Theranos

Theranos was founded in 2003 by Elizabeth Holmes, then 19, who left Stanford University in March 2004; the name combines “therapy” and “diagnosis.” Holmes served as chief executive officer from the founding until 2018.⁠[1][2]

In September 2009, Ramesh “Sunny” Balwani guaranteed a $10 million loan for the company and formally joined Theranos, later serving as president and chief operating officer and as the main contact for relationships with retailers including Safeway and Walgreens.⁠[1][2]

In 2010, Theranos partnered with Walgreens to use Theranos’s proprietary device to conduct patient tests in Walgreens pharmacies.⁠[2]

In September 2013, Theranos and Walgreens announced a long-term partnership, and the first Theranos Wellness Center opened in a Walgreens store in Palo Alto; the original plan was nationwide availability, and the machines were later rolled out to Walgreens stores in California and Arizona.⁠[1][3]

Of the devices Theranos developed, only the Edison was ever used to test patient samples. The SEC alleged that the company’s portable analyzer could run only a few tests and that most patient tests were in fact run on commercially available analyzers made by other manufacturers.⁠[2][4]

In July 2015, the U.S. Food and Drug Administration (FDA) cleared Theranos’s finger-stick herpes test, the company’s first and only diagnostic approval.⁠[1]

In October 2015, The Wall Street Journal published an investigation, first broken by reporter John Carreyrou, questioning Theranos’s testing. Theranos called the reporting “factually and scientifically erroneous,” but then stopped using its proprietary vials for all tests except the herpes test.⁠[1]

In late 2015, the Centers for Medicare & Medicaid Services (CMS) carried out an unannounced inspection of the Theranos laboratory and reported deficiencies posing “immediate jeopardy” to patient health, identifying quality-control failures involving the Edison device and modified third-party devices.⁠[2]

In January 2016, CMS said Theranos’s California laboratory did not meet federal standards, and Walgreens stopped sending it lab work and suspended services at its Palo Alto store. In March, CMS proposed barring Holmes and Balwani from the laboratory business for two years. In May, Balwani left and the company voided two years of blood-test results, correcting tens of thousands of reports. In June, Walgreens ended the partnership and said it would close 40 Theranos Wellness Centers.⁠[1]

In July 2016, CMS made public a letter revoking the certification of Theranos’s laboratory in Newark, California, cancelling its approval to receive Medicare payments, barring Holmes from owning or operating a laboratory for at least two years, and fining the company $10,000 for each day of non-compliance from July 12; the company could appeal before the sanctions took full effect in September. Theranos said it accepted “full responsibility” and denied that patients had been harmed.⁠[5]

In August 2016, Theranos unveiled its miniLab device, seen as a way around the CMS sanctions because they did not cover research and development. The miniLab and another device, the “4.0,” remained in development while Holmes ran Theranos.⁠[1][2]

On March 14, 2018, the SEC charged Theranos, Holmes and Balwani with raising more than $700 million from investors through false statements about the company’s technology, business and financial performance, including falsely claiming that the U.S. Department of Defense had deployed its technology and projecting more than $100 million in 2014 revenue when actual revenue was just over $100,000. Holmes agreed to settle and gave up voting control of the company, while Balwani did not settle.⁠[4]

On June 15, 2018, federal prosecutors announced an indictment charging Holmes and Balwani with two counts of conspiracy to commit wire fraud and nine counts of wire fraud, relating to schemes to defraud investors and to defraud doctors and patients in promoting Palo Alto-based Theranos. Holmes stepped down as chief executive officer and was replaced by David Taylor, while remaining chair.⁠[6][1]

In September 2018, chief executive Taylor wrote in a letter to shareholders that Theranos would dissolve after attempting to pay creditors with its remaining cash of about $5 million, saying the cash was “not nearly sufficient” to pay all creditors in full; most of the remaining employees had worked their last day on August 31. Under Holmes, Theranos had raised more than $700 million and was valued at $9 billion at its peak.⁠[7]

Holmes and Balwani were tried separately: Holmes’s trial began in August 2021 and Balwani’s took place in early 2022, each lasting nearly four months. In January 2022, Holmes was convicted of one conspiracy count and three wire-fraud counts, all involving investors; in July 2022, Balwani was convicted on all ten counts of wire fraud and two counts of conspiracy to commit wire fraud. They were sentenced to 135 months and 155 months in prison, respectively.⁠[1][2]

In May 2023, the court ordered Holmes and Balwani, jointly and severally, to pay $452 million in restitution, including $397 million to twelve investor victims and $54.5 million to Safeway and Walgreens.⁠[2]

On February 24, 2025, the U.S. Court of Appeals for the Ninth Circuit affirmed the convictions and sentences of Holmes and Balwani and the $452 million restitution order.⁠[2]