How does 23andMe make money?

The genetics company sells a DNA analysis kit to consumers and collaborates with researchers

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By cobbling together bits of information from my parents and grandparents, I've concluded that I'm 25% Italian, 25% Scottish, 25% Irish, and 25% Hispanic. But wouldn't it be cool to have science back it up with precise percentages?

When 23andMe broke on the scene a decade ago, people loved the idea of submitting a spit sample to find out not only details about their ancestry but also clues about what diseases or health issues they're predisposed to. It's that early consumer allure that has made 23andMe one of the most notable brand names in the healthtech space.

In late 2013, however, the company faced a crackdown from the Food and Drug Administration (FDA), which ordered that 23andMe stop selling the kit because it didn't have "marketing clearance or approval." The company complied by rebranding the testing kits and simply including ancestry reports with raw genetic data, minus the health analysis.

But that wasn't the end of the story. Last year, with FDA approval, 23andMe reintroduced the kit with health analysis (albeit with a smaller number of reports).

Today, 23andMe offers two different kits analyzing DNA:

For $99, the Ancestry Service gives the customer a breakdown of their global ancestry by percentages. The three included ancestry reports explain which of 31 global populations your DNA is derived from, where your ancestors lived thousands of years ago, and how much you're related to Neanderthals. (We all have a little Neanderthal DNA!)

Additionally, an opt-in program allows customers to find their "DNA relatives," or people in the 23andMe database that share their DNA.

For $199, the Health + Ancestry Service comes with everything included in the Ancestry Service plus additional insights around health. This includes "Carrier Status" reports (including cystic fibrosis, sickle cell anemia, and hereditary hearing loss), "Wellness" reports (including deep sleep, lactose intolerance, saturated fat, and weight), and "Traits" reports (including male bald spot, sweet vs. salty, and unibrow).

In a disclaimer, however, 23andMe says, "The tests are not intended to diagnose a disease, or tell you anything about your risk for developing a disease in the future." And some of the tests are most relevant for a specific subset of people: for example, the one for sickle cell anemia most applies to people of African descent.

Both kits come with all the raw data and can be compared with friends or family that have also ordered their own kits. Those who have ordered the Ancestry Service can order the health reports later on for an additional $125. Finally, for bulk orders (say, for everyone in your family) the company takes 10 percent off each additional kit.

No membership fees or monthly subscriptions are required to order services from 23andMe.

In addition to its consumer products, 23andMe has research-based revenue streams. This includes the company's Genotyping Services for Research (GSR) platform and research services group, which both collaborate with industry and academic institutions to conduct health-based research.

Industry clients can work with 23andMe to conduct genetic research, drive more participants to their studies, capture phenotypic data from participants' smartphones, and more.

Since its founding in 2006, 23andMe has raised nearly $241 million from Google, MPM Capital, Johnson & Johnson Development Corporation, and others. Most recently, the company received a $1.7 million grant from the National Institutes of Health (NIH).