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ME

23andMe Holding NasdaqGS:ME Stock Report

Last Price

US$3.24

Market Cap

US$1.5b

7D

0.6%

1Y

-59.5%

Updated

05 Oct, 2022

Data

Company Financials +
ME fundamental analysis
Snowflake Score
Valuation0/6
Future Growth0/6
Past Performance0/6
Financial Health6/6
Dividends0/6

ME Stock Overview

23andMe Holding Co. operates as a consumer genetics testing company.

23andMe Holding Co. Competitors

Price History & Performance

Summary of all time highs, changes and price drops for 23andMe Holding
Historical stock prices
Current Share PriceUS$3.24
52 Week HighUS$13.68
52 Week LowUS$2.12
Beta0
1 Month Change4.18%
3 Month Change5.88%
1 Year Change-59.50%
3 Year Changen/a
5 Year Changen/a
Change since IPO-66.94%

Recent News & Updates

Sep 27

23andMe: Disappointing Results Could Mean Potential Acquisition Target

Summary FQ1 revenue grew 9% yoy, however adjusted EBITDA loss reached $50 million and was down from the $27 million loss in the year-ago period. Full-year revenue guidance of $260-280 million was reiterated, but adjusted EBITDA loss guidance of $195-215 million remains disappointing. With the company's enterprise value now under $1 billion, investors could start to view 23andMe as a potential acquisition target from a larger drug development company. 23andMe (ME) has been a relatively well-known consumer product company for many years. After the company went public via a SPAC, investors poured into the name with a heightened belief that 23andMe could one day monetize their significant proprietary data set, hosting over 13 million consumer genetic tests. Revenue during the most recent quarter grew 9% yoy, but adjusted EBITDA loss reached $50 million, down from the $27 million loss in the year-ago period. And with the company having $479 million of cash left on the balance sheet, the current run-rate FCF loss of $70 million gives them just 1.5 years left of operating before they need a capital raise. Data by YCharts Since the company completed their public offering via a SPAC, the stock has fallen from $10 down to $3 as investors continue to see disappointing financial results. And while there continues to be progression with the company's co-development programs, investors have yet to see a therapeutic program become mainstream and gain full regulatory approval. While the company reported disappointing results, investors should continue to look at the company for what they actually are. They are not a high-growth, profitable, cash flow generating company. However, they are the leader in DNA collections, hosting significant amounts of proprietary data for the potential co-development of future drugs. For now, I continue to be a believer in the long-term potential of the company and given the ongoing stock weakness, one may start to think of 23andMe as a possible acquisition target for a larger drug development company. 23andMe Overview For those who are unfamiliar, 23andMe provides consumers with DNA genetic testing products, providing insights into an individual's ancestry, DNA, and genetics. With over 13 million consumers being genotyped and 80% of those opting-in to 23andMe's research, the company has developed a vast amount of proprietary data into DNA sequencing. 23andMe Given this vast amount of data, 23andMe has developed 50+ programs, largely in early-stage therapeutic areas. With the hope of co-developing a drug, 23andMe has a strategic collaboration with GSK (GSK), giving 23andMe access to GSK's technology and platform while GSK gets access to 23andM3's data sets. Recent Financial Results The company reported FQ1 earnings in early August, with revenue growing 9% yoy to $64.5 million. As a backdrop, the company will likely continue to grow revenue in the 5-10% range as they are more focused on data collection for the potential co-development of future drugs. So while the near-term financial metrics are unattractive at face value, I continue to believe the real value of the company lies within their database. Regarding FQ1 revenue growth, management called out a few moving pieces. Investors should also remember that the company's Research Services revenue is largely made up of their collaboration with GSK, representing around 13% of total revenue. First quarter revenue growth was primarily due to the inclusion of a full quarter of telehealth services and an increase in subscription revenue. These increases were partially offset by lower revenue in the other areas of Consumer & Research Services. 23andMe From a profitability standpoint, the company reported an adjusted EBITDA loss of $50 million, which was nearly double that of the $27 million loss in the year ago period. Combined with increased costs from the previously acquired Lemonaid's telehealth business, 23andMe also saw increased labor costs. Given the ongoing losses, investors will naturally start to look at the company's balance sheet and their ability to operate as an ongoing concern. At the end of FQ1, 23andMe had $479 million of cash, though they burned through ~$75 million of cash just during the most recent quarter. At this run-rate, the company would have a little over 1.5 years left of operating before one of two things would need to happen. First, and likely the most preferable, 23andMe would need to significantly improve their cash burn and start to move towards profitability. While investors likely don't expect to see profitability in the near-term, by better managing their cash burn, 23andMe would have a safer buffer of cash. If that does not occur, then option two would be for the company to raise capital, either through issuing debt or equity. Given that the stock remains significantly down from the company's original listing price (down around 70%), raising meaningful equity would significantly dilute current shareholders. 23andMe For the full-year, the company reiterated their revenue guidance of $260-280 million, which compares to consensus expectations for $275 million. Adjusted EBITDA loss is also expected to be $195-215 million, which reiterates my belief that the company may need to raise capital in the near future unless they are able to get expenses under better control. While the financial situation has seen better days, 23andMe continues to succeed in building out their moat around human genome data. In our therapeutics efforts, we continue to use our research platform to create a pipeline of more than 50 programs backed by human genetic data with two now in Phase 1 clinical trials. We also just started the fifth year of our exclusive target discovery collaboration with GSK. Our collaboration with GSK has been very productive and we believe GSK's decision to exercise their option for a fifth year further demonstrates the value of our unique database for discovering novel targets for drug development. We believe the new therapeutics that come out of our discovery engine will eventually play a significant role in helping people benefit from the human genome.

