23andMe (US:ME)2025-08-04 20:25Financial Performance - Total revenue for the three months ended June 30, 2025, was $25.419 million, a decrease of 37.1% compared to $40.414 million for the same period in 2024[16] - Gross profit for the quarter was $13.530 million, down from $20.384 million year-over-year, reflecting a gross margin decline[16] - The net loss for the quarter was $23.828 million, compared to a net loss of $69.400 million in the same quarter of 2024, indicating a significant improvement[16] - For the three months ended June 30, 2025, the net loss was $23.8 million, a significant improvement from a net loss of $69.4 million in the same period of 2024, representing a reduction of approximately 65.7%[21] - Net cash used in operating activities for the three months ended June 30, 2025, was $28.99 million, compared to $43.27 million for the same period in 2024, indicating a decrease of about 33.1%[21] - Stock-based compensation expense for the three months ended June 30, 2025, was $5.71 million, down from $21.58 million in the same period of 2024, a reduction of about 73.5%[21] - Net loss attributable to common stockholders for the three months ended June 30, 2025, was $18.744 million, compared to a net loss of $5.084 million for the same period in 2024[124] - Basic and diluted net loss per share attributable to common stockholders was $(0.87) for the three months ended June 30, 2025, consistent with the same period in 2024, while the annual figure was $(2.80) for 2024[124] Operating Expenses - Operating expenses totaled $44.239 million, a reduction of 43.3% from $77.896 million in the prior year, driven by lower research and development and sales and marketing costs[16] - Research and development expenses for the quarter were $14.452 million, down from $29.693 million in the same quarter last year, reflecting cost-cutting measures[16] - Total accrued expenses and other current liabilities increased to $38.4 million as of June 30, 2025, from $15.5 million as of March 31, 2025[102] Cash and Liabilities - Cash and cash equivalents increased to $39.828 million as of June 30, 2025, up from $38.248 million at the end of March 2025[15] - Total current liabilities rose to $111.378 million, compared to $72.703 million at the end of the previous quarter, primarily due to increased accounts payable and accrued expenses[15] - The company reported a total stockholders' deficit of $42.860 million as of June 30, 2025, worsening from a deficit of $26.742 million at the end of March 2025[15] - The company incurred total liabilities subject to compromise of $75.5 million as of June 30, 2025, down from $113.5 million as of March 31, 2025[59] Asset Transactions - The Company received $302.5 million in cash from the asset sale to the Research Institute, which included a total purchase price of $305 million[23] - The company completed a transaction on July 14, 2025, selling substantially all of its assets for total cash proceeds of $302.5 million[43] - The Company paid a break-up fee of $10.0 million to Regeneron Pharmaceuticals, Inc. upon closing the transaction with the Research Institute[68] - The company repaid $25.0 million of borrowings related to DIP Financing on July 14, 2025[135] Bankruptcy and Restructuring - The Company has classified pre-petition unsecured and undersecured claims as liabilities subject to compromise due to its Chapter 11 bankruptcy proceedings[32] - The Company has ceased operations in its direct-to-consumer genetic testing and research services business as part of its restructuring efforts[23] - The Company plans to wind down its operations after selling Lemonaid Health, with no expectation of engaging in revenue-generating activities other than this[44] - The Company has been authorized to continue operations as a debtor-in-possession under the Bankruptcy Code, subject to court approval for certain transactions[46] Revenue Recognition - The company recognized breakage revenue from unreturned kits of $1.9 million for the three months ended June 30, 2025, down from $4.0 million in the same period of 2024[76] - The Company recognized research services revenue of $0.1 million related to the 2023 GSK Amendment for the three months ended June 30, 2025, compared to nil in the same period of 2024[83] - The Company recognized $17.6 million of deferred revenue for consumer services during the three months ended June 30, 2025[78] - Deferred revenue for consumer services as of June 30, 2025, was $38.1 million, down from $46.8 million as of March 31, 2025[78] Legal and Compliance - The Company faced multiple class action claims due to a Cyber Incident reported on October 10, 2023, with ongoing legal proceedings[104] - The Company agreed to pay an aggregate of $30.0 million to settle claims related to the Cyber Incident affecting U.S. customers[105] - The total amount agreed for settlements related to the Cyber Incident, including arbitration and state court settlements, is $37.5 million[107] - The Company recorded approximately $9.0 million in additional settlements and fines related to the Cyber Incident during the three months ended June 30, 2025[109] - As of June 30, 2025, the Company had $49.0 million of accrued expenses related to estimated loss contingencies and legal fees[111] Future Outlook - The company continues to face risks and uncertainties that may impact future performance, as outlined in their Annual Report on Form 10-K[12] - The company is currently evaluating the impacts of recently issued accounting standards, including ASU No. 2023-09 and ASU No. 2024-03, which will affect future financial disclosures[47][48]