What is Theranos?

The healthcare startup grew to become a business worth billions, but the founder is facing federal fraud charges

Theranos is a now-defunct healthcare technology startup founded by disgraced Stanford drop-out Elizabeth Holmes.

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Holmes dropped out of Stanford University at 19 to found Theranos in 2003. She pitched its technology as a cheaper way to run dozens of blood tests with just a prick of a finger and a few droplets of blood.

The startup was founded in Feb. 2014, was headquartered in Palo Alto, Calif., according to Bloomberg. The company grew to become a business worth billions.

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But Theranos shared very little about its blood-testing machine with the public or medical community. Holmes said she was inspired to start the company in response to her fear of needles.

The company claimed to be able to provide over 240 finger-prick blood tests, including ones that could reportedly detect cancer, according to The Wall Street Journal.

A sign outside of the headquarters of Theranos in Palo Alto, California on January 24, 2016. (Photo by Kristoffer Tripplaar/AP) 

The business had garnered hundreds of millions of dollars in investments and was valued at $9 billion in 2015, when a Journal expose showed the company had some not-so-favorable secrets.

In part, according to the report, Theranos had neglected to use the device it marketed as the “lynchpin of its strategy,” called the Edison, for the majority of the tests conducted. The Journal reported that in 2015, the technology was only used for 15 tests.

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And at least one employee told the financial newspaper Theranos executives did not report test results that would have caused concerns about the machine’s accuracy.

The story raised concerns about the accuracy of Theranos’ blood-testing technology, which put patients at risk of having conditions either misdiagnosed or ignored.

Elizabeth Holmes speaks on stage at the Glamour Women of the Year Awards where she receives an award, in New York, NY on Nov. 9, 2015. (REUTERS/Carlo Allegri)

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Holmes, at one point the nation’s youngest self-made female billionaire, and her former chief operating officer Ramesh Balwani, were indicted by federal prosecutors in June 2018 and charged with two counts conspiracy to commit wire fraud and nine counts of wire fraud each.

Prosecutors allege that Holmes and Balwani deliberately misled investors, policymakers and the public about the accuracy of Theranos’ blood-testing technologies since 2013, at least

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The two pleaded not guilty to wire fraud and conspiracy to commit wire fraud. If convicted, they could each face maximum penalties of 20 years in prison a $2.75 million fine and possibly restitution, the Department of Justice said.

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But in February, the pair had a number of charges dropped, excluding wire fraud.

According to The Associated Press, the Journal’s investigation marked the beginning of the end of Theranos. And the company's downfall later became the focus of an HBO documentary, "The Inventor: Out for Blood in Silicon Valley."

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Walgreens ended its blood-testing partnership with the company, and the Department of Health and Human Services effectively banned Theranos in 2016 from doing any blood testing work at all.

The Securities and Exchange Commission also brought civil fraud charges against Holmes and Balwani.

Elizabeth Holmes (Reuters); Ramesh "Sunny" Balwani (Getty Images)

The once-lauded businesswoman ultimately stepped down from the company, which announced in Sept. 2018 it would be closing.

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Holmes will head to trial starting Aug. 4, and Balwani will be tried after the conclusion of Holmes’ case, Bloomberg reported.

The Associated Press contributed to this report.