Aug 26

23andMe: Treacherous Path To Profitability

Summary 23andMe is seeing its revenue decline as operational expenses accelerate. The company is burning cash at an alarming rate with no signs of slowing down. Management has been unclear in the company's concrete steps to reach profitability and how its business model will be impacted in a recession. Low market capitalization and the value of 23andMe's immense data may make this company a potential acquisition target. Thesis We believe that 23andMe Holding Co. (NASDAQ:ME) as a standalone business faces numerous risks and the recent financial performance has raised serious questions about the viability of the company as a business. The company continues to burn through cash at an increasing rate, and management has been unclear on the company's path to profitability and how its business will operate in a severe recession. However, we are recommending a "HOLD" as the company's stock is nearly ~70% down from its SPAC merger price, and we find that there's a possibility that the company may be acquired at some point. Company Overview 23andMe is a genomics and biotechnology company that provides health reports to consumers by analyzing their DNA. The company's services include the analysis of one's genome for ancestry breakdown, phenotypic traits, and assessment of health risks. 23andMe has been around since 2006, and the company has gathered the genomes of more than 1 million people. In 2021, 23andMe went public through a SPAC, raising nearly $600 million in the process. However, the company's stock price has performed poorly in the recent months, and the stock price is down nearly -42% year-to-date. In the same time frame, S&P 500 returned -11.67% and iShares US Healthcare ETF (IYH) had slightly better YTD returns at -8.62%. ME Year to Date Price Returns (Daily) data by YCharts Burning Cash Despite the injection of new capital as a result of the SPAC merger, the company has been burning through cash. In the last reported quarter ending in June 30, 2022, the company reported a loss of $90 million compared to a revenue of $60 million in the same time frame. The company saw operating expenses balloon to $115 million (compared to $42 million in the same quarter last year), and resulted in the company losing more money than the revenue brought in. This trend is not new, as in the preceding quarter ending in March 31, 2022, the company also reported a net loss of $70 million with a revenue of $100 million. The accelerating quarter-over-quarter decline in revenue along with an acceleration of losses is concerning. Furthermore, the cash burn can be visibly seen in the balance sheet, as cash and cash equivalents declined from $769 million in quarter ending June 30, 2021 to $480 million the same quarter this year. The continued cash burn is not sustainable and tightening capital markets will make it more difficult for 23andMe to continue on this trajectory. ME Cash and Equivalents (Quarterly) data by YCharts Unclear Path to Profitability Management has been unclear in the concrete steps to be taken for the business to be profitable. In earnings call and presentations, the company continues to emphasize "investments" in therapeutic business. However, we were not convinced by management's response to question with regard to the path to profitability. An analyst asked 23andMe management during a recent earnings call, "Do you have enough cash on hand to become profitable?" The response by the CEO was: So we disclosed at the end of the first quarter that we have $479 million in cash. And we also then reaffirmed our guidance on our adjusted EBITDA, which is our proxy for operating cash flow. And so when you look at that those two figures the range on adjusted EBITDA is $195 million to $215 million. If you kind of take the average of that and look at that cash balance, you can get a sense of what the runway is and it's a reasonably good period of time it will give us the ability to execute a lot of things that Anne has talked about on the consumer side and that Kenneth is working on with our portfolio of therapeutics.

