class A common stock, $0.0001 par value per share, and 7,105,086 shares of Class B common stock, $0.0001 par value per share, issued and outstanding.

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23ANDME HOLDING CO.
TABLE OF CONTENTS
PAGE

Table of Contents

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,” “23andMe,” “we,” “us,” or “our”) possible or assumed future actions, business strategies, events, or results of operations, are forward-looking statements. In some instances, 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, which we believe to be reasonable, 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 in our Annual Report on Form 10-K for the fiscal year ended March 31, 2024 filed with the Securities and Exchange Commission (the “SEC”) on May 30, 2024, and our subsequent reports filed with the SEC. 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.
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 of 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.

Table of Contents

PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
23ANDME HOLDING CO.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
(Unaudited)
December 31,
2024		March 31,
2024
ASSETS
Current assets:
Cash and cash equivalents$79,350 $216,488 
Restricted cash1,664 1,399 
Accounts receivable, net10,073 3,324 
Inventories21,407 12,465 
Deferred cost of revenue9,920 4,792 
Prepaid expenses and other current assets38,106 15,441 
Current assets of discontinued operations1,057 1,400 
Total current assets161,577 255,309 
Property and equipment, net19,226 22,499 
Operating lease right-of-use assets35,013 38,129 
Restricted cash, noncurrent12,274 6,974 
Internal-use software, net20,724 20,516 
Intangible assets, net27,315 33,255 
Other assets812 650 
Noncurrent assets of discontinued operations481 17,835 
Total assets$277,422 $395,167 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable$7,781 $5,368 
Accrued expenses and other current liabilities66,926 30,832 
Deferred revenue (includes related party amounts of $1,964 and $10,999, respectively)
62,919 64,827 
Operating lease liabilities5,891 4,932 
Current liabilities of discontinued operations (includes related party amounts of $2,190 and $10,561, respectively)
9,823 21,372 
Total current liabilities153,340 127,331 
Deferred revenue, noncurrent (includes related party amounts of nil and $10,000, respectively)
— 10,000 
Operating lease liabilities, noncurrent54,653 59,835 
Other liabilities1,784 1,471 
Noncurrent liabilities of discontinued operations4,925 8,010 
Total liabilities214,702 206,647 
Commitments and contingencies (Note 11)
Stockholders’ equity
Preferred stock - par value $0.0001, 10,000,000 shares authorized as of December 31, 2024 and March 31, 2024; zero shares issued and outstanding as of December 31, 2024 and March 31, 2024
— — 
Common stock, par value $0.0001 - Class A shares, 1,140,000,000 shares authorized, 19,640,404 and 16,169,741 shares issued and outstanding as of December 31, 2024 and March 31, 2024, respectively; Class B shares, 350,000,000 shares authorized, 7,105,086 and 8,336,229 shares issued and outstanding as of December 31, 2024 and March 31, 2024, respectively (1)
3 2 
Additional paid-in capital (1)
2,417,343 2,361,606 
Accumulated deficit(2,354,626)(2,173,088)
Total stockholders’ equity62,720 188,520 
Total liabilities and stockholders’ equity$277,422 $395,167 
(1) Amounts have been adjusted to reflect the reverse stock split that became effective on October 16, 2024. Refer to Note 12, “Stockholders' Equity,” for further information about the reverse stock split.
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Table of Contents

23ANDME HOLDING CO.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(in thousands, except share and per share data)
(Unaudited)
 Three Months Ended December 31,Nine Months Ended December 31,
 2024202320242023
Revenue:
Service (includes related party revenue of $19,696 and nil for the three months ended December 31, 2024 and 2023, respectively, and $20,185 and $11,753 for the nine months ended December 31, 2024 and 2023, respectively)
$54,767 $38,071 $127,960 $134,097 
Product5,495 6,676 16,787 21,513 
Total revenue 60,262 44,747 144,747 155,610 
Cost of revenue:
Service (includes related party cost of nil for both the three months ended December 31, 2024 and 2023 and nil and $295 for the nine months ended December 31, 2024 and 2023, respectively)
17,872 22,134 54,069 74,991 
Product2,564 2,928 8,186 9,470 
Total cost of revenue20,436 25,062 62,255 84,461 
Gross profit39,826 19,685 82,492 71,149 
Operating expenses:
Research and development 20,216 23,897 80,050 77,524 
Sales and marketing17,950 27,925 50,609 69,541 
General and administrative26,891 31,780 83,034 108,742 
Restructuring and other charges10,642 217 10,866 4,642 
Goodwill impairment— 198,800 — 198,800 
Total operating expenses75,699 282,619 224,559 459,249 
Loss from operations(35,873)(262,934)(142,067)(388,100)
Other income:
Interest income, net1,282 3,230 5,865 11,289 
Other income, net316 23 312 501 
Loss before income taxes(34,275)(259,681)(135,890)(376,310)
Provision for (benefit from) income taxes— 19 (41)55 
 Net loss from continuing operations(34,275)(259,700)(135,849)(376,365)
Net loss from discontinued operations (includes related party expenses of $260 and $2,781 for the three months ended December 31, 2024 and 2023, respectively, and $445 and $10,989 for the nine months ended December 31, 2024 and 2023, respectively)
(18,760)(18,276)(45,689)(81,505)
Net loss(53,035)(277,976)(181,538)(457,870)
Other comprehensive income, net of tax— — — 620 
Total comprehensive loss$(53,035)$(277,976)$(181,538)$(457,250)
Net loss per share from continuing operations of Class A and Class B common stock attributable to common stockholders, basic and diluted (1)
$(1.30)$(10.80)$(5.31)$(15.92)
Net loss per share from discontinued operations of Class A and Class B common stock attributable to common stockholders, basic and diluted (1)
$(0.71)$(0.76)$(1.79)$(3.45)
Net loss per share of Class A and Class B common stock attributable to common stockholders, basic and diluted (1)
$(2.01)$(11.56)$(7.10)$(19.37)
Weighted-average shares used to compute net loss per share (1):
Basic and diluted (1)
26,349,22624,040,47825,567,008 23,634,161
(1) Amounts have been adjusted to reflect the reverse stock split that became effective on October 16, 2024. Refer to Note 12, “Stockholders' Equity,” for further information about the reverse stock split.
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Table of Contents

23ANDME HOLDING CO.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)
(in thousands, except share and per share data)
(Unaudited)
Common Stock
Additional
Paid-In Capital (1)
Accumulated DeficitTotal Stockholders’ Equity
(Deficit)
Shares (1)
Amount (1)
Balance as of March 31, 202424,505,970$2 $2,361,606 $(2,173,088)$188,520 
Issuance of common stock upon exercise of stock options6,889— 58 — 58 
Issuance of common stock upon release of restricted stock units184,838— — — — 
Issuance of common stock upon release of restricted stock units under the 23andMe Second Amended and Restated Annual Incentive Plan607,2221 6,450 — 6,451 
Net share settlements for stock-based minimum tax withholdings(4,415)— (48)— (48)
Stock-based compensation expense—— 17,923 — 17,923 
Net loss—— — (69,400)(69,400)
Balance as of June 30, 202425,300,504$3 $2,385,989 $(2,242,488)$143,504 
Issuance of common stock upon release of restricted stock units484,051— — — — 
Net share settlements for stock-based minimum tax withholdings(9,998)— (70)— (70)
Issuance of common stock under employee stock purchase plan61,807— 331 — 331 
Stock-based compensation expense—— 17,267 — 17,267 
Net loss—— — (59,103)(59,103)
Balance as of September 30, 202425,836,364$3 $2,403,517 $(2,301,591)$101,929 
Issuance of common stock upon release of restricted stock units633,195— — — — 
Issuance of common stock for rounding in relation to the Reverse Stock Split281,210— — — — 
Net share settlements for stock-based minimum tax withholdings(5,279)— (17)— (17)
Stock-based compensation expense—— 13,843 — 13,843 
Net loss—— — (53,035)(53,035)
Balance as of December 31, 202426,745,490$3 $2,417,343 $(2,354,626)$62,720 
(1) Amounts have been adjusted to reflect the reverse stock split that became effective on October 16, 2024. Refer to Note 12, “Stockholders' Equity,” for further information about the reverse stock split.

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Table of Contents

23ANDME HOLDING CO.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)
(in thousands, except share and per share data)
(Unaudited)
Common Stock
Additional
Paid-In Capital (1)
Accumulated Other Comprehensive
Income (Loss)		Accumulated DeficitTotal Stockholders’ Equity
(Deficit)
Shares (1)
Amount (1)
Balance as of March 31, 202323,059,998$2 $2,220,941 $(620)$(1,506,384)$713,939 
Issuance of common stock upon exercise of stock options9,036— 85 — — 85 
Issuance of common stock upon release of restricted stock units90,640— — — — — 
Issuance of common stock upon release of restricted stock units under the 23andMe Second Amended and Restated Annual Incentive Plan448,053— 18,630 — — 18,630 
Net share settlements for stock-based minimum tax withholdings(2,949)— (121)— — (121)
Stock-based compensation expense—— 47,915 — — 47,915 
Other comprehensive loss—— — (334)— (334)
Net loss—— — — (104,624)(104,624)
Balance as of June 30, 202323,604,778$2 $2,287,450 $(954)$(1,611,008)$675,490 
Issuance of common stock upon exercise of stock options41,428— 388 — — 388 
Issuance of common stock upon release of restricted stock units217,919— — — — — 
Issuance of common stock upon release of restricted stock units under the 23andMe Second Amended and Restated Annual Incentive Plan2,900— 102 — — 102 
Net share settlements for stock-based minimum tax withholdings(951)— (22)— — (22)
Issuance of common stock under employee stock purchase plan75,477— 1,411 — — 1,411 
Stock-based compensation expense—— 22,198 — — 22,198 
Other comprehensive income—— — 954 — 954 
Net loss—— — — (75,270)(75,270)
Balance as of September 30, 202323,941,551$2 $2,311,527 $— $(1,686,278)$625,251 
Issuance of common stock upon exercise of stock options25,412— 217 — — 217 
Issuance of common stock upon release of restricted stock units161,547— — — — — 
Net share settlements for stock-based minimum tax withholdings(827)— (15)— — (15)
Stock-based compensation expense—— 29,711 — — 29,711 
Net loss—— — — (277,976)(277,976)
Balance as of December 31, 202324,127,683$2 $2,341,440 $— $(1,964,254)$377,188 
(1) Amounts have been adjusted to reflect the reverse stock split that became effective on October 16, 2024. Refer to Note 12, “Stockholders' Equity,” for further information about the reverse stock split.

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Table of Contents

23ANDME HOLDING CO.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
Nine Months Ended December 31,
20242023
Cash flows from operating activities:
Net loss$(181,538)$(457,870)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization11,374 19,171 
Amortization and impairment of internal-use software6,296 4,374 
Stock-based compensation expense50,467 101,198 
Loss (gain) on disposal of property and equipment60 (5)
Loss on disposition of Lemonaid Health Limited— 2,026 
Impairment of long-lived assets10,041 — 
Goodwill impairment— 198,800 
Other operating activities— (504)
Changes in operating assets and liabilities:
Accounts receivable, net (includes related party amounts of nil and $19 for the nine months ended December 31, 2024 and 2023, respectively)
(6,749)(16,257)
Inventories(8,943)(5,420)
Deferred cost of revenue(5,128)(6,846)
Prepaid expenses and other current assets(980)(4,490)
Operating lease right-of-use assets5,565 5,341 
Other assets629 755 
Accounts payable (includes related party amounts of $(3,809) and $3,879 for the nine months ended December 31, 2024 and 2023, respectively)
(2,840)669 
Accrued expenses and other current liabilities (includes related party amounts of $(4,562) and $42 for the nine months ended December 31, 2024 and 2023, respectively)
11,468 (5,906)
Deferred revenue (includes related party amounts of $(19,035) and $8,247 for the nine months ended December 31, 2024 and 2023, respectively)
(11,908)32,948 
Operating lease liabilities(6,981)(6,483)
Other liabilities313 (36)
Net cash used in operating activities(128,854)(138,535)
Cash flows from investing activities:
Purchases of property and equipment(714)(850)
Proceeds from sale of property and equipment2,475 6 
Capitalized internal-use software costs(4,730)(6,636)
Net cash used in investing activities(2,969)(7,480)
Cash flows from financing activities:
Proceeds from exercise of stock options58 687 
Proceeds from issuance of common stock under employee stock purchase plan331 1,411 
Payments of deferred offering costs(4)(356)
Payments for taxes related to net share settlement of equity awards(135)(158)
Net cash provided by financing activities250 1,584 
Net decrease in cash, cash equivalents and restricted cash(131,573)(144,431)
Cash, cash equivalents and restricted cash—beginning of period224,861 395,222 
Cash, cash equivalents and restricted cash—end of period$93,288 $250,791 
Supplemental disclosures of non-cash investing and financing activities:
Purchases of property and equipment included in accounts payable and accrued expenses$6 $213 
Stock-based compensation capitalized for internal-use software costs$1,773 $2,927 
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$79,350 $242,418 
Restricted cash, current1,664 1,399 
Restricted cash, noncurrent12,274 6,974 
Total cash, cash equivalents and restricted cash$93,288 $250,791 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Table of Contents

23ANDME HOLDING CO.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1.    Organization and Description of Business
23andMe Holding Co. (the “Company” or “23andMe”) is dedicated to helping people access, understand, and benefit from the human genome. The Company is dedicated to empowering customers to optimize their health by providing consumers direct access to their genetic information, personalized reports, actionable insights, and digital access to affordable healthcare professionals through the Company’s telehealth platform, Lemonaid Health, Inc. (“Lemonaid Health”).
The Company pioneered direct-to-consumer genetic testing, giving consumers unique, personalized information about their genetic health risks, ancestry, and traits. It was the first company to obtain Food and Drug Administration (“FDA”) authorization for a direct-to-consumer genetic test, and it is the only company to have FDA authorization, clearance, or an exemption from premarket notification for all of the carrier status, genetic health risk, cancer predisposition, and pharmacogenetics reports that the Company offers to customers.
Through the Lemonaid Health telehealth platform, the Company connects patients to licensed healthcare professionals to provide affordable and direct online access to medical care, from consultation through treatment, for a number of common conditions, using evidence-based guidelines and up-to-date clinical protocols. When medications are prescribed by Lemonaid Health’s affiliated healthcare professionals, patients can use Lemonaid Health’s online pharmacy for fulfillment. Patients also can access telehealth consultations for certain 23andMe genetic reports through Lemonaid Health.
As previously disclosed, the Company formed a special committee composed of independent members of the Board of Directors (the “Special Committee”) on March 28, 2024. The role of the Special Committee is to review strategic alternatives that may be available to the Company to maximize stockholder value. On April 17, 2024, Anne Wojcicki, Chief Executive Officer (“CEO”), Co-Founder, and Chair of the Board of Directors of the Company disclosed that she is considering making a proposal to acquire all of the outstanding shares of the Company that she does not currently own. Ms. Wojcicki also indicated that she wishes to maintain control of the Company and, therefore, will not be willing to support any alternative transaction. As previously disclosed, on July 29, 2024, the Special Committee received a preliminary non-binding indication of interest from Ms. Wojcicki to acquire all of the outstanding shares of the Company not owned by her or her affiliates or any other stockholder that she invites to roll over their shares, for cash consideration of $0.40 per share (on a pre-Reverse Stock Split basis) (the “Preliminary Proposal”), as set forth in Amendment No. 2 to Schedule 13D filed by ABeeC 2.0 LLC (Ms. Wojcicki’s affiliated entity) (“ABeeC”) with the Securities and Exchange Commission (the “SEC”) on July 31, 2024. On August 2, 2024, the Company issued a press release announcing the Special Committee’s response to the Preliminary Proposal, including certain requirements for any revised proposal from Ms. Wojcicki. As disclosed in Amendment No. 3 to Schedule 13D filed by ABeeC with the SEC on September 11, 2024, in response to requests from the Special Committee, on September 9, 2024, Ms. Wojcicki notified the members of the Special Committee that Ms. Wojcicki would be open to considering third-party takeover proposals for the Company. On September 17, 2024, the Company issued a press release regarding the resignations of seven non-employee directors (collectively, the “Resigning Directors”) from the Company’s Board of Directors (the “Resignations”). As set forth in the Resigning Directors’ resignation letter dated September 17, 2024, the Resigning Directors stated that such Resigning Directors differed from Ms. Wojcicki on the strategic direction for the Company, and that, as a result of such difference and Ms. Wojcicki’s concentrated voting power, the Resigning Directors believed that it was in the best interest of the Company’s stockholders to resign from the Board of Directors. In Amendment No. 4 to Schedule 13D filed by ABeeC with the SEC on September 18, 2024, Ms. Wojcicki announced that the Company will immediately begin identifying independent directors to join the Company’s Board of Directors. In Amendment No. 5 to Schedule 13D filed by ABeeC with the SEC on September 30, 2024, Ms. Wojcicki disclosed that she was no longer open to considering any third-party proposals to buy the Company and that she remains committed to completing a take-private acquisition of the Company. In connection with the Company’s announcement of the appointment of three independent directors to the Company’s Board of Directors, ABeeC filed Amendment No. 6 to Schedule 13D with the SEC on October 29, 2024. Each of the newly-appointed independent directors was subsequently appointed to the Special Committee on November 2, 2024. On January 28, 2025, the Special Committee announced that it has undertaken a process to explore strategic alternatives, including, among other alternatives, a possible sale of the Company, business combination, sale of all or part of the Company’s assets, licensing of assets, restructuring, or other strategic action. In response to a request from the Special Committee and as disclosed in Amendment No. 8 to Schedule 13D filed by ABeeC with the SEC on January 31, 2025, Ms. Wojcicki stated that based on developments subsequent to her previous statement that she would not be willing to consider third-party takeover proposals for the Company, Ms. Wojcicki had changed her view and is now willing to consider third-party takeover proposals for the Company or other strategic alternatives that may be in the best interests of the Company.


The Company is headquartered in Sunnyvale, California and is incorporated in the State of Delaware.
2.    Summary of Significant Accounting Policies
Basis of Presentation and Principle of Consolidation
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 subsidiaries, and variable interest entities in which it holds a controlling financial interest. All intercompany accounts and transactions have been eliminated in consolidation.
For the three and nine months ended December 31, 2024 and 2023, the Company’s operations were primarily in the United States. The Company had immaterial operations in the United Kingdom (“U.K.”) prior to the disposition of its U.K. subsidiary on August 1, 2023.
As previously disclosed, on November 8, 2024, the Company’s Board of Directors approved a reduction in force (the “November 2024 Reduction in Force”), which also included the closure of substantially all operations in the Company’s Therapeutics operating segment (together with the November 2024 Reduction in Force, the “November 2024 Reduction Plan”). The November 2024 Reduction Plan is intended to restructure and strategically align the Company’s workforce and organization with the Company’s current strategy and to reduce the Company’s operating costs. In accordance with Accounting Standards Codification (“ASC”) 205, Presentation of Financial Statements (“ASC 205”), the Company determined that the closure of substantially all operations in the Company's Therapeutics operating segment on November 11, 2024 represented a strategic shift that will have a major effect on the Company's operations and financial results, thus meeting the criteria to be reported as discontinued operations as of December 31, 2024. As a result, the Company has retrospectively recast its consolidated balance sheet at March 31, 2024 and consolidated statements of operations and comprehensive loss for the three and nine months ended December 31, 2023 to reflect the assets and liabilities and operating results, respectively, related to the disposed business in discontinued operations. The Company has chosen not to segregate the cash flows of the disposed business in the condensed consolidated statements of cash flows. Supplemental disclosures related to discontinued operations for the statements of cash flows have been provided in Note 3, “Discontinued Operations.” Unless otherwise specified, the disclosures in the accompanying condensed consolidated financial statements refer to continuing operations only.
The Company previously operated its business through two reporting segments: (1) Consumer and Research Services; and (2) Therapeutics. With the discontinuation of the Therapeutics operating segment, the Company now operates its business as one segment as of December 31, 2024.
There have been no material changes to the Company’s significant accounting policies during the nine months ended December 31, 2024, as compared to the audited consolidated financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2024 filed with the SEC on May 30, 2024 (the “Fiscal 2024 Form 10-K”).
Change in Capital Structure

As described more fully in Note 12, “Stockholders' Equity,” effective October 16, 2024, the Company effected a one-for-twenty reverse stock split of all of its issued and outstanding shares of Class A common stock and Class B common stock (the “Reverse Stock Split”). All share and per share amounts presented in the unaudited condensed consolidated financial statements and accompanying notes, including, but not limited to, shares issued and outstanding, dollar amounts of common stock, additional paid-in capital, earnings/(loss) per share, and options, have been retroactively adjusted for all periods presented in order to reflect this change in capital structure. There were no changes to the total numbers of authorized shares of Class A common stock and Class B common stock or their respective par values per share as a result of this change.
Unaudited Interim Condensed Consolidated Financial Information
The accompanying interim condensed consolidated financial statements 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 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 fiscal year ended


March 31, 2024 (the “audited consolidated financial statements”) that were included in the Fiscal 2024 Form 10-K. In management’s opinion, the unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements, which include only normal recurring adjustments, necessary for a fair statement of the Company’s financial position as of December 31, 2024 and its condensed consolidated results of operations and cash flows for the nine months ended December 31, 2024 and 2023. The results of operations for the three and nine months ended December 31, 2024 are not necessarily indicative of the results expected for the year ending March 31, 2025 or any other future interim or annual periods, due to among other factors, the seasonal nature of the business.
Fiscal Year
The Company’s fiscal year ends on March 31. References to fiscal 2025 refer to the fiscal year ending March 31, 2025 and references to fiscal 2024 and fiscal 2023 refer to the fiscal years ended March 31, 2024 and March 31, 2023, 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 capitalization and estimated useful life of internal use software; the useful life of long-lived assets; fair value of intangible assets acquired in business combinations; the incremental borrowing rate for operating leases; stock-based compensation including the determination of the fair value of stock options and annual incentive bonuses payable in the form of restricted stock units (“RSUs”); the assumptions used in going concern assessments; legal contingencies; 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 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/or additional information is obtained, and will be recognized in the condensed consolidated financial statements as soon as they become known.
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.
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 nine months ended December 31, 2024 and 2023. One laboratory service provider accounted for 100% of the Company’s processing of customer samples for the three and nine months ended December 31, 2024 and 2023.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to a concentration of credit risk include cash, cash equivalents, and accounts receivable. The Company maintains a majority of its cash and cash equivalents with a single high-quality financial institution, 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 Note 4, “Revenue,” for additional information regarding geographical disaggregation of revenue. The Company grants credit to its customers in the


normal course of business, performs credit evaluations of its significant customers on an as-needed basis, and does not require collateral. Concentrations of credit risk are limited as the Company’s trade receivables are primarily related to third parties, which collect its credit card receivables, and large multinational corporations. The Company regularly monitors the aging of accounts receivable balances.
Significant customer information is as follows:
December 31,
2024		March 31,
2024
Percentage of accounts receivable:
Customer C(1)
92 %59 %
Customer I— %30 %
(1)Customer C is a reseller.

