Elizabeth Holmes (L) and Alan Murray speak at the Fortune Global Forum on Nov. 2, 2015 in San Francisco.
With blood testing business Theranos facing multiple lawsuits and its disgraced founder and CEO Elizabeth Holmes banned for 10 years by the SEC from serving as an officer or director of a business as part of a civil fraud settlement, the company has cut back most of its staff from more than 100 employees to about two dozen, according to The Wall Street Journal.
The cuts follow layoffs made last year as Theranos tried to turn its business around to focus on its miniLab testing platform.
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Citing people familiar with the matter, the paper noted that the cutbacks were part of an effort to effort to preserve cash and avoid bankruptcy for a few more months. A few years ago, Theranos employed as many as 800.
A $100 million Fortress Investment Group loan from last year is helping the company survive but if the company isn’t able to meet the requirements of the loan it could face liquidation. Holmes has appealed to investors for more funding, WSJ noted.
It’s a little surprising that Holmes has the chutzpah to shake a tin cup at investors given the level of fraud the SEC has found with the company — the agency described it as an “elaborate, years-long fraud”. Despite offering 250 tests on its blood testing technology, the company only used its proprietary technology to perform a small portion of those tests in preference to standard lab equipment. Last month, the agency noted in its complaint that despite claims by Holmes, Balwani, and Theranos, the company’s blood tests had not been deployed by the U.S. Department of Defense. Instead of claims that the technology would generate revenues of $100 million in 2014, it produced revenues closer to $100,000.
Although Holmes reached a settlement with the regulator last month, she neither admitted nor denied wrongdoing. Theranos cofounder Sunny Balwani has not yet settled with the SEC, and both Holmes and Balwani remain under investigation by the U.S. attorney’s office in San Francisco. For his part, Balwani has denied fraud charges.
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Last year, Theranos reached a settlement with Arizona, which the state’s Attorney General Mark Brnovich announced last year. As part of the settlement, Theranos pledged to not own or operate a CLIA-licensed laboratory in Arizona until March 28, 2019. Theranos also settled with the Centers for Medicare & Medicaid Services (CMS).
In 2017, the company cut more than 40 percent of its workforce to focus on commercializing it.
Photo: Kimberly White, Getty Images for Fortune