Aug 19

23andMe drops 8% as CFO resigns

The shares of genetics test provider 23andMe Holding Co. (NASDAQ:ME) dropped ~8% in the pre-market trading Friday after the company announced the resignation of its Chief Financial Officer Steven Schoch, effective Sep. 01. Citing a letter from Mr. Schoch on Aug. 15, 23andMe (ME) said he would no longer serve as the company’s principal financial officer and accounting officer from next month. However, Schoch will continue to serve the firm until Sep. 30, during the transition of his responsibilities and duties. Following his resignation on Aug. 17, 23andMe's (ME) board of directors has approved the appointment of Joseph Selsavage as the company’s interim chief financial and accounting officer. Selsavage, who previously served as the CFO of Lemonaid Health, Inc., which was acquired by 23andMe (ME) in Nov. 2021, will serve as the company’s CFO on an interim basis pending an executive search for a permanent replacement. Mr. Schoch's departure comes in the wake of ME's Q2 2022 financials, which indicated an over two-fold sequential rise in the company's net loss.

Aug 11
23andMe Holding Co. (NASDAQ:ME) Just Reported, And Analysts Assigned A US$5.00 Price Target

23andMe Holding Co. (NASDAQ:ME) Just Reported, And Analysts Assigned A US$5.00 Price Target

Shareholders will be ecstatic, with their stake up 34% over the past week following 23andMe Holding Co. 's ( NASDAQ:ME...

Shareholder Returns

MEUS HealthcareUS Market
7D0.6%2.9%1.9%
1Y-59.5%13.9%-18.8%

Return vs Industry: ME underperformed the US Healthcare industry which returned 13.6% over the past year.

Return vs Market: ME underperformed the US Market which returned -18.2% over the past year.

Price Volatility

Is ME's price volatile compared to industry and market?
ME volatility
ME Average Weekly Movement14.1%
Healthcare Industry Average Movement7.8%
Market Average Movement7.0%
10% most volatile stocks in US Market15.5%
10% least volatile stocks in US Market2.9%

Stable Share Price: ME is more volatile than 75% of US stocks over the past 3 months, typically moving +/- 14% a week.

Volatility Over Time: ME's weekly volatility (14%) has been stable over the past year, but is still higher than 75% of US stocks.

About the Company

FoundedEmployeesCEOWebsite
2006n/aAnne Wojcickihttps://www.23andme.com

23andMe Holding Co. operates as a consumer genetics testing company. It operates through two segments, Consumer & Research Services and Therapeutics. The Consumer & Research Services segment provides a suite of genetic reports, including information on customers’ genetic ancestral origins, personal genetic health risks, and chances of passing on certain rare carrier conditions to their children, as well as reports on how genetics can impact responses to medications based on genetic testing of a saliva sample through its spit kit.

23andMe Holding Co. Fundamentals Summary

How do 23andMe Holding's earnings and revenue compare to its market cap?
ME fundamental statistics
Market CapUS$1.46b
Earnings (TTM)-US$265.00m
Revenue (TTM)US$277.17m

5.3x

P/S Ratio

-5.5x

P/E Ratio

Earnings & Revenue

Key profitability statistics from the latest earnings report
ME income statement (TTM)
RevenueUS$277.17m
Cost of RevenueUS$149.43m
Gross ProfitUS$127.74m
Other ExpensesUS$392.73m
Earnings-US$265.00m

Last Reported Earnings

Jun 30, 2022

Next Earnings Date

n/a

Earnings per share (EPS)-0.59
Gross Margin46.09%
Net Profit Margin-95.61%
Debt/Equity Ratio0%

How did ME perform over the long term?

See historical performance and comparison