In October 2024, the National Academies held a workshop on the topic, "Exploring Clinical Guidelines for the Adoption of Genomic Testing."
In 2025, they have released a 15-page summary of the conference.
Find it here:
See my blog at the time, and the workshop home page, which has videos and powerpoints.
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See a June 2024 National Academies report on racial-ethnic problems in health care.
AMA releases new PLA codes quarterly and to no one's surprise, the list for the second quarter is now online.
https://www.ama-assn.org/system/files/cpt-pla-codes-long.pdf
AMA releases a cumulate PDF that includes codes not included in this year's AMA CPT book. In practice, this means codes submitted on around June 15 or later (for the July quarter review, or later) appear in this PDF. The new codes are those released April 1, 2025. Events released on April 1 will be effective for use on July 1.
Among publicly held companies, see Guardant REVEAL (for MRD), 0569U; Biomerieux Biofire respiratory tract 0564U. Haystack/Quest has 2 MRD codes (0560U, 0561U), for baseline and for monitoring. Illumina's FDA approved TruSight test, 517 genes, 0543U.
Not new, from December 2024, I notice CareDx Allosure, not organ specific, 0540U.
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Code applications for the Spring quarter (Q2) were due about March 11 and AMA is currently reviewing them. Will be posted for comment April 15, 2025.
The FDA LDT rule was struck down - see prior blog.
And the Texas judge ruled that the LDT regulation was void - it is canceled nationwide, called vacatur.
What happens next?
One track is whether DOJ files an appeal. They have 60 days, and that's for a "notice of appeal" - which keeps the case alive even if DOJ is still considering its options.
I think the bigger issue is around the "vacatur" - will DOJ ask it to be removed? Lots of moving parts there.
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AI CORNER
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Here's a dilemma. The judgement includes VACATUR. That means the FDA regulation is "canceled." But in general, the current administration does NOT like nationwide vacatur rulings one bit. It hates them. It gives one single judge, anywhere, the ability to cancel nationwide government policy.
So will the DOJ file an emergency motion with judge - and potentially over his head to the Fifth Circuit - to cancel the VACATUR?
It's a dilemma. (1) IF vacatur is left in place, it's bad optics because the current presidency and DOJ hates vacatur's.
But (2) If the Vacatur is in fact removed, then the LDT rule will sail forward as if nothing had happened. With 1000's of man-years of work and billions of dollars in costs, all while the regulation itself is getting royally shot down in court.
How will the current DOJ handle this dilemma?
I think a practical answer is, since the FDA rule has not started, what looks like vacatur is really just a delay while any appeals proceed, and a delay is less harmful than lots of costly implementation that is later canceled, let's say, in 2029. But that's a practical answer perhaps not a legal one.
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You’ve framed the dilemma precisely—and you’re right that it’s not just a legal question but a strategic, political, and institutional balancing act for the DOJ.
Let’s walk through it clearly:
Vacatur in full of the FDA's Final Rule on LDTs.
Effective immediately—no stay, no phase-in, no grace period.
Nationwide vacatur under the APA—viewed as judicial overreach and “legislation from the bench.”
Many legal scholars in the Federalist Society camp argue that courts should only issue relief to the parties, not void regulations for the entire country.
BUT…
They resurrect a massively controversial rule during an active appeal, one that even FDA admits will:
Affect 79,000+ tests and cost $100+ million per year immediately;
Trigger compliance obligations that are difficult to unwind;
Cause some tests to be pulled from the market prematurely;
Create confusion and fear across health systems, labs, and payors.
So yes: reviving the rule mid-litigation could backfire badly—legally, economically, and politically.
Most likely move.
Quietly treat vacatur as a pause on the rule’s rollout.
File a notice of appeal by May 30, buying time.
Later, if a circuit win looks plausible, consider reviving the rule after judgment.
✅ Pros: Avoids bad optics, delays implementation, minimizes chaos.
❌ Cons: Leaves the court’s nationwide vacatur intact—a bitter pill.
Either in district court or directly with the 5th Circuit.
Argue that vacatur is too broad, disrupts executive branch policymaking, harms public interest.
Ask for partial stay (e.g., enforcement of the rule only for new LDTs, or phased implementation).
✅ Pros: Signals defense of FDA turf. Keeps options open.
❌ Cons: Politically inflammatory, likely to be rejected by the same judge who just issued a detailed 51-page takedown.
And importantly: even Trump-era DOJ hated vacatur in principle, but they still often lived with it for practical reasons when enforcement was disruptive.
File a motion under FRCP 59(e) or 60(b) to modify the judgment, arguing that vacatur is overbroad and violates separation-of-powers principles.
Request to limit relief to plaintiffs or to delay effectiveness of vacatur pending appeal.
✅ Pros: Offers a principled stance against nationwide vacatur without triggering immediate enforcement.
❌ Cons: Likely to be denied; Judge Jordan was explicit and grounded in precedent (notably 5th Circuit law supports vacatur in APA overreach cases).
Your instincts track closely with what they’re likely weighing internally:
“Leaving vacatur in place isn’t great, but reigniting a billion-dollar, disruptive rule while it’s being dismantled in court is worse.”
Add to that:
The rule hasn’t yet taken effect—we’re still in the phase-in year (2025).
So no compliance deadlines are being missed yet.
Delaying enforcement via the court’s vacatur looks less like surrender, more like prudence.
Most likely:
DOJ files a notice of appeal by May 30.
Takes no action to lift the vacatur.
Publicly frames the appeal as a defense of agency authority, not the rule itself.
Keeps its options open while waiting for further developments (including election results).
Less likely:
DOJ moves to stay or modify vacatur, especially if political appointees push for a symbolic challenge.
Would you like a formal memo or a Q&A explainer for stakeholder communication on why DOJ might live with vacatur despite its historical stance?
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Can you clarify, DOJ would file for "undoing the vacatur" with this judge, and then, with the Fifth Circuit, and then, with SCOTUS?
It doesn't begin and end with the judge, and he notes, he's already following his circuit precedent.
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Exactly — you're right to point out that the district judge's vacatur is not the end of the line if DOJ wishes to challenge it. Here’s how the procedural ladder works if DOJ seeks to “undo” or stay the vacatur:
DOJ can move for a stay of the vacatur under:
FRCP 59(e) (motion to alter/amend judgment), or
FRCP 60(b) (relief from judgment), or
File a direct motion to stay the judgment pending appeal (common and cleaner).
But:
Judge Jordan has already anchored his ruling in Fifth Circuit precedent.
He carefully cited both APA vacatur standards and the Fifth Circuit’s strong vacatur norms, making it very unlikely that he would reverse or stay his own vacatur order.
📌 Outcome: Almost certain denial. But a necessary step before higher appeal.
If the district court denies a stay (or DOJ bypasses it), DOJ can file a motion for stay pending appeal with the Fifth Circuit under FRAP 8(a)(2).
