Commitments and Contingencies

9 Months Ended

Dec. 31, 2023

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Non-cancelable Purchase Obligations

In the normal course of business, the Company enters into agreements containing non-cancelable purchase commitments for goods or services with various parties. As of December 31, 2023, the Company had a total of $22.2 million in outstanding non-cancelable purchase obligations with a term of 12 months or longer.

Legal Matters

The Company is subject to certain routine legal and regulatory proceedings, as well as demands and claims that arise in the normal course of business. Certain conditions may exist as of the date that the consolidated financial statements are issued, which may result in a loss to the Company, but will only be recorded when one or more future events occur or fail to occur. The Company’s management assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against and by the Company or unasserted claims that may result in such proceedings, the Company’s management evaluates the perceived merits of any legal proceedings or unasserted claims, as well as the perceived merits of the amount of relief sought or expected to be sought.

Cyber Security Incident

On October 10, 2023, the Company reported that certain profile information, was accessed from individual 23andMe.com accounts without the account users’ authorization (the “incident”).

The Company incurred $2.7 million in one-time expenses related to the incident, offset by $1.7 million of probable insurance recoveries, during the three months ended December 31, 2023, primarily consisting of technology consulting services, legal fees, and expenses of other third-party advisors.

As of the filing date of this Form 10-Q, as a result of the incident, multiple class action claims have been filed against the Company in federal and state court in California, as well as in other U.S. and international jurisdictions, which the Company is defending. These cases are at an early stage, and the Company cannot predict the outcome. The Company is also assessing its response to notices filed by consumers under the California Consumer Privacy Act and to inquiries from various governmental officials and agencies.

The full scope of the costs and related impacts of this incident and related litigation, including, without limitation, the availability of its cyber and other insurance policies to offset some of these costs, cannot be estimated at this time. While the Company believes the investigation into these matters is complete, the Company may become aware of new or different information or information that differs from that contained in this Form 10-Q.

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. The Company has never incurred costs to defend lawsuits or settle claims related to these indemnification provisions. As a result, the Company believes 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 December 31, 2023, the Company was not aware of any known events or circumstances that have resulted in a material claim related to these indemnification obligations.