Theranos (/ˈθɛrənoʊs/) is an American privately held health technology company based in Palo Alto, California. The company is known for its marketing of its efforts to create blood tests that used small sample volume technology. It was founded in 2003 by Elizabeth Holmes at the age of 19.[6] By 2014, Theranos had raised more than $400 million in funding with a $9 billion valuation of Theranos.[7][8][10]

In 2015, concerns about the validity of Theranos's claims about its technology were raised in the Wall Street Journal and other media. In June 2016, the company's net worth was estimated to be $800 million. In July 2016, Theranos received sanctions from the Centers for Medicare & Medicaid Services (CMS) including the revocation of its CLIA certificate and prohibition of the owners and operators from owning or operating a lab for two years.[12] Theranos announced that it would close its laboratory operations and wellness centers to work on miniature medical testing machines in October 2016.[13] In April 2017, Theranos announced that it had reached a global settlement agreement with CMS, resolving all outstanding legal and regulatory proceedings.[14]


While at Stanford University, Elizabeth Holmes created a wearable patch to adjust the dosage of drug delivery and notify doctors wirelessly of variables in patient's blood.[15] She started developing lab-on-a-chip technology for blood tests and the idea for a company that would make testing cheaper, more convenient and accessible to consumers.[16] Holmes used the education trust from her parents for Stanford to found the company that would later be called Theranos, which is a combination of the words "therapy" and "diagnosis".[17][19]

In 2004, Theranos was headquartered out of a rented basement located near a strip mall by the Stanford campus.[20] By December 2004, Theranos had more than $6 million from investors with an estimated value of $30 million.[21] The company had about $45 million total fundraising after Series B and Series C funding in 2006.[22] Theranos raised an additional $45 million in 2010 and had an estimated value of $1 billion.[21][23]

The company moved to the former headquarters of Facebook in June 2012.[24] During its first 10 years of operation, Theranos was in stealth mode, similar to other Silicon Valley startups, which received criticism from the media and scientific community.[25] The company had significant news coverage starting in September 2013 after profiles in the San Francisco Business Times and Wall Street Journal.[16] By 2014, Theranos had raised more than $400 million with an estimated value of $9 billion.[26]

In September 2013, Theranos partnered with Walgreens to offer in-store blood tests at more than 40 locations. Walgreens announced plans to expand the "wellness centers" across the United States.[27] The company's blood tests were used on drug trial patients of GlaxoSmithKline and Pfizer. Each company stated that there were no ongoing active projects with Theranos in October 2015.[28][29] In November 2016, Walgreen Co. filed suit against Theranos in a federal court in Delaware, for breach of contract. Theranos reported to investors on June 21, 2017 that the suit, which originally sought $140 million in damages, was settled for less than $30 million.[30][31]

Cleveland Clinic announced a partnership with Theranos to test its technology in order to decrease the cost of lab tests.[32] Theranos became the lab-work provider for Pennsylvania insurers, AmeriHealth Caritas and Capital BlueCross, in July 2015.[33][34]

In July 2015, the Food and Drug Administration approved the use of the company's fingerstick blood testing device for the herpes simplex virus (HSV-1) outside a clinical laboratory setting.[35][7] Theranos was awarded the 2015 Bioscience Company of the Year by AzBio.[7]

In 2016, Forbes revised the estimated net worth of the company to $800 million taking into account the $724 million of capital raised.[5]

Theranos announced that it would close its laboratory operations, wellness centers and lay off about 40 percent of its work force to work on miniature medical testing machines in October 2016.[13][38][7][7][38] On January 6, 2017, Theranos announced that it had laid off 41% of its workforce, or approximately 155 people.

In January 2017, the company faced lawsuits from several different entities including Walgreens[41][42] and the Arizona Attorney General over blood testing devices.[7]. In August 2017, Theranos announced it had reached a settlement with Walgreens, resulting in the dismissal of Walgreens’ lawsuit, with no finding or implication of liability.[7]

Technology and products

During its first decade of operation, the company developed devices to automate and miniaturize blood tests using microscopic blood volumes. Theranos was best known for its "nanotainer" fingerstick, which draws a microliter sample of blood from the capillaries in a patient's hand.[45][46][47] Theranos claimed to have data verifying the accuracy and reliability of its tests that would be published.[48]

Its technology has been criticized for not being scientifically peer reviewed.[49][50] In February 2016, Theranos announced that it would permit the Cleveland Clinic to complete a validation study of its technology.[51] In March 16, 2016, the Journal of Clinical Investigation found that the company's blood test results were flagged "outside their normal range 1.6x more often than other testing services", that 68% of lab measurements evaluated "showed significant interservice [sic] variability", and that "lipid panel test results between Theranos and other clinical services" were "nonequivalent".[52] In August 2016, the company introduced a new robotic, capillary blood testing unit named miniLab to the American Association for Clinical Chemistry, not presenting any data related to its previous test results.[53][54][55]