Three Months Ended December 31,Nine Months Ended December 31,
2024202320242023
Percentage of revenue:
Customer C(1)
17 %19 %20 %20 %
Customer B33 %— %14 %*
•less than 10%
(1)Customer C is a reseller.
Cash, Cash Equivalents and Restricted Cash

Cash consists of bank deposits held at financial institutions. Cash in U.S. banks is insured to the extent defined by the Federal Deposit Insurance Corporation. Cash equivalents consist primarily of short-term money market funds. The Company maintains certain cash amounts restricted as to its withdrawal or use, which are related to letters of credit in connection with the Company’s Sunnyvale operating lease agreement and the Company’s credit card processor, as well as collateral held against the Company’s corporate credit cards. The Company held total restricted cash of $13.9 million and $8.4 million as of December 31, 2024 and March 31, 2024, respectively. The increase in restricted cash is related to a new letter of credit entered into by the Company in April 2024, and subsequently amended and increased in November 2024, as collateral related to the Company’s credit card processor.
Impairment and Abandonment of Long-Lived Assets

The Company evaluates long-lived assets, such as property and equipment, internal-use software, acquired intangible assets, and right-of-use (“ROU”) assets related to operating leases for impairment whenever events or changes in circumstances indicate that the carrying value of long-lived assets may not be recoverable. The recoverability of these assets is measured by comparing the carrying amounts to the future undiscounted cash flows these assets are expected to generate. If the recoverability test indicates that the carrying value of the asset group is not recoverable, the Company would estimate the fair value of the asset group using the discounted cash flow method. An impairment would be recognized in the event that the carrying amount of such assets exceeds the fair value attributable to such assets. The useful lives of long-lived assets are evaluated whenever events or circumstances warrant a revision to the remaining amortization period.

When an operating lease ROU asset has been abandoned, the estimated useful life of the asset is updated to reflect the cease use date, and the remaining carrying value of the asset is amortized ratably over the period between the commitment date and the cease use date.
Escrow Related to Acquisition

On November 1, 2021, the Company completed its acquisition of Lemonaid Health, and upon the acquisition closing date, funds were placed in escrow to cover a potential purchase price adjustment and to secure the indemnification obligations of the former equity holders of Lemonaid Health. In May 2023, $6.0 million of the escrow amount was


released. The remaining escrow amount of $6.2 million was released during the first quarter of fiscal 2025. Accordingly, the entire escrow amount has been released.
Liquidity and Going Concern
Going Concern

The unaudited interim condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and the satisfaction of liabilities in the normal course of business.

In accordance with Subtopic 205-40, the Company has evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about its ability to continue as a going concern within one year after the date that the unaudited interim condensed consolidated financial statements included in this report are issued.

The Company has incurred significant operating losses as reflected in its accumulated deficit and negative cash flows from operations. As of December 31, 2024, the Company had an accumulated deficit of $2.4 billion, and unrestricted cash and cash equivalents of $79.4 million. The Company will need additional liquidity to fund its necessary expenditures and financial commitments for 12 months after the date that the unaudited interim condensed consolidated financial statements included in this report are issued. The Company has determined that, as of the filing date of this report, there is substantial doubt about the Company’s ability to continue as a going concern.

To improve its financial condition and liquidity position, the Company is attempting to raise additional capital. In addition, the Company is working to implement cost-cutting measures, including further reducing operating expenses, negotiating terminations of the Company's long-term real estate leases, and attempting to reach a settlement covering all U.S. customers affected by the Cyber Incident (as defined below) as well as to resolve non-U.S. litigation and ongoing investigations from various governmental agencies arising from the Cyber Incident. See Note 11, "Commitments and Contingencies," for additional details. To reduce the Company's operating costs, during the three months ended December 31, 2024, the Company’s Board of Directors approved the November 2024 Reduction in Force, which represented a reduction of approximately 40% of the Company’s workforce and included the closing of substantially all operations in the Company's former Therapeutics operating segment, and the ceasing of additional investment in the Company’s two clinical trials beyond their respective current stages of development. See Note 9, “Restructuring,” for additional details. The Company’s ability to continue as a going concern, however, is contingent upon the Company’s ability to successfully implement steps such as those referenced above, and if the Company fails to do so and/or is unable to raise sufficient capital or consummate a strategic transaction, it would be forced to modify or cease operations, liquidate assets, or pursue bankruptcy proceedings. While the Company believes in the viability of its strategy, there are numerous risks and uncertainties that may prevent, and there can be no assurances regarding, the successful implementation of the Company’s operational and financial plans and/or the consummation of any transactions. See Note 1, “Organization and Description of Business,” for additional details.

The unaudited interim condensed consolidated financial statements do not reflect any adjustments pertaining to the recoverability and classification of assets or the amount and classification of liabilities or any other adjustments that would be necessary if the Company were unable to continue as a going concern.
Nasdaq Deficiency Minimum Bid Price

On November 10, 2023, the Company received a deficiency letter (the “First Nasdaq Letter”) from the Nasdaq Listing Qualifications Department (the “Staff”) of The Nasdaq Stock Market LLC (“Nasdaq”), notifying the Company that it was not in compliance with Nasdaq Listing Rule 5450(a)(1), which requires the Company to maintain a minimum bid price of at least $1.00 per share for continued listing on The Nasdaq Global Select Market (the “Minimum Bid Requirement”). The Company’s failure to comply with the Minimum Bid Requirement was based on its Class A common stock per share price being below the $1.00 threshold for a period of 30 consecutive trading days. Pursuant to the First Nasdaq Letter, the Company had an initial 180 calendar days from the date of the First Nasdaq Letter to regain compliance. The Company did not regain compliance during the initial compliance period.

On May 9, 2024, the Company received a notification letter from the Staff notifying the Company that it had been granted an additional 180 days, or until November 4, 2024, to regain compliance with the Minimum Bid Requirement, based on the Company meeting the continued listing requirement for market value of publicly held shares and all other applicable requirements for initial listing on The Nasdaq Capital Market with the exception of the bid price requirement, and the Company’s written notice of its intention to cure the deficiency during the second compliance period. In order to be


eligible to receive the second compliance period, the Company applied to have its Class A common stock transferred from the Nasdaq Global Select Market to the Nasdaq Capital Market.

In connection with the foregoing, on July 16, 2024, the Company filed a Definitive Proxy Statement on Schedule 14A with the SEC in connection with the Company’s 2024 Annual Meeting of Stockholders, which was held on August 26, 2024 (the “Annual Meeting”). At the Annual Meeting, the Company’s stockholders, by an affirmative vote of the holders of at least two-thirds (67%) of the voting power of the outstanding shares of the Company’s Class A common stock and Class B common stock voting together as a single class, approved a proposal authorizing the Company’s Board of Directors, in its discretion, to effect a reverse stock split of the Company’s outstanding shares of Class A common stock and Class B common stock, respectively, by a ratio of not less than one-for-five and not more than one-for-thirty, with the exact ratio to be set within this range by the Company’s Board of Directors in its sole discretion. On October 7, 2024, the Company’s Board approved the Reverse Stock Split at a ratio of one-for-twenty. The Reverse Stock Split became effective as of 12:01 a.m. Eastern Time on October 16, 2024.

On October 30, 2024, the Company received written notice (the “Compliance Notice”) from the Staff informing the Company that it has regained compliance with the Minimum Bid Requirement. The Staff notified the Company in the Compliance Notice that, from October 16, 2024 to October 29, 2024, the closing bid price of the Company’s Class A common stock had been $1.00 per share or greater and, accordingly, the Company had regained compliance with the Minimum Bid Requirement and that the matter was now closed.
Nasdaq Deficiency Independent Directors

On September 18, 2024, the Company received a deficiency letter from the Staff, notifying the Company that the Company was not in compliance with Nasdaq Listing Rule 5605 (the “Second Nasdaq Letter”). Specifically, as a result of the Resignations, the Company was no longer in compliance with the following (collectively, the “Corporate Governance Requirements”):
•Nasdaq Listing Rule 5605(b), which requires, among other things, that a majority of the Company’s Board of Directors be comprised of Independent Directors (as defined in Nasdaq Listing Rule 5605(a)(2));
•Nasdaq Listing Rule 5605(c), which requires, among other things, that the Company have an Audit Committee that has at least three members, each of whom must (i) be an Independent Director, (ii) meet the criteria for independence set forth in Rule 10A-3(b)(1) under the Securities Exchange Act of 1934, as amended, (iii) not have participated in the preparation of the financial statements of the Company or any current subsidiary of the Company at any time during the past three years, and (iv) be able to read and understand fundamental financial statements;
•Nasdaq Listing Rule 5605(d), which requires, among other things, that the Company have a Compensation Committee that has at least two members, each of whom must be an Independent Director; and
•Nasdaq Listing Rule 5605(e), which requires, among other things, that the Company have Independent Director oversight of director nominations.

Pursuant to the Second Nasdaq Letter, the Company had until October 3, 2024 to submit a plan to regain compliance with the Corporate Governance Requirements (the “Plan”) for the Staff’s review. The Company submitted the Plan to the Staff on September 26, 2024.

On October 29, 2024, the Company announced the appointment of three independent directors to the Company’s Board of Directors, each of whom was appointed to the Audit Committee and Compensation Committee (the “Appointments”). On October 30, 2024, the Company received a letter from the Staff informing the Company that, as a result of the Appointments, the Company had regained compliance with the Corporate Governance Requirements.
Recently Issued Accounting Pronouncements Not Yet Effective
In November 2023, the Financial Accounting Standard Board (“FASB”) issued Accounting Standard Updated (“ASU”) No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires disclosure of incremental segment information on an annual and interim basis. This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, and


requires retrospective application to all prior periods presented in the financial statements. Early adoption is permitted. The Company is currently evaluating the impacts of the new standard.

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which expands disclosures in an entity’s income tax rate reconciliation table and income taxes paid information. This ASU is effective for fiscal years beginning after December 15, 2024 and may be adopted on a prospective or retrospective basis. Early adoption is permitted. The Company is currently evaluating the impacts and method of adoption.

In November 2024, the FASB issued ASU No. 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures, which requires more detailed information about specified categories of expenses (purchases of inventory, employee compensation, depreciation, amortization, and depletion) included in certain expense captions presented on the face of the income statement. Additionally, in January 2025, the FASB issued ASU No. 2025-01, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures: Clarifying the Effective Date, to clarify the effective date of ASU No. 2024-03. ASU No. 2024-03 is effective for fiscal years beginning after December 15, 2026, and for interim periods for fiscal years beginning after December 15, 2027. Early adoption is permitted. The amendments may be applied either (1) prospectively to financial statements issued for reporting periods after the effective date of this ASU or (2) retrospectively to all prior periods presented in the financial statements. The Company is currently evaluating the impact of these new standards.
3.     Discontinued Operations

In accordance with ASC 205, the Company determined that the closure of substantially all operations in the Company’s Therapeutics operating segment in November 2024 represented a strategic shift that will have a major effect on the Company’s operations and financial results, thus meeting the criteria to be reported as discontinued operations as of December 31, 2024. Discontinued operations include research and development costs, including lab-related research services, clinical development, and collaboration costs, as well as personnel-related, lease, equipment, and depreciation costs associated with the former Therapeutics operating segment. Also included are restructuring costs, including cash severance payments, benefits continuation, stock-based compensation, and exit costs associated with the Company abandoning the lease for its South San Francisco, California lab facility (the “South San Francisco Facility”) following the November 2024 Reduction Plan.

General corporate overhead costs for shared services historically allocated to the former Therapeutics operating segment that do not meet the requirements to be presented in discontinued operations have been allocated to the continuing operations in accordance with ASC 205-20 for the periods presented herein, as the costs were not directly attributable to the discontinued operations of the former Therapeutics operating segment. These costs were $0.5 million and $1.6 million for the three months ended December 31, 2024 and 2023, respectively, and $2.4 million and $6.3 million for the nine months ended December 31, 2024 and 2023, respectively.

The Company will not have any significant continuing involvement in the operations of the former Therapeutics operating segment after the disposal transaction.



The following table summarizes the major classes of assets and liabilities of the discontinued operations:
December 31,
2024		March 31,
2024
(in thousands)
Prepaid expenses and other current assets$1,057 $1,400 
Total current assets of discontinued operations$1,057 $1,400 
Property and equipment, net(1)
$54 $5,852 
Operating lease ROU assets— 10,764 
Other assets427 1,219 
Total assets noncurrent assets of discontinued operations$481 $17,835 
Accounts payable (includes related party amounts of nil and $3,809, respectively)
$886 $6,203 
Accrued expenses and other current liabilities (includes related party amounts of $2,190 and $6,752, respectively)
4,873 11,431 
Operating lease liabilities(2)
4,064 3,738 
Total current liabilities of discontinued operations$9,823 $21,372 
Operating lease liabilities, noncurrent(2)
$4,925 $8,010 
Total noncurrent liabilities of discontinued operations$4,925 $8,010 
(1)In connection with the November 2024 Reduction Plan, the Company wrote off leasehold improvements and disposed of certain laboratory equipment and software. The loss on disposal of property and equipment was immaterial for the three and nine months ended December 31, 2024.
(2)The Company's operating lease for the South San Francisco Facility has a remaining contractual period of 2.1 years. As of December 31, 2024, the future minimum lease payments included in the measurement of the Company’s operating lease liabilities were $1.1 million for the remainder of fiscal 2025, $4.6 million for fiscal 2026, and $3.9 million for fiscal 2027, and the total imputed interest was $0.7 million.
The following table summarizes the condensed operating results of the discontinued operations:
Three Months Ended December 31,Nine Months Ended December 31,
2024202320242023
(in thousands)
Operating expenses:
Research and development (includes related party expenses of $260 and $2,781 for the three months ended December 31, 2024 and 2023, respectively, and $445 and $10,989 for the nine months ended December 31, 2024 and 2023, respectively)(1)(2)
$6,700 $16,996 $31,611 $77,779 
Restructuring and other charges(2)
12,060 1,280 14,078 3,726 
Total operating expenses18,760 18,276 45,689 81,505 
Net loss from discontinued operations(3)
$(18,760)$(18,276)$(45,689)$(81,505)

(1)For the three months ended December 31, 2024 and 2023, the Company recorded operating lease costs of $0.9 million and $1.1 million, respectively, and variable operating lease costs of $0.3 million and $0.2 million, respectively, associated with the South San Francisco Facility. For the nine months ended December 31, 2024 and 2023, the Company recorded operating lease costs of $3.0 million and $3.1 million, respectively, and variable operating lease costs of $0.8 million and $0.6 million, respectively, associated with the South San Francisco Facility.


(2)See Note 13, “Equity Incentive Plans and Stock-Based Compensation,” for details on total stock based compensation related to discontinued operations.
(3)Pre-tax net loss from discontinued operations equals net loss from discontinued operations as there was no provision for (benefit from) income tax related to discontinued operations for the three and nine months ended December 31, 2024 and 2023.

During the three and nine months ended December 31, 2024, the Company recorded restructuring charges of $12.1 million and $14.1 million, respectively, related to discontinued operations, of which $1.8 million and $3.6 million, respectively, were related to cash severance payments and benefits continuation, and $0.3 million and $0.5 million, respectively, were related to stock-based compensation related to equity modifications in connection with the reductions in force. In addition, in connection with the November 2024 Reduction Plan, the Company abandoned the South San Francisco Facility in December 2024. As a result, the Company determined to record a lease abandonment charge of $8.3 million to accelerate all amortization of the remaining carrying value of the operating lease ROU asset for the South San Francisco Facility, and impairment losses of $1.7 million related to leasehold improvements for this facility. The Company recorded the expenses associated with this facility exit in restructuring and other charges in the table above and within discontinued operations in the condensed consolidated statements of operations and comprehensive loss for the three and nine months ended December 31, 2024.

During the three and nine months ended December 31, 2023, the Company recorded restructuring charges of $1.3 million and $3.7 million, respectively, within restructuring and other charges in the table above and net loss from discontinued operations within the condensed consolidated statements of operations, of which $0.3 million and $2.7 million, respectively, were related to cash severance payments and benefits continuation, and $1.0 million and $1.0 million, respectively, were related to stock-based compensation related to equity modifications in connection with the reductions in force. There were no impairments to ROU assets and property and equipment for the three and nine months ended December 31, 2023.
The following table shows the total amount incurred and accrued related to one-time employee termination benefits from discontinued operations:

One-Time Employee Termination Benefits
(in thousands)
Accrued restructuring costs included in accrued expenses and other current liabilities as of March 31, 2024$22 
Restructuring charges incurred during the period4,045 
Amounts paid during the period(3,352)
Accrued restructuring costs included in accrued expenses and other current liabilities as of December 31, 2024$715 



The following table summarizes the condensed cash flow information of the discontinued operations:
Nine Months Ended December 31,
20242023
(in thousands)
Operating activities (non-cash adjustments to net loss):
Depreciation and amortization$1,789 $2,421 
Stock-based compensation expense$2,742 $9,863 
Impairment of long-lived assets$10,033 $— 
Changes in operating assets and liabilities:
Prepaid expenses and other current assets$343 $1,756 
Operating lease ROU assets$2,449 $2,435 
Other assets$792 $157 
Accounts payable (includes related party amounts of $(3,809) and $3,879 for the nine months ended December 31, 2024 and 2023, respectively)
$(5,272)$309 
Accrued expenses and other current liabilities (includes related party amounts of $(4,562) and $42 for the nine months ended December 31, 2024 and 2023, respectively)
$(6,616)$(6,013)
Operating lease liabilities$(2,759)$(2,459)
Cash flows from investing activities:
Purchases of property and equipment$(152)$(468)
Proceeds from sale of property and equipment$2,360 $5 


4.    Revenue
Disaggregation of Revenue
The following table presents revenue by category:
Three Months Ended December 31,Nine Months Ended December 31,
2024202320242023
Amount
% of Revenue
Amount
% of Revenue
Amount
% of Revenue
Amount
% of Revenue
(in thousands, except percentages)
Point in Time
Personal genome service (“PGS”)$23,014 38 %$29,241 65 %$75,063 52 %$95,202 61 %
Telehealth4,832 8 %5,894 13 %14,761 10 %21,051 14 %
Consumer services27,846 46 %35,135 78 %89,824 62 %116,253 75 %
Research services20,060 33 %1,506 3 %20,404 14 %3,859 2 %
Total$47,906 79 %$36,641 81 %$110,228 76 %$120,112 77 %
Over Time
PGS$10,253 17 %$5,835 13 %$27,877 19 %$16,505 11 %
Telehealth1,533 3 %1,928 4 %4,674 4 %6,350 4 %
Consumer services11,786 20 %7,763 17 %32,551 23 %22,855 15 %
Research services570 1 %343 1 %1,968 1 %12,643 8 %
Total$12,356 21 %$8,106 18 %$34,519 24 %$35,498 23 %
 
Revenue by Category
PGS$33,267 55 %$35,076 78 %$102,940 71 %$111,707 72 %
Telehealth6,365 11 %7,822 18 %19,435 14 %27,401 17 %
Consumer services39,632 66 %42,898 96 %122,375 85 %139,108 89 %
Research services20,630 34 %1,849 4 %22,372 15 %16,502 11 %
Total$60,262 100 %$44,747 100 %$144,747 100 %$155,610 100 %
The following table summarizes revenue by region based on the shipping address of customers:
Three Months Ended December 31,Nine Months Ended December 31,
2024202320242023
Amount
% of Revenue
Amount
% of Revenue
Amount
% of Revenue
Amount
% of Revenue
(in thousands, except percentages)
United States$36,236 60 %$39,217 88 %$110,192 76 %$124,728 80 %
United Kingdom21,459 36 %2,139 5 %25,551 18 %20,657 13 %
Canada1,598 3 %2,382 5 %6,015 4 %7,110 5 %
Other regions969 1 %1,009 2 %2,989 2 %3,115 2 %
Total$60,262 100 %$44,747 100 %$144,747 100 %$155,610 100 %



Breakage Revenue
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 for processing, services cannot be completed by the Company, potentially resulting in unexercised rights (“breakage”) revenue. The Company recognized breakage revenue from unreturned kits of $4.4 million and $4.4 million for the three months ended December 31, 2024 and 2023, respectively, and $13.8 million and $13.4 million for the nine months ended December 31, 2024 and 2023, respectively.
Contract Balances
Accounts receivable are recorded when the right to consideration becomes unconditional. Contract assets include amounts associated with contractual rights related to consideration for performance obligations in the Company's Research Services contracts and are included in prepaid expenses and other current assets on the condensed consolidated balance sheets. The amount of contract assets was immaterial as of December 31, 2024 and March 31, 2024.
Contract liabilities consist of deferred revenue. As of December 31, 2024 and March 31, 2024, deferred revenue for consumer services was $59.8 million and $52.3 million, respectively. Of the $52.3 million of deferred revenue for consumer services as of March 31, 2024, the Company recognized $6.5 million and $38.9 million as revenue during the three and nine months ended December 31, 2024, respectively.
As of December 31, 2024 and March 31, 2024, deferred revenue for research services was $3.1 million and $22.5 million, respectively. As of December 31, 2024 and March 31, 2024, deferred revenue for research services included $2.0 million and $21.0 million, respectively, of related party deferred revenue. Of the $22.5 million of deferred revenue for research services as of March 31, 2024, the Company recognized $19.8 million and $21.2 million as revenue during the three and nine months ended December 31, 2024, respectively, which included related party revenue of $19.7 million and $20.2 million for the three and nine months ended December 31, 2024, respectively.
Remaining Performance Obligations
The transaction price allocated to remaining performance obligations represents contracted revenue that has not yet been recognized, which includes deferred revenue and amounts that are expected to be billed and recognized as revenue in future periods. The Company has utilized the practical expedient available under ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”) to not disclose the value of unsatisfied performance obligations for PGS and telehealth as those contracts have an expected length of one year or less. As of December 31, 2024, the aggregate amount of the transaction price allocated to remaining performance obligations for research services was $7.2 million. The Company expects to recognize revenue of approximately 51% of this amount over the next 12 months and the remainder thereafter. During the three and nine months ended December 31, 2024 and 2023, revenue recognized for performance obligations satisfied in prior periods were immaterial.
5.    Collaborations

GlaxoSmithKline Agreement and Subsequent Amendments
In July 2018, the Company and an affiliate of GlaxoSmithKline (“GSK”) entered into a four-year exclusive drug discovery and development collaboration agreement, amended in 2019 and 2021, respectively (as amended, the “original GSK Agreement”), for collaboration on identification and development of therapeutic agents with a unilateral option for GSK to extend the term for an additional year. In January 2022, GSK elected to exercise the option to extend the exclusive target discovery term for an additional year to July 23, 2023, after which it expired under the original GSK Agreement.
The Company has concluded that GSK is considered a customer. Therefore, the Company applied the guidance in ASC 606 to account for and present consideration received from GSK related to research services provided by the Company. The Company’s activities under the original GSK Agreement, which included reporting, drug target discovery, and joint steering committee participation, represented one combined performance obligation to deliver research services. The Company recognized research services revenue related to the original GSK Agreement as the respective performance obligations were satisfied using an input method to measure progress. In addition, the original GSK Agreement, provided GSK the right to include certain identified pre-existing Company programs in the collaboration at GSK’s election, each of which was considered distinct from the research services.