To win a stay, DOJ must show:
Likelihood of success on appeal (low in this case);
Irreparable harm if the vacatur stands;
Harm to others if stay is granted;
Public interest in granting the stay.
🧩 Problem: The Fifth Circuit has often embraced nationwide vacatur in APA cases, and its own decisions are cited favorably by Judge Jordan.
📌 Outcome: Very unlikely to succeed, but not impossible if DOJ can find a sympathetic motions panel.
If the Fifth Circuit denies a stay, DOJ can petition SCOTUS:
File an emergency application for a stay under Supreme Court Rule 23;
Later, file a petition for certiorari on the merits of vacatur and FDA authority.
But:
SCOTUS has been hostile to administrative overreach;
Recently gutted Chevron;
Favors limiting agencies to their clear statutory mandates;
And has shown increasing skepticism of FDA’s regulatory expansion.
📌 Outcome: Very unlikely that SCOTUS would stay vacatur or reverse the Fifth Circuit unless DOJ makes this about a broader doctrinal fight (e.g., limiting district court vacatur authority).
| Step | Action | Likelihood of Success |
|---|---|---|
| 1️⃣ District Court | Motion to stay or amend vacatur | ❌ Very low |
| 2️⃣ Fifth Circuit | Emergency stay pending appeal | ⚠️ Low (5th Circuit supports APA vacatur) |
| 3️⃣ SCOTUS | Emergency stay or cert | ❌ Unlikely (Court skeptical of FDA overreach) |
Yes — the DOJ can challenge vacatur at each level, but each rung on the ladder is steeper than the last, especially in this legal environment.
Judge Jordan effectively locked arms with Fifth Circuit precedent to shield his decision on appeal, making it all the harder for DOJ to argue that vacatur here is extraordinary or unjustified.
Would you like this laid out in a 1-page visual chart or briefing slide for internal or stakeholder use?
On March 31, 2025, federal judge Sean Jordan sided with ACLA and AMP and struck down the FDA's plan to regulate all laboratory-developed tests nationwide.
The President of AMP writes,
The March 31, 2025 decision by Judge Sean D. Jordan of the U.S. District Court for the Eastern District of Texas is a watershed ruling in the battle over FDA’s authority to regulate Laboratory-Developed Tests (LDTs). In ACLA et al. v. FDA and AMP et al. v. FDA, the court struck down the FDA's 2024 Final Rule that sought to classify and regulate all LDTs as medical devices under the Federal Food, Drug, and Cosmetic Act (FDCA). This 51-page opinion—accompanied by a 2-page final judgment—delivers a forceful rebuke to FDA’s regulatory overreach and represents a resounding victory for the laboratory plaintiffs.
FDA's Final Rule is Vacated in Full
The Court vacated and set aside the FDA's final rule in its entirety: Medical Devices; Laboratory Developed Tests, 89 Fed. Reg. 37,286 (May 6, 2024).
FDA Lacks Statutory Authority under the FDCA
The court held that LDTs are not “devices” under the FDCA and thus fall outside the FDA’s statutory jurisdiction. The ruling is grounded in the text, structure, and history of both the FDCA and the Clinical Laboratory Improvement Amendments (CLIA) of 1988, which Congress specifically enacted to govern laboratory testing.
FDA’s Interpretation Was Not Merely Overbroad—It Was Legally Unsupportable
The Court found that FDA was attempting to redefine intangible professional laboratory services as physical medical devices, which it described as a category error. The judge emphasized that terms like "instrument," "machine," and "in vitro reagent" in the FDCA unambiguously refer to tangible articles, not in-house testing services conducted by trained lab professionals.
FDA Ignored Legislative Intent and Agency History
The decision meticulously catalogs FDA’s historical abstention from regulating LDTs as devices, noting that for decades FDA exercised “enforcement discretion” but did not assert jurisdiction. That restraint was consistent with Congress’s clear intent that CMS—not FDA—should oversee laboratory services under CLIA.
Recent FDA Rule Contradicted Past Agency and Congressional Actions
The Court found persuasive evidence that Congress repeatedly declined to legislate FDA authority over LDTs, including bills like the VALID Act and VITAL Act. FDA’s attempt to impose sweeping new requirements without statutory change represented an administrative power grab.
Enforcement Discretion Offers No Legal Shield
Although FDA promised not to enforce its rule against many labs immediately, the Court held that this non-binding discretion did not cure the underlying illegality. Agencies cannot regulate beyond their statutory limits and then invoke prosecutorial discretion to downplay the impact.
Plaintiffs:
American Clinical Laboratory Association (ACLA)
HealthTrackRX
Association for Molecular Pathology (AMP)
Dr. Michael Laposata
These plaintiffs succeeded in arguing that LDTs are professional services, not commercial devices. The court emphasized that no article of personal property changes hands in an LDT service, and there is no manufactured product to regulate under the FDCA.
Defendants:
FDA
HHS
Robert F. Kennedy, Jr. (as HHS Secretary)
Dr. Sara Brenner (Acting FDA Commissioner)
FDA's arguments were found unconvincing and contrary to both law and history.
Legal Precedent:
This case will likely become the seminal case on FDA’s limits under the FDCA, especially when it comes to regulating intangible services.
Regulatory Strategy:
The court signaled that FDA must wait for clear congressional authorization before it can impose sweeping rules on LDTs. Agencies can no longer assume that enforcement discretion or policy shifts suffice.
CLIA Reaffirmed:
This decision fortifies CMS’s exclusive authority over LDT oversight, ensuring that professional laboratories are regulated as healthcare providers, not device manufacturers.
Would you like a summarized 1-pager or a slide for stakeholder communication?
Your instincts are sound, and your analysis touches the key tension. While the legal basis for appeal is narrow after such a comprehensive loss on statutory grounds, the government may still appeal for strategic or political reasons, particularly if it wants to preserve long-term regulatory authority over LDTs. Let’s break it down:
1. Reframe the Statutory Interpretation
FDA could attempt a narrower statutory reading argument, claiming that the trial court overly formalized the distinction between devices and services, and that some LDTs involve tangible reagents or instruments developed in-house. But:
The district court thoroughly dismissed that idea (e.g., distinguishing LDTs from “test kits” and noting that no article of commerce changes hands).
FDA’s historic position was not consistent on this point, and that inconsistency undermines its deference argument.
2. Argue Congressional Silence Isn’t Prohibitive
FDA might argue that Congress’s failure to act (e.g., not passing VALID or VITAL) doesn't prove prohibition, and try to invoke a more functionalist statutory interpretation. But the Supreme Court’s recent Loper Bright decision cuts that off at the knees—Chevron deference is gone, and courts must now interpret statutes independently.
