Embattled Blood-Testing Firm Theranos to Dissolve


Theranos was in default under its credit facility with Fortress Investment Group, Taylor said in the letter.

Theranos did not immediately respond to Reuters' request for comment.

The once-heralded blood-testing startup Theranos is shutting down, according to a media report. An investigation by The Wall Street Journal in October 2015 revealed that Theranos was having trouble with the accuracy of its results, and a federal investigation began six months later.

Holmes had claimed that the company's technology could run comprehensive lab tests using just a few drops of blood - a pitch that appealed to Walgreens, which partnered with Theranos to offer the blood tests in its stores.

The dissolution process was precipitated by the fact that Theranos breached a covenant governing a $65 million loan it received from Fortress Investment Group a year ago. But her net worth was later revised down to nothing.

The move comes after founder Elizabeth Holmes settled a shareholder lawsuit in July aimed at recovering whatever can be salvaged from the fallen blood testing startup.

Instead, in a criminal indictment, the Justice Department says that Holmes and her then-boyfriend, former President and COO Ramesh "Sunny" Balwani, perpetrated "a multi-million dollar scheme to defraud investors, and a separate scheme to defraud doctors and patients".

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Holmes and Balwani both pleaded not guilty at their arraignment.

Ms Holmes reached a settlement with the US Securities & Exchange Commission in March this year in which she paid a $500,000 fine, returned her shares to the company and was banned from serving as an officer or director of a public company for 10 years.

It was briefly one of the most celebrated companies in Silicon Valley - but Theranos, a company valued at $9bn (£7bn) at its peak, will soon be no more.

According to the email, Theranos said it plans to spend the next few months repaying creditors with its remaining resources.

Taylor's email to shareholders was also reported by the Financial Times.

Besides Fortress, Theranos owes at least $60 million to unsecured creditors, Taylor said.