Published: Thu, September 06, 2018
Health Care | By Oscar Goodwin

Theranos bleeds dry, company to dissolve

Theranos bleeds dry, company to dissolve

Taylor said the investment bank with which Theranos was working reached out to more than 80 potential buyers, but none were interested.

The once-heralded blood-testing startup Theranos is now set to formally dissolve just weeks after its CEO was charged with criminal fraud.

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

The Fortress Investment Group loaned $65 million to Theranos past year, with one condition being that Theranos maintain a cash level that has now been breached-hence the dissolution process that will play out over the coming months.

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The biotech company, which was once valued at $9 billion, built its reputation on the claim that it had come up with a cheaper, more efficient alternative to traditional medical tests.

But Theranos' blood-testing machines weren't reliable, and the company itself relied on other companies' devices to run blood tests.

The announcement comes six months after Theranos and its chief executive, Elizabeth Holmes, agreed to settle fraud charges with the US Securities and Exchange Commission in relation to false claims made about the company's technology, business and financial performance.

Holmes, who reigned briefly as the world's youngest female self-made billionaire over her promise to revolutionize blood testing, was criminally charged in June with defrauding investors along with the Palo Alto, California-based company's former president, Ramesh "Sunny" Balwani.

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According to the email, Theranos said it plans to spend the next few months repaying creditors with its remaining resources. "We are now out of time", Taylor wrote in the email, a copy of which was published by the WSJ (paywall). At one time, Theranos was worth more than US$10 billion.

In March, Ms Holmes settled charges with the Securities and Exchange Commission, a top U.S. financial regulator.

Theranos's other, unsecured creditors are owed at least $60 million, and the company is trying to negotiate a deal with Fortress that would see those creditors get the $5 million in cash that Theranos still holds.

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