On February 7, 2024, 23andMe Holding Co (ME, Financial) released its 8-K filing, detailing the financial results for the third quarter of fiscal year 2024 (FY24), which ended December 31, 2023. The company, known for its direct-to-consumer personal genome services and biopharmaceutical research, faced a significant decrease in revenue and an expanded net loss compared to the same quarter in the previous fiscal year.
Revenue and Earnings Overview
23andMe reported a total revenue of $44.7 million in Q3 FY24, a sharp decline from $66.9 million in Q3 FY23. This 33% decrease was attributed to lower research revenue following the end of the GSK collaboration exclusivity term and reduced sales volumes of personal genome service (PGS) kits. Despite this, the company announced a new non-exclusive data license with GSK, which included a $20 million upfront payment.
The company's operating expenses soared to $301 million, largely due to a $199 million non-cash goodwill impairment charge. This resulted in a net loss of $278 million for the quarter, a significant increase from the $92 million net loss in the prior year's quarter. Adjusted EBITDA, which excludes certain non-cash and non-recurring items, was reported as a loss of $48 million, compared to a loss of $43 million in Q3 FY23.
Strategic Developments and Financial Position
23andMe introduced several new offerings, including the 23andMe+ Total Health membership, which provides clinical-grade exome sequencing and biannual blood testing. The company also continued to enhance its 23andMe+ Premium membership with new health features and expanded its genetic health risk report to include additional variants.
On the therapeutics front, 23andMe received FDA clearance for an IND on its immuno-oncology asset 23ME-1473 and expanded its ongoing clinical study for another therapeutic candidate, 23ME-00610. These developments underscore the company's commitment to leveraging its genetic database for drug discovery and development.
However, the company's balance sheet reflects a decrease in cash and cash equivalents, from $387 million at the end of FY23 to $242 million as of December 31, 2023. This reduction in cash reserves, along with the reported net loss, indicates financial challenges that the company will need to navigate in the coming periods.
Adjusted Financial Guidance and Future Outlook
In light of the Q3 FY24 results, 23andMe has adjusted its full-year financial guidance for FY24. The company now expects revenue to be in the range of $215 million to $220 million, with a net loss projected to be between $525 million and $520 million. The Adjusted EBITDA deficit is anticipated to be between $185 million and $180 million for the fiscal year.
23andMe's CEO, Anne Wojcicki, remains optimistic about the company's strategic progress and its positioning to create maximum value. The company is focusing on margin expansion and progressing toward cash flow profitability within its consumer businesses, while narrowing its discovery efforts in therapeutics to align with core strengths.
For investors and potential GuruFocus.com members, 23andMe's financial performance presents a mixed picture. While the company is making strategic progress in its product offerings and therapeutic developments, it faces significant financial challenges that will require careful management and strategic execution in the future.
For more detailed financial information and future updates on 23andMe Holding Co (ME, Financial), stay tuned to GuruFocus.com.
Explore the complete 8-K earnings release (here) from 23andMe Holding Co for further details.
