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23andMe Stock Drops on Plan to Buy Health Platform Lemonaid

23andMe shares drop after the consumer genetics company definitively agrees to pay $400 million for health platform Lemonaid.
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23andMe  (ME) - Get 23andMe Report shares dropped on Friday after the consumer genetics and research company definitively agreed to pay $400 million for Lemonaid Health, a provider of a platform through which consumers can access medical care and pharmacy services online.

At last check 23andMe shares were 6.7% lower at $9.64. The stock has bounced off a 52-week low of $7.01, set in mid-August. But it's trading at a bit more than half its 52-week high above 18, set in early February.

The Sunnyvale, Calif., company said it would pay 75% stock and 25% cash for Lemonaid, which is based in San Francisco.

For 23andMe, which enables people to explore their genetic backgrounds, the deal adds Lemonaid’s telemedicine and prescription-drug delivery services.

“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,” Anne Wojcicki, co-founder and chief executive of 23andMe, said in a statement.

Lemonaid Health’s focus on delivering individualized care fits with that mission, she said.

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Paul Johnson, co-founder and chief executive at Lemonaid Health, becomes general manager of the 23andMe consumer business and will continue to run Lemonaid’s services. Ian Van Every, co-founder of parent Lemonaid and managing director for U.K., will continue to run the operations there.

The companies hope to close the deal this year.

23andMe is scheduled to report fiscal-second-quarter results before the market opens Nov. 10.

For the first quarter ended June 30, 23andMe narrowed its net loss to 25 cents a share from 38 cents in the year-earlier period. Revenue reached $59.2 million, up 23% from $48.1 million.

23andMe went public in mid-June via a merger with a special-purpose-acquisition company founded by the entrepreneur Richard Branson.

SPACs, or blank-check companies, are formed for the express purpose of finding and merging with an operating partner. The idea is to speed the operating company to the public markets and avoid the extended process of a traditional initial public offering.