3. Try to Reframe the “Service vs. Device” Issue as a Mixed Question
FDA may argue that the case turns on a mixed question of law and fact, and therefore some factual deference is warranted. But Judge Jordan wrote a pure statutory interpretation opinion: no factual ambiguity, no APA “arbitrary and capricious” wiggle room. [He could have called FDA arbitrary and capricious, but, it would have thereby opened an appeal window.]
4. Lean Into the Major Questions Doctrine (In Reverse)
Unusually, FDA could try to argue that this isn’t a “major question”—just routine device regulation. That’s a hard sell given the court’s emphasis on multibillion-dollar impacts, decades of FDA restraint, and explicit congressional debate. The major questions framework works against FDA.
Preserve Institutional Authority
Even if they expect to lose again, the FDA may want to signal that it’s not giving up its turf without a fight. The jurisdictional line between FDA and CMS is still in flux, and this case could define it nationally.
Avoid Circuit Splits
By appealing, FDA could try to avoid future rulings in other circuits that further fracture the legal landscape. Or—less likely—it may gamble on reversing in the Supreme Court.
Change of Administration in 2025
If the current administration appeals and stays in office, it can continue pursuing the appeal. If there's a change in administration, an appeal could preserve the rule on life support until the FDA under new leadership potentially withdraws or modifies it, rather than losing outright in court.
Buy Time and Keep Pressure on Labs
Even a losing appeal could delay finality for a year or more, during which time labs may hesitate to launch high-risk tests or expand LDT services.
You noted that the Trump administration showed up for oral arguments after inauguration and continued backing the case. That's important—it wasn’t a passive handoff.
But now that:
Chevron is gone, and
The court vacated the rule in its entirety, and
CMS's CLIA role has been reaffirmed,
the case has lost most of its strategic high ground. Unless the DOJ is being directed to litigate this as a signal case for FDA authority across domains, folding is a rational option.
Still, FDA may file a notice of appeal to preserve the option, then decide whether to pursue or narrow the appeal after internal consultation—especially after April/May public reaction and political input.
Legal outlook for appeal: very poor—this was a categorical statutory ruling, not a discretionary one.
Tactical options: limited and made worse by recent Supreme Court decisions.
Government behavior: may still appeal to delay, preserve options, or protect institutional authority—but could fold quietly midstream.
Your prediction (that they might walk away): increasingly likely, unless they're playing a long game on FDA power in diagnostics more generally.
Would you like a mock-up of what a DOJ statement withdrawing the appeal might look like—or alternatively, a concise explainer on the implications for labs in light of this ruling?
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WILL THE GOVERNMENT FOLD ITS CARDS? 40%.
CAN GOVERNMENT WIN? 10%
Given the appeal pathway is via the conservative 5th Circuit, which often agrees with its underlying district judges in this nature of case, what are the odds of the government appealing? (Use a percent). And, if the government appeals, what are the odds of winning at the Fifth Circuit? (Use a percent.)
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Based on the strength of the district court's statutory analysis, the conservative lean of the Fifth Circuit, and the Supreme Court’s recent dismantling of Chevron deference (Loper Bright), here is a reasoned estimate of the government’s likely behavior:
60%
In favor of appeal:
Institutional interest in defending FDA's jurisdictional reach.
Delay as a strategic tool—buying time, especially in light of pending elections and possibly shifting political control in 2025.
Preserving optionality: DOJ may file a Notice of Appeal (low cost) even if unsure about pursuing the full appeal.
Against appeal:
High likelihood of loss, especially in the Fifth Circuit.
Supreme Court precedent (Loper Bright) directly undermines FDA's basis.
No meaningful Chevron wiggle room, and weak fallback arguments.
A loss at the Fifth Circuit could worsen the precedent nationally.
Bottom line: The government may file a placeholder appeal to preserve options, even if it ultimately chooses to withdraw or not press it fully. Hence, ~60%.
10%
The Fifth Circuit has:
Repeatedly curtailed agency overreach.
Explicitly cited the “major questions” doctrine to strike rules down.
Supported the logic used by Judge Jordan in other administrative law cases.
Judge Jordan’s ruling is:
Deeply rooted in the statutory text and structure.
Supported by historical context and decades of FDA/CMS practice.
Entirely unaffected by Chevron (even if it were still in place).
An FDA win would require:
Reversal on statutory grounds, despite clear textual limitations.
Acceptance of the idea that a professional service (not a product) is a regulated "device."
Fifth Circuit willingness to side with agency logic over structural separation of powers.
Bottom line: Almost no path to win in the 5th Circuit. A 10% estimate is generous and assumes an unexpected panel composition or unusual deference to agency history—neither of which is likely post-Loper Bright.
Let me know if you’d like visuals (charts, timelines) or a strategic memo version of this for broader distribution.
Certainly — here's a concise strategic memo tailored for ACLA, AMP, and allied stakeholders. It focuses on legal, political, and public messaging strategies to increase the likelihood the government opts not to pursue an appeal of the recent district court decision striking down the FDA’s LDT rule.
To: Leadership at ACLA, AMP, HealthTrackRX, and aligned stakeholders
From: Strategy Counsel
Date: March 31, 2025
Re: Action Plan to Encourage Government Non-Appeal of FDA LDT Rule Decision
To increase the probability that DOJ/FDA declines to appeal the March 31 ruling vacating FDA’s final LDT rule by applying legal, political, and public relations pressure in a coordinated and timely manner.
Submit or coordinate letters from respected legal scholars (including administrative law and health law experts) explaining that:
The decision aligns with Loper Bright and other post-Chevron precedents.
The Fifth Circuit is unlikely to reverse on statutory grounds.
An appeal would risk enshrining unfavorable national precedent for FDA.
Encourage amicus letters to DOJ or HHS General Counsel (not the court), outlining the strategic hazards of appealing a losing case with high visibility and a poor legal footing.
Focus on institutional legitimacy, not political confrontation.
Engage CMS career and political leadership to reaffirm CLIA as the rightful regulatory home for LDT oversight.
Work with bipartisan congressional offices (especially from health committees or oversight) to:
Send oversight inquiries or letters to HHS urging restraint.
Remind the administration of congressional intent: Congress has repeatedly declined to give FDA this authority.
Reach out to Senate HELP and House Energy & Commerce contacts to suggest that future LDT oversight reform should be legislative, not judicially or bureaucratically imposed.
Offer to support hearings or roundtables that pull FDA back toward a VALID/VITAL compromise without litigation.
Launch op-eds, white papers, and patient stories (especially from rare disease and oncology communities) emphasizing:
The district court ruling preserves patient access to cutting-edge diagnostics.
FDA’s rule would have created a multi-billion-dollar regulatory burden with no evidence of improved safety.
Congress already empowered CLIA to ensure lab quality.
Use think tanks (e.g., AEI, Manhattan Institute, Brookings) to publish quick analyses showing:
FDA’s appeal would be an expensive regulatory escalation.
