Is Theranos still in business? The company’s patents keep the Theranos name alive

Elizabeth Holmes founded Theranos with tuition money saved from her time at Stanford. Holmes famously didn’t complete her studies; she dropped out of Stanford after two semesters to form the company. Holmes founded Theranos with dreams of becoming a billionaire, and for a brief period, she achieved her goals, with Forbes valuing her at a staggering $4.5 billion. 

At the time, Theranos was valued at over $9 billion, having attracted investments of over $700 million. However, behind the promise of a revolutionary blood-testing method lay years of fraud, exaggeration of the company’s capabilities, and manipulation of business statements. 

Theranos dissolved in September 2018 following shocking allegations against the company

In early September 2018, David Taylor, the company’s general counsel and chief executive, sent an email informing shareholders of the company’s dissolution. Shareholders must have expected such news sooner rather than later: the previous CEO faced criminal fraud charges filed by prosecutors, potentially facing 20 years in prison. 

Theranos initiated the dissolution process three years after John Carreyrou published an exposé on The Wall Street Journal, exposing the company for lying about its products. 

Elizabeth Holmes reacted by making several media appearances, but she failed to uproot the seeds of doubt planted by John’s report. In the following months, Theranos’s house of cards started crumbling as various companies scrambled to sever ties with Theranos. 

A potential million-dollar deal with Safeway, a supermarket chain, collapsed. A short while later, its partnership with Walgreens ended. Internally, investors sued the company, alleging securities fraud; the suits marked the beginning of the end for Theranos. 

In 2018, the SEC charged Holmes and Theranos’s former president Ramesh Balwani with massive fraud. Holmes was forced to step down and hand over her shares to Theranos and was barred from holding management office in a public company for ten years. 

Perhaps the most damning allegation against Theranos was that it knowingly sent false medical information, which patients used to make medical decisions. Despite evidence of this, Elizabeth Holmes denied that she intentionally deceived investors or patients.

John’s investigation found that most people working at Theranos were unaware of the fraudulent activities orchestrated by the top brass. Thousands of employees lost their jobs after Theranos dissolved. 

Holmes owned 50% of the company’s common shares, which fell a class below preferred shares owned by investors. Some investors recouped their investments in the company while others didn’t. 

“Because the company’s cash is not nearly sufficient to pay all of the creditors in full, there will be no distribution to shareholders,” the letter by David Taylor read. 

Theranos patents still exist and are owned by Fortress Investment Group

In 2017, Fortress Investment Group invested $100 million in Theranos – an investment secured on its patents. The terms obliged Theranos to maintain an unspecified cash level; Theranos dissolved after dipping below the specified limit. 

Therefore, Fortress acquired Theranos’ patents, hundreds of which Elizabeth Holmes allegedly invented. 

Theranos is now dead – its closed website attests to that – but the name lives on through its patents, which Elizabeth Holmes used as part of her defense during her trial. Holmes’ legal team claimed that the patents gave Theranos some legitimacy. 

“They’re pieces of paper. They’re not proof that the technology worked,” US Attorney Robert Leach countered. US District Judge Edward Davila admitted early patents but blocked the use of later patents by the defense. 

The United States Patent and Trademark Office (USPTO) faced scrutiny for its allegedly fraudulent and reckless awarding of patents to Theranos. 

The USPTO granted Theranos 859 patents over 18 years, including 544 patents allegedly invented by Elizabeth. It’s not unheard of for an inventor to register that many patents, but the USPTO should have investigated how she handles inventions while building and running a company.

Theranos likely exaggerated the number of projects Elizabeth was involved with to elevate her status in the medtech world. In April 2019, nearly a year after Theranos dissolved, the USPTO granted the company five new patents. 

Holmes can’t profit from Theranos’s patents as she signed off her rights to royalties. However, patents fraudulently or mistakenly linked to the wrong inventors can attract lawsuits from companies looking to attack Theranos’s intellectual property. 

Forbes valued former CEO Elizabeth Holmes at $0, but she lives in a lavish Silicon Valley estate

A year after valuing Elizabeth at $4.5 billion, Forbes revised its valuation, placing her net worth at $0. 

Nevertheless, at trial, Elizabeth’s legal team filed a motion seeking to block prosecutors from introducing evidence of Holmes’s purported wealth. The team alleged that such revelations would prejudice the jury. The motion read:

“The government has no legitimate purpose for offering this evidence. It has no bearing on whether Ms. Holmes engaged in the alleged schemes to defraud with which she is charged. Instead … [it] invites the jury to convict Ms. Holmes based on improper emotional appeals.”

Holmes’s team argued that she took a lower salary than Theranos’ other executives. Elizabeth’s lawyers argued that Holmes’s refusal to sell equity in the company demonstrated that she didn’t plan to profit from the massive fraud. 

Prosecutors brought nine charges against Holmes, but the jury found her guilty on four. Holmes remains free on a $500,000 bond secured on her property. 

It’s widely believed that Elizabeth has no money. So, how’s she able to afford a residence in a Silicon Valley estate valued at $135 million? Some believe that she relies on her husband’s wealth. 

Elizabeth’s husband, Billy Evans, is the heir to a hotel management group based in California. On the Inside the Hive with Nick Bilton podcast, Nick Bilton alleged that Billy’s supporting Elizabeth financially:

“She doesn’t have any money… he [Billy Evans] is a trust fund baby and has a lot of money, and he is probably helping out with the legal bills, because Elizabeth’s family doesn’t have money either.”

Billy and Elizabeth welcomed their son, William Holmes Evans, in August 2021.