Imagine a world where a single drop of blood could diagnose a multitude of conditions, revolutionizing healthcare forever. This was the promise that propelled Theranos, a Silicon Valley startup, to meteoric heights. Over fourteen years, Theranos duped the public to raise over nine billion dollars in valuation. However, as the facade crumbled, it revealed a story of deception, ambition, and the dangerous allure of unchecked innovation.
However, none of Theranos’ legacy would have been possible without the execution of one person: Elizabeth Holmes
Born in 1984, Elizabeth Holmes was born to an elite family in Washington D.C. Growing up, she had one ambition: to become a billionaire.
At the age of eighteen, Elizabeth began her undergraduate study at Stanford University. During one of her summer breaks, Holmes worked at the Genome Institute of Singapore on a computer chip designed to detect the SARS virus. This experience sparked her interest in creating more efficient medical devices to improve diagnostic testing and therapeutic assessment. Holmes left Stanford during her sophomore year to launch Theranos in 2003.
Through her passion for minimalistic medical testing, Elizabeth Holmes envisioned a new future for blood testing technology. Current blood testing procedures involve drawing a syringe of blood (5 to 10 mL) and employing hulking blood analysis systems. On the other hand, Theranos would only require a few drops of blood and analysis systems the size of a typical computer. Additionally, cloud-based servers could quickly deliver blood measurements to medical professionals.
Between 2003 and 2014, Elizabeth Holmes expanded Theranos by securing investor funding, building infrastructure, and secretly developing the company’s proprietary processes. Hiring tech leaders like former Apple VP Avie Tevanian, as well as her longtime friend Sunny Balwani, Theranos began to innovate the Edison, a pivotal blood analysis system. In 2013, Walgreens, with over 8,000 U.S. drugstores, announced a partnership with Theranos to create wellness centers in its pharmacies. By 2014, Theranos offered over 200 diagnostic tests and held certification from the U.S. Centers for Medicare & Medicaid Services (CMS), the federal regulator of medical laboratories.
However, in the process, Holmes made some ethically questionable decisions. In 2006, Theranos partnered with the pharmaceutical giant Pfizer, administering a pilot test on cancer patients. Despite the Theranos system being incapable of running blood tests to the degree advertised, Holmes insisted on proceeding with the testing. Furthermore, the supermarket chain Safeway had poured 350 million dollars into renovating their stores in anticipation of the Theranos machines. Even after the constant launch delays and excuses, it was found that Theranos had been testing Safeway samples on existing third-party blood analysis systems, rather than the Theranos Edison machines. In general, Theranos also practiced fear-mongering tactics on the public. Theranos pressured patients into taking their blood tests before “it was too late”.
By late 2015, Theranos’s technologies and its primary medical testing device, the Edison, became controversial. News outlets like The Wall Street Journal and The Washington Post claimed that Theranos exaggerated the capabilities of the Edison, which was only used for a fraction of their blood tests.
In July 2016, the Centers for Medicare & Medicaid Services (CMS) informed Theranos that it had failed to correct and comply with federal regulations, citing an “immediate jeopardy to patient health and safety”. As a result, CMS blocked Theranos from receiving Medicare and Medicaid reimbursements and forbade Holmes from operating a medical laboratory for two years. Around the same time, Theranos lost partnerships with Walgreens and Safeway.
Following a series of layoffs and lawsuits, The United States Securities and Exchange Commission (SEC) charged Elizabeth Holmes and Sunny Balwani with fraud. The SEC alleged that the couple had taken over 700 million dollars from investors while falsely advertising their product. Holmes settled with the SEC, agreeing to pay a 500,000 dollar fine and surrendering 19 million shares in Theranos. Moreover, Elizabeth Holmes was barred from serving as a director of a public company for 10 years. That same year, Holmes and Balwani were indicted for federal wire fraud charges. Both pleaded not guilty.
After a series of COVID-19 and pregnancy setbacks, Elizabeth Holmes was found guilty in 2022 of one count of conspiracy to defraud investors and three wire fraud counts. She faces up to twenty years in prison and a fine of 250,000 dollars with restitution for each count.
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