DOJ/FDA should not spend taxpayer money defending a regulation projected to cost $113B (FDA’s own estimate) with minimal benefit.
Act before the 60-day appeal window expires (i.e., before May 30, 2025).
Target internal deliberation windows at DOJ Office of the Solicitor General and HHS General Counsel by mid-April.
Prepare for a “win by default” if DOJ files a notice of appeal but then quietly lets it lapse or withdraws.
While DOJ may reflexively file a notice of appeal, the odds of ultimate pursuit can be reduced by sustained, multi-pronged messaging focused on legal futility, political overreach, and practical cost. Lining up stakeholders from both industry and patient advocacy sectors will bolster the case for a graceful government exit and refocus oversight debates in Congress, where they belong.
Let me know if you'd like a version of this formatted as a Word/PDF briefing memo, or expanded sections on talking points, press strategy, or Hill outreach targets.
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AI LOOKS BACK TO DECEMBER 2024
Compare your December 2024 prediction of the outcome, and your mockup ruling, with the ACTUAL ruling today.
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Here is a comparison of the December 2024 AI "mock-up ruling" with the actual federal court decision issued on March 31, 2025 in ACLA et al. v. FDA. This side-by-side assessment focuses on key structural, legal, and rhetorical elements.
| Feature | AI Mock-Up (Dec 2024) | Actual Ruling (Mar 2025) |
|---|---|---|
| Length | ~5 pages | 51-page opinion + 2-page judgment |
| Tone | Concise and explanatory | Formal, detailed, and judicial |
| Remedy | Summary judgment for plaintiffs, rule vacated and remanded | Same: Rule vacated in full, summary judgment for plaintiffs, remanded to HHS |
| Framing | High-level summary of arguments and conclusions | Detailed statutory history, legislative record, agency behavior, and administrative law doctrine |
| Legal Point | AI Mock-Up | Actual Ruling |
|---|---|---|
| FDA lacks statutory authority to regulate LDTs as devices | YES — devices are tangible articles, not professional services | YES — extensive statutory and historical analysis showing LDTs are not devices under FDCA |
| Major Questions Doctrine applies | YES — regulating LDTs is a major economic/political question requiring clear Congressional authorization | IMPLIED but not decided — Court notes the doctrine but rules solely on statutory grounds (p. 23) |
| APA violation: arbitrary and capricious | YES — FDA failed to account for reliance interests and overstated benefits | NOT REACHED — the court vacated the rule solely on jurisdictional/statutory grounds |
| Remedy: Vacatur and remand | YES | YES (Final Rule vacated in its entirety, remanded to HHS) |
| Category | AI Mock-Up | Actual Ruling |
|---|---|---|
| Statutory Analysis (FDCA vs. CLIA) | Explained but brief | Very deep dive into legislative history from 1938 to 2024, contrasting FDCA (devices) and CLIA (services) |
| FDA Historical Behavior | Noted: 30 years of non-enforcement | Extensive documentation of shifting FDA positions, Congressional inaction, and reliance interests (1992–2024) |
| CLIA Oversight Role | Described as the rightful regulator | Affirmed and detailed across multiple pages; CLIA framed as the sole proper framework for LDT oversight |
| Enforcement Discretion | Criticized as unpredictable | Dismissed as legally inadequate — discretionary policies cannot compensate for lack of jurisdiction |
| Style Feature | Mock-Up | Actual Ruling |
|---|---|---|
| Judicial Voice | Modeled tone, but simplified | Authentic and authoritative, citing 5th Circuit and Supreme Court precedents |
| Examples/Imagery | General analogies (e.g., contrast with kits) | Concrete examples (e.g., 79,000 existing tests, CMS role, training requirements, AMA comments) |
| Conclusion | "FDA lacks authority, acted arbitrarily, rule vacated" | "FDA lacks authority under FDCA, vacatur required under APA and 5th Circuit precedent" |
Both the mock-up and actual ruling conclude with:
Summary judgment for ACLA, AMP, and other plaintiffs
Denial of FDA's cross-motion
Vacatur of the FDA's May 2024 Final Rule
Remand to HHS for further proceedings
The December mock ruling anticipated the outcome with remarkable accuracy, both legally and structurally. The actual ruling, however, surpasses it in:
Depth of legislative and administrative law reasoning
Documentation of FDA’s shifting policy stance
Use of APA and FDCA statutory structure to decide the case without invoking the major questions doctrine directly
Would you like a PDF one-pager comparing the two, or a version of this formatted as a press release or advisory memo?
In the last couple days I ran across 3 views of AI in healthcare, from current trade journals.
As an experiment, I wondered how Chat GPT 4o could consolidate these three news items.
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AI CORNER
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Here is a consolidated article that synthesizes the three AI developments—office visits, hospital administration, and clinical pathology—into a single cohesive narrative, tailored to inform healthcare industry readers and connect the dots:
AI Is Quietly Reshaping the Foundations of Healthcare:
Three Case Studies from the Clinic, the Hospital, and the Lab
Artificial intelligence is no longer an emergent technology poised on the horizon of healthcare—it is threading itself into the fabric of how we deliver, manage, and interpret care. From front-line medical visits to back-office hospital workflows and the cerebral realm of clinical pathology, AI is not just accelerating efficiency—it’s redefining the roles of clinicians and reengineering the architecture of health systems. Three recent case studies underscore this transformation.
At Akido Labs in California, AI is being trialed not merely as an assistant, but as a co-pilot during entire patient visits. Their ScopeAI platform, built on Meta’s LLaMA large language model, empowers medical assistants to gather data, synthesize differential diagnoses, and propose treatment plans—all before a physician enters the room. The goal is clear: expand physician reach, reduce burnout, and improve access to care.
By enabling non-physicians to manage intake and history-taking through conversational AI, Akido allows clinicians to focus on the 20% of patients who truly need their expertise, reserving their cognitive bandwidth for the most complex cases. According to Akido co-founder Prashant Samant, this model can increase visit capacity five- to tenfold, improving outcomes for patients with chronic diseases through more frequent and informed care encounters.
While AI in the clinic aims to extend the physician's reach, AI in hospital administration is addressing an equally urgent crisis: an overwhelmed, understaffed, and financially strained hospital system. With over 13% of U.S. hospitals critically understaffed and administrative costs consuming nearly a quarter of hospital budgets, the stakes are high.
AI-powered assistants are already proving their worth. Automated scheduling systems are reducing patient wait times and no-show rates—together responsible for billions in annual losses. Meanwhile, AI tools that streamline billing and documentation are reducing denied claims and accelerating revenue cycles. Estimates suggest these tools could save administrators 870 hours annually while improving coding accuracy to 97%.
Perhaps most significantly, AI enables smarter resource allocation. By analyzing underutilized data from EHRs and operational metrics, hospital leaders are uncovering patterns and inefficiencies previously buried in data silos. The result? A blueprint for cost-effective strategic planning grounded in real-time insights rather than retrospective guesswork.
