Published: Sat, September 08, 2018
Medicine | By Earnest Bishop

Theranos, Elizabeth Holmes' startup, is shutting down for good

Theranos, Elizabeth Holmes' startup, is shutting down for good

By 2014, Theranos was valued at $10 billion and she, herself, became a billionaire in the process.

Blood-testing company Theranos plans to go out of business in the wake of one of the tech community's biggest frauds, the Wall Street Journal reported Tuesday night. A few months later a federal grand jury indicted Elizabeth Holmes and the company's former COO on charges of wire fraud.

Theranos will dissolve itself and pay unsecured investors its remaining cash according to an article in the Wall Street Journal.

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Soon after she devoted herself full time to her company, Holmes attracted a number of key investors (including Larry Ellison and Draper Fisher Jurvetson) and high-profile board members (including former U.S. Secretaries of State Henry Kissinger and George Schultz, and former U.S. Senators William Frist and Sam Nunn).

Aforementioned CEO David Taylor's approval rating hovered around 52% until Glassdoor shut down the metric after July 7, which it will sometimes do when a company is going through a leadership transition or time of crisis. But in 2015, the company's value plunged after news outlets began reporting that its technology wasn't as advertised. Instead of the familiar needles, tourniquets, vials, and bandages of the past, Theranos offered a comprehensive blood test that required just a finger stick and a single drop of blood.

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The dissolution process was precipitated by the fact that Theranos breached a covenant governing a $65 million loan it received from Fortress Investment Group a year ago. This rating did see a jump in December 2017, which coincides with an announcement that more than 76,000 Arizonans would receive $4.6 million in refunds for blood tests they had purchased from Theranos.

In March, the Securities and Exchange Commission announced that it had reached a settlement with Holmes over its accusations that she and former Theranos President Ramesh "Sunny" Balwani engaged in "massive fraud" worth $700 million. The Journal reports that most of the company's employees - reported to be down to fewer than two dozen as of April, a drastic fall from a peak of 800 - worked their last day on August 31.

The regulator alleged that Theranos, Ms Holmes and Mr Balwani made a series of false and misleading statements in investor presentations, product demonstrations and interviews.

Neither Taylor nor representatives for Palo Alto, California-based Theranos immediately responded to Reuters' requests for comment.

Theranos is now negotiating with Fortress to keep part of its remaining cash to pay off other investors.

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