23andMe, the genetic testing giant once valued in the billions, is now navigating Chapter 11 bankruptcy and notifying millions of current and former customers that they may be eligible to file claims as part of the restructuring process. The company and 11 of its subsidiaries, including Lemonaid Health and LPRXOne, filed for bankruptcy protection on March 23 of this year in the Eastern District of Missouri. Customers were alerted Sunday that they have until July 14 to file claims for losses incurred.
The bankruptcy follows a tumultuous 18 months for 23andMe, marked by declining sales, executive departures, and a devastating data breach that compromised sensitive personal information of nearly 7 million users. The breach, publicly disclosed in October 2023, exposed customers’ names, birth years, relationship labels, percentages of DNA shared with relatives, ancestry reports, and self-reported locations, according to TechCrunch. The fallout triggered multiple class action lawsuits and a wave of customer mistrust that severely undercut the company’s consumer-facing business.
Now, customers who were affected by that breach — specifically those notified by 23andMe that their information was compromised between May and October 2023 — may file what is known as a Cyber Security Incident Claim. Those who suffered financial or other damages due to the breach can submit a claim as part of the bankruptcy case. Customers with other types of grievances unrelated to the cyberattack, such as issues with DNA test results or the company’s telehealth services, may submit a separate claim under the General Bar Date Package.
Congress has also expressed concerns about the privacy implications of the bankruptcy.
23andMe’s fall from grace was swift, and its woes were compounded by its ambitious but costly expansion into digital health and telemedicine, which included the $400 million acquisition of Lemonaid Health in 2021. Originally aimed at diversifying 23andMe’s offerings beyond consumer DNA testing, the moves strained 23andMe’s financial resources and failed to deliver the growth the company needed.
A proposed $30 million settlement in a related class action lawsuit over the cyberattack remains on hold due to the bankruptcy proceedings. (23andMe’s attorneys say the settlement is in dispute now that the company is in bankruptcy.) Customers who want to preserve their right to compensation must submit a formal proof of claim regardless of their participation in the class action.
TechCrunch has reached out to 23andMe for comment.
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