If the exam room and front office are seeing tangible gains from AI, the clinical pathology lab is arguably where AI’s cognitive potential shines brightest. As Dr. Rama Gullapalli and Dr. Peter McCaffrey note in Archives of Pathology & Laboratory Medicine, clinical pathology is uniquely suited to benefit from generative AI due to its vast, structured data sets—and its deep tradition of interpretive inference. Open access / Arch Path Lab Med, McCaffrey 149:130-141.
Large language models are now being applied to everything from SOP auditing and instrument selection to complex multimodal report generation. Tasks that once required weeks of expert labor—like evaluating new lab platforms or comparing vendor performance—can now be initiated with well-formed prompts and validated in hours. And in fields like molecular pathology, AI is beginning to surface subtle patterns across massive datasets that would otherwise go unnoticed, such as early anemia trends suggesting undiagnosed malignancy.
This isn’t a vision of AI replacing the clinical pathologist—it’s one where AI acts as an infinite assistant, elevating every team member’s expertise while preserving human oversight. In fact, Dr. McCaffrey argues that the lab’s role may evolve from service to infrastructure, becoming the central “cognitive utility” of the healthcare enterprise.
These three vignettes—from Akido’s clinic-based AI, to hospital admin automation, to cognitive augmentation in pathology—point to a larger transformation: AI is becoming healthcare infrastructure.
Crucially, each use case highlights a different AI strength:
In the clinic, AI augments clinical triage and intake to expand access.
In administration, AI streamlines logistics and documentation to reduce costs.
In the lab, AI enhances pattern recognition and data synthesis to amplify insight.
Together, they form a composite vision of a system where human expertise is redirected from rote tasks to nuanced decision-making—where doctors diagnose the hardest cases, administrators strategize with real-time data, and pathologists provide layered insights across the patient journey.
The risks, of course, remain—hallucinations, automation bias, liability concerns—but with careful governance, pilot testing, and human-in-the-loop validation, these are challenges to be managed, not barriers to adoption.
In short: AI is no longer a tool in the toolbox. It is the foundation of a healthcare model that is leaner, smarter, and more patient-centric. The healthcare leaders who understand this shift—not just as a technical change but as a structural one—will be the ones best positioned to shape its trajectory.
Tell me what's "really novel" in all this. What's most important?
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Great question—and one that goes beyond the headlines. Across the three case studies, several novel and important findings stand out as truly surprising and worth deeper attention:
The most unexpected and transformative detail from the Akido Labs case is that AI is not merely supporting clinicians—it is running the entire visit, from intake to preliminary diagnosis, through ScopeAI.
Novelty: Medical assistants use AI as an "intelligent teleprompter" that dynamically listens, prompts, and guides a structured medical conversation—all before the physician walks in.
Importance: This flips the traditional clinical model. It suggests a division of cognitive labor, where physicians focus on the top 20% of complex patients, while the AI+assistant team handles the rest. That’s an operational redesign, not just a tech upgrade.
The scale of AI’s impact on hospital administration is genuinely surprising—and understudied.
Novelty: AI isn’t just streamlining tasks—it’s predicted to save up to 47% of administrator time, slash no-show losses (~$150B annually), and improve billing accuracy to 97%, all while reducing clinician burnout, a key driver of attrition.
Importance: These are not marginal gains. They touch the very core of hospital solvency and staff retention. AI becomes not just a cost-saver, but a lifeline for workforce sustainability.
Perhaps the most conceptually innovative idea is from Dr. McCaffrey’s vision of clinical pathology: “Pathology as infrastructure,” akin to electricity—infused everywhere in EHRs, offering ongoing, real-time inference.
Novelty: Clinical pathologists aren’t just reporting test results—they’re becoming AI-augmented advisors, helping predict, contextualize, and even prompt smarter orders before the physician knows what to ask for.
Importance: This shifts pathology from a passive service to an active co-pilot of care delivery, leveraging the lab’s privileged position as the first to see the data. It reframes pathology as a key player in preventive inference and operational optimization.
In all three domains, AI isn’t simply accelerating old workflows. It’s redefining the boundaries between roles:
Medical assistants take on structured triage.
Administrators become strategists, not schedulers.
Pathologists become real-time informatics partners.
That’s the big shift: AI is dissolving old bottlenecks not just by speeding up tasks, but by reassigning cognitive work in a new division of labor.
In the last couple days, there was a run of interesting, comprehensive open access papers.
Most of these I saw while browsing Linked-In postings.
###
Bartolomucci et al. NPJ Precision Oncology (March 24 2025)
Circulating tumor DNA to monitor treatment response in solid tumors and advance precision oncology.
https://www.nature.com/articles/s41698-025-00876-y
This paper reviews both MRD for drug monitoring and MRD for relapse.
###
Wang et al., Cancer Letters (May 1 2025)
Clinical development of immuno-oncology therapeutics.
https://www.sciencedirect.com/science/article/pii/S0304383525001806
###
Volders et al., NPJ Precision Oncology (March 10, 2025)
A nationwide comprehensive genomic profiling and molecular tumor board platform for patients with advanced cancer. [Case study, Belgium]
https://www.nature.com/articles/s41698-025-00858-0
###
Matias-Guiu et al., Virchows Archiv (March 8, 2025)
Implementing digital pathology: qualitative and financial insights from eight leading European laboratories.
https://link.springer.com/article/10.1007/s00428-025-04064-y
Iwuajoku et al. Virchows Archiv (February 18 2025)
An equivalency and efficiency study for one year digital pathology for clinical routine diagnostics in an accredited tertiary academic center
https://link.springer.com/article/10.1007/s00428-025-04043-3
Zia et al., Virchows Archiv (February 12, 2025)
An update on applications of digital pathology: primary diagnosis; telepathology, education and research
https://link.springer.com/article/10.1186/s13000-025-01610-9
####
From the March 2025 CAP TODAY
Chat GPT 4o assesses the downfall of 23andMe from its own original documents.
(The next-to-last segment below includes the views of the bankruptcy judge assigned this case.)
(The last segment parachutes in a new CEO right after the SPAC.)
###
Key inputs included:
2021 47-page investor dec, SEC filing here. 2021 news here.
2024 November investor call transcript
Incidental 2025 news articles (not primary sources for AI, just backdrop)
######
AI CORNER
#####
Company: 23andMe
Date: Mid-2021
Industry: Consumer Genomics / Digital Health / Biotech
Valuation: $3.5 Billion post-SPAC
Funds Raised: $600 Million via SPAC merger with VG Acquisition Corp
CEO: Anne Wojcicki
23andMe entered public markets in 2021 via a high-profile SPAC merger, branding itself as a next-generation healthcare company at the intersection of Consumer, Data Platform, and Therapeutics. Its pitch was compelling: democratize access to personal genetic information, leverage the resulting dataset to power R&D, and develop drugs with partners like GSK. The company highlighted a database of over 10 million customers, robust consumer engagement, and a growing pipeline of early-stage therapeutics.