Prior to the expiration of the original GSK Agreement, drug targets were identified for inclusion in the collaboration during the performance of research services. Cost sharing related to the performance of research services was recorded when incurred within cost of revenue.
For the drug targets that had been identified for inclusion in the original collaboration, the Company and GSK equally shared in the costs of further research, development, and commercialization of identified targets under the original GSK Agreement, subject to certain rights of either party to opt-out of funding at certain predetermined development milestones. These cost-sharing charges for the program costs incurred subsequent to the identification of drug targets have been included in research and development expense on the condensed consolidated statements of operations and comprehensive loss during the period incurred. The Company may also share in the net profits or losses of products that are commercialized pursuant to the collaboration or receive royalties on products which are successfully commercialized.
In October 2023, the Company entered into an amendment to the original GSK Agreement (the “2023 GSK Amendment”) to provide GSK with a non-exclusive license to certain new, de-identified, aggregated data included in the Company’s database (the “New Data”), as well as access to certain Company research services with respect to such New Data in return for a $20.0 million data access fee, which the Company received during fiscal 2024. The license to the New Data will expire one year from the date GSK provides the Company with a notice that GSK was ready to use the New Data (the “Data Use Notice”); in September 2024, the Company and GSK agreed to extend the deadline for the Data Use Notice from September 30, 2024 to October 28, 2024. Revenue attributable to the New Data license was accounted for upon the satisfaction of performance obligations and was recognized upon the Company’s receipt of the Data Use Notice from GSK, which occurred on October 28, 2024. Revenue attributable to research services will be recognized as the performance obligation is satisfied using an input method to measure progress. The Company believes that actual hours incurred relative to contractually agreed upon hours is the most accurate measurement of progress for the input method. As of December 31, 2024, deferred revenue associated with the New Data access was $0.4 million. The license to the New Data will expire on October 28, 2025.
Pursuant to the 2023 GSK Amendment, the Company opted-out of cost-sharing and other research and development obligations with respect to three programs initiated by GSK and the Company under the original GSK Agreement. The Company will retain rights to receive low to mid single digit royalties on net sales of products developed in these three programs.
The Company did not recognize research services revenue related to the original GSK Agreement during the three months ended December 31, 2024 and 2023. The Company recognized research services revenue related to the original GSK Agreement of nil and $11.8 million during the nine months ended December 31, 2024 and 2023, respectively. The Company recognized research services revenue related to the 2023 GSK Amendment of $19.6 million during the three and nine months ended December 31, 2024. The Company did not recognize research services revenue related to the 2023 GSK Amendment during the three and nine months ended December 31, 2023.
As of December 31, 2024 and March 31, 2024, the Company had deferred revenue of $0.4 million and $20.0 million, respectively, related to the 2023 GSK Amendment. Cost-sharing amounts incurred prior to the identification of targets included in cost of service revenue were nil during the three and nine months ended December 31, 2024, and were nil and immaterial for the three and nine months ended December 31, 2023, respectively.
Cost-sharing amounts incurred subsequent to the identification of targets were $0.3 million and $0.4 million during the three and nine months ended December 31, 2024, respectively, and $2.8 million and $11.0 million during the three and nine months ended December 31, 2023, respectively, included within net loss from discontinued operations within the condensed consolidated statement of operations. As of December 31, 2024 and March 31, 2024, the Company had $2.2 million and $10.6 million, respectively, related to balances of amounts payable to GSK for reimbursement of shared costs included within current liabilities from discontinued operations on the condensed consolidated balance sheets.
GSK’s affiliate, Glaxo Group Limited, is considered as a related party to the Company. See Note 18, “Related Party Transactions.”
6.    Variable Interest Entities
In providing telehealth services that include professional medical consultations, the Company maintains relationships with various affiliated professional medical corporations (“PMCs”). Additionally, with respect to its telehealth services involving the sale of prescription products, the Company maintains relationships with affiliated pharmacies (collectively, the “Affiliated Pharmacies”) to fill prescriptions that are ordered by the Company’s patients. On February 15, 2024, the Company acquired full ownership of the active Affiliated Pharmacies, and thereafter the Company


ceased to treat the Affiliated Pharmacies as Variable Interest Entities (“VIEs”). The Company determined that the PMCs are, and prior to being acquired by the Company, the Affiliated Pharmacies were, VIEs, in each case due to the respective equity holders having nominal capital at risk and the Company having a variable interest in each of the PMCs and, prior to acquiring them, the Affiliated Pharmacies. Until February 15, 2024, the Company consolidated the PMCs and Affiliated Pharmacies under the VIE model since the Company had the power to direct activities that most significantly impact the VIEs’ economic performance and the right to receive benefits or the obligation to absorb losses that could potentially be significant to the VIEs. Under the VIE model, the Company presents the results of operations and the financial position of the VIEs as part of the condensed consolidated financial statements of the Company. There was no impact to the Company’s condensed consolidated financial statements as a result of the Affiliated Pharmacies being acquired by the Company.
Furthermore, as a direct result of the financial support the Company provided to the VIEs (e.g., loans), the interests held by holders lacked economic substance and did not provide them with the ability to participate in the residual profits or losses generated by the VIEs. Therefore, all income and expenses recognized by the VIEs were allocated to the Company’s stockholders.
The aggregate carrying value of total assets and total liabilities included on the condensed consolidated balance sheets for the VIEs after elimination of intercompany transactions were not material as of December 31, 2024 and March 31, 2024. Total revenue included in the condensed consolidated statements of operations and comprehensive loss for the VIEs after elimination of intercompany transactions was $0.9 million and $7.8 million for the three months ended December 31, 2024 and 2023, respectively, and $2.6 million and $25.3 million for the nine months ended December 31, 2024 and 2023, respectively. The Company maintains the ability to control the VIEs, is entitled to substantially all of the economic benefits from the VIEs, and is obligated to absorb all expected losses of the VIEs.
7.    Fair Value Measurements
Recurring Fair Value Measurements
The following table presents information about the Company’s financial instruments that are measured at fair value on a recurring basis as of December 31, 2024 and March 31, 2024:
As ofAs of
December 31, 2024March 31, 2024
Fair ValueLevel 1Level 2Level 3Fair ValueLevel 1Level 2Level 3
(in thousands)
Financial Assets:
Money market funds$74,750 $74,750 $— $— $211,000 $211,000 $— $— 
Total financial assets$74,750 $74,750 $— $— $211,000 $211,000 $— $— 
The fair value of cash, restricted cash, accounts receivable, accounts payable, and accrued liabilities are stated at their carrying value, which approximates fair value due to the short time to the expected receipt or payment date as of December 31, 2024 and March 31, 2024.
Cash equivalents consist primarily of money market funds and are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices in active markets.
The Company had no transfers between levels of the fair value hierarchy of its assets and liabilities measured at fair value during the nine months ended December 31, 2024 and the fiscal year ended March 31, 2024.
Nonrecurring Fair Value Measurements
Identifiable assets and liabilities acquired or assumed are measured separately at their fair values as of the acquisition date. Certain of the Company’s assets, including intangible assets and goodwill, are measured at fair value on a nonrecurring basis and are classified in Level 3 of the fair value hierarchy.
As a result of a sustained decline in market capitalization based on the Company’s publicly quoted share price, lower than expected financial performance and macroeconomic conditions that existed during the three months ended December 31, 2023, the Company performed an impairment assessment of goodwill acquired as part of the Lemonaid


Health acquisition. The Company utilized the income approach (discounted cash flow method) corroborated by the market approach (guideline public company method), which are Level 3 non-recurring fair value measurements. The Company recorded a $198.8 million impairment charge to partially write down the value of its goodwill to its estimated fair value during the three and nine months ended December 31, 2023. No nonrecurring fair value measurements for continuing operations were required during the three and nine months ended December 31, 2024.
8.    Balance Sheet Components
Prepaid Expense and Other Current Assets
Prepaid expense and other current assets consisted of the following:
December 31, 2024March 31, 2024
(in thousands)
Prepaid expenses$11,674 $7,896 
Insurance recovery receivable21,594 2,188 
Other receivables2,232 3,563 
Other current assets2,606 1,794 
Prepaid expenses and other current assets$38,106 $15,441 
Property and Equipment, Net
Property and equipment, net consisted of the following:
December 31, 2024March 31, 2024
(in thousands)
Computer equipment and software$6,814 $7,347 
Laboratory equipment and software34,423 34,539 
Furniture and office equipment7,343 7,416 
Leasehold improvements31,289 31,250 
Capitalized asset retirement obligations853 853 
Property and equipment, gross80,722 81,405 
Less: accumulated depreciation and amortization(61,496)(58,906)
Property and equipment, net$19,226 $22,499 
Depreciation and amortization expense was $1.0 million and $2.1 million for the three months ended December 31, 2024 and 2023, respectively, and $3.6 million and $6.5 million for the nine months ended December 31, 2024 and 2023, respectively.
Operating Lease ROU Assets, Net
Operating lease ROU assets, net consisted of the following:
December 31, 2024March 31, 2024
(in thousands)
Operating lease ROU assets$56,662 $56,662 
Less: accumulated amortization(21,649)(18,533)
Operating lease ROU assets, net$35,013 $38,129 
There were no impairments to ROU assets for continuing operations during the three and nine months ended December 31, 2024 and 2023.


Internal-Use Software, Net
Internal-use software, net consisted of the following:
December 31, 2024March 31, 2024
(in thousands)
Capitalized internal-use software$41,203 $35,918 
Less: accumulated amortization(20,479)(15,402)
Internal-use software, net$20,724 $20,516 
The Company capitalized $2.0 million and $2.7 million in internal-use software during the three months ended December 31, 2024 and 2023, respectively, and $6.5 million and $9.6 million in internal-use software during the nine months ended December 31, 2024 and 2023, respectively. In addition, the Company wrote off $1.1 million of internal-use software during the three months ended December 31, 2023 related to the disposition of Lemonaid Health Limited, refer to Note 17, “Disposition of Subsidiary,” for additional information.
Amortization of internal-use software was $1.7 million and $1.6 million for the three months ended December 31, 2024 and 2023, respectively, and $5.1 million and $4.1 million for the nine months ended December 31, 2024 and 2023, respectively. Impairment to internal-use software was nil and $1.2 million for the three and nine months ended December 31, 2024, respectively, and $0.3 million for both the three and nine months ended December 31, 2023, respectively.
Intangible Assets, Net
Intangible assets, net consisted of the following:
December 31, 2024
Weighted Average Remaining Useful Life
(Years)
Gross Carrying Amount
Accumulated Amortization
Net Carrying Amount
(in thousands, except years)
Customer relationships0.0$14,900 $(14,900)$— 
Partnerships6.89,000 (2,850)6,150 
Trademark1.811,000 (6,967)4,033 
Developed technology3.824,100 (10,902)13,198 
Non-compete agreements1.82,800 (1,773)1,027 
Patents3.85,500 (2,593)2,907 
Total intangible assets$67,300 $(39,985)$27,315 


 March 31, 2024
Weighted Average Remaining Useful Life
(Years)
Gross Carrying Amount
Accumulated Amortization
Net Carrying Amount
(in thousands, except years)
Customer relationships0.0$14,900 $(14,900)$— 
Partnerships7.69,000 (2,175)6,825 
Trademark2.611,000 (5,317)5,683 
Developed technology4.624,100 (8,320)15,780 
Non-compete agreements2.62,800 (1,353)1,447 
Patents4.55,500 (1,980)3,520 
Total intangible assets$67,300 $(34,045)$33,255 
Amortization expense for intangible assets was $2.0 million and $2.6 million for the three months ended December 31, 2024 and 2023, respectively, and $5.9 million and $10.3 million for nine months ended December 31, 2024 and 2023, respectively. There was no impairment to intangible assets during the three and nine months ended December 31, 2024 and 2023.
Estimated future amortization expense of the identified intangible assets as of December 31, 2024 was as follows:
 Estimated Amortization
 (in thousands)
Fiscal years ending March 31, 
Remainder of 2025 (Remaining three months)$1,980 
20267,919 
20276,769 
20285,006 
20293,175 
Thereafter2,466 
Total estimated future amortization expense$27,315 
Accrued Expense and Other Current Liabilities
Accrued expense and other current liabilities consisted of the following:
December 31, 2024March 31, 2024
(in thousands)
Accrued payables$9,428 $9,623 
Accrued settlement and legal expenses42,134 3,260 
Accrued compensation and benefits5,541 3,725 
Accrued vacation5,623 6,528 
Accrued bonus3,803 6,588 
Accrued taxes and other397 1,108 
Total accrued expenses and other current liabilities$66,926 $30,832 
9.    Restructuring
In June 2023, the Company approved a reduction in force intended to restructure and align strategically its workforce with the Company’s strategy and to reduce the Company’s operating costs, primarily in the former Consumer


and Research Services segment. Subsequently in August 2023, the Company approved another reduction in force primarily intended to restructure and strategically align the former Therapeutics segment’s workforce. On August 1, 2024, the Board of Directors of the Company determined that it was in the best interests of the Company and its stockholders to cease operations of the Therapeutics Discovery portion of the Company’s former Therapeutics segment, effective August 9, 2024.
In November 2024, the Company’s Board of Directors approved the November 2024 Reduction in Force, which, as previously disclosed, represented a reduction of approximately 40% of the Company’s workforce and also included the closure of substantially all operations in the Company’s Therapeutics operating segment. The November 2024 Reduction Plan is intended to restructure and strategically align the Company’s workforce and organization with the Company’s current strategy and to reduce the Company’s operating costs. The Company completed the November 2024 Reduction Plan substantially during the three months ended December 31, 2024, with certain affected employees retained through a transition period expected to end no later than the end of fiscal 2025.
During the three and nine months ended December 31, 2024, the Company recorded restructuring charges of $10.6 million and $10.9 million, respectively, related to continuing operations within restructuring and other charges in the condensed consolidated statements of operations, of which $8.5 million and $8.8 million, respectively, were related to cash severance payments and benefits continuation, and $2.1 million and $2.1 million, respectively, to stock-based compensation related to equity modifications in connection with the reductions in force. During the three and nine months ended December 31, 2023, the Company recorded restructuring charges of $0.2 million and $4.6 million, respectively, related to continuing operations within restructuring and other charges in the condensed consolidated statements of operations, of which $0.2 million and $4.0 million, respectively, were related to cash severance payments and benefits continuation, and nil and $0.6 million, respectively, to stock-based compensation related to equity modifications in connection with the reductions in force.
The following table shows the total amount incurred and accrued related to one-time employee termination benefits from continuing operations:
One-Time Employee Termination Benefits
(in thousands)
Accrued restructuring costs included in accrued expenses and other current liabilities as of March 31, 2024
$— 
Restructuring charges incurred during the period10,866 
Amounts paid during the period(8,501)
Accrued restructuring costs included in accrued expenses and other current liabilities as of December 31, 2024
$2,365 
The Company does not expect to incur any further material expenses in connection with these reductions in force.
10.    Leases
The Company has entered into operating leases for its corporate offices and storage spaces, with remaining contractual periods ranging from 1.0 year to 6.6 years. For the Company’s facility in Sunnyvale, California (the “Sunnyvale facility”), there is an option to extend the lease for a period of seven years. The Company is not reasonably certain that it will exercise this option and therefore it is not included in its ROU assets and lease liabilities as of December 31, 2024. The Company did not have any finance leases for the periods presented.
In connection with the November 2024 Reduction Plan, the Company abandoned the South San Francisco Facility in December 2024. See Note 3, “Discontinued Operations,” for details.
On September 16, 2024, the Company entered into an agreement with a third party to sublease 17,312 square feet of the Sunnyvale facility. The total rental commitment over the four-year term of the sublease is $3.2 million. The Company’s sublease agreement: (i) includes renewal and termination options; (ii) provides for customary escalations of lease payments in the normal course of business; (iii) grants the subtenant free rent for specific months during term; (iv) requires variable payments that are dependent on usage, output, or may vary for other reasons, such as insurance and tax payments; and (v) grants the subtenant title of furniture if it extends the lease. The sublease is classified as operating leases


whereby sublease income is recognized on a straight-line basis over the sublease term that expires in 2028. Sublease income was $0.3 million for both the three and nine months ended December 31, 2024. There was no sublease income recognized during the three and nine months ended December 31, 2023.
For continuing operations for the three months ended December 31, 2024 and 2023, the Company recorded operating lease costs of $2.2 million and $2.3 million, respectively, and variable operating lease costs of $0.7 million and $1.3 million, respectively. For continuing operations for the nine months ended December 31, 2024 and 2023, the Company recorded operating lease costs of $6.8 million and $7.0 million, respectively, and variable operating lease costs of $3.1 million and $3.4 million, respectively.
As of December 31, 2024, the future minimum lease payments included in the measurement of the Company’s operating lease liabilities from continuing operations were as follows:
December 31,
2024
(in thousands)
Fiscal years ending March 31,
Remainder of 2025 (Remaining three months)$1,878 
202611,355 
202711,536 
202811,666 
202912,016 
Thereafter29,413 
Total future operating lease payments77,864 
Less: imputed interest(17,320)
Total operating lease liabilities$60,544 
11.    Commitments and Contingencies
Non-cancelable Purchase Obligations
In the normal course of business, the Company enters into agreements containing non-cancelable purchase commitments for goods or services with various parties, which include agreements to purchase goods or services that are enforceable and legally binding to the Company. Recognition of purchase obligations occurs when products or services are delivered to the Company, generally within accounts payable, or accrued and other current liabilities. As of December 31, 2024, the Company had a total of $52.2 million in outstanding non-cancelable purchase obligations with a term of 12 months or longer that have not been recognized on its balance sheet.
Legal Matters
Cyber Incident
On October 10, 2023, the Company reported that certain information was accessed from individual 23andMe.com accounts without the account users’ authorization (the “Cyber Incident”).
As a result of the Cyber Incident, multiple class action claims have been filed against the Company in federal and state courts in California, as well as in other U.S. and international jurisdictions, and the Company has received demand letters from attorneys purporting to represent customers seeking arbitration claims. The Company is also responding to inquiries from various governmental officials and agencies. The federal class action claims were coordinated for pretrial proceedings by the Multidistrict Litigation Panel, and on June 5, 2024, co-lead plaintiffs’ counsel were appointed. On July 15, 2024, the Company reached an agreement in principle to settle the putative class action lawsuits currently pending in the U.S. District Court for the Northern District of California (the “Court”).
The parties executed a confidential settlement term sheet on July 29, 2024, which contemplated an aggregate cash payment by the Company of $30.0 million to settle all claims brought on behalf of all persons in the United States whose personal information was impacted by the Cyber Incident. In addition, the Company agreed to document various business practice initiatives relating to cybersecurity and provide customers with the option to enroll in a privacy and monitoring


