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23andMe Gains Foothold in Primary Care, Disease Prevention With Lemonaid Health Acquisition

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CHICAGO – After agreeing to acquire Lemonaid Health for $400 million in cash and stock, consumer genetics and research firm 23andMe is looking to move into primary care, with genetic information as a foundation, through Lemonaid's telemedicine and pharmacy services.

Details of the acquisition call for Sunnyvale, California-based 23andMe, which went public in June through a merger with a special-purpose acquisition company, to acquire San Francisco-based Lemonaid for $100 million in cash and $300 million in common stock. The transaction is expected to close by the end of the year.

23andMe cofounder and CEO Anne Wojcicki called the deal a key step toward realizing the promise of personalized healthcare.

"We are acquiring Lemonaid Health to enable us to bring true, personalized healthcare to 23andMe customers," she said Friday in a conference call with investors. "We believe that our customer-centric, personalized model has the power to shift traditional healthcare to a new focus on individualized care and prevention."

CFO Steve Schoch said opportunities for growth will come from product developments including the firm's proprietary polygenic risk scores, as well as the Lemonaid acquisition that gives 23andMe a telehealth platform and a pharmacy.

Citing a May 2020 report from consulting firm McKinsey, Wojcicki noted that telehealth use has exploded during the COVID-19 pandemic, and that consumers and providers alike are far more comfortable with virtual visits than they previously were. A July 2021 update estimated that telehealth utilization is now 38 times higher than it had been before the pandemic.

Schoch said that Lemonaid Health has relationships with physicians and nurse practitioners in all 50 US states, so the company complies with state laws that often require the patient be present in the jurisdiction where a care provider is licensed.

Lemonaid has its own pharmacy tied to an online pharmacy fulfillment platform. This, according to Schoch, "[increases] the speed, accessibility, and efficiency of treatment."

Lemonaid CEO and cofounder Paul Johnson will become general manager of the 23andMe consumer business. "That means the entire consumer business, including what 23andMe does today and in the future and what Lemonaid does today and in the future," Schoch said.

"23andMe's mission-driven focus on empowering and transforming the healthcare experience is perfectly aligned with Lemonaid Health's founding principle to improve access to quality healthcare," Johnson said in a statement. He did not participate in the conference call.

Also joining 23andMe is Lemonaid's other cofounder, Ian Van Every, the firm's managing director for the UK. He will continue to oversee UK operations.

Historically, Lemonaid has been focused on treatment of stigmatized conditions such as mental and sexual health, though it does offer some more traditional primary care services like care for indications including influenza, high blood pressure, and migraines.

Wojcicki said that 23andMe will be able to apply its "genetic foundation" to Lemonaid's existing infrastructure. "We get an infrastructure that is entirely capable of adopting genetic information and really engaging people more and more into prevention, into a long-term relationship," she said.

Additionally, Lemonaid will fill the void left by physicians who have not been trained in working with genetic information or who are not experienced in managing preventive care, the 23andMe CEO said.

This year, 23andMe began offering pharmacogenetic reports to customers that include metabolism information on the antidepressant citalopram and blood thinner clopidogrel. Thanks to a 2020 US Food and Drug Administration clearance, these reports do not require confirmatory testing before a physician can use the information to guide treatment decisions.

"That's another gap I see in the system where people really don't know how to necessarily integrate this information," Wojcicki said. She added that the Lemonaid acquisition will help push 23andMe into primary care and "offer a real solution for people on prevention and a real solution for how we can integrate pharmacogenetics."

Wojcicki said that the company has heard from customers for years that physicians do not know what to do with genetic reports patients bring in.

"Sometimes it's that they're not trained on genetics, or sometimes it's that prevention of atrial fib[rilation] or type 2 diabetes is not really a reimbursable activity," she said.

Wojcicki said that 23andMe now has an opportunity not only to help its customers learn about themselves through genetics but also to teach them how to apply test results to their daily lives and to their healthcare. "This opens up the door for us to really make genetics integrated into care," she said.

Internal 23andMe research has shown that 75 percent of customers are looking to make lifestyle changes, according to Wojcicki.

"I think we absolutely look at insurance at the right time," Wojcicki said. She did not offer any timeline, but noted that despite efforts at the federal level to encourage preventive care, reimbursement for preventive services and disease management continues to lag.

23andMe joins other consumer genetic testing companies that have teamed with telehealth providers in one form or another. For example, PTC Therapeutics, Genome Medical, and Invitae have partnered to offer genetic testing free of charge to patients in the US who have symptoms or a diagnosis of cerebral palsy with no evidence of brain injury.

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