Caught in the Theranos Wreckage

The high-profile investors, including Ms. DeVos and Mr. Murdoch, collectively invested about $600 million in the company Theranos

Even some of the world’s richest people may get duped, according to newly unsealed documents in a lawsuit filed on behalf of investors in the failing blood-testing company Theranos.

High-profile investors who collectively lost hundreds of millions of dollars included Walmart’s Walton family, the media mogul Rupert Murdoch, as well as Betsy DeVos, the secretary of education and her relatives.

The list of investors, which was first reported by The Wall Street Journal, came to light as part of a class-action lawsuit brought in 2016 by Robert Colman, a retired Silicon Valley investment banker, who claims that Theranos misled investors about its business and technology.

Theranos, founded by Elizabeth Holmes when she was a 19-year-old Stanford University dropout, promised to revolutionize the lab industry using a few drops of blood from a simple finger-prick to look for everything from diabetes to cancer, at a fraction of the cost of a traditional blood test.

The company became a Silicon Valley fairy tale, with investors awarding the privately held company a valuation of around $9 billion. But the story began to unravel in October 2015 after The Wall Street Journal, owned by Mr. Murdoch’s News Corp., began questioning whether the tests worked. Theranos became the subject of federal investigations into its testing and claims of proprietary technology, which were called “nanotainers.” Much of the time the company had to resort to using conventional blood testing methods, unable to get federal approval for any test but one for Herpes.

Theranos and its founder also became embroiled in a series of lawsuits, involving investors as well as one of its key partners, Walgreens, a large drugstore chain, where it offered its tests. The company reached a settlement with Walgreens last August.

In March, the Securities and Exchange Commission charged Ms. Holmes with fraud, accusing her of exaggerating and lying about her technology to attract investors. As part of the S.E.C. action, Ms. Holmes agreed to pay $500,000, give up control of her company, and is barred from serving as an officer or director of any public company for 10 years. She and Theranos did not admit nor deny the allegations.

Theranos still faces the class-action lawsuit, and may still be subject to a criminal investigation by the United States attorney in San Francisco. The company’s future is unclear. The company did not respond to requests for comment.

Theranos had always boasted a star-studded list of investors and directors — its board included the former secretaries of state George P. Shultz and Henry A. Kissinger, two former United States senators, and Gen. Jim Mattis, the current secretary of defense. But while some high-profile investors’ links to Theranos had been previously known, the new documents provide a detailed list of financial amounts.

The Walton family invested about $150 million in 2014 through two separate entities, according to the investor list. Mr. Murdoch put in about $125 million, and the extended family of Ms. DeVos invested about $100 million.

“It’s obvious that they are highly disappointed in them as a company and as an investment,” said Greg McNeilly, the chief operating officer of The Windquest Group, the holding company of Ms. DeVos and her husband. Mr. McNeilly said the $100 million was a joint investment across multiple generations and branches of her family, and described the share held by Ms. DeVos and her husband as “minor.”

Other prominent investors, according to the list, included the Cox family; the Atlanta billionaires who own the media conglomerate Cox Enterprises and who invested $100 million; and a company affiliated with Mexican billionaire Carlos Slim that put in about $30 million. Robert K. Kraft, the owner of the New England Patriots, invested $1 million.

Representatives for Mr. Kraft, the Walton family, Cox Enterprises and News Corp. declined to comment.

 

 

Theranos secures $100M loan, avoids bankruptcy

https://www.beckershospitalreview.com/healthcare-information-technology/wsj-theranos-secures-100m-loan-avoids-bankruptcy.html

Image result for theranos

Theranos’ outlook for 2018 improved after securing a $100 million loan from Fortress Investment Group, which will help the troubled blood-testing company dodge bankruptcy, according to the Wall Street Journal

Theranos CEO Elizabeth Holmes wrote in an email to shareholders that the loan is subject to the company “achieving certain product and operational milestones.” She said the deal provides Theranos with “sufficient liquidity through 2018.”

Through the loan, Fortress assumes 4 percent of Theranos’ equity. The investment group specializes in distressed asset investing.

The expose on Theranos that WSJ published in October 2015 prompted a series of events that left what was once a well-funded and perceived-to-be promising startup as an embattled and gutted company. It was reported in April that Ms. Holmes owes the startup $25 million. The company settled several lawsuits this year, including one with Walgreens, and recently moved its operations and staff from Palo Alto, Calif., to a manufacturing facility in Newark, Calif.

 

Walgreens just filed a $140 million lawsuit against Theranos

http://www.businessinsider.com/walgreens-files-lawsuit-against-theranos-2016-11?nr_email_referer=1&utm_source=Sailthru&utm_medium=email&utm_content=ScienceSelect&pt=385758&ct=Sailthru_BI_Newsletters&mt=8&utm_campaign=BI%20Science%202016-11-08&utm_term=Science%20Select%20-%20Engaged%2C%20Active%2C%20Passive%2C%20Disengaged

Elizabeth Holmes

Walgreens has filed a breach of contract lawsuit against Theranos, the embattled blood-testing startup.

The lawsuit was filed Tuesday in Delaware’s district court. Details on Walgreen’s complaint weren’t immediately available because the suit was sealed by the court.

The Wall Street Journal is reporting that Walgreens is looking for $140 million in damages, claiming that Theranos misled Walgreens about how far along its blood-testing technology was when the original partnership was inked.

Walgreens, once Theranos’ biggest partner, terminated its relationship with the company in June. It had operated Theranos Wellness Centers, where people could go have their blood tested in the company’s stores.

CMS may ban Theranos founder Elizabeth Holmes for 2 years, sanction company, WSJ says

http://www.healthcarefinancenews.com/news/cms-may-ban-theranos-founder-elizabeth-holmes-2-years-sanction-company-wsj-says?mkt_tok=eyJpIjoiT0RZMFptTmtNMlJsTUdVMiIsInQiOiJuZjAwWEdTaDd6S0hXT0NjTlwvMXlTZ0oySVBWN3RFUFBcL1JGeDVWMFBSMEp4ekR6cFJXUjRhOEIrUkNVbEZuZFlBanQ0a3FPZ2Nzem1QbnQzZUxITDRKTlFVcjFTazRpc2ZVb0doR0lQTGRBPSJ9

If the company doesn’t respond to the satisfaction of the regulators, CMS will impose the sanctions.