service for three years. The Company subsequently reached an agreement with the plaintiffs on all material terms, including payment of $30.0 million (the “Settlement Agreement”). On September 12, 2024, plaintiffs filed a motion asking the Court for preliminary approval of the Settlement Agreement.
On December 4, 2024, the Court granted preliminary conditional approval of the Settlement Agreement under which the Company would agree to pay $30.0 million and implement certain remedial measures to resolve all claims by U.S. customers (who do not opt out) arising out of the Cyber Incident disclosed in October 2023. The Court’s order granting preliminary approval of the settlement was conditioned on the parties’ acceptance of certain modifications to the Settlement Agreement, including the exclusion from the settlement class of customers who have chosen to exercise their right to arbitrate, whether by making a demand for arbitration or by filing a formal complaint with the arbitral forum. Following the December 4, 2024 order, the parties have engaged in discussions regarding a potential settlement that would resolve all claims by U.S. customers, including those who choose to exercise arbitration rights. As of the filing date of this report, such discussions have not resulted in a revised settlement.
During the three months ended December 31, 2024, the Company incurred an additional $8.9 million in expenses related to the Cyber Incident, which is inclusive of an additional loss contingency that the Company believes is reasonably possible. The Company will continue to evaluate information as it becomes known, and it is possible that future results of operations or cash flows for any particular interim or annual period could be materially affected by unfavorable resolutions of this matter.
During the nine months ended December 31, 2024, the Company recognized $19.8 million in net expenses related to the Cyber Incident primarily consisting of $42.0 million in legal fees incurred and estimated loss contingencies, partially offset by probable insurance recoveries of $22.2 million, within general and administrative expense in the condensed consolidated statements of operations and comprehensive loss. As of December 31, 2024, the Company had $41.3 million of accrued expenses related to estimated loss contingencies and legal fees included in current liabilities, offset by $21.3 million of insurance recoveries included in prepaid and other current assets, in the condensed consolidated balance sheets.
Indemnification
The Company enters into indemnification provisions under agreements with other companies in the ordinary course of business, including, but not limited to, collaborators, landlords, vendors, and contractors. Pursuant to these arrangements, the Company agrees to indemnify, defend, and hold harmless the indemnified party for certain losses suffered or incurred by the indemnified party as a result of the Company’s activities. The maximum potential amount of future payments the Company could be required to make under these agreements is not determinable. As of the date of this filing, the Company has never incurred costs to defend lawsuits or settle claims related to these indemnification provisions. As a result, the Company believes that the fair value of these provisions is not material. The Company maintains insurance, including commercial general liability insurance and product liability insurance, to offset certain potential liabilities under these indemnification provisions. In addition, the Company indemnifies its officers, directors, and certain key employees against claims made with respect to matters that arise while they are serving in their respective capacities as such, subject to certain limitations set forth under applicable law, the Company’s Bylaws, and applicable indemnification agreements. As of December 31, 2024, the Company was not aware of any known events or circumstances that have resulted in a material claim related to these indemnification obligations.
12.    Stockholders’ Equity
Common Stock
The Company has authorized Class A common stock and Class B common stock. The rights of the holders of Class A common stock and Class B common stock are identical, except with respect to voting and conversion rights. Holders of Class A common stock are entitled to one vote per share and holders of Class B common stock are entitled to ten votes per share. Each share of Class B common stock is convertible into one share of Class A common stock any time at the option of the holder and is automatically converted into one share of Class A common stock upon transfer (except for certain permitted transfers). Once converted into Class A common stock, the Class B common stock will not be reissued.
On October 7, 2024, the Board approved the Reverse Stock Split at a ratio of one-for-twenty, to be effective at 12:01 a.m. Eastern Time on October 16, 2024. On October 11, 2024, the Company filed the Certificate of Amendment to its Certificate of Incorporation with the Secretary of State of the State of Delaware to effect the Reverse Stock Split, which became effective as of 12:01 a.m., Eastern Time on October 16, 2024. As a result of the Reverse Stock Split, every twenty shares of the Company’s Class A common stock and Class B common stock were automatically combined into one issued and outstanding share of the Company’s respective Class A common stock and Class B common stock, without any change


in their respective par values per share. The Company did not issue fractional shares in connection with the Reverse Stock Split. Instead, stockholders who otherwise would have been entitled to receive fractional shares because they held a number of shares not evenly divisible by the Reverse Stock Split ratio were automatically entitled to receive an additional fraction of a share of Class A common stock or Class B common stock, as applicable, to round up to the next whole share. The impact of the Reverse Stock Split was applied retroactively for all periods presented in accordance with applicable guidance. There was no change to the total number of authorized shares of Class A common stock of 1,140,000,000 and the total number of authorized shares of Class B common stock of 350,000,000.
Earn-Out Shares
On June 16, 2021, VG Acquisition Corp. (“VGAC”) and Chrome Merger Sub, Inc., a Delaware corporation and wholly owned direct subsidiary of VGAC (“Merger Sub”), consummated a merger with 23andMe, Inc. (the “Merger”), whereby Merger Sub merged with and into 23andMe, Inc., with 23andMe, Inc. being the surviving corporation and a wholly owned subsidiary of the Company. As of December 31, 2024 and March 31, 2024, the Class A common stock included 190,707 shares held by VGAC founders (“Earn-Out Shares”) that are subject to a lock-up of seven years from June 16, 2021, the closing date of the Merger. The lock-up has an early release effective (i) with respect to 50% of the Earn-Out Shares, upon the closing price of the Company’s Class A common stock equaling or exceeding $250.00 per share for any 20 trading days within any 30-trading-day period, and (ii) with respect to the other 50% of the Earn-Out Shares, upon the closing price of the Company’s Class A common stock equaling or exceeding $300.00 per share for any 20 trading days within any 30-trading-day period; provided that the transfer restrictions applicable to the Earn-Out Shares will terminate on the date following the closing date on which the Company completes a liquidation, merger, amalgamation, capital stock exchange, reorganization, or other similar transaction that results in all of the Company’s public stockholders having the right to exchange their shares of Class A common stock for cash, securities, or other property (a “Liquidation Event”), if such Liquidation Event occurs prior to the date that the stock price thresholds referenced in (i) and (ii) are met. As of December 31, 2024, the Company did not meet any earn-out thresholds. The Earn-Out Shares are issued and outstanding Class A common shares that cannot be forfeited, and as such, meet the criteria for equity classification in accordance with ASC 505, Equity.
Reserve for Issuance
The Company has the following shares of Class A common stock reserved for future issuance, on an as-if-converted basis:
 December 31,
2024		March 31,
2024
Outstanding stock options3,030,5953,536,989
Outstanding restricted stock units2,975,4912,202,834
Remaining shares available for future issuance under Amended and Restated 2021 Incentive Equity Plan3,400,8405,563,844
Remaining shares available for future issuance under Employee Stock Purchase Plan580,436642,263
Total shares of common stock reserved9,987,36211,945,930
At-the-Market (“ATM”) Offering
On February 6, 2023, the Company entered into a sales agreement with Cowen and Company, LLC (“Cowen”), as sales agent, pursuant to which the Company may sell shares of its Class A common stock for an aggregate up to $150.0 million under at-the-market offering program (the “ATM program”). The Company will pay Cowen a commission of 3.0% of the gross proceeds for the Class A common stock sold through the ATM program. As of December 31, 2024, the Company had not made any sales under the ATM program. The sales agreement will terminate upon the earliest of (a) the sale of the maximum number or amount of the shares permitted to be sold under the sales agreement and (b) the termination of the sales agreement by the parties thereto.


13.    Equity Incentive Plans and Stock-Based Compensation
Incentive Equity Plans
On September 6, 2023 (the “Effective Date”), the Company’s stockholders approved an amendment and restatement of the 23andMe Holding Co. 2021 Incentive Equity Plan (the “2021 Plan” and, as amended and restated, the “A&R Plan”). The terms of the A&R Plan replaced the existing terms of the 2021 Plan.
As a result of the Reverse Stock Split, on October 16, 2024, the Company amended and restated the A&R Plan, to reflect, pursuant to the provisions of Sections 4(e) and 17(a) thereof, the proportionate adjustment of the number of shares of Company’s Class A common stock authorized and available for issuance under the A&R Plan to 10,034,656 shares using the same one-for-twenty ratio used to consummate the Reverse Stock Split (the “Second A&R Plan”). Additionally, the maximum number of shares of Class A common stock that remained available for issuance pursuant to Incentive Stock Options (“ISO”) under the A&R Plan as of the effective time of the Reverse Stock Split was proportionally adjusted.
In connection with such amendment, pursuant to Section 4(e) of the A&R Plan, the Company’s Board of Directors proportionally adjusted the number of shares of Class A common stock subject to outstanding awards granted pursuant to the A&R Plan and the exercise price per share of Class A common stock of each such award to reflect the impact of the Reverse Stock Split. The impact of the Reverse Stock Split has been applied retroactively to all disclosures.
Pursuant to the Second A&R Plan, the aggregate number of shares of Class A common stock that may be issued or transferred under the Second A&R Plan shall be increased on an annual basis by a number equal to (x) 5.0% of the aggregate number of shares of Class A common stock and Class B common stock, taken together, outstanding as of the last day of the immediately preceding calendar year or (y) such lesser number of shares of Class A common stock as may be determined by the Compensation Committee of the Company’s Board of Directors. Under the Second A&R Plan, options (including non-statutory options and ISO), stock appreciation rights, restricted stock, RSUs, and other stock-based awards may be granted to employees, non-employee directors and certain consultants and advisors of the Company and its subsidiaries. Options have a contractual life of up to ten years. The exercise price of a stock option shall not be less than 100% of the estimated fair value of the shares on the date of grant, as determined by the Board of Directors. For ISO as defined in the Internal Revenue Code of 1986, as amended (the “Code”), the exercise price of an ISO granted to a 10% stockholder shall not be less than 110% of the estimated fair value of the underlying stock on the date of grant as determined by the Board of Directors. The Company’s options generally vest over three to four years. Under the Second A&R Plan, stock option awards entitle the holder to receive one share of Class A common stock for every option exercised.
Time-based RSUs granted pursuant to the Second A&R Plan generally vest ratably over a period ranging from one to four years and are subject to the participant’s continuing service to the Company over that period. RSUs issued pursuant to the 23andMe Second Amended and Restated Annual Incentive Plan (the “AIP”) upon the achievement of certain pre-determined annual performance metrics, as discussed below, vest immediately upon issuance. Until vested, RSUs do not have the voting and dividend participation rights of Class A common stock and the shares of Class A common stock underlying the awards are not considered issued and outstanding.
The Company issues new shares of Class A common stock upon the exercise of stock options, the vesting and settlement of RSUs, and the issuance of shares purchased under the ESPP (as defined below).
In February 2022, the Compensation Committee of the Company’s Board of Directors adopted a RSU conversion and deferral program for non-employee directors. The purpose of the program is to provide non-employee directors with the option to convert all or a portion of their cash compensation into a RSU award under the Second A&R Plan and the opportunity to defer settlement of all or a portion of their RSU awards. In connection with the Resignations, the Company released all prior deferred RSU awards for the two non-employee directors who elected to defer settlement of their RSU awards. As of December 31, 2024, no non-employee directors were participating in the program.
On June 9, 2022, the Compensation Committee of the Company’s Board of Directors adopted the AIP, pursuant to which, beginning in fiscal 2023, employees and certain service providers of 23andMe, Inc. and its affiliates were eligible to receive annual incentive bonuses in the form of cash or RSUs issued by the Company under the Second A&R Plan, based upon the Company’s achievement of certain pre-established financial, operational, and/or strategic performance metrics. On June 3, 2024, the Company paid annual incentive bonuses in the form of RSUs based upon the Company’s achievement of certain pre-established performance metrics during the one-year performance period ended March 31, 2024 and as determined by the Compensation Committee of the Company’s Board of Directors. The number of RSUs granted was determined by dividing the dollar amount of the AIP annual incentive bonuses by the trailing average closing price of the


Company’s Class A common stock for the 20 trading days preceding the date of payment resulting in the grant of 607,222 shares underlying fully-vested RSUs on June 5, 2024.
The Company accounts for the RSUs issued under the AIP (the “AIP RSUs”) as liability awards, and adjusts the liability and corresponding expenses at the end of each quarter until the date of settlement, considering the probability that the performance conditions will be satisfied. The Company recorded stock-based compensation expense from continuing operations of $(3.4) million and $(2.0) million related to the AIP RSUs for the three months ended December 31, 2024 and 2023, respectively, and $3.1 million and $3.8 million for the nine months ended December 31, 2024 and 2023, respectively. The Company recorded stock-based compensation expense from discontinued operations of $(0.4) million and $(0.5) million related to the AIP RSUs for the three months ended December 31, 2024 and 2023, respectively, and $0.1 million and $0.5 million for the nine months ended December 31, 2024 and 2023, respectively. As of December 31, 2024 and March 31, 2024, the liability of the AIP RSUs from continuing operations was $3.2 million and $5.8 million, respectively, which was included in other current liabilities on the condensed consolidated balance sheet, and from discontinued operations was nil and $0.7 million, respectively, which was included in current liabilities from discontinued operations on the condensed consolidated balance sheets.
Stock Option Activity
Stock option activity and activity regarding shares available for grant under the Second A&R Plan are as follows:
Options Outstanding
Outstanding
Stock
Options 		Weighted-Average
Exercise Price		Weighted-Average
Remaining
Contractual
Life (Years)		Aggregate
Intrinsic
Value
(in thousands, except share, years, and per share data)
Balance as of March 31, 20243,537,668$73.62 5.1$306 
Granted200,990$6.03 
Exercised(6,889)$8.46 
Canceled/forfeited/expired(701,174)$82.04 
Balance as of December 31, 20243,030,595$67.34 4.6$— 
Vested and exercisable as of December 31, 20242,322,401$77.93 3.5$— 
The weighted average grant date fair value per share of options granted was $4.09 and $17.40 for the nine months ended December 31, 2024 and 2023, respectively. The total intrinsic value of vested options exercised for the nine months ended December 31, 2024 and 2023 was immaterial and $1.2 million, respectively. As of December 31, 2024, unrecognized stock-based compensation expense from continuing operations related to unvested stock options was $14.4 million, which is expected to be recognized over a weighted-average period of 2.2 years. Due to a valuation allowance on deferred tax assets, the Company did not recognize any tax expense or benefit from stock option exercises for the three and nine months ended December 31, 2024 and 2023.
The Company estimated the fair value of options granted using the Black-Scholes option-pricing model. The fair value of stock options is being amortized on a straight-line basis over the requisite service period of the awards.
The weighted average Black-Scholes assumptions used to value stock options at the grant dates are as follows:
Three Months Ended December 31,Nine Months Ended December 31,
2024202320242023
Min
Max
Min
Max
Min
Max
Min
Max
Expected term (years)6.06.0006.06.05.86.0
Expected volatility range75 %75 %— — 75 %75 %78 %79 %
Expected weighted-average volatility75%—75%79%
Risk-free interest rate3.9 %3.9 %— — 3.5 %3.9 %3.6 %4.4 %
Expected dividend yield— — — — — — — — 


There were no stock options granted during the three months ended December 31, 2023.
Restricted Stock Units
The following table summarizes the RSU activity under the equity incentive plans and related information:
 Unvested RSUs Weighted-Average
Grant Date Fair
Value Per Share
Balance as of March 31, 20242,203,078$45.86 
Granted3,738,075$8.45 
Vested(1,909,306)$29.07 
Canceled/forfeited(1,056,356)$19.64 
Balance as of December 31, 20242,975,491$18.95 
As of December 31, 2024, unrecognized stock-based compensation expense from continuing operations related to outstanding unvested RSUs was $44.2 million, which is expected to be recognized over a weighted-average period of 2.4 years.
Stock Subject to Vesting
In November 2021, in connection with the acquisition of Lemonaid Health (the “Lemonaid Acquisition”), the Company granted 187,352 shares of Class A common stock with an aggregate grant date fair value of $43.9 million to two recipients, each of whom was a former stockholder and officer of Lemonaid Health (each, a “Former Lemonaid Officer”) and each of whom, following the closing of the Lemonaid Acquisition, joined the Company’s management team. The shares were scheduled to vest over a four-year period in quarterly installments beginning on February 1, 2022, subject to the respective recipient’s continued employment with the Company. In connection with the Lemonaid Acquisition, each of these recipients entered into a relinquishment agreement that provides that during the four-year period that commenced on November 1, 2021 (the “Protection Period”), the Company will not (i) terminate the recipient’s employment without cause, (ii) materially reduce the recipient’s base salary or the benefits to which similarly-situated executive employees of the Company or the Company’s subsidiaries are entitled, other than a broad-based reduction to the same extent that applies to such similarly-situated executive employees, or (iii) relocate the recipient’s principal place of employment to a location outside of a 50-mile radius of their current principal place of employment. If any such event occurs during the Protection Period or in the event of the recipient’s death or disability, then the unvested portion(s) of these awards will immediately vest.
On June 30, 2023, the employment of one of the Former Lemonaid Officers terminated, which resulted in $22.0 million of stock-based compensation expense related to these awards recognized within general and administrative expenses within the condensed consolidated statement of operations in the first quarter of fiscal 2024. On November 1, 2023, the employment of the other Former Lemonaid Officer terminated, which resulted in $3.1 million of stock-based compensation expense related to these awards recognized within general and administrative expenses in the third quarter of fiscal 2024.
The Company recognized total stock-based compensation expense related to these awards of $3.3 million and $28.4 million for the three and nine months ended December 31, 2023, respectively, within general and administrative expenses. There was no stock-based compensation expense related to these awards recognized during the three and nine months ended December 31, 2024. As of December 31, 2024, there was no remaining unamortized stock-based compensation expense associated with these awards.
Employee Stock Purchase Plan
On June 10, 2021, the shareholders of VGAC approved the 23andMe Holding Co. Employee Stock Purchase Plan (“ESPP”). As a result of the Reverse Stock Split, on October 16, 2024, the Company amended and restated the ESPP, to reflect, pursuant to the provisions of Sections III.C and X thereof, the proportionate adjustment of the number of shares of Company’s Class A common stock authorized and available for issuance under the ESPP to 580,456 shares using the same one-for-twenty ratio used to consummate the Reverse Stock Split (the “A&R ESPP”). Additionally, Section III.B of the ESPP, which provides for the automatic annual increase in the number of shares available for issuance under the ESPP, was revised to make proportionate adjustments to reflect the Reverse Stock Split. Accordingly, the number of shares of the Company’s Class A common stock reserved for issuance will automatically increase on January 1 of each calendar year,


beginning on January 1, 2025, by the lesser of (i) an amount equal to one percent (1.0%) of the total number of shares of Class A and Class B common stock outstanding as of the last day of the immediately preceding December 31st, (ii) 250,000 shares, or (iii) a lesser number of shares as determined by the Board of Directors in its discretion. No other material modifications or amendments were made to the ESPP.
In connection with such amendment, pursuant to Section III.C of the ESPP, the Company’s Board of Directors also proportionally adjusted the maximum number of shares of Class A common stock purchasable per ESPP participant during any offering period and on any one purchase date during that offering period, the number of shares in effect under each outstanding purchase right, the number of shares issued and to be issued under the ESPP, and the price per share in effect under each outstanding purchase right to reflect the impact of the Reverse Stock Split.
The A&R ESPP provides for concurrent 12-month offerings with successive six-month purchase intervals commencing on March 1 and September 1 of each year and purchase dates occurring on the last day of each such purchase interval (i.e., August 31 and February 28). The A&R ESPP contains a rollover provision whereby if the price of the Company’s Class A common stock on the first day of a new offering period is less than the price on the first day of any preceding offering period, all participants in a preceding offering period with a higher first day price will be automatically withdrawn from such preceding offering period and re-enrolled in the new offering period. The rollover feature, when triggered, will be accounted for as a modification to the preceding offering period, resulting in incremental expense to be recognized over the new offering period.
The Company estimated the fair value of the shares issued pursuant to the A&R ESPP using the Black-Scholes option-pricing model. The fair value is amortized on a straight-line basis over the requisite service period, which is the withholding period. During the three months ended December 31, 2024 and 2023, no shares were issued under the A&R ESPP. During the nine months ended December 31, 2024 and 2023, 61,807 and 75,472 shares of the Company’s Class A common stock, respectively, were purchased under the A&R ESPP, at an average exercise price of $5.35 and $18.70, respectively.
The per share weighted average grant date fair value of shares issued pursuant to the A&R ESPP for the nine months ended December 31, 2024 and 2023 was $2.52 and $8.78, respectively, using the following assumptions:
Nine Months Ended December 31,
20242023
Min
Max
Min
Max
Expected term (years)0.51.00.51.0
Expected volatility76 %77 %67 %73 %
Expected weighted-average volatility76%70%
Risk-free interest rate4.4 %4.8 %5.4 %5.5 %
Expected dividend yield— — — — 


Stock-Based Compensation
Total stock-based compensation expense from continuing operations, including stock-based compensation expense related to awards classified as liabilities, was included in costs and expenses as follows:
 Three Months Ended December 31,Nine Months Ended December 31,
 2024202320242023
 (in thousands)
Cost of service revenue$365 $788 $2,242 $4,066 
Cost of product revenue216 287 1,074 1,228 
Research and development2,362 4,805 19,490 19,172 
Sales and marketing561 1,145 5,240 5,048 
General and administrative (1)
3,663 17,075 17,566 61,191 
Restructuring and other charges(2)
2,077 — 2,113 630 
Total stock-based compensation expense$9,244 $24,100 $47,725 $91,335 
(1)Includes $10.8 million and $32.8 million of stock-based compensation charges related to the termination of two Former Lemonaid Officers during the three and nine months ended December 31, 2023, respectively.
(2)In connection with the November 2024 Reduction in Force, the Company approved the modification of equity awards as part of the termination of employment for effected employees. The award modifications included the acceleration of certain non-vested awards. The Company accounted for the award modifications under ASC 718, Compensation – Stock Compensation, and recorded $2.1 million of stock-based compensation modification expense from continuing operations related to the November 2024 Reduction in Force during the three and nine months ended December 31, 2024.
Total stock-based compensation expense from discontinued operations was $0.2 million and $2.3 million for the three months ended December 31, 2024 and 2023, respectively, and $2.7 million and $9.9 million for the nine months ended December 31, 2024 and 2023, respectively.
14.    Net Loss Per Share Attributable to Common Stockholders
The net loss attributable to common stockholders is allocated on a proportionate basis, and the resulting net loss per share is identical for Class A common stock and Class B common stock under the two-class method.
The Company’s stock options, RSUs, restricted stock awards subject to vesting, estimated RSUs to be issued under the AIP, and estimated shares to be issued under the ESPP are considered to be potential common stock equivalents but have been excluded from the calculation of diluted net loss per share attributable to common stockholders as their effect is anti-dilutive.
Net loss attributable to common stockholders was equivalent to net loss for all periods presented.


