23andMe turns to CFOs to fill director roles after mass board exit
A pedestrian walks by a sign posted in front of the 23andMe headquarters on February 01, 2024 in Sunnyvale, California. ·CFO Dive·Justin Sullivan via Getty Images
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Dive Brief:
Genetic testing company 23andMe has appointed three new independent directors to its board, including former WeWork CFO Andre Fernandez, ex-Cloudera CFO Jim Frankola and former RedLeaf CFO Mark Jensen, following the resignation of all seven independent directors last month, according to a Tuesday announcement.
In association with the appointments, the company terminated its previous outside director compensation policy and approved a $1 million cash compensation provision for each new director, according to a securities filing. The Sunnyvale, Calif-based company’s reconfigured board will be comprised of the three ex-CFOs and 23andMe’s CEO, Co-Founder and Chair of the Board Anne Wojcicki, according to the announcement.
The appointments come after the previous independent directors tendered their resignations, citing a failure to reach a consensus with Wojcicki regarding her plan to take the company private. The tussle between Wojcicki and the previous board occurred as 23andMe, which has yet to become profitable, faces declining revenues and continues to rapidly burn cash, among other challenges.
Dive Insight:
The new directors officially joined the board Monday, 23andMe, a provider of DNA testing kits, said. Fernandez will serve as chair of the genetic testing company’s audit committee, while Jensen will serve as chair of its compensation committee, 23andMe said in the filing.
Jensen — a 10-year alum of Big Four firm Deloitte — has previously served as audit committee chair for companies including Lattice Semiconductor, Exabeam and ForeScout, according to his LinkedIn account. Fernandez serves on the board of bank rewards program company Cardlytics, and was WeWork’s CFO for the year ending June 2023, according to his LinkedIn profile. Frankola is a board member for corporate digital leaning platform Skillsoft and served as the CFO at cloud platform Cloudera for nearly 10 years, according to his LinkedIn page.
Along with CEO Wojcicki — whose sister, former YouTube CEO Susan Wojcicki, died in August — the three new directors will be tasked with reviving the company as it faces a crisis of liquidity, prompted by rapid cash burn and hits to its public image. The company recently agreed to pay $30 million to settle a class-action lawsuit stemming from a data breach which comprised the ancestry data of millions of users, USA Today reported last month.
The DNA testing kit provider has rapidly fallen from grace after its 2021 public debut made Wojcicki a billionaire. Its valuation has plummeted by 98% in the four years since its initial public offering — in effect vaporizing those billions, The Wall Street Journal reported in January. The biopharmaceutical company has never recorded a profit and despite Wojcicki having raised $1.4 billion for the business, it has continued to burn cash so rapidly that it may run out of capital by 2025, according to the WSJ.
For its Q1 of fiscal 2025 ended June 30, 23andMe recorded a 34% drop in revenue to $40 million and operating expenses of $92 million — a decrease from $140 million in the prior year period due primarily to layoffs, according to the company’s earnings results. It also recorded a net loss of $69 million, leaving it with cash and cash equivalents of $170 million, compared to $216 million as of Mar. 31.
Wojcicki has announced future plans to take the company private in a bid to ease some of the cost pressures, but a lack of a detailed proposal to do so led to frictions between the CEO and the company’s board prior to their September resignations.
“After months of work, we have yet to receive from you a fully financed, fully diligenced, actionable proposal that is in the best interests of the non-affiliated shareholders,” the former directors wrote in their September letter.
The previous board members cited a difference in the “strategic vision” for the company between themselves and the CEO and also pointed to the fact Wojcicki holds 49% of the company’s shares as a reason for their departure.
“Because of that difference and because of your concentrated voting power, we believe that it is in the best interests of the Company’s shareholders that we resign from the Board rather than have a protracted and distracting difference of view with you as to the direction of the Company,” the September letter by the former directors reads.
The company’s share price has reflected its leadership friction, teetering on the cusp of the Nasdaq’s $1 minimum bid price and threatening a delisting, further jeopardizing its options to generate cash by selling shares, the WSJ said in January.
With the resignation of its board last month, 23andMe received a notification that it was not in compliance with Nasdaq’s listing rules, which require that the majority of its board be comprised of independent directors, according to a Sept. 18 filing with the Securities and Exchange Commission. 23andMe has regained compliance with the appointment of its three independent directors this week, according to an announcement.
Shares of the company fell 3.3% Thursday to close at $4.65.
23andMe declined to comment beyond the details included in its press release.
