Release Date: May 23, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- 23andMe Holding Co (ME, Financial) passed the 15 million customer milestone, demonstrating strong customer engagement.
- Membership revenue grew by 41% year over year to $20 million, indicating successful subscription model implementation.
- The company launched new genetic reports for breast, colorectal, and prostate cancer, enhancing its health offerings.
- Telehealth business generated positive gross margins and improved bottom line by reducing advertising spend.
- 23andMe Holding Co (ME) is actively developing AI models to enhance both consumer and data partnership businesses, leveraging its unique database.
Negative Points
- Revenue for the quarter and the year decreased by 31% and 27%, respectively, compared to the prior year.
- Net loss for the quarter and the year increased significantly to $209 million and $667 million, respectively.
- The company is not providing financial guidance due to the ongoing special committee review of strategic alternatives.
- Operating expenses increased due to non-cash goodwill impairment charges, impacting overall financial performance.
- The decrease in consumer revenue was driven by lower sales across consumer offerings, despite improved unit economics and customer lifetime value.
Q & A Highlights
Q: Would you be able to help frame expectations for the Phase 2 update that's coming into ASCO?
A: Jennifer Low, Head of Therapeutics Development: We're excited to present the first efficacy, safety, and biomarker data on two of our cohorts, the neuroendocrine and ovarian cohorts. The data is embargoed until the presentation of the abstracts just before the conference starts. We will present the posters on our investor website and the therapeutics website when they become available.
Q: What do you see as the biggest drivers of margin expansion as the year proceeds?
A: Joe Selsavage, Chief Financial and Accounting Officer: The focus is on membership revenue. We've seen improvements in our subscription revenue and increased the price from $29 to $69 on our 23andMe+ memberships. This recurring revenue will help us with high-margin dollars added to our bottom line.
Q: At what point do you think you'll have a fair degree of visibility on the retention of customers post the price increases?
A: Joe Selsavage, Chief Financial and Accounting Officer: We increased prices in mid-2024. We will start to see these retention rates going forward into the next quarter and beyond.
Q: How's the rollout of Total Health going at this point?
A: Anne Wojcicki, CEO: The rollout on Total Health is one we haven't disclosed details on, but we will launch this to existing customers in the Q3 timeframe.
Q: Are there any plans to team up further with pharmaceutical companies to utilize the data you've collected?
A: Anne Wojcicki, CEO: Absolutely. We are prioritizing partnerships with the therapeutics development industry to leverage our data to help accelerate the development of therapeutic discoveries and development.
Q: What are the most exciting aspects of the future of the company?
A: Anne Wojcicki, CEO: Three areas: integrating Lemonaid to develop a consumer-focused wellness prevention service, leveraging our database with AI models for both therapeutic and consumer applications, and developing therapeutics from our data to impact human lives.
Q: What are the plans to comply with the Nasdaq minimum bid requirement?
A: Joe Selsavage, Chief Financial and Accounting Officer: We are focused on improving the stock price organically through continued execution and operating momentum. We may consider a reverse stock split under the right circumstances later in the year.
Q: What are the plans to leverage your data with artificial intelligence models?
A: Anne Wojcicki, CEO: We are building models for risk prediction and therapeutic development. By understanding and analyzing our data, we can help consumers understand their risks and predict health events, as well as develop drugs more effectively.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