The following table sets forth the computation of basic and diluted net loss per share attributable to common stockholders for the periods presented:
 Three Months Ended December 31,Nine Months Ended December 31,
 2024202320242023
 
Class A
Class B
Class A
Class B
Class A
 
Class B
Class A
Class B
 
(in thousands, except share and per share data)
Numerator:
Net loss from continuing operations$(24,671)$(9,604)$(169,234)$(90,466)$(94,220)$(41,629)$(242,789)$(133,576)
Net loss from discontinued operations$(13,503)$(5,257)$(11,910)$(6,366)$(31,688)$(14,001)$(52,578)$(28,927)
Net loss attributable to common stockholders$(38,174)$(14,861)$(181,144)$(96,832)$(125,908)$(55,630)$(295,367)$(162,503)
Denominator:
Weighted-average shares used in computing net loss per share, basic and diluted18,966,0937,383,13315,666,0148,374,46417,732,3777,834,63115,246,1208,388,041
Net loss per share attributable to common stockholders:
Net loss per share from continuing operations, basic and diluted$(1.30)$(1.30)$(10.80)$(10.80)$(5.31)$(5.31)$(15.92)$(15.92)
Net loss per share from discontinued operations, basic and diluted$(0.71)$(0.71)$(0.76)$(0.76)$(1.79)$(1.79)$(3.45)$(3.45)
Net loss per share attributable to common stockholders, basic and diluted$(2.01)$(2.01)$(11.56)$(11.56)$(7.10)$(7.10)$(19.37)$(19.37)
The potential shares of Class A common stock outstanding that were excluded from the computation of diluted net loss per share attributable to common stockholders for the periods presented because including them would have been anti-dilutive were as follows:
 
Three and Nine Months Ended December 31,
 20242023
Outstanding stock options3,030,5953,682,344
Unvested restricted stock units2,975,4912,067,637
ESPP437,052283,540
Total6,443,1386,033,521
There were no potential shares of Class B common stock that were excluded from the computation of diluted net loss per share attributable to common stockholders for the periods presented.
15.    Retirement Benefit Plans
The Company has established a 401(k) retirement plan that allows participating employees in the U.S. to contribute as defined by the terms of the plan and subject to the limitations under Section 401(k) of the Code. The Company matches the greater of 100% of the first 2% or 100% of the first $2,300 (subject to annual compensation and contribution limits) of employee contributions. The Company recognized matching contributions cost of $0.8 million and $0.7 million for the three months ended December 31, 2024 and 2023, respectively, and $1.9 million and $2.1 million for the nine months ended December 31, 2024 and 2023, respectively.
16.    Income Taxes
The Company computes the provision for income taxes by applying the estimated annual effective tax rate to year-to-date income from recurring operations and adjusts the provision for discrete tax items recorded in the period. The Company’s annual estimated effective tax rate differs from the U.S. federal statutory rate primarily as a result of a valuation allowance against its deferred tax assets.


There was no tax provision recognized and an immaterial tax benefit was recognized for the three and nine months ended December 31, 2024, respectively, and an immaterial tax provision was recognized for the three and nine months ended December 31, 2023. The provision tax expense or benefit from income taxes is reflected on the condensed consolidated statements of operations and comprehensive loss for the periods. The Company continues to maintain a full valuation allowance on the remaining net deferred tax assets of the U.S. entities as it is more likely than not that the Company will not realize the deferred tax assets. Utilization of net operating loss carryforwards may be subject to future annual limitations provided by Section 382 of the Code and similar state provisions.
The Company files income tax returns in the U.S. federal jurisdiction and various states. As of the date of this filing, the Company is not currently under examination by income tax authorities in federal, state, or other jurisdictions. All tax returns will remain open for examination by the federal and state authorities for three and four years, respectively, from the date of utilization of any net operating loss or credits.
17.    Disposition of Subsidiary
On August 1, 2023, the Company completed the sale of Lemonaid Health Limited, its wholly-owned, indirect U.K. subsidiary. Lemonaid Health Limited was not a significant subsidiary, and the disposition of Lemonaid Health Limited did not constitute a strategic shift that would have a major effect on the Company’s operations or financial results. As a result, the results of operations for Lemonaid Health Limited were not reported as discontinued operations under the guidance of ASC 205. During the nine months ended December 31, 2023, the Company recorded $2.4 million of loss on the disposition of Lemonaid Health Limited and transaction-related costs within general and administrative expenses. There were no charges incurred during the three and nine months ended December 31, 2024.
18.    Related Party Transactions
As described in Note 5, “Collaborations,” in July 2018, the Company and GSK entered into the original GSK Agreement, and there were transactions with GSK during the three and nine months ended December 31, 2024 and 2023. At the time the original GSK Agreement was entered into, GSK also purchased shares of Series F-1 redeemable convertible preferred stock of 23andMe, Inc. These shares were converted into a like number of shares of 23andMe, Inc. Class B common stock immediately prior to the Merger and were exchanged pursuant to the share conversion ratio provided for in the Merger Agreement into shares of the Company’s Class B common stock. GSK had a 21.9% and 19.9% voting interest in the Company as of December 31, 2024 and March 31, 2024, respectively.
The Anne Wojcicki Foundation, which subscribed for 125,000 shares of the Company’s Class A common stock in the PIPE investment in connection with the Merger, is affiliated with the Company’s CEO and therefore a related party.
In January 2024, the Company entered into a research services agreement (the “TWF Agreement”) and related statement of work (the “initial SOW”) with the Troper Wojcicki Foundation (“TWF”) with the goal of expanding scientific knowledge in the field of lung cancer using the Company’s phenotype and genotype data to build large scale research cohorts. At the time, Susan Wojcicki was a director and officer of TWF, and a sibling of the Company’s CEO, Anne Wojcicki, and therefore the Company determined that TWF is a related party. The TWF Agreement has a term of five years through December 21, 2028. The fees under the initial SOW are $5.4 million, payable in installments over the term of the TWF Agreement, with certain payments being subject to the achievement of specified milestones. The Company recognized revenue from the TWF Agreement of $0.1 million and nil during the three months ended December 31, 2024 and 2023, respectively, and $0.6 million and nil during the nine months ended December 31, 2024 and 2023, respectively. As of December 31, 2024 and March 31, 2024, the Company had deferred revenue of $1.6 million and $1.0 million, respectively, associated with the TWF Agreement.


Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis provide information that management believes is relevant to an assessment and understanding of our consolidated results of operations and financial condition. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the Annual Report on Form 10-K for the fiscal year ended March 31, 2024 (“Fiscal 2024 Form 10-K”), including the audited consolidated financial statements of 23andMe Holding Co. as of March 31, 2024 and 2023 and Management’s Discussion and Analysis of Financial Condition and Results of Operations included therein, as well as the accompanying unaudited condensed consolidated financial statements and notes thereto included in this Form 10-Q.
In addition to historical information, this discussion and analysis contains forward-looking statements. These forward-looking statements are subject to risks and uncertainties, including, without limitation, those discussed in the Fiscal 2024 Form 10-K and our subsequent reports filed with the SEC, that could cause actual results to differ materially from historical results or anticipated results. Unless the context otherwise requires, references in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” to the “Company,” “23andMe,” “we,” “us,” and “our” refer to 23andMe Holding Co., a Delaware corporation formerly known as VG Acquisition Corp. and its consolidated subsidiaries.
Overview
Our mission is to help people access, understand, and benefit from the human genome. To achieve this, we pioneered direct-to-consumer genetic testing and built the world’s largest crowdsourced platform for genetic research. Our data engine powers our leading direct-to-consumer precision health platform and our genetics driven Research business.
We are dedicated to empowering customers to optimize their health by providing direct access to their genetic information, personalized reports, actionable insights and digital access to affordable healthcare professionals through our telehealth platform, Lemonaid Health, Inc. (“Lemonaid Health”).
Through direct-to-consumer genetic testing, we give consumers unique, personalized information about their genetic health risks, ancestry, and traits. We were the first company to obtain Food and Drug Administration (“FDA”) authorization for a direct-to-consumer genetic test, and we are the only company to have FDA authorization, clearance, or an exemption from premarket notification for all of the carrier status, genetic health risk, cancer predisposition, and pharmacogenetics reports that we offer to customers. As of December 31, 2024, we had over 65 health and carrier status reports that were available to customers in the U.S.
Through our Lemonaid Health telehealth platform, our ultimate goal is to provide customers access to personalized care based on their unique genetic profile and lifestyle. We currently connect patients to licensed healthcare professionals to provide affordable and direct online access to medical care, from consultation through treatment, for a number of common conditions, using evidence-based guidelines and up-to-date clinical protocols. When medications are prescribed by Lemonaid Health’s affiliated healthcare professionals, patients can use Lemonaid Health’s online pharmacy for fulfillment. Patients also can access telehealth consultations for certain 23andMe genetic reports through Lemonaid Health.
In November 2023, we launched 23andMe+ Total Health (“Total Health”), our most comprehensive membership providing access to third-party independent clinicians practicing genetics informed care with a focus on early risk detection preventative actions. Our Total Health service combines membership and telehealth offerings with the addition of next generation sequencing covering 200x more hereditary disease-causing variants than our personal genome service (“PGS”) reports (50,000+ hereditary disease-causing variants in Total Health exome sequencing compared to 250 health-related variants in our genotyping Carrier Status and Genetic Health Risk reports). Total Health also includes blood testing and access to genetics-based clinical care.
We have built the world’s largest crowdsourced platform for genetic research. The aim of our Research business is to revolutionize research and become the market’s preferred genetic-based research partner by monetizing access to our growing data engine of genetic and phenotypic information provided by our millions of engaged customers. We believe that this platform allows us to accelerate research at an unprecedented scale, enabling us to discover insights into the origins of diseases and to speed the discovery and development of novel therapies.
We previously operated our business through two reporting segments: (1) Consumer and Research Services; and (2) Therapeutics. As previously disclosed, on November 8, 2024, our Board of Directors approved a reduction in force related to both our former Consumer and Research Services and Therapeutics segments (the “November 2024 Reduction in

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Force”), which also included the closure of substantially all operations in our Therapeutics operating segment (together with the November 2024 Reduction in Force, the “November 2024 Reduction Plan”). With the discontinuation of the Therapeutics operating segment, we now operate our business as one segment as of December 31, 2024. Prior comparative periods have been revised to conform with the current period segment presentation. Unless otherwise noted, management’s discussion and analysis of our results of operations relate to our continuing operations. See Note 2, “Summary of Significant Accounting Policies,” and Note 3, “Discontinued Operations,” to our condensed consolidated financial statements included elsewhere in this Form 10-Q for additional details.
Key Factors Affecting Results of Operations
We believe that our performance and future success depend on several factors that present significant opportunities for us but also pose known and unknown risks and challenges, including, without limitation, those set forth in Part I, Item 1A., “Risk Factors,” of the Fiscal 2024 Form 10-K, as amended and supplemented in our subsequent reports and filings with the SEC.
New Customer Acquisition
PGS. Our ability to attract new customers is a key factor for the future growth of our PGS business and our database. Our historical financial performance has largely been driven by the rate of sales of our PGS kits. Revenue from our PGS business, primarily composed of kit sales, represented approximately 55% and 78% of our total revenues for the three months ended December 31, 2024 and 2023, respectively, and approximately 71% and 72% of our total revenues for the nine months ended December 31, 2024 and 2023, respectively. In addition, kit sales are a source of members to our PGS membership service, which represented approximately 16% and 12% of our total revenue during the three months ended December 31, 2024 and 2023, respectively, and approximately 19% and 9% of our total revenue during the nine months ended December 31, 2024 and 2023, respectively. We expect PGS revenues to fluctuate in the near-term and to grow in the long-term, as we continue to evolve our product offerings across kit sales and our membership service, and introduce new products or features that enhance or add value for customers and members. This will be achieved by increasing awareness of our current and new offerings in existing markets and expanding into new markets.
Purchasing patterns of our kits are largely influenced by product innovation, marketing spend, and varying levels of price discounting on our products. Sales and marketing expenses are typically higher during promotional windows that align with gift-giving portions of the year, with an emphasis on the holiday period, as well as other gift-giving and family-oriented holidays such as Mother’s Day and Father’s Day, and major Amazon sales events such as Prime Day, which may change from year to year. We expect the seasonality of our business to continue, with pronounced increases in revenue recognized in the fourth fiscal quarter, relating to our holiday promotions. For the three months ended December 31, 2024, PGS kit sales were lower than the prior year quarter. This decrease could have a negative impact on revenue and financial results in fiscal 2025.
Telehealth. Our ability to attract new patients and members is a key factor for the future growth of our telehealth business. Revenue from our telehealth business represented approximately 11% and 18% of our total revenue during the three months ended December 31, 2024 and 2023, respectively, approximately 14% and 17% of our total revenue during the nine months ended December 31, 2024 and 2023, respectively. As there are many participants in the telehealth market, including new entrants and traditional health care systems offering virtual care, competition with respect to our telehealth business continues to intensify.
Engagement of Research Participants
Our ability to conduct research and grow our database of genotypic and phenotypic information depends on our customers’ willingness to consent to participate in our research. As of December 31, 2024, over 80% of our customers have consented to participate in research. These customers permit us to use their de-identified data in our research and many of them regularly respond to our research surveys, providing us with phenotypic data in addition to the genetic data in their DNA samples. We analyze this genotypic and phenotypic data and conduct genome-wide association studies and phenome-wide association studies, which enable us to determine whether particular genetic variants affect the likelihood of individuals developing certain diseases. Our customers can withdraw their consent to participate in research at any time. If a significant number of our customers were to withdraw their consent, or if the percentage of consenting customers were to decline significantly, our ability to conduct research successfully could be diminished, which could adversely affect our business.

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Collaborations
Substantially all of our research services revenues were generated from the original GSK Agreement.
The exclusive target discovery term under the original GSK Agreement expired in July 2023. In October 2023, we entered into an amendment to the original GSK Agreement (the “2023 GSK Amendment”) to provide GSK with a non-exclusive license to certain new, de-identified, aggregated data included in our database (the “New Data”), as well as access to certain research services with respect to such New Data in return for a $20.0 million data access fee, which we received during fiscal 2024. The license to the New Data will expire one year from the date GSK provides the Company with a notice that GSK was ready to use the New Data (the “Data Use Notice”), which occurred on October 28, 2024. Accordingly, the license to the New Data will expire on October 28, 2025. See Note 5, “Collaborations,” to our condensed consolidated financial statements for more information regarding the 2023 GSK Amendment. Our ability to enter into new collaboration agreements will affect our research services revenues. If we are unable to enter into additional collaboration agreements, our future research services revenue will decline.
Expansion into New Categories and Customer Retention
We launched our 23andMe+ Premium membership service in October 2020, and through our acquisition of Lemonaid Health, we began providing access to telehealth services in November 2021. In November 2023, we launched Total Health, our comprehensive ongoing early detection health membership.
We expect to expand into new categories and innovative healthcare models with the goal of driving future growth. Such opportunities include product enhancements, such as our proprietary polygenic risk scores, new product offerings aimed at extending our personalized and customer-centric philosophy to primary healthcare, and potential additional acquisitions of other consumer-oriented healthcare businesses. Such expansion would allow us to increase the number of engaged customers who purchase additional products and services.
The success of our membership services will depend upon our ability to acquire and retain members over an extended period. Retention of customers will be based on the perceived value of the premium content and features they receive. If we are unable to provide sufficiently compelling new content and features, members may not renew.
Similarly, the success of our telehealth business is dependent on our ability to attract and retain patients and members, as well as continuing to expand our offering in related products and services categories. Category expansion allows us to increase the number of patients to whom we can provide products and services. It also allows us to offer access to treatment of additional conditions that may already affect our current patients. Expanding into new categories will require financial investments in additional headcount, marketing and customer acquisition expenses, additional operational capabilities, and may require the purchase of new inventory. If we are unable to generate sufficient demand in new categories, we may not recover the financial investments we make in new categories and revenue may not increase in the future.
Our Total Health product combines select features and services of our membership and telehealth offerings. As such, the success of the Total Health product will depend on factors similar to those described above.
Investments in Growth and Innovation
Our research platform is based on a continually growing database of genotypic and phenotypic information. Our database allows us to conduct analyses in a broad-based fashion, by searching for genetic signatures of particular diseases or the likelihood of a particular genetic variant causing disease in a particular individual or group of individuals who share the same trait. We believe that our platform enables us to rapidly and serially conduct studies across an almost unlimited number of conditions at unprecedented statistical power, yielding insights into the causes and potential treatments of a wide variety of diseases.
We believe that our research platform enables the rapid identification of genetically validated drug targets with improved odds of clinical success. With our state-of-the-art bioinformatics capabilities, we analyze the trillions of data points in our database, optimizing the use of our resources, to genetically validate drug targets, inform patient selection for clinical trials, and increase the probability of success.
We expect to continue investing in our business to capitalize on market opportunities and long-term growth. We plan to continue to invest in our research and development efforts and in marketing to acquire new customers and drive brand awareness, and also expect to incur software development costs as we work to enhance our existing products, expand

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the depth of our membership services, and design new offerings, including additional primary care offerings. In addition, we expect to continue to incur expenses associated with operating as a public company. The expenses we incur may vary significantly by quarter as we focus on building out different aspects of our business. We regularly evaluate our capital allocation approach to make sure that our capital is being used for the highest value-creating activities and in the most efficient manner. This may require changes to investment levels, how we operate, or are structured to ensure alignment to business priorities.
Recent Developments
Special Committee of the Company’s Board of Directors
As previously disclosed, the Company formed a special committee composed of independent members of the Board of Directors (the “Special Committee”) on March 28, 2024. The role of the Special Committee is to review strategic alternatives that may be available to the Company to maximize stockholder value. See Note 1, “Organization and Description of Business,” to our condensed consolidated financial statements included elsewhere in this Form 10-Q for details.
Nasdaq Minimum Bid Requirement
On November 10, 2023, the Company received a deficiency letter from the Nasdaq Listing Qualifications Department (the “Staff”) of The Nasdaq Stock Market LLC (“Nasdaq”), notifying the Company that it was not in compliance with Nasdaq Listing Rule 5450(a)(1), which requires the Company to maintain a minimum bid price of at least $1.00 per share for continued listing on The Nasdaq Global Select Market (the “Minimum Bid Requirement”). Following the effectiveness of the Reverse Stock Split (as defined below), on October 30, 2024, the Company received written notice from the Staff informing the Company that it has regained compliance with the Minimum Bid Requirement. See Note 2, “Summary of Significant Accounting Policies,” to our condensed consolidated financial statements included elsewhere in this Form 10-Q for additional details.
Nasdaq Listing Rule 5605 Corporate Governance Requirements
On September 18, 2024, the Company received a deficiency letter from the Staff, notifying the Company that the Company was not in compliance with Nasdaq Listing Rule 5605 (the “Corporate Governance Requirements”). On October 29, 2024, the Company announced the appointment of three independent directors to the Company’s Board of Directors, each of whom was appointed to the Audit Committee and Compensation Committee. On October 30, 2024, the Company received written notice from the Staff informing the Company that it has regained compliance with the Corporate Governance Requirements. See Note 2, “Summary of Significant Accounting Policies,” to our condensed consolidated financial statements included elsewhere in this Form 10-Q for additional details.
Reverse Stock Split
On October 11, 2024, the Company filed the Certificate of Amendment to its Certificate of Incorporation with the Secretary of State of the State of Delaware to effect a reverse stock split at the ratio of one-for-twenty, which became effective on October 16, 2024 (the “Reverse Stock Split”). See Note 2, “Summary of Significant Accounting Policies,” to our condensed consolidated financial statements included elsewhere in this Form 10-Q for additional details.
Settlement Related to the Cyber Incident
On October 10, 2023, the Company reported that certain information was accessed from individual 23andMe.com accounts without the account users’ authorization (the “Cyber Incident”).
On July 15, 2024, we reached an agreement in principle to settle the putative class action lawsuits currently pending in the U.S. District Court for the Northern District of California (the “Court”). The parties executed a confidential settlement term sheet on July 29, 2024. We subsequently reached agreement with the plaintiffs on all material terms, including payment of $30.0 million (the “Settlement Agreement”). On September 12, 2024, plaintiffs filed a motion asking the Court for preliminary approval of the Settlement Agreement, and the motion was considered at a court hearing on October 29, 2024. On October 29, 2024, the Court deferred the motion for preliminary approval and asked the parties to provide additional information by November 12, 2024.
On December 4, 2024, the Court granted preliminary conditional approval of the Settlement Agreement under which the Company would agree to pay $30.0 million and implement certain remedial measures to resolve all claims by

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U.S. customers (who do not opt out) arising out of the Cyber Incident disclosed in October 2023. The Court’s order granting preliminary approval of the settlement was conditioned on the parties’ acceptance of certain modifications to the Settlement Agreement, including the exclusion from the settlement class of customers who have chosen to exercise their right to arbitrate, whether by making a demand for arbitration or by filing a formal complaint with the arbitral forum. Following the December 4, 2024 order, the parties have engaged in discussions regarding a potential settlement that would resolve all claims by U.S. customers, including those who choose to exercise arbitration rights. As of the filing date of this report, such discussions have not resulted in a revised settlement. See Note 11, “Commitments and Contingencies — Cyber Incident,” to our condensed consolidated financial statements included elsewhere in this Form 10-Q for additional details.
GSK New Data Notification
In September 2024, the Company and GSK agreed to extend the deadline for the Data Use Notice from September 30, 2024 to October 28, 2024. Revenue attributable to the New Data license was accounted for upon the satisfaction of performance obligations and was recognized upon the Company’s receipt of the Data Use Notice from GSK, which occurred on October 28, 2024. See Note 5, “Collaboration,” to our condensed consolidated financial statements included elsewhere in this Form 10-Q for additional details.
Costs Associated with Exit or Disposal Activities and Cease of Operations of Therapeutics
In August 2024, the Board of Directors of the Company determined that it was in the best interests of the Company and its stockholders to cease operations of the Therapeutics Discovery portion of the Company’s Therapeutics business, effective August 9, 2024. As a result, the Company terminated 30 employees. Therapeutics Discovery operated within the Company’s former Therapeutics segment.
In November 2024, the Board of Directors of the Company approved the November 2024 Reduction in Force, which, as previously disclosed, involved 223 employees, representing approximately 40% of our then-workforce, and also included the closure of substantially all operations in our former Therapeutics segment. The November 2024 Reduction Plan was intended to restructure and strategically align our workforce and organization with our current strategy and to reduce our operating costs. The November 2024 Reduction in Force is expected to reduce annualized payroll and benefit expenses by more than $35.0 million. In connection with the November 2024 Reduction Plan, we (i) ceased additional investment in our two clinical trials (23ME-00610 and 23ME-01473) beyond their respective current stages of development in November 2024, and (ii) abandoned our South San Francisco, California lab facility (the “South San Francisco Facility”) in December 2024. We completed the November 2024 Reduction Plan substantially during the three months ended December 31, 2024, with certain affected employees retained through a transition period expected to end no later than the end of fiscal 2025. See Note 9, “Restructuring,” to our condensed consolidated financial statements included elsewhere in this Form 10-Q for additional details.
Discontinued Operations of the Therapeutics Segment
In accordance with Accounting Standards Codification (“ASC”) 205, Presentation of Financial Statements (“ASC 205”), we determined that the closure of substantially all operations in our Therapeutics operating segment in November 2024 represented a strategic shift that will have a major effect on our operations and financial results, thus meeting the criteria to be reported as discontinued operations as of December 31, 2024. Discontinued operations include research and development costs, including lab-related research services, clinical development, and collaboration costs, as well as personnel-related, lease, equipment and depreciation costs associated with the Therapeutics segment. Also included are restructuring costs including cash severance payments, benefits continuation, stock-based compensation, and the South San Francisco Facility exit costs in connection with the November 2024 Reduction Plan.
We will not have any significant continuing involvement in the operations of the Therapeutics operating segment after the disposal transaction. See Note 3, “Discontinued Operations,” to our condensed consolidated financial statements included elsewhere in this Form 10-Q for additional details.
Basis of Presentation
The unaudited condensed consolidated financial statements and accompanying notes of the Company included elsewhere in this Form 10-Q include the accounts of 23andMe Holding Co. and its consolidated subsidiaries and variable interest entities and were prepared in accordance with generally accepted accounting principles in the United States (“GAAP”).

