23andMe shares begin trading on Nasdaq after SPAC merger

Shares of 23andMe (ME) rose about 1% to commerce simply over $11 per share of their trading debut on the Nasdaq as the patron genetic testing firm grew to become one of many newest firms to go public through SPAC deal. 

The public debut comes after 23andMe and the particular objective acquisition firm (SPAC) VG Acquisition Corp. announced a merger in February. The deal valued 23andMe’s outstanding shares of capital stock at $3.5 billion. The overwhelming majority of shareholders of VG Acquisition Corp., which was based by Virgin Galactic’s Richard Branson, voted in favor of the merger agreement in a meeting June 10, and the deal closed on Wednesday.

Sunnyvale, Calif.-based 23andMe mentioned it deliberate to make use of capital garnered from the transaction towards extra investments to develop its shopper well being and therapeutics operations. The firm makes nearly all of its income from its shopper analysis and providers enterprise, which incorporates gross sales of its flagship direct-to-consumer ancestry and genetic testing kits. 

The firm noticed progress decelerate in its most up-to-date full fiscal yr, nevertheless, and posted revenue of $305.5 million in the course of the fiscal yr ended March 31, 2020, for a drop of 31% in comparison with the $440.9 million delivered over the identical interval ending in March 2019. Revenue was $155.three million for the 9 months ended December 31, 2020. As of late January, the corporate had 83,400 subscribers to 23andMe+, a subscription service the corporate launched final October to supply members with extra genetic testing reviews.

And like many newly public firms, 23andMe continues to submit losses. Net losses totaled $250.9 million in the course of the yr ended March 31, 2020, widening in comparison with losses of $183.5 million a yr earlier. The firm added in a filing it “expects to continue to incur significant expenses and operating losses for the foreseeable future” because it expands its therapeutic analysis and improvement and builds out its services. 

23andMe joins a bevy of different firms opting to go public through a merger with a blank-check firm, or car that raises funds to amass after which carry a personal firm public. Other firms together with electric-vehicle maker Nikola (NKLA), house exploration agency Virgin Galactic (SPCE) and private finance firm Sofi Technologies (SOFI) every went public through SPAC. For personal firms, a SPAC deal can expedite a go-public timeline and assist circumvent most of the charges related to working with funding banks in a standard preliminary public providing. 

The SPAC merger rose in prominence in 2020, with 248 issuances elevating a complete of $83.four billion final yr, according to SPAC Research data. So far in 2021, 343 offers have raised a $107.three billion, setting a brand new annual report within the first half of the yr alone. 

However, many of those offers befell within the first quarter of 2021, with issuances slowing after March following elevated regulatory scrutiny and potential accounting changes for SPAC warrants from the U.S. Securities and Exchanged Commission. Others, including famed billionaire investor Warren Buffett, have issued harsh criticisms of SPACs, partly for his or her tendency to take speculative firms public.

Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck

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