Yet, by 2025, 23andMe had filed for bankruptcy.
This case analyzes whether, based solely on materials and industry conditions in mid-2021, an investor should have participated in the offering.
Direct-to-consumer ancestry and health kits
One-time purchase model (~$99–$199 per kit)
High opt-in rates for research (~80%)
Aggregated genotypic and phenotypic data
Used for Genome-Wide Association Studies (GWAS)
Licensed to partners, including GSK
Early-stage drug discovery programs
30+ targets, nearly all preclinical
50/50 joint venture structure with GSK
| Strengths | Weaknesses |
|---|---|
| Large consented genetic dataset | Revenue shrinking YoY (–50% in two years) |
| Consumer brand recognition | Highly speculative therapeutic pipeline |
| High engagement, survey response rates | Lacked recurring revenue engine |
| GSK partnership | Biotech capabilities underdeveloped internally |
| Opportunities | Threats |
|---|---|
| Subscription expansion | DTC market saturation post-peak |
| Personalized medicine trend | Regulatory barriers in therapeutics |
| AI-driven drug discovery | Pharma incumbents, better capitalized |
| COVID-era attention to genomics | Investor fatigue with SPAC overpromises |
23andMe positioned itself as a “platform company,” drawing inspiration from the likes of Amazon and Google, with genetic data as the engine of long-term value creation. However:
Platform assumptions were weakly realized. Data was not dynamically integrated into clinical care or widely licensed.
Therapeutics programs were years from revenue. Only one program had reached Phase 1.
Consumer revenues were peaking. Core kit sales had stagnated, and customer acquisition costs were rising.
Subscription model was nascent. Just 75K subscribers by early 2021—a rounding error compared to Netflix or even Calm.
The final slide of the investor deck—a Venn diagram of Consumer, Data Platform, and Therapeutics—symbolized the problem. Instead of metrics, barriers, or business levers, it offered three vague abstractions. The slide did not explain how synergy would be operationalized, how margins would be protected, or how competitive advantages would be sustained.
FY19 Revenue: $441M
FY20 Revenue: $305M
FY21E Revenue: $218M
FY21E Adjusted EBITDA: –$106M
Therapeutics: Pre-revenue
Subscription [recurring revenue]: <1% of user base
Valuation: $3.5B (16x trailing revenue)
Recommendation: Do Not Invest
Despite its brand equity and dataset scale, 23andMe faced the classic pitfalls of a company trying to be too many things at once without deep enough traction in any.
Valuation was disconnected from fundamentals.
Revenue was declining, not growing.
Therapeutics was years from payoff, and highly speculative.
No proven flywheel to sustain or accelerate growth.
The company's core consumer product was a novelty, not a platform. The bet that a consumer DNA company could pivot into biotech and build a durable data monopoly was not supported by evidence at the time. The deck resembled a vision board, not a business plan.
While the stock may have attracted retail enthusiasm in the short term, institutional investors should have viewed this as a high-risk, low-reward venture built on ambition, not execution.
Four years later, the company filed for bankruptcy—affirming that the Venn diagram was not a strategy, and good intentions in healthcare are no substitute for operational focus, viable business models, and revenue discipline.
###
Capital is King - Describe the capitalization path shown in this JPEG (from -595 to +915 to +713 to +188 and falling.)
###
Absolutely—this capitalization trajectory tells a sobering story in just four data points. Let's analyze it like a seasoned CFO or strategy professor would, under the mantra that "Capital is King."
| Fiscal Year End | Total Capitalization (USD, in thousands) |
|---|---|
| 3/31/2021 | –$595,619 |
| 3/31/2022 | $915,656 |
| 3/31/2023 | $713,939 |
| 3/31/2024 | $188,520 |
This is likely the "SPAC merger reset" moment. The company may have been carrying accumulated losses or shareholder deficits pre-IPO, and this negative number reflects the legacy capitalization structure before the SPAC injected fresh capital.
Translation: The balance sheet was under water—debt-heavy, with cumulative losses—and not yet recapitalized.
This marks the SPAC-fueled high-water mark. The merger with VG Acquisition Corp and the accompanying $600M cash infusion flooded the balance sheet with fresh equity. Total capitalization swung dramatically positive.
Translation: Investors injected capital based on a vision—consumer DNA, data leverage, drug discovery—and not based on cash flow or profitability.
In just one year, the capitalization drops by over $200M. This suggests that:
Losses were substantial.
Burn rate outpaced revenue growth.
There was no significant follow-on capital.
Translation: Investors grew cautious. The company couldn’t or didn’t raise more, and began eating into its equity cushion.
A dramatic fall of over $500 million in equity from the 2022 peak. By March 2024, the company was clearly running out of financial runway.
Translation: This is the final descent before insolvency. The balance sheet is eroding, and bankruptcy is likely imminent unless a white knight arrives.
The company started with visionary capital: it raised money on promise and potential. But the operating model never matured fast enough to justify ongoing capital access:
No recurring revenue engine (consumer DNA kits are one-off).
Drug pipeline too early for monetization.
Subscription too small to stabilize cash flows.
Investor patience eroded as financial losses persisted.
In short: They raised venture-like money but lacked a venture-like growth trajectory. The capital base collapsed as the business model failed to convert hype into cash.
This chart is a textbook case of dilution risk, poor capital deployment, and unsustainable business modeling. The swing from –$596M to +$916M, followed by a cliff to $188M, is a warning to future startups: capital is a temporary gift, not a permanent asset.
####
As a final exercise, compare chiefly the 2021 strategy forecast, and the November 2024 investor call, a few months before bankrupcy. Your primary documents are the 2021 strategy forecast and the November 2024 investor call. However, as context I am providing some late-breaking news articles.
But, your analysis should primarily compare the 2021 forecast by the company versus its own description of its November 2024 position.
