In the first quarter of fiscal 2025, 23andMe showcased significant strides in its journey towards becoming a sustainably growing, profitable company, while maintaining its commitment to improving the health of millions worldwide. The company's leadership, including CEO Anne Wojcicki and CFO Joe Selsavage, shared insights into key initiatives, financial performance, and future growth prospects during their recent earnings call.
Focus on Memberships, Telehealth, and Research Data
23andMe's strategy centers around three primary areas: adding value to memberships in its PGS segment, driving growth in telehealth, and leveraging its data assets to create a thriving, profitable research data business. The company's focus on these areas is yielding positive results, with noticeable improvements in membership revenue growth and better member retention metrics. This strategy is expected to continue, with the launch of a GLP-1 weight loss telehealth membership and a large-scale research study to identify the genetic mechanisms driving the efficacy and potential side effects of GLP-1s.
Advancements in Research and Therapeutics
In the research front, 23andMe has made significant strides, with studies on lung cancer genetics and a collaboration with Nightingale Health to pilot a metabolomic blood biomarker panel. The company's focus on drug discovery through AI models is also showing promise, with a preprint demonstrating the potential of large language models to better interpret genetic association studies. In therapeutics, 23andMe's CD200R1 inhibitor, 23ME-610, continues to show therapeutic potential and is being explored for combination strategies with commonly used standard of care agents.
Financial Performance and Outlook
Financially, 23andMe reported a revenue decrease of 34% year-over-year, primarily due to the conclusion of the exclusive discovery term under its GSK collaboration and lower consumer services revenue. Despite this decrease, the company is optimistic about its ability to drive adjusted EBITDA leverage through cost discipline and investment prioritization, with a goal of achieving adjusted EBITDA profitability. The company ended the quarter with $170 million in cash and cash equivalents, which it plans to use for targeted investment in high ROI growth initiatives.
Investor Questions and Future Plans
During the Q&A session, investors and analysts raised questions about the company's plans for Total Health, potential margin expansion, and the impact of the Therapeutics Discovery group's downsizing on its internal assets. The company provided updates on these topics, reiterating its commitment to improving membership offerings, exploring combination strategies for its therapeutics, and focusing on operational efficiencies to drive profitability.
In conclusion, 23andMe's first quarter fiscal 2025 results highlight the company's strategic shift towards sustainable growth and profitability, with a focus on memberships, telehealth, and research data. The company's initiatives in these areas, coupled with its advancements in therapeutics and drug discovery, position it well for future success. As 23andMe continues to innovate and execute its strategic plans, investors and stakeholders can look forward to a company that is not only improving individual health outcomes but also creating value for its shareholders.