Corporate affairs


Theranos is headquartered in Palo Alto, California. It had laboratories in Newark, California and Scottsdale, Arizona.[10]


Since its incorporation in 2003, Holmes has been the company's chief executive officer. She recruited Channing Robertson, a chemical-engineering professor at Stanford, to be a technical advisor and the company's first board member during its early years. Sunny Balwani, a software engineer Holmes had met during high school, joined the company as its president and chief operating officer in 2009.[57] In July 2011, Holmes was introduced to former Secretary of State George Shultz, who joined the Theranos board of directors that same month.[58] Over the next three years, Shultz helped to introduce almost all the outside directors on the "all-star board," which included William Perry (former Secretary of Defense), Henry Kissinger (former Secretary of State), Sam Nunn (former U.S. Senator), Bill Frist (former U.S. Senator and heart-transplant surgeon), Gary Roughead (Admiral, USN, retired), James Mattis (General, USMC), Richard Kovacevich (former Wells Fargo Chairman and CEO) and Riley Bechtel (chairman of the board and former CEO at Bechtel Group).[58][10][10] The board was criticized for consisting "mainly of directors with diplomatic or military backgrounds."[16]

In April 2016, Theranos announced its medical advisory board which included past presidents or board members of the American Association for Clinical Chemistry.[61] Members were invited to review the company's proprietary technologies and advise on the integration into clinical practice.[61] The board included past presidents or board members of the American Association for Clinical Chemistry such as Susan A. Evans, William Foege, former director U.S. Centers for Disease Control and Prevention, David Helfet, director of the Orthopedic Trauma Service at the Hospital for Special Surgery and professors, Ann M. Gronowski, Larry J. Kricka, Jack Ladenson, Andy O. Miller and Steven Spitalnik.[10][10]

Balwani left his position as President and COO in May 2016. At that time, the company announced its new board members, Fabrizio Bonanni (former executive vice president of Amgen), Richard Kovacevich and William Foege, (former director of the Centers for Disease Control and Prevention), who would help to publicly introduce its technologies.[10][10]

As of May 2016, the Theranos board of directors were:

In December 2016, it was announced the Theranos management team would be restructured with the departing of Riley Bechtel. In January 2017 incoming Secretary of Defense nominee James Mattis resigned from the Theranos board. As of January 2017, the Theranos board of directors includes:

  • Elizabeth Holmes, Founder and CEO
  • Fabrizio Bonanni, former executive vice president of Amgen
  • Daniel Warmenhoven, former NetApp CEO, who replaced Riley Bechtel

It was also announced in November 2016 that the celebrity-studded "board of counselors" would be scrapped in January 2017.


A 2016 article said that the company had been valued in the private market at $9 billion in 2013, soon after its tests had launched. At the time, Holmes was the majority shareholder.[66]

In June 2016, Forbes magazine spoke to venture capitalists, analysts and industry experts and concluded that a more realistic value for Theranos is now $800 million. Since Theranos' venture capital investors own preferred shares, they would get paid back before Holmes. This would render Holmes' shares virtually worthless.

Investor recapitalization

In May 2017, participating shareholders provided a release of any potential claims against Theranos in exchange for shares of the company's new preferred stock. Holders of more than 99 percent of the shares elected to participate. CEO Elizabeth Holmes contributed shares to the Company and gave up equity to offset potential dilution to non-participating shareholders.


Blood test device approval

The FDA received a formal inquiry to look at Theranos blood test devices by the U.S. Department of Defense in 2012 before the devices were commercially available and did not require FDA approval. FDA inspection reports from 2014 and 2015 stated that its containers for blood collection were "not validated under actual or simulated use conditions" and "were not reviewed and not approved by designated individual(s) prior to issuance". After the inspection, Theranos announced that it would voluntarily suspend its tests apart from the FDA-approved herpes simplex virus (HSV-1) test.

