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Theranos
Theranos was a failed blood analysis company that became notorious for gaining a $10 billion valuation without actually having proven, functional technology.
Theranos was founded by entrepreneur Elizabeth Holmes. Its name is a combination of therapy and diagnosis. Holmes founded the company in 2003, dropping out of Stanford University as a sophomore to do so.
The company announced that it would leave the clinical laboratory business in 2016 after becoming the target of a major expose by the Wall Street Journal, CMS sanctions, and numerous lawsuits. Theranos was ultimately dissolved in 2018 by David Taylor, its CEO at the time.
Theranos claimed it could perform hundreds of laboratory tests using a finger-stick collection and a micro-specimen vial instead of a needle and several vacutainers of blood. The company said it could return results in four hours for about half of the typical Medicare Part B lab test fees. This would have been exponentially less painful, faster, and cheaper than conventional blood testing performed by clinical laboratories. Theranos partnered with Walgreens in late 2013, with 41 Walgreens testing centers participating in this partnership at one point.
Theranos problems began with an in-depth investigative report by The Wall Street Journal in October 2015. This report was the result of information provided by whistleblowers whose concerns were ignored by both Holmes and Theranos’s President and Chief Operating Officer, Ramesh “Sunny” Balwani.
The Journal’s report revealed aspects of Theranos that the secretive company had kept from public view. Based on interviews with several employees and others with knowledge of events at Theranos, the Journal disclosed that the company ran only a handful of tests using its proprietary technology, relying on traditional testing for most of its specimen work. Following this exposé, Theranos quickly lost its role as the darling of the media and Silicon Valley.
In July 2016, the U.S. Centers for Medicare and Medicaid Services applied the most stringent sanctions it could to Theranos for problems it reported at the company’s lab in Newark, Calif., including a two-year prohibition on Holmes owning any CLIA-certified lab.
As a result of in-depth investigations, the U.S. Security and Exchange Commission (SEC) filed charges on March 14, 2018, stating that Theranos, Holmes, and Balwani allegedly raised more than $700 million from investors through an elaborate, years-long scheme that involved exaggerating or making false statements about the company’s technology, business, and financial performance.
To settle the SEC’s charges, Holmes agreed to pay a $500,000 fine and to 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. Balwani said he would contest the charges.
Three months later, the federal U.S. Department of Justice filed indictments against Holmes and Balwani.
Holmes’ trial was delayed multiple times due to the COVID-19 pandemic and her pregnancy. On January 3, 2022, Holmes was found guilty on three counts of defrauding investors and one count of wire fraud. She is scheduled to be sentenced in September 2022.
Balwani’s trial concluded on July 7, 2022, with him being found guilty on two counts of conspiracy and ten counts of wire fraud. Balwani is scheduled to be sentenced in November 2022.
Pathologist Makes News at Elizabeth Holmes Trial
CEO SUMMARY: During the trial, a pathologist who formerly was CLIA lab director at Theranos testified about the little regard Theranos executives had for federal proficiency testing regulations labs must follow to retain their CLIA license. Another point of contention was how this p…
September 27, 2021 Intelligence: Late-Breaking Lab News
Following the opening of her criminal trial in a Silicon Valley courtroom in recent weeks, Elizabeth Holmes—the disgraced ex-Founder and CEO of Theranos—continues to be the subject of news headlines. Federal prosecutors are calling witnesses to testify. Much of this testimony includes anec…
August 16, 2021 Intelligence: Late-Breaking Lab News
Elizabeth Holmes, the disgraced ex-CEO of the now-defunct Theranos, continues to be in the news. In the past several weeks, news reports indicate that she gave birth to a child, but whether it is a boy or a girl has not been reported. Also in recent weeks, attorneys have been in court arguing …
Judge Rules in Theranos Case, Elizabeth Holmes Again Is News
Attorneys for former Theranos CEO Elizabeth Holmes and former President Ramesh Balwani are in court maneuvering before the federal case starts the trial phase this summer. Last week, Judge Edward J. Davila ruled that prosecutors from the federal Department of Justice …
Several Big Surprises in 2018’s Top 10 Lab Stories
CEO SUMMARY: This year’s list of the Top 10 Lab Industry Stories for 2018 is dominated by new directives from Medicare and private health insurers, as well as significant decisions by federal courts. Collectively, these developments create new compliance risks for all clinical laborator…
December 3, 2018 Intelligence: Late Breaking Lab News
Another long-established regional laboratory company is about to be acquired. On November 27, Boyce and Bynum Pathology Laboratories of Columbia, Mo., disclosed that it had entered an agreement to be acquired by Quest Diagnostics Inc. Notably, the press release abou…
Are More Criminal Charges Coming in Theranos Case?
CEO SUMMARY: As a going business, Theranos may have been dissolved in September, but it continues to be in the news. The biggest development was a disclosure in federal court earlier this month by federal prosecutors that there may be additional criminal charges to come that go beyond the…
The Next Theranos News Could See More Criminal Charges
CEO SUMMARY: THE DARK REPORT has learned – before any other lab news resource – that in the latest in a long line of Theranos news stories, the U.S. Attorney is making statements ab…
Theranos Will Dissolve, Seeks to Settle Claims
CEO SUMMARY: It appears that the final chapter in what many call Silicon Valley’s biggest investor fraud will conclude this week. Theranos, Inc., the once high-flying lab testing company, is to be dissolved and its remaining cash and intellectual property will be distributed, according …
Theranos News Gets Worse for the Former Silicon Valley Hero
CEO SUMMARY: In a tale of two fraudsters, the Department of Justice has filed a warning shot to all technology startups: Criminal indictments against Elizabeth Holmes and Ramesh “Sunny” Balwani could mean prison time and massive fines. In this latest Theranos news, The DOJ ci…
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