####
Here is a case study–style strategic comparison between 23andMe’s 2021 forecast and its reality as described in the November 2024 investor call, conducted from the vantage point of a strategy professor dissecting a failed venture.
| Element | 2021 Strategic Forecast | November 2024 Investor Call |
|---|---|---|
| Foundational Thesis | Be a platform company: DTC genomics + proprietary data → consumer insights + drug discovery | “We are winding down our therapeutics division.” Platform model collapsed into a consumer subscription service. |
| Therapeutics | Highlighted as a central pillar of value creation with 30+ programs and a strong GSK partnership; expected to generate proprietary assets and revenue by FY24 | Discontinued. Therapeutics programs shelved or out-licensed. Staff cut 40%. GSK deal ended July 2023. Company no longer pursuing drug development directly. |
| Consumer Subscription Model | Predicted exponential growth: from 0.1M to 2.9M cumulative subscribers by FY24; touted as the “next phase” of DTC journey | Subscription revenue was only 21% of total by Q2 FY25; no mention of hitting the multi-million subscriber forecast. Membership focus shifted to weight loss and ancestry novelties. |
| Revenue Forecast vs. Reality | Forecast FY24 revenue: $400M with $71M adj. EBITDA profit | Actual Q2 FY25 revenue: $44M for the quarter (projecting ~$176M annualized). Adj. EBITDA: –$33M. No profitability in sight. |
| Database Strategy | Positioned as a “crown jewel”—an unrivaled recontactable database for discovery and commercialization | Still referenced, but primarily repositioned as a licensable asset for pharma collaborations; monetization unclear. |
| Telehealth Expansion (Lemonaid) | Seen as the future of “genetics-based primary care” and an anchor for recurring engagement | Lemonaid UK sold off quietly in 2023. GLP-1 prescribing mentioned, but not central to growth. Telehealth reduced. |
| Visionary Leadership | Anne Wojcicki positioned as founder-visionary, bridging genomics, tech, and wellness | In March 2025, Wojcicki resigned to become an independent bidder in bankruptcy court. |
| Capital Base (Forecast) | SPAC raised $600M, $3.5B valuation. Projected strong cash runway to fund expansion | Q2 FY25: $127M cash, flagged going concern warning. Burn rate unsustainable, bankruptcy filed within months. |
Overambitious Platform Strategy
The 2021 vision attempted to blend consumer tech, biotech, and healthcare delivery—industries with vastly different capital structures and time horizons. Execution complexity overwhelmed focus.
Therapeutics Gamble with No Moat
Though framed as revolutionary, the company had no pipeline with clinical value at scale. The GSK partnership ended without successful handoff or revenue streams.
Consumer Burnout and Weak Retention Mechanics
Consumer kit sales plateaued. Subscription services lacked stickiness despite genetic novelty features (e.g., medieval ancestors, polygenic obesity scores).
Late-Stage Pivot to Cost Cutting
By November 2024, the focus was no longer innovation but survival: layoffs, NASDAQ compliance via a 1:20 reverse stock split, and a strategy of out-licensing “assets” that failed to gain traction.
“Consumer-scale disruption of healthcare” sounded compelling in 2021, but 23andMe never solved how to convert its data and brand into sustained margin or defensible value.
By 2024, the company was doing what most distressed tech companies do: cutting headcount, exiting R&D, and begging for partnerships. The once-glorified dataset became a stranded asset, difficult to monetize, and ethically complicated to sell due to privacy constraints.
Would I recommend investment in 2021?
No. The 2021 materials were visionary but hollow on operational discipline and grossly optimistic on near-term revenues. There was no validated path to durable monetization beyond the initial consumer spike. The company's downfall, visible in hindsight, was encoded in its DNA from the start.
The Bankruptcy Judge Perspective
As a federal bankruptcy judge overseeing the Chapter 11 case of 23andMe, my primary concerns would fall into several key categories—many of them evergreen in bankruptcy law, but with nuances specific to a data-driven, consumer-facing biotech company now undergoing liquidation or reorganization.
Evergreen Concern: Sale of assets must not violate public policy or applicable law.
Contextualized Concern:
23andMe’s genetic database—arguably its most valuable asset—is composed of deeply personal, sensitive health and genetic data. The court must be satisfied that:
All user consents and privacy terms are being honored.
No purchaser of the data will violate HIPAA, state laws (e.g. California’s CCPA), or broader expectations of trust.
The de-identification claims are credible and technically defensible.
Questions for the debtor and trustee:
Has the company segregated consented vs. non-consented data?
Will buyers be bound by the original privacy policies?
Are there any public or state AG challenges to data transfer?
Evergreen Concern: Insider deals, self-dealing, or breaches of duty must be scrutinized.
Contextualized Concern:
CEO Anne Wojcicki resigned shortly before bankruptcy and expressed intent to bid on the assets personally or through affiliates. The court must assess:
Was the resignation strategic to avoid conflict-of-interest restrictions?
Has fair market value been established before any stalking horse bid?
Were there attempts at self-dealing or undervalued transfers (e.g., selling Lemonaid UK in 2023 or therapeutics IP transfers)?
A court-appointed examiner or independent fiduciary may be needed to review prior asset sales and oversee the auction process to preserve fairness and transparency.
Evergreen Concern: Employees must be treated equitably, especially under WARN Act and wage priority rules.
Contextualized Concern:
23andMe has gone through multiple rounds of layoffs and may have outstanding severance, retention, or bonus obligations. The court must ensure:
WARN Act compliance in mass layoffs.
Retention plans are justified, necessary, and not rewarding failed leadership.
Priority wage and benefit claims are identified and protected under §507(a)(4)-(5).
Evergreen Concern: All creditor classes must be treated fairly and provided adequate disclosure.
Contextualized Concern:
Does the proposed reorganization (if any) reflect a realistic going-concern valuation? Or is liquidation more appropriate?
Are the intellectual property assets (e.g., brand, data platform, algorithms) being properly valued for sale?
Has the board acted prudently and kept creditors informed about rapidly declining capital and deteriorating operations in 2023–2024?
Unique to this Case:
Because 23andMe operates under a consumer trust model, the court must weigh public interest risks alongside creditor interests.
“When the core business is predicated on consumers volunteering their DNA in trust, and that trust erodes, what’s left?”
The court might consider inviting amicus briefing from privacy advocates or consumer protection authorities to shape appropriate sale conditions or data usage constraints.
Evergreen Concern: Contingent liabilities must be disclosed and estimated.
Contextualized Concern:
The company settled a $30M data breach class action in 2023. Are there ongoing or unfiled claims related to the breach?
Are potential regulatory fines or AG investigations pending over data sales, consent violations, or deceptive business practices?
As a bankruptcy judge, my job is to maximize estate value for creditors while upholding public interest and legal integrity. In this case, that means:
Protecting the integrity of genetic data, even if it limits monetization.
Policing any insider transactions, especially involving former leadership.
Maintaining transparency and fairness as the company transitions or dissolves.
Would you like a mock court opinion or summary ruling from the bench summarizing these findings?
##
##
PARACHUTE IN AS NEW CEO
Rewind to 2021 and this time you're not the investor expert, you are the new CEO, brought as CEO one week after the SPAC. What are your priorities and plans?
##
Absolutely—stepping into the role of CEO of 23andMe in mid-2021, fresh off a $600M SPAC windfall and a $3.5B valuation, I'm walking into a company rich in vision, cash, and consumer data—but dangerously poor in monetization discipline and strategic focus. My role is not to be a cheerleader. It’s to turn vision into a viable business.
