In the mid 2010’s, Theranos was a booming biotech company that promised customers a way to accurately, conveniently, and with very little blood shed, test for a wide variety of diseases and conditions. However, by 2018, the billion-dollar company was worth virtually nothing and founder Elizabeth Holmes had been charged with fraud. What happened? And where is Elizabeth Holmes- the enigmatic and complicated mind behind the company – now?
The Theranos Rise and Fall
The story of Theranos is intriguing – it tracks the tale of an unlikely business entrepreneur who seemingly rose from virtual obscurity to the top of the biotech world, only to come crashing down. So how did Holmes’ business rise so high and then fall so far?
The answer is: it’s all in the blood.
Holmes is the daughter of a government aid worker and a congressional committee staffer. Born February 3rd, 1984, and raised in Washington D.C. and Houston, young Holmes spent some time in China during high school. But even before traveling abroad, a 7-year-old Holmes tried to invent a time machine, competed like everything was life-or-death, and somberly professed to family a dream to become a billionaire. Per Business Insider, “Inspired by her great-great-grandfather Christian Holmes, a surgeon, Holmes decided she wanted to go into medicine. But she discovered early on that she was terrified of needles. Later, she said this influenced her to start Theranos.”
While in China as a teen, Holmes started a business selling software to universities, and it inspired her to pursue a degree in chemical and electrical engineering at Stanford University once she returned stateside.
Brittanica writes, “During a summer break from her studies at Stanford, Holmes took a job at the Genome Institute of Singapore to work on a computer chip designed to detect the presence of the SARS virus in the body. She then became interested in developing more-efficient medical devices that could improve upon traditional diagnostic testing and therapeutic assessment. Upon her return to Stanford, Holmes patented a device that attached to a person’s body and measured the effectiveness of a given medication by comparing parameters of chemical markers produced by a diseased region with those of the therapeutic agent.”
In order to pursue her tech, Holmes dropped out of Stanford and started Theranos – a company devoted to minimally invasive testing. Where traditional blood tests required a vial of sample, Theranos promised they only needed a few drops. Per Brittanica, “Between 2003 and 2014, Holmes grew Theranos by securing funding from investors, building infrastructure, and developing the company’s proprietary processes in secret. In 2013 Walgreen Co., which boasted more than 8,000 drugstores in the U.S., announced that it had partnered with Theranos to establish wellness centres inside its Walgreens pharmacies. By 2014 Theranos provided more than 200 diagnostic tests, was licensed to operate in almost all 50 U.S. states, and held a certification by the U.S. government Centers for Medicare & Medicaid Services (CMS), the federal regulator overseeing medical laboratories.”
However, by 2015, the tech world had started to challenge Holmes’ proprietary testing system – the Edison. After several media reports examined the Edison device to see if it worked as Theranos claimed it did, it became apparent that the company was not using its own system to process the tests they were receiving. The Center for Medicare & Medicaid Services (CMS) asserted that Holmes’ company failed to provide them with enough documentation to prove the efficacy and function of their patented testing device, and blocked Theranos from receiving government reimbursements, a devastating financial blow. In the same fell swoop, CMS banned Holmes from owning or operating a medical lab for at least two years.
Brittanica shares, ” In March 2018 the U.S. Securities and Exchange Commission (SEC) charged Holmes and Theranos’s former president, Ramesh Balwani, with fraud by taking more than $700 million from investors while advertising a false product. Holmes settled the charges with the SEC by agreeing to pay a fine of $500,000, surrendering almost 19 million shares in Theranos to relinquish her controlling interest in the company, and consenting to be barred from serving as either an officer or director of a public company for a period of 10 years. In exchange, both Holmes and Theranos were able to avoid either admitting or denying the SEC’s allegations against them. In June 2018, however, she and Balwani were indicted for wire fraud by federal authorities. That same day Holmes stepped down as CEO, and later that year Theranos ceased operations.”