Testing allegations and case

In October 2015, The Wall Street Journal reported that Theranos was using traditional blood testing machines, such as Siemens, to run its tests and that the company's Edison machines might provide inaccurate results.[67] Theranos claimed that the allegations were "factually and scientifically erroneous and grounded in baseless assertions by inexperienced and disgruntled former employees and industry incumbents".[68][69] Walgreens suspended plans to expand blood-testing centers in their stores following the report.[70][71] At that time, the Cleveland Clinic announced that it would work to verify Theranos technology.[72]

Theranos is under criminal investigation by federal prosecutors and the Securities and Exchange Commission for allegedly misleading investors and government officials about its technology.[73] The case is considered "extremely unusual" by a former assistant U.S. attorney for the Justice Department.[74] The U.S. House of Representatives Committee on Energy and Commerce requested information on what Theranos was doing to correct its testing inaccuracies and adherence to federal guidelines in June 2016.[75][76]

On April 21, 2017, the Wall Street Journal reported that an investor had alleged that Theranos Inc. had misled company directors about its practices concerning laboratory testing. According to a lawsuit filed by the investor, Theranos had used a shell company to secretly buy lab equipment to run fake demonstrations with.[77]. The case was settled on May 1, 2017, dismissing all claims by PFM against Theranos.[78]

Failed lab inspections

The Arizona Department of Health Services reported issues with the company's Scottsdale lab meeting regulations in October 2015.[79] In January 2016, the Centers for Medicare and Medicaid Services (CMS) sent a letter to Theranos based on an inspection of its Newark, California lab in the fall of 2015, reporting that the facility did not "comply with certificate requirements and performance standards" and caused an "immediate jeopardy to patient health and safety" due to a test to determine the correct dose of the blood-thinning drug warfarin.[80] In March 2016, CMS regulators announced plans to enact sanctions that included suspending Holmes and Balwani from owning or operating a lab for two years and that they would revoke the lab's license.[81] The company did not receive the sanctions until July.[82] Walgreens and Capital BlueCross announced a suspension of Theranos blood tests from the Newark lab.[83] In May 2016, Theranos announced that it had voided two years of results from its Edison device.[84] The company announced that about 1 percent of test results had been voided or corrected from its proprietary machines in June 2016.[85]

In July 2016, Theranos announced that the CMS had revoked its CLIA certificate as well as sanctions prohibiting its owners and operators from owning or operating a lab for two years, suspension of approval to receive Medicare and Medicaid payments, and a civil monetary penalty. The company discontinued testing at its Newark location while attempting to resolve the issues.[12] Theranos announced plans to appeal the decision by regulators to revoke its license to operate a lab in California and other sanctions.[86] In April 2017, Theranos reached a settlement with CMS agreeing to stay out of the blood-testing business for at least two years in exchange for reduced penalties.[14]

The company withdrew its request for emergency clearance of a Zika virus blood test after a lack of essential safeguards during the testing process was found by federal inspectors in August 2016.[14][14]

In January 2017, the Wall Street Journal reported Theranos is closing down the last remaining blood-testing facility after the lab reportedly failed a second major U.S. regulatory inspection.[14][14]


In November, 2016, the Wall Street Journal ran a story about Tyler Shultz, the grandson of former Secretary of State and one-time Theranos director George P. Shultz. The younger Shultz was a Theranos employee 2013–14 and, it appears, a critical whistleblower regarding defects in Theranos' technology. The elder Shultz had joined the board in 2011 and been joined soon thereafter by fellow Hoover Institution fellows former Secretary of State Henry Kissinger, former Secretary of Defense William Perry, and former U.S. Senator Sam Nunn (D-GA). The Journal reported: "After the Journal published in October 2015 its first article detailing problems at Theranos, the company announced that all four men had been moved from the board of directors to a newly formed board of counselors." David Boies' law firm pursued the younger Shultz aggressively on behalf of the company. While causing significant family and financial strains, in the November 2016 article Tyler Shultz was quoted as having said, "Fraud is not a trade secret .... I refuse to allow bullying, intimidation and threat of legal action to take away my First Amendment right to speak out against wrongdoing." He had first failed to successfully register his concerns with company management, to which he had special access due to his family connection. He had then been a key Journal source for its October 2015 article and was also, under an alias, the first to report the company to a regulatory body, New York state's public-health lab.[66]

Arizona Attorney General

In April 2017, Theranos reached a settlement with the state of Arizona over alleged false advertisement and inaccurate blood testing, agreeing to refund $4.65 million to the state's residents for Theranos blood testing services, regardless of whether the test results were voided or corrected.[14][14][94][14]

Partner Fund Management

In court documents unsealed on April 18, 2017, lawyers for Partner Investments LP and two other funds, with combined stakes totaling more than $96 million in Theranos preferred shares, charged that Theranos had threatened to seek bankruptcy protection if the investors did not agree to accept additional stock equity in lieu of litigation. Theranos officials said the funds had mischaracterized the exchange offer, which was discussed before the suit was filed.[14] On May 1, 2017, Theranos announced that it had reached an undisclosed settlement with Partner Fund Management LP. Theranos General Counsel David Taylor stated: “Theranos is pleased to have resolved both lawsuits with PFM. Although we are confident that we would have prevailed at trial, resolution of these two cases allows our tender offer to go forward and enables us to return our focus where it belongs, which is on executing our business plans and delivering value for our shareholders.”[15]

See also