Theranos, founded by Elizabeth Holmes in 2003, raised more than $700 million and reached a reported $9 billion valuation in 2013–2014 by claiming its Edison analyzer could perform many rapid, accurate blood tests from finger-prick samples. Investigations by John Carreyrou of The Wall Street Journal, supported by former employee Tyler Shultz, reported in October 2015 that Theranos frequently used conventional laboratory machines and that its proprietary devices could produce unreliable results. Theranos also created a mock laboratory for a 2014 tour by then–Vice President Joe Biden, according to the source. The company pursued aggressive legal and reputational pressure against critics and attempted to conceal operational details from investors and partners.
Regulators found serious compliance and patient-safety problems. In January 2016, the Centers for Medicare and Medicaid Services warned that conditions at Theranos’s Newark, California, laboratory created “immediate jeopardy” to patient health, including problems involving warfarin-dose testing. CMS later revoked the laboratory’s certification, barred Holmes and former president Ramesh “Sunny” Balwani from operating certified laboratories for two years, and suspended Medicare and Medicaid payments. Theranos voided or corrected large numbers of results, terminated its Walgreens partnership, settled with Arizona for $4.65 million in consumer refunds, and dissolved in September 2018. The SEC charged Holmes and Balwani with fraud in March 2018; Holmes was convicted in January 2022 and sentenced to 11 years and 3 months in prison, while Balwani was convicted in July 2022 and sentenced to 12 years and 11 months.