Holmes is Arrested
At its height, Theranos was worth an estimated and staggering $9 billion. When Holmes was charged in 2018, the company was worth nothing. As questions flew in 2015 around the proprietary testing device, Holmes projected an air of confidence in her company. Securing a partnership with Walgreens and convincing all comers that Theranos was revolutionary and viable, Holmes seemed to be confident and capable at the helm. A Vanity Fair article exploring the “house of cards” collapse of Theranos explains how the beginning of the end started, “One of the only journalists who seemed unimpressed by this narrative was John Carreyrou, a recalcitrant health-care reporter from The Wall Street Journal. Carreyrou came away from [an article from The New Yorker explaining with little detail how Theranos’ device worked] surprised by Theranos’s secrecy—such behavior was to be expected at a tech company but not a medical operation. Moreover, he was also struck by Holmes’s limited ability to explain how it all worked. When The New Yorker reporter asked about Theranos’s technology, she responded, somewhat cryptically, ‘a chemistry is performed so that a chemical reaction occurs and generates a signal from the chemical interaction with the sample, which is translated into a result, which is then reviewed by certified laboratory personnel.’
Shortly after reading the article, Carreyrou started investigating Theranos’s medical practices. As it turned out, there was an underside to Theranos’s story that had not been told—one that involved questionable lab procedures and results, among other things. Soon after Carreyrou began his reporting, David Boies, the superstar lawyer—and Theranos board member—who had taken on Bill Gates in the 1990s and represented Al Gore during the 2000 Florida recount case, visited the Journal newsroom for a five-hour meeting. Boies subsequently returned to the Journal to meet with the paper’s editor in chief, Gerard Baker. Eventually, on October 16, 2015, the Journal published the article: HOT STARTUP THERANOS HAS STRUGGLED WITH ITS BLOOD-TEST TECHNOLOGY.”
Once the dam broke, Holmes opted to double down on her rhetoric rather than open up about the tech. Hailing herself as the female Steve Jobs and in her signature baritone, Holmes spoke publicly often after the article broke. The unruffled businesswoman continued to maintain that her revolutionary technology wouldn’t be buried and she had done nothing wrong. Holmes declared that if the company was dragged down, she’d pull it from the ashes and start again.
But it was not to be. Once the article broke, CMS pulled their reimbursements, and Walgreens canceled their partnership, Theranos was all but doomed. And when Holmes and her partner were charged, it was clear that there would be no phoenix moment for the company.
Holmes’ Trial is Delayed for a Surprising Reason
Despite it being in her nature to stay in the public eye, and her continued assertion that no fraud was committed, Holmes has laid relatively low in recent years. The entrepreneur appeared for a court date in mid-March to request a delay to the start of her trial, originally slated to start on July 13th. The reason for the delay? Holmes is pregnant, and due in July. In order to accommodate her pregnancy, the trial has been pushed back to August 31st.
Esquire writes that Holmes is living in San Francisco California, and seems positive, shockingly currently seeking funds for a new venture. “‘Elizabeth sees herself as the victim,’ a former executive close to Holmes told Vanity Fair. ‘She blames John Carreyrou, she blames [lawyer] David Boies, and she blames [lawyer] Heather King.’”
Per Esquire, “Still, the magazine reports that Holmes has appeared ‘chirpy’ and ‘chipper,’ and that she is engaged to ‘a younger hospitality heir, who also works in tech.’
The ABC podcast The Dropout confirmed that Holmes’s fiancé is eight years younger than her and graduated from MIT where he studied economics and now works in technology in San Francisco. Former Theranos software engineer Michael Craig said on the podcast he ran into Holmes and her fiancé at a restaurant in Sausalito, California over Martin Luther King Jr. weekend.
‘She was dressed in a dark hoodie and jeans and didn’t look to have any makeup on or anything. She looked very young,’ Craig said. ‘She seemed a little bit worn-down, but she didn’t seem like somebody who had done anything wrong.’”
Although there’s chatter of concern that Holmes’ impending motherhood will garner sympathy from the jury, there’s nothing to be done now but wait for the baby’s arrival and move forward with the trial. With Holmes still maintaining her innocence and focused on starting fresh, it seems likely that she will face a harsh awakening in the face of the mountains of proof against Theranos.