Theranos is Officially Dead: Here’s The Full Story

It’s the final nail in the coffin for Theranos. The startup company, once worth 9 billion, has completely fallen over time. It was once hailed as the producer of revolutionary technology. It was going to save lives, and reach millions of people worldwide. Little did the founder, Elizabeth Holmes, understand the possible ramifications of her actions. 

Recently, Elizabeth Holmes was found guilty on four out of 11 fraud and conspiracy charges. These charges appeared in January and resulted in a months-long trial. Her ex-boyfriend, Sunny Balwani, was charged on 10 counts of federal wire fraud and 2 counts of planning the act. It’s safe to say that their product, Theranos, was a complete and utter disaster.

What was this product, you may ask? Theranos was a device that could diagnose a whole list of diseases and health problems through one drop of blood. 

Yeah, if you think that sounds too good to be true, that’s because it was. Elizabeth Holmes and her company quickly went down the drain when people realized this product did not work. At all. But that wasn’t the before Holmes and her then-boyfriend ripped off a ton of investors and roped multiple patients into safety hazards. 

Now, this would seem like an obvious scam on paper, right? One device that could diagnose any disease? With just one prick of blood? I’m no science major, but to test for multiple diseases, I think you’d need tons of equipment, materials, and lots of samples. That calls for more than a prick of blood. It isn’t hard to wonder how a device like this could work.

Apparently, the device works by… not working at all! Let’s analyze how we were able to fall for this frankly obvious scam.

The Beginning

Now, the main thing you have to know about Theranos is that for the majority of its run, it had two executives; Elizabeth Holmes, and Ramesh “Sunny” Balwani. The company started with Holmes, when she dropped out of college in March of 2004. Holmes was a Stanford University student pursuing a career in chemical engineering. Somewhere along the line, her ambitions changed, and she pursued her startup company instead. Just a year before she dropped out, she had an innovation in mind, titled Theranos. The name came from the mash-up of the words “therapy” and “diagnosis.” 

The idea was two-fold: with a simple prick of the finger, patients could get all the information they needed about their health. The machines running these tests were called “Edison Machines.” Theranos was meant to be a lot quicker and cheaper than your standard blood test. 

In September of 2009, her boyfriend, Sunny Balwani, joined the company. He was way older than Holmes. About 20 years older, to be precise. And it seemed that he had more financial security too. He was able to take out a 10 million dollar loan to get Theranos on its feet.

The Bold Claims

It took around ten years for homes to take to media and describe her innovation to the world. She quickly announced a long-term partnership with Walgreens. Right out the gate, she was bringing a good amount of legitimacy to her brand. Originally, she thought of bringing Theranos to nationwide Walgreens locations. In old advertisements, you could see her claiming that everyone deserves the right easily know their health conditions. She even suggested that one day, Theranos could be put into people’s homes.

Holmes expressed a deep desire to make lab testing as cheap and accessible as possible. While most blood tests cost around $50 to $100 (depending on multiple factors), Theranos can be as cheap as $10. 

Just a year after announcing her brand to the world, Holmes was named one of the richest women in America by Forbes. Yeah, apparently people invested a shitton of money into her start-up, which she owned 50% stock in. So at this point, she was a billionaire. And meanwhile, details regarding Theranos testing remained under wraps and suspiciously secretive.

The Concerns

2015 came with a surprising revelation from the Wall Street Journal. You see, throughout most of Theranos’ journey so far, they’ve been receiving nothing but praise and money. There were a few concerns regarding the nature of these tests, but they were drowned out by the overwhelmingly positive media. 

That is until Wall Street Journal came out with an article, exposing them for several misleading claims. The author, John Carreyrou, expressed a number of concerns and accusations. Most notably, he claimed that Theranos used their propriety testing on a select number of individuals. Furthermore, Theranos didn’t use a prick of the finger as advertised. Instead, their labs were using traditional vials that drew blood from the arm. 

Of course, there was major pushback from the founders, as they wanted to preserve their brand. But by this point, the damage was done. 

These claims gave way to suspicion from the FDA. They directed Theranos to stop using the majority of their blood collection vials. The FDA also provided a list of 14 issues to be addressed. The propriety vial was even referred to as an “uncleared medical device.”

To clear the air, Holmes sat down for a public conference at Laguna Beach. She stated that, 

“We know what we’re doing and we’re very proud of it.” 

 Yeah, Holmes totally knew what she was doing. She was very proud of tricking the public and taking billions from investors. But I digress. 

The Downfall

Following the Wall Street Journal incident, 2016 proved to be a dreadful time for Theranos. In just this one year, they lost practically everything they were building. 

So where do I even begin? Well, first of all, Safeway and Theranos had a partnership.  It burnt out only a month after the Wall Street Journal investigation. 

Walgreens ceased sending their tests to the California Theranos labs. Why, you may ask? Well, it’s because federal regulators sent a letter to Theranos regarding the state of these testing grounds. Apparently, they had failed to comply with the FDA standards. Patients were reported to be in “immediate jeopardy” due to their practices. 

After getting that warning, Holmes proceeded to do absolutely nothing about it. Soon after, CMS regulators threatened Holmes with a ban from lap services. They needed to address the health and safety issues in their California locations. Though for some reason, no progress was being made.

After Balwani stepped down from the company, Theranos addressed the massive issues with their blood tests. Two years’ worth of blood test results were voided. That’s right; two freaking years! If that doesn’t say something about the testing devices, then I don’t know what does. 

By June, Forbes had re-estimated Holmes’ net worth to $0. And once this happened Walgreens officially ended its partnership with Theranos. They proceeded to shut down all 40 of their Theranos wellness centers.

And to add more fuel to the fire, Holmes was finally banned from running blood tests. This ban lasted for a total of two years as they’ve previously threatened.  Theranos was given many chances to fix their problems but the devices just were not working correctly. Every time you turned around, there were more stories of people being grossly misdiagnosed. 

Digging Their Grave

As the years passed, Elizabeth Holmes and Sunny Balwani were getting sued left and right. First by a Theranos investor, who was rightfully pissed. Then by their old friend, Walgreens. Meanwhile, Theranos kept failing their lab regulatory inspections. This caused them to close their testing locations one by one. 

It all came to a head in June 2018, when  Holmes and Balwani were indicted on criminal fraud charges. They were both accused of  hosting a multimillion dolladr scheme to fraud investors, doctors, and their patients. And yeah, looking at the whole picture, you can’t really argure with  that. 

But of course, both executives pleaded not guilty. And so, chaos ensued. Holmes stepped down as CEO just before the charges became public, and Theranos dissolved soon after. 

Despite their product never being released to the public, (and for good reason), the former executives faced so many lawsuits over the years. The main trials were delayed due to various setbacks. Finally, as of 2022, both Holmes and Balwani have faced the consequences of their actions.

Featured Image From Entertainment Tonight