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As discussed above, we determined that the closure of substantially all operations in the Therapeutics operating segment met the criteria for presentation as a discontinued operation. Certain prior period amounts related to discontinued operations, as a result of the closure of substantially all operations in our Therapeutics operating segment, have been reclassified to conform with the current period presentation. As a result, we have retrospectively recast our consolidated balance sheet at March 31, 2024 and consolidated statements of operations and comprehensive loss for the three and nine months ended December 31, 2023 to reflect the assets and liabilities and operating results, respectively, related to the disposed business in discontinued operations. We have chosen not to segregate the cash flows of the disposed business in the condensed consolidated statements of cash flows. Supplemental disclosures related to discontinued operations for the statements of cash flows have been provided in Note 3, “Discontinued Operations,” to our condensed consolidated financial statements included elsewhere in this Form 10-Q. Unless otherwise noted, management’s discussion and analysis of our results of operations relate to our continuing operations.
General corporate overhead costs historically allocated to the former Therapeutics operating segment that do not meet the requirements to be presented in discontinued operations have been allocated to the continuing operations in accordance with ASC 205-20 for the periods presented herein, as the costs were not directly attributable to the discontinued operations of the Therapeutics operating segment. Such allocations include general corporate overhead costs for shared services.
Key Business Metrics
We monitor the following key metrics to help us evaluate our business, identify trends, formulate business plans, and make strategic decisions. We believe that the following metrics are useful in evaluating our business:
•PGS Customers. “Customers” means individuals who have registered a PGS kit and provided their DNA sample. We view Customers as an important metric to assess our financial performance because each Customer has registered a kit and has engaged with us by providing us with their DNA sample. These Customers may be interested in purchasing additional PGS products and services or in becoming members of our 23andMe+ Premium membership service, especially if they consent to participate in our research. We had approximately 15.5 million and 15.1 million Customers as of December 31, 2024 and March 31, 2024, respectively.
•Consenting Customers. “Consenting Customers” are Customers who have affirmatively opted in to participate in our research program. Consenting Customers are critical to our research programs and to the continuing growth of our database, which we use to identify drug targets and to generate new and interesting additional ancestry and health reports. Moreover, Consenting Customers respond to our research surveys, providing useful phenotypic data about their traits, habits, and lifestyles, which we analyze using de-identified data to determine whether a genetic variant makes an individual more or less likely to develop certain diseases. A Consenting Customer is likely to be more engaged with our brand, which may lead to the purchase of our 23andMe+ Premium membership service and to participation in further research studies, helping us to advance our research. As of December 31, 2024, over 80% of our Customers were Consenting Customers.
•Members. This metric represents the number of customers who have signed up for our 23andMe+ Premium membership service, which was launched in October 2020. We believe that 23andMe+ Premium, and any other future membership offerings, will position us for future growth, as the membership model, which is annual for 23andMe+ Premium, represents a previously untapped source of recurring revenue. We are continually investing in new reports and features to provide to members as part of the 23andMe+ Premium membership, which we believe will enhance customer lifetime value as customers can make new discoveries about themselves. We believe that this, in turn, will help to scale our customer acquisition costs and create expanding network effects. As of March 31, 2024 and 2023, our 23andMe+ Premium membership base had approximately 562,000 and 640,000 members, respectively.
•Adjusted EBITDA. Adjusted EBITDA from continuing operations, a non-GAAP financial measure, is the measure of profitability reported to our Chief Executive Officer (“CEO”), the chief operating decision-maker (“CODM”). See “—Adjusted EBITDA” below for further details and a reconciliation of Adjusted EBITDA to net loss.

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Components of Results of Operations
Revenue
We recognize revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”), when we transfer promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.
Our service revenue is composed primarily of sales of PGS kits to customers, 23andMe+ Premium membership and telehealth services, which include online medical visits and memberships, as well as revenues from our research collaborations. Our product revenue is composed primarily of telehealth pharmaceutical sales, as well as a portion of our telehealth membership revenue.
See Note 2, “Summary of Significant Accounting Policies,” to our consolidated financial statements included in our Fiscal 2024 Form 10-K for a more detailed discussion of our revenue recognition policies.
Cost of Revenue, Gross Profit, and Gross Margin
Cost of service revenue for PGS primarily consists of cost of raw materials, lab processing fees, personnel-related expenses, including salaries, benefits, and stock-based compensation, shipping and handling, and allocated overhead. Cost of service revenue for telehealth primarily consists of personnel-related expenses as described above that we incur for medical services, and amortization of intangible assets. Cost of product revenue consists of personnel-related expenses, telehealth prescription drug costs, packaging and shipping, and allocated overhead. Cost of revenue for research services primarily consists of personnel-related expenses as described above, and allocated overhead. We expect cost of revenue to fluctuate from period to period in the foreseeable future in absolute dollars but gradually decrease as a percentage of revenue over the long term.
Our gross profit represents total revenue less our total cost of revenue, and our gross margin is our gross profit expressed as a percentage of our total revenue. Our gross profit and gross margin have been and will continue to be affected by a number of factors, including the volume of PGS kit sales recognized, the prices we charge for our PGS products and research services, the prices we charge and renewal rates of members within our membership services, the prices we charge for telehealth services (medical visits, pharmacy services, and memberships), the fees we incur for lab processing PGS kits, the costs we incur for medical services and prescription drug costs, the revenues from our collaboration agreements, and the personnel costs to fulfill them. We expect our gross margin to increase over the long term as membership revenues become a higher percentage of revenue mix, although our gross margin may fluctuate from period to period. Substantially all our research services revenue in the periods prior to July 2023 was derived from the original GSK Agreement. In October 2023, we entered into the 2023 GSK Amendment to provide GSK with a non-exclusive license to certain new, de-identified, aggregated New Data, as well as access to certain of our research services with respect to such New Data. See Note 5, “Collaborations,” to our condensed consolidated financial statements for additional information regarding the 2023 GSK Amendment. If we are unable to add new research services agreements, our research services revenue may decline substantially.
Operating Expenses
Our operating expenses primarily consist of research and development, sales and marketing, and general and administrative expenses. Personnel-related expenses, which include salaries, benefits, and stock-based compensation, are the most significant component of research and development and general and administrative expenses. Advertising and brand-related spend and personnel-related expenses represent the primary components of sales and marketing expenses. Operating expenses also include allocated overhead costs. Overhead costs that are not substantially dedicated for use by a specific functional group are allocated based on headcount. Allocated overhead costs include shared costs associated with facilities (including rent and utilities) and related personnel, information technology and related personnel, and depreciation of property and equipment. We regularly evaluate our capital allocation approach to make sure our capital is being used for the highest value-creating activities and in the most efficient manner. This may require changes to investment levels, how we operate, or are structured to ensure alignment to business priorities.
Research and Development Expenses
Our research and development expenses support our efforts to add new services and features to our existing services, and to ensure the reliability and scalability of our services. Prior to closure of the remaining portion of our Therapeutics business in November 2024 (following the previous closure of the Therapeutics Discovery portion of the

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business in August 2024), research and development expenses included efforts to develop our portfolio of existing therapeutic product candidates in our former Therapeutics segment. Prior to ceasing operations of the Therapeutics Discovery portion of our Therapeutics business in August 2024, research and development expenses included our efforts to discover and genetically-validate new therapeutic product candidates. Research and development expenses primarily consist of personnel-related expenses, including salaries, benefits, and stock-based compensation associated with our research and development personnel, collaboration expenses, preclinical and clinical trial costs, laboratory services and supplies costs, third-party data services, and allocated overhead.
We plan to continue to invest in our research and development efforts. Our research and development expenses may fluctuate as a percentage of revenue from period to period due to the timing and amount of these expenses.
Sales and Marketing Expenses
Sales and marketing expenses consist primarily of advertising costs, personnel-related expenses, including salaries, benefits, and stock-based compensation associated with our sales and marketing personnel, amortization and impairment of intangible assets, outside services, and allocated overhead.
Advertising and brand costs consist primarily of direct expenses related to television, online and radio advertising, including production and branding, paid search, online display advertising, direct mail, affiliate programs, marketing collateral, market research and public relations. Advertising production costs are expensed the first time that the advertising takes place, and all other advertising costs are expensed as incurred. Deferred advertising costs primarily consist of vendor payments made in advance to secure media spots across varying media channels, as well as production costs incurred before the first time the advertising takes place. Deferred advertising costs are expensed on the first date that the advertisements occur. In addition, advertising costs include platform fees due to brokers related to our third-party retailers.
We expect our sales and marketing expenses to gradually decrease as a percentage of revenue over the long term, although our sales and marketing expenses may fluctuate as a percentage of revenue from period to period due to promotional strategies that drive the timing and amount of these expenses.
General and Administrative Expenses
General and administrative expenses primarily consist of personnel-related expenses, including salaries, benefits, and stock-based compensation associated with corporate management, including our CEO office, finance, legal, compliance, regulatory, corporate communications, corporate development, and other administrative personnel. In addition, general and administrative expenses include professional fees for external legal, accounting, and other consulting services, as well as credit card processing fees related to PGS kit sales and telehealth services, and allocated overhead.
We currently experience substantial general and administrative expenses in connection with operating as a public company, including expenses associated with compliance with SEC rules and regulations, and related legal, audit, insurance, investor relations, professional services, and other administrative expenses. We anticipate general and administrative expenses will stabilize over the long term and gradually decrease as a percentage of revenue, although it may fluctuate as a percentage of total revenue from period to period due to the timing and amount of these expenses.
Restructuring and Other Charges
Restructuring and other charges consists of costs directly associated with employee-related and disposal activities, and other restructuring activities. Such costs include employee severance and termination benefits associated with a reduction in force, including non-cash stock-based compensation, if applicable, for the period.
Goodwill Impairment Charge
Goodwill impairment charge included the impairment loss recognized on goodwill. Goodwill was assessed for impairment on an annual basis and whenever events and circumstances indicated that the asset might be impaired at the former Consumer and Research Services reporting segment. We compared the fair value of our former Consumer and Research Services reporting unit to its carrying value. If the carrying value exceeded our former Consumer and Research Services reporting segment’s fair value, we recognized an impairment loss for the amount by which the carrying amount exceeded the former Consumer and Research Services reporting segment’s fair value. See Note 7, “Fair Value Measurements — Nonrecurring Fair Value Measurements,” to our condensed consolidated financial statements for details.

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Other Income (Expense)
Other income (expense) includes interest income, net, and other income (expense), net. Interest income, net primarily consists of interest income earned on our cash deposits and cash equivalents. Other income (expense), net primarily consists of effects of changes in foreign currency exchange rates, and other non-operating income and expenditures.
Provision for (Benefit from) Income Taxes
Provision for income tax primarily consists of separate state tax expense generated by one of the variable interest entities. Deferred tax assets are reduced by a valuation allowance to the extent management believes it is not more likely than not to be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income. Management makes estimates and judgments about future taxable income based on assumptions that are consistent with our plans and estimates.
Net Loss from Discontinued Operations
Net loss from discontinued operations includes the results of our research and development activities related to the former Therapeutics operating segment and restructuring and other charges, including lease abandonment charges, in connection with the discontinuation of the Therapeutics operating segment. It does not include any allocation of general corporate overhead costs historically allocated to the former Therapeutics operating segment that do not meet the requirements to be presented in discontinued operations.

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Results of Operations
Comparisons for the Three and Nine Months Ended December 31, 2024 and 2023
The following table sets forth our unaudited condensed consolidated statements of operations for the three and nine months ended December 31, 2024 and 2023, respectively, and the dollar and percentage change between the two periods:
Three Months Ended December 31,Nine Months Ended December 31,
20242023
$ Change
% Change
20242023
$ Change
% Change
(in thousands, except percentages)
Revenue:
Service$54,767 $38,071 $16,696 44 %$127,960 $134,097 $(6,137)(5 %)
Product5,495 6,676 (1,181)(18 %)16,787 21,513 (4,726)(22 %)
Total revenue60,262 44,747 15,515 35 %144,747 155,610 (10,863)(7 %)
Cost of revenue:
Service (1) (2)
17,872 22,134 (4,262)(19 %)54,069 74,991 (20,922)(28 %)
Product (1) (2)
2,564 2,928 (364)(12 %)8,186 9,470 (1,284)(14 %)
Total cost of revenue20,436 25,062 (4,626)(18 %)62,255 84,461 (22,206)(26 %)
Gross profit39,826 19,685 20,141 102 %82,492 71,149 11,343 16 %
Operating expenses:
Research and development (1) (2)
20,216 23,897 (3,681)(15 %)80,050 77,524 2,526 3 %
Sales and marketing (1) (2)
17,950 27,925 (9,975)(36 %)50,609 69,541 (18,932)(27 %)
General and administrative (1) (2)
26,891 31,780 (4,889)(15 %)83,034 108,742 (25,708)(24 %)
Restructuring and other charges (1) (2)
10,642 217 10,425 NM10,866 4,642 6,224 134 %
Goodwill impairment— 198,800 (198,800)(100 %)— 198,800 (198,800)(100 %)
Total operating expenses75,699 282,619 (206,920)(73 %)224,559 459,249 (234,690)(51 %)
Loss from operations(35,873)(262,934)227,061 (86 %)(142,067)(388,100)246,033 (63 %)
Other income (expense):
Interest income, net1,282 3,230 (1,948)(60 %)5,865 11,289 (5,424)(48 %)
Other income (expense), net316 23 293 NM312 501 (189)(38 %)
Loss before income taxes(34,275)(259,681)225,406 (87 %)(135,890)(376,310)240,420 (64 %)
Provision for (benefit from) income taxes— 19 (19)(100 %)(41)55 (96)(175 %)
Net loss from continuing operations$(34,275)$(259,700)$225,425 (87 %)$(135,849)$(376,365)$240,516 (64 %)
Net loss from discontinued operations (3)
(18,760)(18,276)(484)3 %(45,689)(81,505)35,816 (44 %)
Net loss$(53,035)$(277,976)$224,941 (81 %)$(181,538)$(457,870)$276,332 (60 %)
NM = not meaningful
(1)General corporate overhead costs for shared services historically allocated to the former Therapeutics operating segment that do not meet the requirements to be presented in discontinued operations have been allocated to the continuing operations for the periods presented herein, as the costs were not directly attributable to the discontinued operations of the former Therapeutics operating segment. These costs were $0.5 million and $1.6 million for the three months ended December 31, 2024 and 2023, respectively, and $2.4 million and $6.3 million for the nine months ended December 31, 2024 and 2023, respectively.
(2)Includes stock-based compensation expense from continuing operations as follows:

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Three Months Ended December 31,Nine Months Ended December 31,
20242023
$ Change
% Change
20242023
$ Change
% Change
(in thousands, except percentages)
Cost of service revenue$365 $788 $(423)(54 %)$2,242 $4,066 $(1,824)(45 %)
Cost of product revenue216 287 (71)(25 %)1,074 1,228 (154)(13 %)
Research and development2,362 4,805 (2,443)(51 %)19,490 19,172 318 2 %
Sales and marketing561 1,145 (584)(51 %)5,240 5,048 192 4 %
General and administrative (a)
3,663 17,075 (13,412)(79 %)17,566 61,191 (43,625)(71 %)
Restructuring and other charges (b)
2,077 — 2,077 100 %2,113 630 1,483 235 %
Total stock-based compensation expense (c)
$9,244 $24,100 $(14,856)(62 %)$47,725 $91,335 $(43,610)(48 %)
(a)Includes $10.8 million and $32.8 million of stock-based compensation charges related to the termination of two former Lemonaid officers during the three and nine months ended December 31, 2023, respectively.
(b)In connection with the November 2024 Reduction in Force, there were modifications of equity awards, which included the acceleration of certain non-vested awards. We recorded $2.1 million of stock-based compensation modification expense related to the November 2024 Reduction in Force during the three and nine months ended December 31, 2024.
(3)Total stock-based compensation expense from discontinued operations was $0.2 million and $2.3 million for the three months ended December 31, 2024 and 2023, respectively, and $2.7 million and $9.9 million for the nine months ended December 31, 2024 and 2023, respectively.


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The following table sets forth our condensed consolidated statements of operations data expressed as a percentage of revenue for the three and nine months ended December 31, 2024 and 2023:
Three Months Ended December 31,Nine Months Ended December 31,
2024202320242023
Revenue:
Service91 %85 %88 %86 %
Product9 %15 %12 %14 %
Total revenue100 %100 %100 %100 %
Cost of revenue:
Service30 %49 %37 %48 %
Product4 %6 %6 %6 %
Total cost of revenue34 %55 %43 %54 %
Gross profit66 %45 %57 %46 %
Operating expenses:
Research and development33 %53 %55 %50 %
Sales and marketing30 %63 %35 %45 %
General and administrative45 %71 %57 %70 %
Restructuring and other charges18 %1 %8 %3 %
Goodwill impairment
— %444 %— %128 %
Total operating expenses126 %632 %155 %296 %
Loss from operations(60 %)(587 %)(98 %)(250 %)
Other income (expense):
Interest income, net2 %7 %4 %8 %
Other income (expense), net1 %— %— %— %
Loss before income taxes(57 %)(580 %)(94 %)(242 %)
Provision for (benefit from) income taxes— %— %— %— %
Net loss from continuing operations(57 %)(580 %)(94 %)(242 %)
Net loss from discontinued operations(31 %)(41 %)(31 %)(52 %)
Net loss(88 %)(621 %)(125 %)(294 %)
Revenue
Total revenue increased by $15.5 million, or 35%, for the three months ended December 31, 2024 as compared to the three months ended December 31, 2023. The increase in total revenue was driven by an $18.8 million increase in research services revenue due to the recognition of $19.3 million of non-recurring revenue upon receipt of the Data Use Notice from GSK, representing substantially all remaining revenue associated with the 2023 GSK Amendment (the “Non-Recurring Revenue Recognition”). The increase in research services revenue was partially offset by a $3.3 million decrease in consumer services revenue. Consumer revenue decreased due to a $6.4 million decrease in PGS kit revenue driven mainly by lower PGS kit sales volume, as well as a lower average selling price due to greater promotions and discounts versus the prior year quarter. Consumer revenue also decreased due to a $0.3 million decrease in telehealth services revenue and a $1.2 million decrease in telehealth tangible product revenue, primarily driven by lower medical visits and pharmacy sales compared to the prior year quarter. These decreases in consumer revenue were partially offset by a $4.6 million increase in consumer PGS membership services revenue.
Total revenue decreased by $10.9 million, or 7%, for the nine months ended December 31, 2024 as compared to the nine months ended December 31, 2023. The decrease in total revenue was driven by a $16.7 million decrease in consumer services revenue, which included a $21.2 million decrease in PGS kit revenue driven mainly by lower PGS kit sales volume, as well as a lower average selling price due to greater promotions and discounts versus the prior year period. The decrease in consumer services revenue also included a $3.2 million decrease in telehealth services revenue and a $4.7 million decrease in telehealth tangible product revenue, primarily driven by lower medical visits and pharmacy sales, and partially related to the disposition of Lemonaid Health Limited, compared to the prior year period. These decreases in

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consumer revenue were partially offset by a $12.3 million increase in consumer PGS membership services revenue. In addition, there was a $5.9 million increase in research services revenue due primarily to the Non-Recurring Revenue Recognition, partially offset by decreases in research services revenue related to the conclusion of the exclusive target discovery term of the original GSK Agreement in July 2023.
Cost of Revenue, Gross Profit and Gross Margin
Total cost of revenue decreased by $4.6 million, or 18%, for the three months ended December 31, 2024 as compared to the three months ended December 31, 2023. The cost of revenue for consumer services decreased by $4.2 million, driven by a $2.5 million decrease in the cost of revenue for consumer PGS primarily due to lower lab processing and kit costs due to lower PGS kit sales volume, as well as lower overhead allocations. In addition, there was a $1.3 million decrease in consumer telehealth services cost of revenue primarily from lower personnel-related expenses and related overhead allocations due to reductions in force. There was also a $0.4 million decrease in consumer telehealth tangible product cost of revenue primarily from reduced shipping costs due to lower pharmacy sales volume. The cost of revenue for research services also decreased by $0.4 million primarily due to the conclusion of the exclusive target discovery term of the original GSK Agreement in July 2023.
Total cost of revenue decreased by $22.2 million, or 26%, for the nine months ended December 31, 2024 as compared to the nine months ended December 31, 2023. The cost of revenue for consumer services decreased by $20.3 million, driven by a $9.9 million decrease in the cost of revenue for consumer PGS primarily due to lower lab processing, shipping and fulfillment, and kit costs due to lower PGS kit sales volume. In addition, there was a $9.1 million decrease in consumer telehealth services cost of revenue primarily from lower personnel-related expenses and related overhead allocations due to reductions in force and the disposition of Lemonaid Health Limited during the second quarter of the fiscal 2024. There was also a $1.3 million decrease in consumer telehealth tangible product cost of revenue primarily from reduced shipping costs due to lower pharmacy sales volume. The cost of revenue for research services decreased by $2.0 million primarily due to the conclusion of the exclusive target discovery term of the original GSK Agreement in July 2023.
Our overall gross profit increased by $20.1 million, or 102%, to $39.8 million for the three months ended December 31, 2024 from $19.7 million for the three months ended December 31, 2023. The increase in gross profit was primarily driven by an increase of $19.2 million in research services gross profit due to the Non-Recurring Revenue Recognition. Our gross margin improved from 45% for the three months ended December 31, 2023 to 66% for the three months ended December 31, 2024. The increase in gross margin was due primarily to the aforementioned 2023 GSK Amendment revenue.
Our overall gross profit increased by $11.3 million, or 16%, from $71.1 million for the nine months ended December 31, 2023 to $82.5 million for the nine months ended December 31, 2024. The increase in gross profit was primarily driven by an increase of $7.8 million in research services gross profit due to the Non-Recurring Revenue Recognition. There was also an increase in consumer gross profit of $3.5 million, which was primarily driven by an increase in telehealth service and PGS gross profit, partially offset by a decrease in telehealth product gross profit. Our gross margin improved from 46% for the nine months ended December 31, 2023 to 57% for the nine months ended December 31, 2024. The increase in gross margin was primarily due to an increase in research services gross margin due primarily to the aforementioned 2023 GSK Amendment revenue.
Gross margin has historically been higher for activities associated with research services than for consumer services.

