How Much Money Embattled Theranos Has Left in the Bank
2/17/2017 6:10:38 AM
February 17, 2017
By Alex Keown, BioSpace.com Breaking News Staff
PALO ALTO, Calif. –After a series of devastating missteps that has forced the layoff of hundreds of employees and earned a two-year ban on operating a clinical laboratory, just how much money does embattled Theranos have left?
According to a Wall Street Journal report, Theranos closed out 2016 with approximately $200 million in its bank accounts—a far cry from the $9 billion the company was once reportedly worth. The Journal cited information from a Theranos investors call. Also, the Journal said Theranos had no material revenue in 2015 or 2016. Of what funds Theranos has, the Journal said the company has not set aside any funds for legal liability—which is surprising given the company is facing multiple lawsuits seeking hundreds of millions of dollars in damages. The two biggest lawsuits come from former partner Walgreens, which filed a $140 million lawsuit against Theranos and a $100 million lawsuit filed by a Bay Area hedge fund that alleged the biotech company duped investors about the efficacy of its products in order to attract investments. Additionally, the company is facing legal challenges from patients who used the company’s blood-testing technology. Last year, Theranos announced it was forced to thousands of test results it sent to patients. Many of those patients used the test results to direct their healthcare plans.
Theranos has dismissed the lawsuits and claimed they are without merit. With the legal actions against the company and no funds set aside to defend them, Theranos finds itself in a precarious position, especially if the courts rule in favor of the plaintiffs. In that situation, Theranos could be forced to shut its doors and sell-off what few assets it has.
Theranos has been in a downfall for nearly the past two years after a series of scathing articles from multiple news outlets have highlighted problems that plague the company helmed by founder Elizabeth Holmes. In its early days, Theranos relied upon Silicon Valley investors to bolster its accounts as it sought to disrupt the blood-testing world with its proposed technology – technology that has ultimately proven to be rife with problems. After facing criticism over its technology as well as its clinical practices, which led to the company shuttering its clinical laboratories, Theranos pivoted its business focus to the development of a miniaturized and portable laboratory.
Theranos started 2017 with an announcement it was slashing about 41 percent of its workforce, leaving “a core team of 220 professionals to execute on its business plans.” In October, the terminated 340 people as it shut down its clinical labs and wellness centers following a two-year ban from operating a clinical laboratory. The company is appealing the ban.
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