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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.
Holmes, Balwani Indicted by Department of Justice
CEO SUMMARY: Federal criminal indictments were unsealed last Friday in San Francisco against Elizabeth Holmes and Ramesh “Sunny” Balwani for their actions as executives at Theranos, Inc., the once high-flying lab test company. Officials at the Department of Justice said the counts aga…
Theranos’ Elizabeth Holmes Prepares to Meet Justice
IT’S NOW CLEAR THAT TWO CLINICAL LABORATORY EXECUTIVES COMMITED one of the largest corporate fraud schemes in the past century. Reading the federal indictments against Elizabeth Holmes and Ramesh “Sunny” Balwani unsealed Friday provides insights into the extensive scale and wide scope of the a…
How Many Patients Were Harmed at Theranos?
CEO SUMMARY: Reporting in The Wall Street Journal shows that some physicians in Arizona were concerned about the harm from erroneous test results from Theranos Inc. But those physicians who expressed concern may have been only a small set of the …
WSJ Reporter Tells All About Downfall of Troubled Theranos
CEO SUMMARY: While Theranos was a darling of the business and national media, Wall Street Journal reporter John Carreyrou was hearing troubling reports about patients who got incongruent lab results that put them at risk for inappropriate medical…
Discovery of Pathology Errors Shows Quality Flaws
MOST PATHOLOGISTS WOULD AGREE THAT PATIENTS AND THEIR PHYSICIANS have every right to expect a timely, accurate lab test result. Stated differently, patients and physicians implicitly trust that a pa…
SEC Charges Theranos with ‘Massive Fraud’
CEO SUMMARY: In an action against Theranos and two of its executives, the SEC said in a federal court filing this month that the company, CEO Elizabeth Holmes, and former COO Ramesh “Sunny” Balwani deceived investors into believing that the company’s portable blood analyzer could co…
Powerful Forces Are Reshaping Lab, Pathology
THERE IS NO BETTER WAY TO UNDERSTAND HOW THINGS ARE CHANGING within the house of laboratory medicine than to survey current news. Understanding why and how breaking news stories are indicators of deeply-rooted and forceful trends is essential for lab administrators and pathologists who want to keep t…
NILA: CLIA Proposal Doesn’t Address Flaws
CEO SUMMARY: For many years, NILA has urged the federal Centers for Medicare and Medicaid Services to make significant changes in CLIA regulations. Yet, in its recent request for information, CMS addressed five specific areas. But the federal agency left out the need for a comprehensive o…
January 2, 2018 Intelligence: Late Breaking Lab News
In Arizona, individuals and patients who paid for clinical laboratory tests performed by Theranos, Inc., are finally getting refunds. These payments are a result of a settlement between the Arizona Attorney General and Theranos. News accounts indicate that, over the time in 2013 thr…
LabCorp, Quest Open PSCs in Retail Stores
CEO SUMMARY: In the past year, both national laboratory companies have increased the number of patient service centers they operate in retail pharmacies and grocery stores. But these PSCs are not serving direct access testing (DAT) customers. Rather, early evidence indicates that patients…
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