Theranos, whose then-chief executive officer Elizabeth Holmes and former president and chief operating officer Ramesh Balwani earlier this year were charged with investor fraud (see India-West article here: https://bit.ly/2oPhgLq), has announced it is dissolving.
The blood testing firm, which was exposed in a Wall Street Journal report of misleading claims about the efficiency of its tests, will formally dissolve later this month. Theranos’ supposedly revolutionary blood-testing processes—which involved mere drops of blood rather than the traditional vials—were reported as slow, inaccurate and unreliable.
Holmes and Balwani are accused of faking demonstrations of the technology, lying to investors about the anticipated returns, lying to the media, lying about the deployment of the technology on the battlefield, using third-party equipment to conduct tests while claiming to use Theranos’ own gear, and misrepresenting the progress of a partnership with Walgreens.
Theranos general counsel David Taylor, who took over as CEO when Holmes resigned from the firm in June, wrote to company stockholders to say all efforts to sell the operation had failed, according to a Wall Street Journal report.
“We are now out of time,” Taylor wrote, according to the report. “Despite our careful cash management, we are in default under the Fortress credit facility.”
The Fortress Investment Group loaned $65 million to Theranos last year, with one condition being that Theranos maintain a cash level that has now been breached, it said.
Theranos’ 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, it added.
In exchange, Fortress would get Theranos’ patents, the report said.