DNA testing giant 23andMe buys telehealth firm Lemonaid for $400 million

Consumer DNA testing giant 23andMe Holding Co. agreed to purchase telehealth upstart and drug-delivery service Lemonaid Health Inc. in a bid to make its personalized genetics approach part of patients’ primary care.

23andMe will pay $400 million for Lemonaid, with 25% of the purchase price in cash and the rest in stock, according to a statement Friday. The acquisition is expected to close by the end of the year.

Shares of 23andMe, which have fallen 28% since debuting on June 17, were down 7.3% at 10:22 a.m. in New York.

“For me, it’s always been that the central point of what we’re trying to do is to maximize the benefit of the human genome,” said Chief Executive Officer Anne Wojcicki in an interview. “Genetics still has not been adopted into primary care.”

Wojcicki founded 23andMe in 2006 with the aim of not only selling customers tests that could yield entertaining information about ancestry and cilantro preference, but using genetics to change how patients receive health care overall.

In 2015, the company launched a therapeutics unit to use its trove of genetic data to develop drugs. Part of the reason the company went public, Wojcicki has said, was to help fund those efforts. More recently, she has hinted that she would like to bring genetic insights into the doctors office, perhaps by making the company a health care provider itself.

With Lemonaid, she said, the first obvious point of integration will be to make use of 23andMe’s pharmacogenetics reports—which help determine which drugs are likely to work best for an individual—when prescribing drugs through Lemonaid doctors.

Wojcicki said the company will train Lemonaid doctors in how to integrate genetic risk reports and pharmacogenetics into care. While there is no “defined product roadmap,” she said the eventual goal is to create a mode of care that best makes use of genomic information.

“If you know you have a genetic risk factor, what can you actually do about it?” she said.

Wojicki said the pandemic has created such an opportunity, as the coronavirus limited patients’ ability to see health providers in person and pushed droves of people to shift to virtual care.

Broader focus

The acquisition of Lemonaid signals the company is now on its way toward becoming involved in every step of a patient’s care, from assessing their health risks, to developing drugs to ultimately prescribing and delivering treatments. One other way she said Lemonaid might come into play is in helping locate patients to participate in clinical trials of 23andMe-developed drugs.

Paul Johnson, Lemonaid’s chief executive officer and co-founder, will become general manager of 23andMe’s consumer business and run continue to run the division, according to the statement. Ian Van Every, the telehealth company’s co-founder and managing director for the U.K., will stay in a similar role with 23andMe.

At present, Lemonaid offers care for a specific suite of conditions for a nominal fee—typically $25—without insurance, and then delivers medications to patients from a pharmacy it owns. Wojcicki said that at least in the near term, the health care offerings of the company are likely to remain limited in scope. In the future, she said, her customers will likely view 23andMe as a hybrid of a health care provider and a consumer brand.

GlaxoSmithKline Plc took a $300 million stake in 23andMe in 2018 with an agreement to collaborate on drug development. In October, the genetics company launched a subscription product that gives consumers health information.