v3.25.2
Commitments and Contingencies
3 Months Ended
Jun. 30, 2025
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies Commitments and Contingencies
Legal Matters
Cyber Incident
On October 10, 2023, the Company reported that certain information was accessed from individual 23andMe.com accounts without the account users’ authorization (the “Cyber Incident”).
As a result of the Cyber Incident, multiple class action claims have been filed against the Company in federal and state courts in California, as well as in other U.S. and international jurisdictions, and individuals have asserted or threatened arbitration claims against the Company. The Company is also responding to inquiries from various governmental officials and agencies. The federal class action claims were coordinated for pretrial proceedings by the Multidistrict Litigation Panel, and on June 5, 2024, co-lead plaintiffs’ counsel were appointed (“US Cyber Class Action Counsel”). On July 15, 2024, the Company reached an agreement in principle with US Cyber Class Action Counsel on behalf of certain representatives of U.S. persons impacted by the Cyber Incident (the “Settlement Class Representatives”) to settle the putative class action lawsuits currently pending in the U.S. District Court for the Northern District of California (the “Court”).
The parties executed a confidential settlement term sheet on July 29, 2024, which contemplated an aggregate cash payment by the Company of $30.0 million to settle all claims brought on behalf of all persons in the United States whose personal information was impacted by the Cyber Incident. In addition, the Company agreed to document various business practice initiatives relating to cybersecurity and provide customers with the option to enroll in a privacy and monitoring service for three years. The Company subsequently reached an agreement with US Cyber Class Action Counsel, on behalf of the Settlement Class Representatives, on all material terms, including payment of $30.0 million (the “Class Action Settlement”).
On December 4, 2024, the Court granted preliminary conditional approval of the Class Action Settlement under which the Company would agree to pay $30.0 million and implement certain remedial measures to resolve all claims by U.S. customers (who do not opt out) arising out of the Cyber Incident (“Cyber Class Action Members”). The Court’s order granting preliminary approval of the settlement was conditioned on the parties’ acceptance of certain modifications to the Class Action Settlement, including the exclusion from the settlement class of customers who have chosen to exercise their right to arbitrate, whether by making a demand for arbitration or by filing a formal complaint with the arbitral forum.
On March 21, 2025, the Company entered into settlements with arbitration claimants represented by Labaton Keller Sucharow LLP, Levi & Korsinsky LLP, and Milberg Coleman Bryson Phillips Grossman PLLC, (the “Arbitration Settlement”) and plaintiffs represented by Potter Handy, LLP in actions filed in the Superior Court of the State of California (the “State Court Settlement”) relating to the Cyber Incident. Pursuant to the terms of the Class Action Settlement, the Arbitration Settlement, and the State Court Settlement (collectively, the “Settlements”), the Company has agreed to pay, subject to the satisfaction of certain conditions, an aggregate of $37.5 million to settle claims relating to the Cyber Incident brought on behalf of U.S. customers (who do not opt out). The Settlements represent compromise settlements and shall not be construed as an admission of any liability or obligation whatsoever by any party to any other party or any other person or entity. The status and treatment of the Arbitration Settlement and State Court Settlement remain subject to ongoing discussions and negotiations in the Chapter 11 Cases.
As part of the Chapter 11 Cases, the Company reached agreements in principle with US Cyber Class Action Counsel and counsel representing Canadian putative class members impacted by the Cyber Incident (“Canadian Cyber Counsel”) that authorize US Cyber Class Action Counsel and Canadian Cyber Counsel to each file one, consolidated class proof of claim on behalf of their respective class members.
On June 17, 2025, the United Kingdom’s Information Commissioner’s Office fined the Company for conduct relating to the Cyber Incident.
During the three months ended June 30, 2025, the Company recorded a total of approximately $9.0 million in additional settlements and fines related to the Cyber Incident. The Settlements and fines have been reclassified as liabilities
subject to compromise in accordance with ASC 852 and will be subject to claims resolution in the Bankruptcy Court. The ultimate resolution of these liabilities is subject to the outcome of the Chapter 11 Cases and may be adjusted based on claims allowed by the Bankruptcy Court.
During the three months ended June 30, 2025, the Company recognized $10.3 million in net expenses related to the Cyber Incident, primarily related to estimated loss contingencies and legal fees incurred. As of June 30, 2025, the Company had $49.0 million of accrued expenses related to estimated loss contingencies and legal fees included in liabilities subject to compromise, offset by $18.0 million of insurance recoveries included in prepaid and other current assets, in the condensed consolidated balance sheets.
Indemnification
The Company enters into indemnification provisions under agreements with other companies in the ordinary course of business, including, but not limited to, collaborators, landlords, vendors, and contractors. Pursuant to these arrangements, the Company agrees to indemnify, defend, and hold harmless the indemnified party for certain losses suffered or incurred by the indemnified party as a result of the Company’s activities. The maximum potential amount of future payments the Company could be required to make under these agreements is not determinable. As of the date of this filing, the Company had never incurred costs to defend lawsuits or settle claims related to these indemnification provisions. As a result, the Company believes that the fair value of these provisions is not material. The Company maintains insurance, including commercial general liability insurance and product liability insurance, to offset certain potential liabilities under these indemnification provisions. In addition, the Company indemnifies its officers, directors, and certain key employees against claims made with respect to matters that arise while they are serving in their respective capacities as such, subject to certain limitations set forth under applicable law, the Company’s Bylaws, and applicable indemnification agreements. As of June 30, 2025, the Company was not aware of any known events or circumstances that have resulted in a material claim related to these indemnification obligations.