23andMe Files Bankruptcy Amid Data Breach and Financial Struggles

23andMe, a prominent genetic testing company once valued in the billions, has filed for Chapter 11 bankruptcy protection along with 11 subsidiaries, including Lemonaid Health and LPRXOne. This filing, made in the Eastern District of Missouri on March 23, 2025, marks a significant downturn for the company amid financial struggles and a major cybersecurity incident.

Customers were recently notified that they have until July 14 to file claims related to losses incurred during the bankruptcy process. Those affected by the October 2023 data breach, which compromised sensitive personal information of nearly 7 million users, may file Cyber Security Incident Claims. This breach exposed names, birth years, relationship data, DNA sharing percentages, ancestry reports, and self-reported locations, severely damaging customer trust.

The fallout from the breach has led to multiple class action lawsuits and a significant decline in consumer-facing business. Customers with grievances unrelated to the cyberattack, such as issues with DNA test results or telehealth services, can submit separate claims under the General Bar Date Package. The bankruptcy has also paused a proposed $30 million settlement related to the breach.

23andMe’s financial difficulties were compounded by an ambitious but costly expansion into digital health and telemedicine, including the $400 million acquisition of Lemonaid Health in 2021. These moves strained the company’s resources without delivering the expected growth, contributing to its rapid decline.

The bankruptcy proceedings highlight critical issues around data privacy, corporate governance, and the risks of rapid expansion in tech-driven healthcare sectors. Congress has also raised concerns about the privacy implications of the bankruptcy, underscoring the broader regulatory and ethical challenges faced by companies handling sensitive genetic data.

For customers and stakeholders, the situation serves as a cautionary tale about the importance of robust cybersecurity measures and transparent communication during crises. The requirement for customers to submit formal proofs of claim, regardless of class action participation, emphasizes the complexity of legal recourse in bankruptcy contexts.