Published: Thu, September 06, 2018
Medical | By

Embattled blood-testing firm Theranos to dissolve

Embattled blood-testing firm Theranos to dissolve

At one time, Theranos was worth more than $10 billion and Holmes the youngest self-made female billionaire.

Holmes had claimed that the company's technology could run comprehensive lab tests using just a few drops of blood - a pitch that appealed to Walgreens, which partnered with Theranos to offer the blood tests in its stores.

Its founder, Elizabeth Holmes, and her second-in-command are facing criminal charges on accusations that they defrauded investors, doctors and patients.

Theranos, the once-celebrated Silicon Valley blood testing firm, is about to dissolve itself months after top executives were indicted for defrauding investors, the Wall Street Journal reported on Wednesday.

Taylor, who took over from her as CEO in June, said in the email cited by The Journal that Theranos was in default for a loan from Fortress Investment Group, which now has the right to take ownership of all of its assets.

It says most of the company's remaining two dozen employees finished work last Friday and that Fortress, the United States private equity firm, is set to take control of the company's patents - leaving just $5m to be distributed among unsecured creditors.

Taylor's email to shareholders was also reported by the Financial Times.

Theranos's other, unsecured creditors are owed at least $60 million, and the company is trying to negotiate a deal with Fortress that would see those creditors get the $5 million in cash that Theranos still holds.

The Justice Department alleges that Holmes and Balwani transmitted the results despite knowing that the tests were unreliable.

In March, US securities regulators accused the youthful entrepreneur of an "elaborate, years-long fraud". "For example, allegedly, Holmes and Balwani knew that the analyzer, in truth, had accuracy and reliability problems, performed a limited number of tests, was slower than some competing devices, and, in some respects, could not compete with existing, more conventional machines".

As part of the settlement, Ms Holmes had to return millions of shares to the privately held company and pay a $500,000 fine.

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