Blood-Testing Firm Theranos to Dissolve

Faith Castro
September 6, 2018

In the email to shareholders, sent Tuesday, Theranos General Counsel and Chief Executive Officer David Taylor said the company is trying to negotiate a settlement with Fortress that would give the NY private-equity firm ownership of the company's patents but leave its remaining cash-estimated at about $5 million-for distribution to other unsecured creditors.

The Fortress Investment Group loaned $65 million to Theranos a year ago, 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.

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

On the strength of her claims, Theranos rolled out its vaunted finger-stick blood tests in Walgreens stores in California and Arizona and rocketed to a valuation of more than $9 billion, making Ms. Holmes a billionaire and media celebrity. 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. But her net worth was later revised down to nothing.

The news comes as Theranos founder Elizabeth Holmes and her second-in-command face criminal charges on accusations that they defrauded investors, doctors, and patients.

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

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David Taylor, who became CEO in June, said Theranos will dissolve after it attempts to pay creditors with its remaining cash.

The downfall of Holmes, who settled with the Securities and Exchange Commission in March over fraud charges it announced against her, has hastened the collapse of her company.

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.

He said the startup hopes to reach a settlement with Fortress that would allow it to distribute an estimated $5 million it has left in cash to other creditors.

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

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