Blood-Testing Firm Theranos Will Formally Dissolve, Report Says

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Blood-testing startup Theranos reportedly to dissolve

Theranos is closing up shop, The Wall Street Journal reported on Tuesday night, citing a shareholder email.

In the wake of a high-profile scandal, the company will formally dissolve, according to a shareholder email obtained by Dow Jones Newswires.

Today, David Taylor, who was appointed CEO back in June, penned a letter that said Theranos will dissolve after paying creditors what remains of their cash.

It is the latest twist in one of the most dramatic rise-and-fall stories United States business has ever seen and comes three months after Elizabeth Holmes, who founded the company at the age of 19, was charged with fraud along with Sunny Balwani, her former lover and the company's former chief operating officer.

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Theranos, founded in 2003 by a then 19-year-old, wide-eyed Elizabeth Holmes, the Stanford drop-out who everyone believed could change the world. Under the loan terms, Fortress was entitled to foreclose upon the company's assets if its cash fell beneath a certain threshold. Taylor said the investment bank with which Theranos was working reached out to more than 80 potential buyers, but none were interested.

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

The action followed a failed bid to sell the company. But that unraveled spectacularly under the scrutiny of Wall Street Journal investigative reporter John Carreyrou.

Investors lost nearly $1 billion in the company, The Journal reported. That came three months after the Securities and Exchange Commission charged Theranos with "massive fraud". Mr. Balwani was Theranos's president and chief operating officer until he retired from the company in May 2016.

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She and Mr Balwani still face up to 20 years in prison and fines of millions of dollars if convicted of fraud.

The idea was that this would reduce sharply the cost of blood tests as well as making the process less unpleasant to patients with a phobia of needles. Former CEO Elizabeth Holmes' black turtleneck and lofty goals drew comparisons with Apple's Steve Jobs. The pharmacy chain has said it was misled by Theranos about its technology and prospects.

But Theranos' blood-testing machines weren't reliable, and the company itself relied on other companies' devices to run blood tests. In reality, the SEC says, the analyzer could only complete a small number of tests, and the company "conducted the vast majority of patient tests on modified and industry-standard commercial analyzers manufactured by others".

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