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Research and Development Expenses
The following table sets forth our research and development expenses for the three and nine months ended December 31, 2024 and 2023, and the dollar and percentage change between the two periods:
Three Months Ended December 31,Nine Months Ended December 31,
20242023
$ Change
% Change
20242023
$ Change
% Change
(in thousands, except percentages)
Personnel-related expenses$13,126 $15,541 $(2,415)(16 %)$55,588 $53,475 $2,113 4 %
Lab-related research services574 614 (40)(7 %)1,594 1,599 (5)— %
Depreciation, amortization, equipment, and supplies, net of capitalized internal-use software 552 361 191 53 %1,511 (1,021)2,532 (248 %)
Facilities, overhead allocations and other5,964 7,381 (1,417)(19 %)21,357 23,471 (2,114)(9 %)
Total research and development expenses$20,216 $23,897 $(3,681)(15 %)$80,050 $77,524 $2,526 3 %
Research and development expenses for the three months ended December 31, 2024 decreased to $20.2 million as compared to $23.9 million for the three months ended December 31, 2023. The $3.7 million, or 15%, decrease was primarily attributable to a $2.4 million decrease in personnel-related expenses, including a decrease in non-cash stock-based compensation expense, primarily due to reductions in force. In addition, there was a $1.4 million decrease in facilities, overhead allocations and other expenses, primarily due to a reduction in overhead allocations resulting from the aforementioned reductions in force.
Research and development expenses for the nine months ended December 31, 2024 increased to $80.1 million as compared to $77.5 million for the nine months ended December 31, 2023. The $2.5 million, or 3%, increase was primarily attributable to a $2.1 million increase in personnel-related expenses, including non-cash stock-based compensation expense, primarily due to an increase in headcount prior to the November 2024 Reduction in Force. In addition, there was a $2.5 million increase in depreciation, amortization, equipment and supplies, net of capitalized internal use software, primarily related to fewer internal use software project hours in development during the nine months ended December 31, 2024. These increases were offset by a $2.1 million decrease in facilities, overhead allocations and other expenses, primarily due to a reduction in overhead allocations resulting from the aforementioned reductions in force.
Sales and Marketing Expenses
The following table sets forth our sales and marketing expenses for the three and nine months ended December 31, 2024 and 2023, and the dollar and percentage change between the two periods:
Three Months Ended December 31,Nine Months Ended December 31,
20242023$ Change % Change20242023
$ Change
% Change
(in thousands, except percentages)
Advertising and brand$9,817 $18,881 $(9,064)(48 %)$22,358 $38,570 $(16,212)(42 %)
Personnel-related expenses3,788 4,123 (335)(8 %)14,837 13,481 1,356 10 %
Intangibles amortization and impairment, depreciation, equipment, and supplies1,489 1,946 (457)(23 %)4,064 8,271 (4,207)(51 %)
Facilities, overhead allocations and other2,856 2,975 (119)(4 %)9,350 9,219 131 1 %
Total sales and marketing expenses$17,950 $27,925 $(9,975)(36 %)$50,609 $69,541 $(18,932)(27 %)
Sales and marketing expenses for the three months ended December 31, 2024 decreased to $18.0 million as compared to $27.9 million for the three months ended December 31, 2023. The decrease of $10.0 million, or 36%, was primarily driven by a $9.1 million decrease in advertising and brand-related expenses due to a reduction in marketing campaigns and spending.
Sales and marketing expenses for the nine months ended December 31, 2024 decreased to $50.6 million as compared to $69.5 million for the nine months ended December 31, 2023. The decrease of $18.9 million, or 27%, was primarily driven by a $16.2 million decrease in advertising and brand-related expenses due to a reduction in marketing

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campaigns and spending. There was also a decrease of $4.2 million in intangible asset amortization and impairment, depreciation, equipment, and supplies primarily due to customer relationships being fully amortized within intangible assets in the second quarter of fiscal 2024. These decreases were partially offset by a $1.4 million increase in personnel-related expenses, including an increase in non-cash stock-based compensation expense, related to headcount growth prior to the November 2024 Reduction in Force.
General and Administrative Expenses
Total general and administrative expenses for the three months ended December 31, 2024 decreased by $4.9 million, or 15%, to $26.9 million as compared to $31.8 million for the three months ended December 31, 2023. The decrease was primarily due to a $14.4 million reduction in personnel-related expenses, primarily driven by a decrease in non-cash stock-based compensation, of which $10.8 million was related to a charge taken during the three months ended December 31, 2023 due to the departure of a former Lemonaid officer, and the remainder of the decrease was related to reductions in force. In addition, there was a decrease of $1.4 million in other expenses, including overhead allocations due to reductions in force. These decreases were partially offset by a $10.9 million increase in outside services expenses primarily due to the accrual of an additional loss contingency and legal fees associated with the Cyber Incident, net of probable insurance recoveries, compensation and recruiting fees related to the recruitment and appointment of three independent directors to our Board of Directors in order to regain compliance with the Nasdaq listing rules, as well as legal and finance expenses to support the Special Committee.
Total general and administrative expenses for the nine months ended December 31, 2024 decreased by $25.7 million, or 24%, to $83.0 million as compared to $108.7 million for the nine months ended December 31, 2023. The decrease was primarily due to a $45.8 million reduction in personnel-related expenses, mostly related to non-cash stock-based compensation, of which $32.8 million was related to charges taken during the nine months ended December 31, 2023 due to the departure of two former Lemonaid officers and the remainder of the decrease was related to reductions in force. See Note 13, “Equity Incentive Plans and Stock-Based Compensation,” to our condensed consolidated financial statements for details. In addition, there was a decrease of $4.7 million in overhead allocations due to reductions in force, business insurance and other expenses. These decreases were partially offset by a $24.9 million increase in outside services expenses primarily due to the accrual of an additional loss contingency and legal fees associated with the Cyber Incident, net of probable insurance recoveries, compensation and recruiting fees related to the recruitment and appointment of three independent directors to our Board of Directors in order to regain compliance with the Nasdaq listing rules, and legal and finance expenses to support the Special Committee.
Restructuring and Other Charges
Restructuring and other charges for the three months ended December 31, 2024 increased by $10.4 million, to $10.6 million as compared to $0.2 million for the three months ended December 31, 2023. The charges for the three months ended December 31, 2024 consisted of $10.6 million of employee severance and termination benefits related to the November 2024 Reduction in Force, of which $2.1 million was non-cash stock-based compensation expense.
Restructuring and other charges for the nine months ended December 31, 2024 increased by $6.2 million, or 134%, to $10.9 million as compared to $4.6 million for the nine months ended December 31, 2023. The charges for the nine months ended December 31, 2024 consisted of $10.9 million of employee severance and termination benefits related to the November 2024 Reduction in Force, of which $2.1 million was non-cash stock-based compensation expense. For the nine months ended December 31, 2023, the charges consisted of $4.6 million of employee severance and termination benefits related to the prior year reductions in force, of which $0.6 million was non-cash stock-based compensation expense. See Note 9, “Restructuring,” to our condensed consolidated financial statements for details.
Goodwill Impairment
During the three months ended December 31, 2023, as a result of a decline in market capitalization based on the Company's publicly quoted share price, lower than expected financial performance and macroeconomic conditions, we performed an impairment assessment of goodwill. Based on our quantitative assessment, we determined that the carrying value of our former Consumer and Research Services reporting segment exceeded its fair value as of December 31, 2023, and as a result, we recorded a goodwill impairment charge of $198.8 million during the three and nine months ended December 31, 2023. See Note 7, “Fair Value Measurements — Nonrecurring Fair Value Measurements,” to our condensed consolidated financial statements for details. There were no goodwill impairment charges during the three and nine months ended December 31, 2024.

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Interest Income, net
Interest income, net decreased by $1.9 million to $1.3 million for the three months ended December 31, 2024 from $3.2 million for the three months ended December 31, 2023 primarily due to a decrease in the cash equivalents balance held in money market funds.
Interest income, net decreased by $5.4 million to $5.9 million for the nine months ended December 31, 2024 from $11.3 million for the nine months ended December 31, 2023 primarily due to a decrease in the cash equivalents balance held in money market funds.
Net Loss from Discontinued Operations
Net loss from discontinued operations was primarily attributable to the discontinuation of the former Therapeutics operating segment in connection with the November 2024 Reduction Plan. The following table summarizes the condensed operating results of the discontinued operations:
Three Months Ended December 31,Nine Months Ended December 31,
20242023
$ Change
% Change
20242023
$ Change
% Change
(in thousands, except percentages)
Operating expenses:
Research and development6,700 16,996 (10,296)(61)%31,611 77,779 (46,168)(59)%
Restructuring and other charges12,060 1,280 10,780 842 %14,078 3,726 10,352 278 %
Total operating expenses18,760 18,276 484 3 %45,689 81,505 (35,816)(44)%
Net loss from discontinued operations(18,760)(18,276)(484)3 %(45,689)(81,505)35,816 (44)%

Net loss from discontinued operations for the three months ended December 31, 2024 increased by $0.5 million, or 3%, to $18.8 million as compared to $18.3 million for the three months ended December 31, 2023. The increase was primarily due to a $10.8 million increase in restructuring and other charges, which relates primarily to a $10.0 million charge taken to write off the right-of-use (“ROU”) assets and leasehold improvements associated with the abandonment of the South San Francisco Facility and $0.8 million increase in employee severance and termination benefits, and non-cash stock-based compensation, related to reductions in force. This increase was mostly offset by a $10.3 million decrease in research and development expenses due to a $5.5 million decrease in personnel-expenses, including non-cash stock-based compensation, associated with reduced headcount from reductions in force, a $3.5 million decrease in lab-related research services related to our former proprietary and collaboration therapeutics programs, and a $1.3 million decrease in other expenses, including consulting.
Net loss from discontinued operations for the nine months ended December 31, 2024 decreased by $35.8 million, or 44%, to $45.7 million as compared to $81.5 million for the nine months ended December 31, 2023. The decrease was due to a $46.2 million decrease in research and development expenses due to a $20.6 million decrease in personnel-expenses, including non-cash stock-based compensation, associated with reduced headcount from reductions in force, and a $24.9 million decrease in lab-related research services related to our former proprietary and collaboration therapeutics programs. This decrease was partially offset by an $10.4 million increase in restructuring and other charges, which relates primarily to a $10.0 million charge taken to write off the ROU assets and leasehold improvements associated with the abandonment of the South San Francisco Facility.
Adjusted EBITDA from Continuing Operations
We evaluate the performance of our business based on Adjusted EBITDA, which is a non-GAAP financial measure that we define as net income (loss) from continuing operations before net interest 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: litigation settlements, gains or losses on dispositions of subsidiaries and transaction-related costs, and Cyber Incident expenses, net of probable insurance recoveries, if applicable for the periods presented. Adjusted EBITDA is a key measure used by our management and our Board of Directors to understand and evaluate our operating performance and trends, to prepare and approve our annual budget, and to develop short- and long-term operating plans. In particular, we believe that the exclusion of the items eliminated in calculating Adjusted EBITDA provides useful measures for period-

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to-period comparisons of our business. Accordingly, we believe that Adjusted EBITDA provides useful information in understanding and evaluating our operating results in the same manner as our management and our Board of Directors. 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 our 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. In evaluating Adjusted EBITDA, you should be aware that in the future we will incur expenses similar to the adjustments in this presentation. Our presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by these expenses or any unusual or non-recurring items. When evaluating our performance, you should consider Adjusted EBITDA alongside other financial performance measures, including our net loss and other GAAP results.
The following tables reconcile net loss from continuing operations to Adjusted EBITDA for the three and nine months ended December 31, 2024 and 2023:
 Three Months Ended December 31,
Nine Months Ended December 31,
 20242023$ Change% Change20242023$ Change% Change
 
(in thousands, except percentages)
Reconciliation of net loss from continuing operations to Adjusted EBITDA from continuing operations:
Net loss from continuing operations$(34,275)$(259,700)$225,425 (87 %)$(135,849)$(376,365)$240,516 (64 %)
Adjustments:
Interest income, net(1,282)(3,230)1,948 (60 %)(5,865)(11,289)5,424 (48 %)
Other (income) expense, net(316)(23)(293)NM(312)(501)189 (38 %)
Provision for (benefit from) income taxes— 19 (19)(100 %)(41)55 (96)(175 %)
Depreciation, amortization and impairment2,970 4,153 (1,183)(28 %)10,562 11,482 (920)(8 %)
Amortization of acquired intangible assets1,776 2,397 (621)(26 %)5,327 9,673 (4,346)(45 %)
Stock-based compensation expense9,244 24,100 (14,856)(62 %)47,725 91,335 (43,610)(48 %)
Loss on disposition of Lemonaid Health and transaction-related costs (1)
— — — — %— 2,375 (2,375)(100 %)
Goodwill impairment (2)
— 198,800 (198,800)(100 %)— 198,800 (198,800)(100 %)
Litigation settlement cost— — — — %— 98 (98)(100 %)
Cyber Incident expenses, net of probable insurance recoveries (3)
8,884 1,000 7,884 788 %19,837 1,000 18,837 NM
Total Adjusted EBITDA from continuing operations$(12,999)$(32,484)$19,485 (60 %)$(58,616)$(73,337)$14,721 (20 %)
NM = not meaningful
(1)Refer to Note 17, “Disposition of Subsidiary” for additional information.
(2)Refer to Note 7, “Fair Value Measurements — Nonrecurring Fair Value Measurements” for additional information.
(3)Refer to Note 11, “Commitments and Contingencies — Cyber Incident” for additional information.
Three Months Ended December 31, 2024
Adjusted EBITDA from continuing operations increased by $19.5 million, or 60%, for the three months ended December 31, 2024 as compared to the three months ended December 31, 2023, due to an increase in revenue of $15.5

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million, or 35%, which was primarily driven by the Non-Recurring Revenue Recognition, and a decrease in expenses of $4.0 million, or 5%.
See “Results of Operations - Revenue” above for continuing operations revenue variance explanations for the three months ended December 31, 2024.
Expenses decreased primarily due to a $8.8 million decrease in advertising and brand-related expenses due to a reduction in marketing campaigns and spending, a $2.0 million decrease in lab processing and kit costs due to lower PGS kit sales volume, a $1.2 million decrease in facilities expenses due to property tax refunds, and a $0.4 million decrease in other expenses, including insurance premiums. These decreases were partially offset by a $3.3 million increase in outside services primarily due to compensation and recruiting fees related to the recruitment and appointment of three independent directors to our Board of Directors in order to regain compliance with the Nasdaq listing rules, as well as legal and finance expenses to support the Special Committee. In addition, there was a $3.0 million increase in personnel-related expenses due to severance charges associated with the November 2024 Reduction in Force, and $2.1 million increase in other expenses, including equipment and supplies.
Nine Months Ended December 31, 2024
Adjusted EBITDA from continuing operations increased by $14.7 million, or 20%, for the nine months ended December 31, 2024 as compared to the nine months ended December 31, 2023, primarily due to a decrease in expenses of $25.6 million, or 11%, partially offset by a decrease in revenue of $10.9 million, or 7%.
See “Results of Operations - Revenue” above for continuing operations revenue variance explanations for the nine months ended December 31, 2024.
Expenses decreased primarily due to a $16.1 million decrease in advertising and brand-related expenses due to a reduction in marketing campaigns and spending, a $5.6 million decrease in personnel-related expenses due to reductions in force, an $8.6 million decrease in shipping and fulfillment, lab supplies and processing, and kit costs due to lower PGS kit sales volume, a $1.3 million decrease in facilities expenses due to property tax refunds, a $1.4 million decrease in operations expenses, including a decrease in business insurance premiums, and a $0.5 million decrease in other expenses. These decreases were partially offset by a $6.0 million increase in outside services primarily due to compensation and recruiting fees related to the recruitment and appointment of three independent directors to our Board of Directors in order to regain compliance with the Nasdaq listing rules, legal and finance costs incurred to support the Special Committee, and an increase in consulting fees, as well as a $1.9 million increase in expenses due to a decrease in internal use software project hours in development.
Liquidity, Capital Resources and Going Concern
We have financed our operations primarily through sales of equity securities and sales of PGS, telehealth, and research services. During fiscal 2022, we received gross proceeds of $309.7 million from the Merger and $250.0 million from the PIPE investment consummated in connection with the Merger. Our primary requirements for liquidity and capital are to fund operating needs and finance working capital, capital expenditures, and general corporate purposes.
As of December 31, 2024, our principal source of liquidity was our unrestricted cash and cash equivalents balance of $79.4 million, which is held for working capital purposes. We have incurred significant operating losses as reflected in our accumulated deficit and negative cash flows from operations. We had an accumulated deficit of $2.4 billion as of December 31, 2024.
We will need additional liquidity to fund our necessary expenditures and financial commitments for 12 months after the date that the unaudited condensed consolidated financial statements included elsewhere in this Form 10-Q are issued. We have determined that, as of the filing date of this report, there is substantial doubt about our ability to continue as a going concern.
To improve our financial condition and liquidity position, we are attempting to raise additional capital. In addition, we are working to implement cost-cutting measures, including further reducing operating expenses, negotiating terminations of our long-term real estate leases, and attempting to reach a settlement covering all U.S. customers affected by the Cyber Incident as well as to resolve non-U.S. litigation and ongoing investigations from various governmental agencies arising from the Cyber Incident. See Note 11, "Commitments and Contingencies," to our condensed consolidated financial statements included elsewhere in this Form 10-Q for additional details. To reduce our operating costs, in November 2024, our Board of Directors approved the November 2024 Reduction in Force, which represented a reduction

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of approximately 40% of our workforce and included the closing of substantially all operations in our former Therapeutics operating segment, and the ceasing of additional investment in our two clinical trials (23ME-00610 and 23ME-01473) beyond their respective current stages of development. See Note 9, “Restructuring,” to our condensed consolidated financial statements included elsewhere in this Form 10-Q for additional details. Our ability to continue as a going concern, however, is contingent upon our ability to successfully implement steps such as those referenced above and if we fail to do so and/or are unable to raise sufficient capital or consummate a strategic transaction, we would be forced to modify or cease operations, liquidate assets, or pursue bankruptcy proceedings. While we believe in the viability of our strategy, there are numerous risks and uncertainties that may prevent, and there can be no assurances regarding, the successful implementation of our operational and financial plans and/or the consummation of any transactions. See Note 1, “Organization and Description of Business,” to our condensed consolidated financial statements included elsewhere in this Form 10-Q for additional details.
The unaudited interim condensed consolidated financial statements have been prepared assuming that we will continue as a going concern.
Our future capital requirements will depend on many factors including our revenue growth rate, the timing and extent of spending to support further sales and marketing activities, and research and development efforts. We may not be able to obtain additional financing on terms acceptable to us or at all. Our ability to obtain additional financing depends on a number of factors, including, but not limited to, the market price of our Class A common stock, the availability and cost of additional equity capital, our ability to retain the listing of our Class A common stock on The Nasdaq Stock Market, and the general economic and industry conditions affecting the availability and cost of capital. If we raise additional funds by issuing equity or equity-linked securities, our stockholders may experience dilution. Future debt financing, if available, may involve covenants restricting our operations or our ability to incur additional debt. If we are unable to raise additional capital when desired, our business, results of operations, and financial condition would be materially and adversely affected. See Note 2, “Summary of Significant Accounting Policies - Liquidity and Going Concern,” to our condensed consolidated financial statements included elsewhere in this Form 10-Q for additional details.
Cash from operations could also be affected by our customers and other risks, including, without limitation, those risks set forth in Part I, Item 1A, “Risk Factors,” of our Fiscal 2024 Form 10-K, as amended and supplemented in our subsequent reports and filings with the SEC. We will require additional financing to execute our ongoing and future operations and expect to continue to maintain financing flexibility in the current market conditions.
On February 6, 2023, we entered into a Sales Agreement (the “Sales Agreement”) with Cowen and Company, LLC (the “Agent”), pursuant to which we may sell, from time to time, at our option, up to $150.0 million in aggregate principal amount of an indeterminate amount of shares of our Class A common stock, $0.0001 par value per share (the “ATM Shares”), through the Agent, as our sales agent (the “ATM program”). Subject to the terms of the Sales Agreement, the Agent will use reasonable efforts to sell the ATM Shares from time to time, based upon our instructions (including any price, time, or size limits or other customary parameters or conditions that we may impose), by methods deemed to be an “at the market offering” as defined in Rule 415(a)(4) promulgated under the Securities Act of 1933, as amended, and pursuant to the Shelf Registration Statement on Form S-3 that we filed with the SEC on February 6, 2023. We will pay the Agent a commission of 3.0% of the gross proceeds from the sales of the ATM Shares, if any. We have also agreed to provide the Agent with customary indemnification and contribution rights. The offering of the ATM Shares will terminate upon the earliest of (a) the sale of the maximum number or amount of the ATM Shares permitted to be sold under the Sales Agreement and (b) the termination of the Sales Agreement by the parties thereto. While we cannot provide any assurances that we will sell any ATM Shares pursuant to the Sales Agreement, we expect to use the net proceeds from the sale of securities under the Sales Agreement, if any, for general corporate purposes, including working capital requirements and operating expenses; we, however, have not allocated the net proceeds for specific purposes. As of the date of this Form 10-Q, we have not made any sales under the Sales Agreement.
For the nine months ended December 31, 2024, there were no material changes outside of the ordinary course of business in our commitments and contractual obligations disclosed in the Fiscal 2024 Form 10-K, except for the net loss contingencies related to the Cyber Incident. As of December 31, 2024, we had $41.3 million of accrued expenses related to estimated loss contingencies and legal fees included in current liabilities, offset by $21.3 million of insurance recoveries included in prepaid and other current assets, in the condensed consolidated balance sheets. See Note 11, “Commitments and Contingencies,” to our condensed consolidated financial statements included elsewhere in this Form 10-Q for additional details.

