Blood-testing company Theranos forced to dissolve
The start-up, once with a valuation of nearly $10B, cannot find any buyers
Theranos, the Silicon Valley blood-testing startup that promised plenty but failed to deliver, is shutting down 15 years after it was founded.
An email to shareholders says the company — which at one time had a valuation of nearly $10 billion and whose board of directors included former secretaries of state and current Secretary of Defense James Mattis — cannot find any buyers and will be dissolved.
“I write with difficult news about the future of the Company,” the letter from CEO David Taylor began.
Taylor took over in June for Elizabeth Holmes, the founder of the company who is now facing criminal fraud charges. He joined Theranos as its general counsel in 2016, a year after reports by the Wall Street Journal called into question claims by Holmes — who founded Theranos as a 19-year-old Stanford University dropout — that the company could use a pin prick’s worth of blood for multiple blood tests.
Taylor said investment bank Jefferies “reached out on our behalf to over 80 potential sale counter-parties,” but came away with no buyers.
“We are now out of time,” Taylor said in the letter sent Tuesday, which was obtained by the Wall Street Journal. Theranos does not have enough cash to keep going under terms of a loan from Fortress Investment Group it secured last year, according to the letter. It has about $5 million left that will be distributed to investors.
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. Holmes, who did not admit wrongdoing, was fined $500,000
and ordered to relinquish 18.9 million shares in the company.
The unraveling of Theranos came after reports alleged it was not using its own technology in many of the blood tests it performed. Theranos later had to void a million tests, and some patients reported ill
effects from relying on inaccurate results of the testing, the Journal reported. Holmes was subsequently banned from running a blood-testing lab, then from running a public company or serving on the board of one for the next decade.
In June, Holmes appeared in federal court in San Jose to face charges of criminal fraud, and resigned as CEO of Theranos. She and Balwani
were slapped with multiple charges of wire fraud and conspiracy to commit wire fraud and are facing up to 20 years in prison.
Investors in Theranos include the Waltons of Walmart fame, Oracle founder Larry Ellison, media mogul Rupert Murdoch, venture capitalist Tim Draper and others. Theranos also had a partnership with Walgreens, which had blood-testing centers in its stores.
The Newark company’s website is no longer accessible. Calls to its phone number went unanswered Wednesday.
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 Aug. 31.