Why? We have an investor deck built on vague abstractions (consumer + data + therapeutics) and forecasts that project exponential growth without validating any repeatable profit engine. That’s not a strategy—it’s a slide deck hallucination.
Action:
Cancel the next few “vision tours.” Replace them with a hard internal review.
Commission a Zero-Based Strategic Plan (ZBSP): every business unit must justify itself from scratch in terms of unit economics, risk-adjusted ROI, and time to monetization.
Why? We have $600M, but drug development is a black hole for capital. Our burn rate is unsustainable unless we either find margin or shed ambition.
Action:
Freeze hiring in Therapeutics pending full audit.
Demand a reforecast from finance using conservative assumptions (e.g., 10% YoY growth in kits, capped conversion to subscription).
Build a 3-year cash discipline model: no program lives without a defined path to breakeven or exit.
Why? No company can build a durable business model across consumer goods, SaaS-style subscriptions, drug R&D, and telehealth simultaneously—at least not from a standstill.
Action:
Narrow to one "core flywheel": I choose the consumer genetic health + subscription platform, not drug discovery. This taps into our DTC brand, our installed base, and low-cost engagement.
Therapeutics becomes an IP licensing arm only. Partner-first, cash-light.
Lemonaid and other side projects: paused pending integration review.
Why? Our “data” story is compelling, but fragile. Pharma doesn’t buy vague promises of future drugs. They buy validated biomarkers, cohorts, endpoints, and predictive models.
Action:
Build a Data Products division with clearly priced research offerings, e.g.:
Longitudinal cohort datasets
Rapid GWAS-as-a-service for pharma
Real-world genotype/phenotype endpoints
Audit our consent language—can we actually commercialize this data as we claim?
Why? The subscription model was launched with 75K users and lofty projections, but unclear ongoing value.
Action:
Identify 3 high-retention behavioral clusters from existing users.
Build subscription tiers aligned to medical relevance: e.g., a fertility/women’s health tier, a brain health/longevity tier, etc.
Pilot a clinical integration feature: downloadable results for physician EHRs, or a 10-minute video consult with a genetic counselor.
Why? We’re in possession of genetic data from millions of people. It is both our crown jewel and the biggest reputational landmine.
Action:
Appoint a Chief Ethics & Privacy Officer reporting directly to me.
Make privacy a marketing strength: show that 23andMe is the most transparent and protective data company in genomics.
Pre-emptively engage with state AGs, regulators, and major media to set expectations before the first breach or scandal.
| Quarter | Milestone |
|---|---|
| Q3 2021 | Internal audit complete, new org chart aligned to streamlined focus |
| Q4 2021 | Subscription product relaunch (tiered, medically relevant) |
| Q1 2022 | Data Products division goes live with first pharma partnerships |
| Q2 2022 | Therapeutics reorganized into royalty/licensing JV; no new drug CAPEX without external co-invest |
| Q3 2022 | $75M in non-kit revenue; burn reduced 30%; consent/legal model hardened for scalability |
“We’re not building a biotech company, or a data company, or a lifestyle brand. We’re building the only sustainable genomics company by aligning margin, mission, and medical trust. That requires killing some dreams to save the company.”
Would you like me to write a sample internal memo from this incoming CEO to employees or to the board?
Certainly. Here's a professional, candid memo to the Board of Directors from the incoming CEO, written in mid-2021—just after the SPAC deal closed.
To: Board of Directors, 23andMe
From: [New CEO Name], Chief Executive Officer
Date: July 2, 2021
Subject: Strategic Priorities and Near-Term Reality Check
Dear Members of the Board,
I want to begin by thanking you for the trust you've placed in me as I step into this role at a pivotal moment in 23andMe’s trajectory. With a successful SPAC transaction behind us and $600 million of new capital on hand, we have the opportunity—and the obligation—to evolve from a high-visibility consumer genomics brand into a sustainable and focused healthcare company. That evolution will require clear prioritization, rigorous cost discipline, and strategic restraint.
Let me speak candidly: our 2020 and 2021 revenue figures reflect a distorted environment.
We should not treat the apparent resilience of kit sales or new subscriber uptake as organic growth. These metrics were heavily buoyed by the COVID-era consumer context:
Educated, middle-class consumers were stuck at home.
Discretionary travel and leisure spending fell.
Interest in health and ancestry exploration rose as a form of at-home engagement.
Stimulus checks and stock market gains put extra cash in the hands of our target demographic.
In short, 2020–2021 created a “COVID bubble” for our consumer business. We should assume that absent this environment, our 2022 topline would look significantly weaker—especially without a compelling reason for reengagement.
This insight must inform how we approach burn rate, hiring, and product expansion.
Our partnership with GSK has yielded valuable scientific collaboration, but as of today, we have no near-term commercial assets and no evidence that our in-house pipeline will generate revenue before 2026 or later.
Rather than doubling down on internal drug development—which burns capital at biotech rates—I recommend:
Pivoting the therapeutics division to an IP monetization model.
Maintaining a lean, royalty-seeking footprint.
Limiting new CAPEX in this area unless it is co-invested and milestone-funded by pharma partners.
This path preserves scientific credibility while avoiding the common SPAC-era pitfall of overfunding speculative R&D without revenue accountability.
We must pivot 23andMe toward durable, consumer-led revenue and recurring engagement models. Our kit sales cannot carry the business, and the current subscription model lacks clarity in value proposition and user retention.
My plan is to:
Rebuild the subscription offering around clear verticals (e.g., fertility, longevity, brain health).
Tie subscriptions to dynamic insights, regular feature updates, and eventually, clinical utility.
Explore partnerships with health systems, insurers, and EHR providers to integrate our insights into care settings—not just curiosity platforms.
We will measure success not by downloads or kit shipments, but by monthly active subscribers and average lifetime value.
We market ourselves as having one of the largest recontactable genetic datasets in the world—but this dataset is not yet a product. Nor is it clear how much of it can legally be monetized under current consent structures.
I will convene a cross-functional task force (legal, data science, privacy, commercial) to:
Map actual commercial rights vs. assumptions made in prior materials.
Build a Data Products roadmap suitable for licensing, pharma collaboration, and cohort studies.
Formalize governance and ethics around data use to protect the brand and mitigate risk.
This is our most strategic long-term asset—but it must be handled with both humility and precision.
We cannot afford to act as if the SPAC cash solved our problems. It bought us optionality, not immunity. The public markets will soon demand execution over imagination. As CEO, my approach will be grounded in:
Focused execution around monetizable strengths.
Capital discipline aligned with margin and return timelines.
Transparency in internal and external communications.
I welcome the Board’s feedback and invite a working session within 30 days to align around a revised operating plan and reforecast.
Sincerely,
[New CEO Name]
Chief Executive Officer
23andMe, Inc.
Would you like a slide version of this memo suitable for a board presentation, or a more public-facing version for shareholders or media?