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Cash Flows
The following table summarizes our cash flows from continuing and discontinued operations for the periods presented:
Nine Months Ended December 31,
20242023
(in thousands)
Net cash used in operating activities$(128,854)$(138,535)
Net cash used in investing activities$(2,969)$(7,480)
Net cash provided by financing activities$250 $1,584 
Cash Flows from Operating Activities
Net cash used in operating activities of $128.9 million for the nine months ended December 31, 2024 was primarily related to a net loss of $181.5 million, partially offset by non-cash charges for stock-based compensation of $50.5 million, depreciation and amortization of $11.4 million, impairment of long-lived assets of $10.0 million, and amortization and impairment of internal-use software of $6.3 million. The net changes in operating assets and liabilities of $25.6 million were primarily related to a decrease in deferred revenue of $11.9 million as a result of a decrease in research services deferred revenue related to GSK collaboration, an increase in inventories of $8.9 million primarily driven by an increase in kit inventory in preparation for October’s Amazon Prime Day and the holiday season, a decrease in operating lease liabilities of $7.0 million primarily due to lease payments, an increase in accounts receivable of $6.7 million primarily due to timing of customer billing, an increase in deferred cost of revenue of $5.1 million primarily due to PGS kits sales during the holiday season, a decrease in accounts payable of $2.8 million primarily due to the timing of vendor payments, and an increase in prepaid expenses and other current assets of $1.0 million primarily due to an increase in prepaid insurance. These were partially offset by an increase in accrued and other current liabilities of $11.5 million primarily driven by an increase in loss contingencies and legal fees associated with the Cyber Incident, as well as the timing of vendor invoices receipts, and a decrease in operating ROU assets of $5.6 million primarily due to ROU assets amortization.
Net cash used in operating activities of $138.5 million for the nine months ended December 31, 2023 was primarily related to a net loss of $457.9 million, partially offset by non-cash charges for goodwill impairment of $198.8 million, stock-based compensation of $101.2 million, depreciation and amortization of $19.2 million, amortization and impairment of internal-use software of $4.4 million, and loss on the disposition of Lemonaid Health Limited of $2.0 million. The net changes in operating assets and liabilities of $5.7 million were primarily related to an increase in accounts receivable of $16.3 million primarily due to timing of customer billing, an increase in inventories of $5.4 million primarily due to increased purchases of arrays for the processing of Kits sold during the holiday season, an increase in deferred cost of revenue of $6.8 million primarily due to PGS Kits sales during the holiday season, a decrease in operating lease liabilities of $6.5 million primarily due to lease payments, a decrease in accrued and other current liabilities of $5.9 million primarily due to timing of vendor invoice receipts, and an increase in prepaid expenses and other current assets of $4.5 million primarily due to an increase in prepaid insurance. These were partially offset by an increase in deferred revenue of $32.9 million as a result of an increase in research services deferred revenue related to the GSK collaboration and increases in PGS deferred revenue primarily due to more Kit sales from holiday sales than revenue recognized during the period, and a decrease in operating ROU assets of $5.3 million primarily due to ROU assets amortization.
Cash Flows from Investing Activities
Net cash used in investing activities was $3.0 million for the nine months ended December 31, 2024, which consisted of capitalization of internal-use software costs of $4.7 million and purchases of property and equipment of $0.7 million, offset by proceeds from sale of property and equipment of $2.5 million.
Net cash used in investing activities was $7.5 million for the nine months ended December 31, 2023, which consisted of capitalization of internal-use software costs of $6.6 million and purchases of property and equipment of $0.9 million.
Cash Flows from Financing Activities
Net cash provided by financing activities was $0.3 million for the nine months ended December 31, 2024.


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Net cash provided by financing activities was $1.6 million for the nine months ended December 31, 2023, which consisted of $0.7 million in proceeds from the exercise of stock options and $1.4 million in proceeds from the issuance of Class A common stock under the ESPP, partially offset by $0.2 million in payments for taxes related to net share settlement of equity award and $0.4 million in payments of deferred offering costs.
Contractual Obligations and Commitments
Our lease portfolio includes leased offices, dedicated lab facility and storage space, and dedicated data center facility space, with remaining contractual periods ranging from 1 to 6.6 years. Refer to Note 10, “Leases,” to our unaudited condensed consolidated financial statements included elsewhere in this Form 10-Q for a summary of our future minimum lease obligations.
In the normal course of business, we enter into non-cancelable purchase commitments with various parties for purchases. Refer to Note 11, “Commitments and Contingencies,” to our unaudited condensed consolidated financial statements included elsewhere in this Form 10-Q for a summary of our commitments as of December 31, 2024.
Critical Accounting Policies and Estimates
Our condensed consolidated financial statements and the related notes thereto included elsewhere in this Form 10-Q are prepared in accordance with GAAP. The preparation of condensed consolidated financial statements also requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses, and related disclosures. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results could differ significantly from the estimates made by management. To the extent that there are differences between our estimates and actual results, our future financial statement presentation, financial condition, results of operations, and cash flows will be affected. We believe that the following are the critical accounting policies used in the preparation of our condensed consolidated financial statements, as well as the significant estimates and judgments affecting the application of these policies. This discussion and analysis should be read in conjunction with our condensed consolidated financial statements and related notes included in this Form 10-Q.
Our significant accounting policies are described in Note 2 to our consolidated financial statements included in our Fiscal 2024 Form 10-K. These are the policies that we believe are the most critical to aid in fully understanding and evaluating our condensed consolidated financial condition and results of operations.
Revenue Recognition
We generate revenue from our PGS, telehealth, and research services. In accordance with ASC 606, revenue is recognized when a customer obtains control of promised goods or services. The amount of revenue recognized reflects the consideration that we expect to receive in exchange for these goods or services.
We sell through multiple channels, including direct-to-consumer via our website and through online retailers. If the customer does not return the kit, services cannot be completed by us, potentially resulting in unexercised rights (“breakage”) revenue. To estimate breakage, we apply the practical expedient available under ASC 606 to assess our customer contracts on a portfolio basis as opposed to individual customer contracts, due to the similarity of customer characteristics, at the sales channel level. We recognize the breakage amounts as revenue, proportionate to the pattern of revenue recognition of the returning kits in these respective sales channel portfolios. We estimate breakage for the portion of kits not expected to be returned using an analysis of historical data and consider other factors that could influence customer kit return behavior. We update our breakage rate estimate periodically and, if necessary, adjust the deferred revenue balance accordingly. If actual return patterns vary from the estimate, actual breakage revenue may differ from the amounts recorded.
We recognized breakage revenue from unreturned kits of $4.4 million and $4.4 million for the three months ended December 31, 2024 and 2023, respectively, and $13.8 million and $13.4 million for the nine months ended December 31, 2024 and 2023, respectively. A hypothetical ten percent change in our breakage rate estimate would not have had a material impact on total revenue recognized during the three and nine months ended December 31, 2024.
There have been no material changes to our critical accounting policies and estimates as compared to those described in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” set forth in the Fiscal 2024 Form 10-K.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk
We have operations primarily within the United States and we are exposed to market risk in the ordinary course of our business. Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates. We do not believe that inflation has had a material effect on our business, results of operations or financial condition. Nonetheless, if our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs. Our inability or failure to do so could harm our business, results of operations or financial conditions.
Interest Rate Risk
As of December 31, 2024, we had $79.4 million in cash and cash equivalents. Our cash equivalents are comprised primarily of money market accounts. Due to the short-term nature of these instruments, we believe that we do not have any material exposure to changes in the fair value of our investment portfolio as a result of changes in interest rates. Declines in interest rates, however, would reduce future interest income and cash flows. A hypothetical 10% change in interest rates during the three and nine months ended December 31, 2024 and 2023 would not have had a material impact on our historical condensed consolidated financial statements.
Foreign Currency Risk
Our results of operations and cash flows are subject to fluctuations due to changes in foreign currency exchange rates. Currently, substantially all our revenue and expenses are denominated in U.S. dollars. Revenue and expenses are remeasured each day at the exchange rate in effect on the day the transaction occurred. Our results of operations and cash flows in the future may be adversely affected due to an expansion of non-U.S. dollar denominated contracts and changes in foreign exchange rates. The effect of a hypothetical 10% change in foreign currency exchange rates applicable to our business would not have had a material impact on our historical condensed consolidated financial statements for the three and nine months ended December 31, 2024 and 2023. To date, we have not engaged in any hedging strategies. If our international activities grow, we will continue to reassess our approach to manage the risk relating to fluctuations in currency rates.
Item 4. Controls and Procedures
Disclosure Controls and Procedures
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in company reports filed or submitted under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.
We do not expect that our disclosure controls and procedures will prevent all errors and all instances of fraud. Disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable assurance of achieving the desired control objectives. Further, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and the benefits must be considered relative to their costs. The design of disclosure controls and procedures also is based partly on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.
As of December 31, 2024, as required by Rules 13a-15 and 15d-15 under the Exchange Act, our Chief Executive Officer and Chief Financial Officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures. Based upon their evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as a result of the material weakness in internal control over financial reporting as described below, our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) were not effective as of December 31, 2024.
As a result of the resignations of seven non-employee directors from the Company’s Board of Directors on September 17, 2024, the Company did not have a majority independent Board of Directors with an independent Audit Committee as of September 30, 2024. Accordingly, material weaknesses in the control environment and monitoring of the internal control over financial reporting were identified as a result of the lack of oversight by an independent Audit Committee to assess the development and performance of internal control, maintain reporting lines and responsibilities, and

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demonstrate a commitment to integrity and ethical values that support a functioning system of internal control, all of which impacted the Company’s ability to monitor and evaluate whether the components of internal control were present and functioning and properly evaluate deficiencies.
Remediation Efforts to Address Deficiencies in Internal Control Over Financial Reporting
On October 29, 2024, the Company announced the appointment of three independent board members (the “New Directors”), each of whom was appointed to the Audit Committee of the Board of Directors. Each of the New Directors (i) qualifies as an Independent Director (as defined in Nasdaq Listing Rule 5605(a)(2)), (ii) meets the criteria for independence set forth in Rule 10A-3(b)(1) under the Securities Exchange Act of 1934, as amended, (iii) has not participated in the preparation of the financial statements of the Company or any current subsidiary of the Company at any time during the past three years, and (iv) is able to read and understand fundamental financial statements. Additionally, at least one of the New Directors qualifies and was designated as the “audit committee financial expert.” The Company is working to remediate the material weakness upon demonstration of effective oversight of external financial reporting and internal controls over financial reporting within fiscal 2025.
Changes in Internal Control over Financial Reporting
There was no change in our internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, during the fiscal quarter ended December 31, 2024 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The information set forth in Note 11, “Commitments and Contingencies,” of the Condensed Consolidated Financial Statements of this Form 10-Q is incorporated herein by reference.
Item 1A. Risk Factors
Except as set forth below, there have been no material changes to the risk factors set forth in Part I, Item 1A., “Risk Factors,” of the Fiscal 2024 Form 10-K.
Our strategic restructuring and the associated headcount reduction have significantly changed our business, resulted in significant expense, may not result in anticipated savings, and has and will continue to disrupt our business.
As previously disclosed, on November 8, 2024, the Board of Directors of the Company approved a reduction in force (the “November 2024 Reduction in Force”), which also included the closure of substantially all operations in our former Therapeutics operating segment (together with the November 2024 Reduction in Force, the “November 2024 Reduction Plan”). The November 2024 Reduction Plan is intended to restructure and strategically align our workforce and organization with our current strategy and to reduce our operating costs. See Note 9, “Restructuring,” for additional details. We may not realize, in full or in part, the anticipated benefits, savings, and improvements in our cost structure from our restructuring efforts, and if we are unable to realize the expected operational efficiencies and cost savings from the restructuring, our operating results and financial condition would be adversely affected.
Our restructuring efforts could and have resulted in significant write-offs and other charges; for example, we recorded $10.0 million related to the South San Francisco Facility abandonment related to the November 2024 Reduction Plan during the three months ended December 31, 2024. Additionally, our restructuring efforts may divert management’s attention from our core business operations, have an adverse effect on existing relationships with our third-party business partners, and impact our ability to retain qualified personnel, which may negatively affect our infrastructure and operations or result in a loss of employees and reduced productivity among remaining employees. Further, the November 2024 Reduction Plan may yield unintended consequences, such as attrition beyond our intended workforce reduction, reduced employee morale, loss of customers or partners, and other adverse effects on our business.
If our management is unable to successfully manage the restructuring, or if we are required to take additional actions in order to support our business objectives, our expenses may be more than expected and may vary significantly from period to period and we may be unable to implement our business strategy. As a result, our future financial performance, operations, and prospects would be negatively affected.
There is substantial doubt regarding our ability to continue as a going concern.
We incurred significant operating losses as reflected in our accumulated deficit and negative cash flows from operations. As of December 31, 2024, we had an accumulated deficit of $2.4 billion, and unrestricted cash and cash equivalents of $79.4 million. We will need additional liquidity to fund our necessary expenditures and financial commitments for 12 months after the date that the unaudited condensed consolidated financial statements included in this Form 10-Q are issued. We have determined that, as of the filing date of this report, there is substantial doubt about our ability to continue as a going concern.
To improve our financial condition and liquidity position, we are attempting to raise additional capital. In addition, we are working to implement cost-cutting measures, including further reducing operating expenses, negotiating terminations of our long-term real estate leases, and attempting to reach a settlement covering all U.S. customers affected by the Cyber Incident that was reported by us in October 2023 as well as to resolve non-U.S. litigation and ongoing investigations from various governmental agencies arising from the Cyber Incident. Our ability to continue as a going concern, however, is contingent upon our ability to successfully implement steps such as those referenced above, and if we fail to do so and/or are unable to raise sufficient capital or consummate a strategic transaction, we would be forced to modify or cease operations, liquidate assets or pursue bankruptcy proceedings. While we believe in the viability of our strategy there are numerous risks and uncertainties may prevent, and there can be no assurances regarding, the successful implementation of our operational and financial plans and/or the consummation of any transactions.
Furthermore, the reaction of investors to our potential inability to continue as a going concern could also have a material and adverse impact on the price of our Class A common stock, which could negatively impact our ability to obtain

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stock-based financing or enter into strategic transactions. Additionally, the perception that we may not be able to continue as a going concern may cause prospective partners or collaborators to choose not to conduct business with us due to concerns about our ability to meet our contractual obligations and continue operating our business without interruption.
The ultimate effect of the Reverse Stock Split on the market price of our Class A common stock cannot be predicted with any certainty and may decrease the liquidity of our Class A common stock and magnify any decrease in our overall market capitalization.
Effective October 16, 2024, we effected a one-for-twenty reverse stock split of all of our issued and outstanding shares of Class A common stock and Class B common stock, pursuant to which every twenty shares of our Class A common stock and Class B common stock were automatically combined into one issued and outstanding share of our respective Class A common stock and Class B common stock.
The ultimate effect of the Reverse Stock Split on the market price of our Class A common stock cannot be predicted with any certainty, and we cannot assure you that the Reverse Stock Split will result in any or all of the expected benefits, including enabling us to maintain compliance with the Nasdaq listing standards for any meaningful period of time. While the reduction in the number of outstanding shares of our Class A common stock increased the market price of our Class A common stock such that we were able to regain compliance with Nasdaq’s Minimum Bid Requirement, we cannot assure you that the Reverse Stock Split will result in any permanent or sustained increase in the market price of our Class A common stock. The market price of our Class A common stock depends on multiple factors, many of which are unrelated to the number of shares outstanding, including our business and financial performance, general market conditions, and prospects for future success, any of which could have a counteracting effect to the Reverse Stock Split on the per share price.
In addition, the Reverse Stock Split also reduced the total number of outstanding shares of our Class A common stock, which may lead to reduced trading for our Class A common stock. As a result of a lower number of shares outstanding, the market for our Class A common stock may also become more volatile. The Reverse Stock Split also increased the number of stockholders who own “odd lots” of less than 100 shares of Class A common stock. A purchase or sale of less than 100 shares of Class A common stock (an “odd lot” transaction) may result in incrementally higher trading costs through certain brokers, particularly “full service” brokers. Therefore, those stockholders who own fewer than 100 shares of Class A common stock following the Reverse Stock Split may be required to pay higher transaction costs if they sell their Class A common stock.
Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not Applicable.
Item 5. Other Information
Rule 10b5-1 Trading Arrangements and Non-Rule 10b5-1 Trading Arrangements
None of the Company’s directors or officers adopted, modified, or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the Company’s fiscal quarter ended December 31, 2024.



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Item 6. Exhibits
The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q (unless otherwise indicated, the file number with respect to each filed document is 001-39587):
Exhibit Index
3.1*
10.1
10.2
31.1*
31.2*
32.1**
32.2**
101.INSInline XBRL Instance Document
101.SCHInline XBRL Taxonomy Extension Schema
101.CALInline XBRL Taxonomy Extension Calculation Linkbase
101.DEFInline XBRL Taxonomy Extension Definition Linkbase
101.LABInline XBRL Taxonomy Extension Label Linkbase
101.PREInline XBRL Taxonomy Extension Presentation Linkbase
104Cover Page Interactive Data File (Embedded within the Inline XBRL document and included in Exhibit)
*Filed herewith
**Furnished herewith

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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
23ANDME HOLDING CO.
Date:February 6, 2025By: /s/ Anne Wojcicki
Name: Anne Wojcicki
Chief Executive Officer and President
(Principal Executive Officer)
Date:February 6, 2025By: /s/ Joseph Selsavage
Name: Joseph Selsavage
Chief Financial and Accounting Officer
(Principal Financial and Accounting Officer)
/s/ Jeffrey W. Bullock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
/s/ JAMES CAHILLANE

 
/s/ Jeffrey W. Bullock

 

 
Anne Wojcicki Name: /s/ Anne Wojcicki By:

 

Exhibit 31.1
CERTIFICATION PURSUANT TO
RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Anne Wojcicki, certify that:
1.I have reviewed this Quarterly Report on Form 10-Q of 23andMe Holding Co. for the quarter ended December 31, 2024;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
i.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
ii.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
iii.Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
iv.Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
i.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
ii.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: February 6, 2025
By:/s/ Anne Wojcicki
Anne Wojcicki
Chief Executive Officer
(Principal Executive Officer)

Exhibit 31.2
CERTIFICATION PURSUANT TO
RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Joseph Selsavage, certify that:
1.I have reviewed this Quarterly Report on Form 10-Q of 23andMe Holding Co. for the quarter ended December 31, 2024;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
i.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
ii.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
iii.Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
iv.Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
i.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
ii.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: February 6, 2025
By:/s/ Joseph Selsavage
Joseph Selsavage
Chief Financial and Accounting Officer
(Principal Financial and Accounting Officer)

Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the quarterly report of 23andMe Holding Co. (the “Company”) on Form 10-Q for the quarter ended December 31, 2024, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:
1.The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
Date: February 6, 2025
By:/s/ Anne Wojcicki
Anne Wojcicki
Chief Executive Officer
(Principal Executive Officer)

Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the quarterly report of 23andMe Holding Co. (the “Company”) on Form 10-Q for the quarter ended December 31, 2024, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:
1.The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
Date:February 6, 2025By: /s/ Joseph Selsavage
Joseph Selsavage
Chief Financial and Accounting Officer
(Principal Financial and Accounting Officer)