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Elizabeth Holmes
Elizabeth Holmes is the convicted former CEO at Theranos, a now-defunct blood test company.
Holmes was a charming and charismatic leader, poised to change the world of clinical laboratory testing. Her legacy, however, will instead be one of enamoring well-recognized investors with her personality while the technology behind her company ultimately proved lacking.
Her downfall was stunning. In 2014, Holmes was reported to have 18 U.S. patents and 66 non-U.S. patents in her name, and she was listed as a co-inventor on more than 100 patent applications. She was the youngest self-made female billionaire on the 2014 Forbes 400 list, with an estimated net worth of $4.6 billion. Yet by early 2016, Forbes updated her net worth to zero.
She founded Theranos in 2003 at age 19 while she was a chemical engineering major at Stanford University. She subsequently dropped out of Stanford as a sophomore to focus on her startup.
Theranos’ technology was based on her invention and patent for a way to run 30 common clinical laboratory tests on blood obtained via a fingerstick using microfluidics technology – a much faster and cheaper method than traditional lab testing techniques.
By 2014, the company offered 200 tests, was licensed to operate in every state in the U.S., and was valued at nearly $10 billion.
While some observers predicted Holmes’s innovations would dominate the clinical lab test market, an in-depth investigative report by The Wall Street Journal in October 2015 revealed aspects of Theranos that the secretive company has kept from public view. This reporting started the chain of events that would lead to Theranos’s downfall.
As a result of regulator scrutiny, in July 2016, the Medicare program handed down stringent sanctions to Theranos for problems at the company’s lab, including a two-year prohibition on Holmes owning any CLIA-certified laboratory.
Then, in March 2018, the U.S. Security and Exchange Commission (SEC) filed charges that focused on Theranos and Holmes allegedly raising more than $700 million from investors by exaggerating or making false statements about the company’s technology and financial performance.
To settle the SEC’s charges, Holmes agreed to pay a $500,000 fine and surrender almost 19 million shares of Theranos stock and voting control of the company, the SEC said. Also, she was barred from running a public company for 10 years. At the time, Holmes did not admit to nor deny the charges.
Later in 2018, the federal prosecutors charged Holmes on various counts of conspiracy and wire fraud charges. Following the indictments, Holmes stepped down as CEO. Theranos dissolved in September 2018.
Holmes went on trial in fall 2021 after multiple delays due to the COVID-19 pandemic and her pregnancy. On January 3, 2022, she was found guilty on three counts of defrauding investors and one count of wire fraud. She is scheduled to be sentenced in September 2022.
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Volume XXX No. 4 – March 6, 2023
Readers will uncover a theme of mergers and consolidations running throughout this issue of The Dark Report. Case in point is our story about the pending merger between Sanford Health and Fairview Health Services. If the deal goes through, the new system will have 58 hospitals across five states. The Dark Report also notes revenues from Labcorp’s acquisition of Ascension Health, and reports on the creation of a major MT training center in Utah.
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