23andMe is buying another direct-to-consumer startup, looking to build on its genetic services with telehealth. The company struck a deal to buy Lemonaid Health for $400 million in stock and cash.
In a call with investors, CEO Anne Wojcicki said 23andMe plans to offer genetics-based primary care. It would add Lemonaid’s health coaching services and online pharmacy with consumer genetic testing.
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“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 news release.
To start, 23andMe plans to make use of its pharmacogenetics reports, which can indicate how well different people metabolize certain drugs. The company currently has FDA-cleared pharmacogenetics reports for 33 variants, but for the majority of its tests, consumers are still directed not to change their medications without independent testing prescribed by a clinician.
23andMe also plans to train Lemonaid’s doctors and nurse practitioners on how to use its genetic reports in patients’ care.
San Francisco-based Lemonaid offers delivery of common prescription medications, such as birth control, and treatments for acne and UTIs. They’re prescribed after a telehealth consult with a doctor or nurse practitioner, which involves patients filling out a questionnaire about their medical history, and sometimes a video visit. It also offers health coaching for anxiety and depression.
Both of Lemonaid’s co-founders will continue with the combined company. CEO Paul Johnson will become general manager of 23andMe’s consumer business, and U.K. Managing Director Ian Van Every will continue to grow its operations in the U.K. The deal is expected to close later this year.
23andMe went public earlier this year, after merging with a special-purpose acquisition company. As purchases of genetic tests have slowed, it’s looking for other ways to bring in revenue, such as launching a membership service. It also has been working with GlaxoSmithKline on drug development after the pharmaceutical company invested in 23andMe in 2018.
For the quarter ending on June 30, the company brought in revenue of $59 million, up 23% from last year. But it reported a bigger net loss, $42 million compared to its $36 million net loss last year.
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