How Theranos Patients and Investors Paid the Price for Elizabeth Holmes’ Claims

For years, Theranos sold patients and investors on the idea that their version of a routine blood test could be transformative. Founder Elizabeth Holmes claimed the company’s technology could deliver accurate results for numerous medical tests from tiny samples of blood, helping propel Theranos to a valuation of more than $9 billion and making Holmes one of Silicon Valley’s most celebrated entrepreneurs.

Behind that success, however, Theranos was struggling with technology that could not reliably perform many of the tests Holmes had promoted. By the time those problems became public, the company’s blood-testing services had reached real patients, some of whom received results that wrongly suggested they were miscarrying, facing cancer or experiencing other serious medical problems.

The fallout ultimately became part of two federal criminal cases. Holmes was convicted in 2022 of conspiracy and fraud involving investors, although jurors acquitted her on patient-related charges; a fourth count related to patients was dismissed. Former Theranos president and chief operating officer Ramesh “Sunny” Balwani, who was tried separately, was convicted of defrauding both investors and patients.

Patients experienced some of the most personal consequences of Theranos’ unreliable testing.

Theranos offered tests for human chorionic gonadotropin, or hCG, a hormone used to monitor early pregnancies. According to federal prosecutors, a woman who had previously suffered multiple miscarriages received Theranos results strongly indicating that she was miscarrying again. Conventional testing instead showed a viable pregnancy, and she ultimately gave birth to a healthy baby. Prosecutors said multiple pregnant women received

erroneous hCG results from Theranos. The FDA documented another case involving a woman being treated for an ectopic pregnancy whose Theranos results incorrectly indicated that the pregnancy had ended.

More patients received alarming results that subsequent testing did not confirm. A physician who underwent Theranos testing repeatedly received extremely elevated prostate-specific antigen test results, which can be an indicator of prostate cancer. Conventional testing later showed the results were inaccurate. In another case, a doctor sent a patient to an emergency room because Theranos results suggested a possible heart attack; hospital testing using a different method came back with a result within normal ranges.

Questionable results could also affect treatment already underway. Federal prosecutors described the case of a Theranos employee taking blood-thinning medication because of a history of blood clots. After Theranos testing produced markedly different results from earlier conventional tests, a doctor changed the employee’s dosage. Testing at a traditional laboratory later showed normal levels, meaning the adjustment had been unnecessary.

The full extent of the problem was difficult to determine. Theranos eventually voided all results produced by its proprietary Edison devices in 2014 and 2015 and issued tens of thousands of corrected or voided reports to doctors and patients. An Arizona investigation later found that Theranos had voided or corrected 10% of test results provided to consumers in that state between 2013 and 2016.

Some of Theranos’ most financially impacted victims were investors who had been persuaded that the company possessed technology capable of transforming laboratory testing.

According to the Securities and Exchange Commission, Theranos raised more than $700 million from investors while Holmes and Balwani made false or exaggerated claims about the company’s technology, business rela

tionships and financial performance. Investors were told that Theranos’ devices could perform a broad range of tests using a few drops of blood, when in reality its proprietary analyzer could perform only a limited number.

Holmes and Balwani also claimed that Theranos technology had been deployed by the U.S. military in the field and projected that the company would generate more than $100 million in revenue in 2014 and approximately $1 billion in 2015. Prosecutors said the military claim was false and that actual revenues fell far short of those projections.

Those losses became central to Holmes’ criminal case. In January 2022, jurors convicted her of conspiracy to defraud Theranos investors and three counts of wire fraud involving individual investors and transfers totaling more

than $140 million.

A federal judge later ordered Holmes and Balwani to pay approximately $452 million in restitution jointly or separately. Nearly $398 million of that amount represented losses attributed to 12 Theranos investors.

Theranos’ business partners suffered significant losses as well. Walgreens and Safeway entered agreements with the company as they prepared to bring Theranos blood testing to their customers. Those relationships also became an important part of the image Theranos presented to prospective investors; the SEC later alleged that Holmes portrayed the retail partnerships as thriving even as the Walgreens rollout had stalled.

Walgreens ultimately opened Theranos Wellness Centers in its stores and purchased a $40 million convertible note and paid a separate $100 million “innovation fee.” Safeway also invested millions while preparing its supermarkets to offer Theranos testing, although that rollout never fully materialized. Federal prosecutors later said Holmes and Balwani had induced Walgreens and Safeway to invest based in part on false claims about pharmaceutical endorsements and Theranos’ projected revenues.

As questions about Theranos’ technology mounted, the partnerships unraveled. In June 2016, Walgreens terminated its relationship with Theranos and announced that it would close all 40 Theranos Wellness Centers operating in its Arizona stores.

The restitution order ultimately calculated Walgreens’ loss at $40 million and Safeway’s at $14.5 million.

The fallout also extended to employees who raised concerns about what was happening inside Theranos. Two of the best known were lab associates Erika Cheung and Tyler Shultz.

Cheung worried about quality control failures and discrepancies in test results and eventually took her concerns to federal health regulators. Shultz, the grandson of Theranos board member and former Secretary of State George Shultz, also raised concerns internally before contacting regulators. Both later provided information to Wall Street Journal reporter John Carreyrou, whose reporting helped expose problems inside the company.

Both employees also described intense pressure from Theranos after they left. Cheung said company lawyers threatened legal action over alleged disclosure of confidential information, while Shultz faced years of legal threats and said private investigators followed him. His family ultimately spent hundreds of thousands of dollars on legal fees. Their warnings helped bring problems with Theranos’ testing into public view at a time when patients and investors had little reason to question the company’s claims.

After Holmes and Balwani were convicted, federal prosecutors asked people who believed they had been victimized by Theranos to come forward ahead of sentencing.

The restitution process accounted for the losses suffered by investors and business partners, but only part of the damage caused by Theranos could be measured financially. Patients who received inaccurate results, doctors who relied on them and employees who faced legal pressure after raising concerns experienced consequences that could not be easily calculated—or repaid.