Health

23andMe jumps into telehealth, prescription drug delivery with $400M buyout of Lemonaid Health

Consumer genetic testing company 23andMe plans to buy Lemonaid Health, a virtual care and pharmacy provider, to integrate its personalized genetics service more deeply into primary care.

23andMe, which went public in June via a merger with Richard Branson’s blank check company, will pay $400 million for Lemonaid Health, with 25% of the purchase price in cash and the rest in shares of 23andMe.

The acquisition is expected to close by the end of 2021.

The acquisition adds Lemonaid Health’s telemedicine and prescription drug delivery services to 23andMe’s consumer business.

“Our vision is to provide consumers convenient access s to personalized, proactive and genetically based primary care,” said Anne Wojcicki, CEO and co-founder of 23andMe, during a conference call with investors Friday.

“There is a huge opportunity for us to help to be able to help our customers, to not just learn about themselves and get their genetic information, but actually pull it through and apply it to their life or their healthcare. This opens up the door for us to really make genetics integrated into care,” she said.

Paul Johnson, CEO and co-founder of Lemonaid Health, will become the general manager of the 23andMe consumer business, and in that role, will continue to run the Lemonaid Health services.

Ian Van Every, managing director, U.K. and co-founder of Lemonaid Health, will manage and grow operations in the U.K., the company said in a press release.

RELATED: 23andMe rises in stock market debut after Branson-backed merger

By combining Lemonaid Health’s telemedicine platform, including its online team of medical professionals and its pharmacy services, with 23andMe’s consumer business, the company is taking “an important step in transforming the traditional primary care experience and making personalized healthcare a reality,” Wojcicki said.

“By starting with genetics as the foundation, we will give patients and healthcare providers better information about health risks and treatments, opening up the door to prevent as well as better manage disease,” she said in a statement.

Lemonaid Health, launched in 2013, offers patients direct online access to medical care, from consultation through treatment, for a number of common conditions, with a particular focus on stigmatized conditions. Lemonaid Health’s virtual medical services are licensed in all 50 states. The company also operates its own pharmacy and patients are offered free and fast delivery of prescription medications through the platform.

“When I look at what we get with Lemonaid, we get an infrastructure that is entirely capable of adopting genetic information and engaging people more and more into prevention, into a long-term relationship and really filling this gap that a lot of physicians today don’t know how to manage genetic information and are not trained also on how to manage, help and coach on prevention,” Wojcicki said on the conference call.

23andMe launched in 2006 and sells direct-to-consumer genetic testing kits that people can use to find out more about their own DNA and what it says about their potential health issues and ancestry. The company reports that 11 million people have used its genetic testing services.

As sales of genetic testing kits have slowed, company executives have signaled that the company is shifting away from ancestry to focus on the health market. 

23andMe’s shares have lost about 22% since the company began selling shares June 17. They rose 1.2% in trading before U.S. markets opened, Bloomberg reported.

RELATED: 23andMe going public at $3.5B via merger with Branson’s blank check company

In recent years, 23andMe has expanded efforts to turn genetic data from its more than 11 million customers into therapies. It struck a deal to collaborate on drug development with GlaxoSmithKline, which took a $300 million stake in the company in 2018.

23andMe is also developing drug candidates on its own. The company says it has a broad pipeline of more than 30 therapeutic programs spanning oncology as well as respiratory and cardiovascular diseases. The company also received U.S. Food and Drug Administration (FDA) authorization to offer reports to customers on pharmacogenetics, indicating how customers’ genetics may influence the way they metabolize certain medications.

“The pharmacy side [of Lemonaid Health’s business] is incredibly interesting to me,” Wojcicki said during the conference call. “Because we have these FDA authorized pharmacogenetic reports, that’s another gap I see in the system where people don’t know how to integrate this information. While there is a market demand today, I 100% look at this opportunity to drive it more and more into genetic-based primary care that is going to offer a real solution to people on prevention and a real solution for how we can integrate pharmacogenetics.”

Allen & Company LLC acted as financial advisor to 23andMe, and Morgan, Lewis & Bockius LLP provided legal counsel. Fenwick & West LLP and Nelson Hardiman LLP provided legal counsel to Lemonaid Health.

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