SUNNYVALE, Calif. - 23andMe Holding Co. (NASDAQ:ME), a consumer genetics and research company, has announced a reverse stock split of its Class A and Class B common stock at a ratio of 1-for-20, set to take effect at the start of trading on October 16, 2024. The decision follows stockholder approval at the 2024 Annual Meeting and subsequent Board of Directors authorization.
The reverse stock split will consolidate every 20 shares of issued and outstanding Class A and Class B common stock into one share of the respective class. This action will reduce the total number of Class A common shares from approximately 350.3 million to about 17.5 million, and Class B common shares from around 166.4 million to approximately 8.3 million.
Shareholders will not receive fractional shares in the process; instead, fractional shares will be rounded up to the nearest whole number. The adjustment will also apply proportionately to the company's outstanding restricted stock unit and stock option awards, as well as the exercise prices of those awards. Furthermore, the number of shares authorized for issuance under 23andMe's incentive equity plan and employee stock purchase plan will be similarly reduced.
For holders of record with shares registered directly with the company's transfer agent, Continental Stock Transfer & Trust Company, no action is required as the transition to post-reverse stock split shares will be automatic. Beneficial owners with shares held in street name through a bank, broker, or other nominee should contact their respective institutions, as processes may vary.
The reverse stock split aims to reduce the number of shares outstanding and is expected to proportionately affect all shareholders. 23andMe, known for its direct-to-consumer genetic testing kits, also operates in the healthcare and therapeutics sectors.
This announcement is based on a press release statement and should be evaluated in the context of market conditions and regulatory requirements. The company has cautioned that forward-looking statements are subject to risks and uncertainties, and actual events could differ materially from those anticipated.
In other recent news, 23andMe has reported a 34% decrease in Q1 2025 revenue, falling to $40 million, primarily due to the termination of a partnership with GSK. However, the company's net loss showed improvement, standing at $69 million compared to the previous year's $105 million. Analyst firm Citi reiterated a Neutral rating on 23andMe, following the presentation of additional trial data.
In a major reshuffling, all independent directors resigned over strategic differences with CEO Anne Wojcicki. The company is also facing potential delisting from Nasdaq due to non-compliance with corporate governance requirements.
23andMe has been actively expanding its services, launching a new report aimed at helping individuals understand their genetic predisposition to emotional eating. In partnership with Mathew Knowles (NYSE:KN), the company is promoting the benefits of genetic testing for identifying personal health risks. Furthermore, its subsidiary, Lemonaid Health, introduced a new weight loss program providing access to GLP-1 medications through a monthly subscription model. These are the recent developments shaping the trajectory of 23andMe.
InvestingPro Insights
As 23andMe Holding Co. (NASDAQ:ME) prepares for its reverse stock split, InvestingPro data provides additional context to the company's financial situation. The company's market capitalization stands at $151.7 million, reflecting its current position in the consumer genetics and research sector.
One of the key InvestingPro Tips highlights that 23andMe is "quickly burning through cash." This insight is particularly relevant given the company's decision to implement a reverse stock split, which is often a strategy employed by companies facing financial challenges or seeking to maintain stock exchange listing requirements.
Another InvestingPro Tip notes that the company is "trading at a low revenue valuation multiple." This could be seen as a potential opportunity for investors, but it's important to consider this in light of the company's financial performance. The revenue for the last twelve months as of Q1 2025 was $199.19 million, with a concerning revenue growth of -32.67% over the same period.
The company's profitability is also a concern, as indicated by the operating income margin of -128.25% for the last twelve months as of Q1 2025. This aligns with another InvestingPro Tip stating that "analysts do not anticipate the company will be profitable this year."
It's worth noting that InvestingPro offers 7 additional tips for 23andMe, providing a more comprehensive analysis for investors considering the impact of the upcoming reverse stock split and the company's overall financial health.
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