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Theranos: A Unicorn That Has Lost Its Magic

Failed promises that ended in broken dreams

1Jul

How do you build $9 billion company, then lose your reputation in the blink of an eye? Theranos and its CEO Elizabeth Holmes may know the answer. Launched in 2003, this heavily-backed project was a rising star, with its CEO Elizabeth Holmes once the youngest self-made female billionaire in the world, according to Forbes. However, everything changed after Holmes's company was investigated multiple times over allegations of fraud and quality-control issues with its products and services. This resulted in the closure of all 40 Theranos-testing locations, and, eventually, Forbes reduced the CEO’s estimated value from $4.5 billion to nothing amid the federal investigation.

Elizabeth Holmes became a billionaire when she was only 30 years old. She was portrayed as an exceptionally hardworking individual, and her company was set to become one of the biggest disruptors in the lab-test industry. Holmes once told Inc. magazine that she didn’t take a single vacation during her 20s and that her life was designed around Theranos and saving lives. One of the company's products, Edison, aimed to develop blood tests capable of detecting hundreds of health conditions using just a couple of blood drops from the finger, instead of tubes of blood from a vein in the arm. The company aimed to use this to leave behind its mature rivals Quest Diagnostics and Laboratory Corporation of America.

Questions began to be raised in 2015 when The Journal of the American Medical Association mentioned that, apart from appearing in the mainstream press, Theranos's products weren't published in any peer-reviewed biomedical literature. Another worrying sign was that the company was highly secretive about the specific mechanism of their innovative technology.

Walgreens, one of the largest drugstore chains in the US, then announced that it was terminating its partnership with Theranos. When the company agreed to do business with the rising startup, it didn't check products thoroughly as to their effectiveness. The decision was also partly due to recent news that Theranos had voided 2 years worth of blood test results that came from Edison due to inaccuracy. Walgreens' SVP Brad Fluegel wrote in his statement that, in light of the voiding of a number of test results, and as the Centers for Medicine and Medical Services has rejected Theranos's plan of correction and was considering sanctions, the company has decided to terminate their partnership.

On top of these existing problems, the US health inspectors identified a number of issues linked to quality control in one of the Theranos's labs that triggered two-class action lawsuits, alleging Theranos had falsely marketed its technology. Since April 2016, Theranos has been under investigation by the U.S Securities and Exchange Commission and the U.S Attorney's Office for the Northern District of California. In June, Forbes wrote of its decision to cut the company's and the CEO's net worth estimate, nothing: 'Forbes spoke to a dozen venture capitalists, analysts, and industry experts and concluded that a more realistic value for Theranos is $800 million, rather than $9 billion. At such low valuation, Holmes' stake is essentially worth nothing.' The company has since responded, saying the media outlet didn't have essential data and that the article was purely based on speculation.

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