Theranos CEO Holmes Presses on as Costs Mount

Recent court settlements have given Holmes more room to focus on product development, though hurdles remain.

The financial impact of Theranos’ disputes with authorities, partners and customers accumulated this week following two settlements that cost the blood-testing company almost $5 million.

The upshot was that it held onto its lab-operating certificates, posing the question of whether founder and CEO Elizabeth Holmes will ever fully recover from the scandal that started in 2015 when the Wall Street Journal first suggested the company’s products were flawed.

On Monday, Theranos agreed to drop its appeal against a ruling last year by the Centers for Medicare & Medicaid Services banning it from operating a clinical laboratory for two years. The authority also withdrew the revocation of its CLIA operating certificates and only imposed a relatively modest $30,000 fine.

A day later, Theranos agreed to pay a $4.65 million settlement to cover full refunds for every customer in Arizona that used the company’s testing services. Theranos also agreed to pay $200,000 in civil penalties and $25,000 in attorney’s fees, though, as the company noted in a statement, the matter was settled without any admission of liability.


In a separate statement, the company suggested its future could get brighter.

“Theranos exited the clinical lab and retail business last year, and is focusing on its miniaturized, automated testing platforms and related chemistries,” it said. “The company looks forward to working with regulatory authorities to secure approval for these innovative technologies.”

Last August, Holmes unveiled a new “mini-lab” kit that can run a variety of diagnostic tests on small-volume blood samples. It is still awaiting approval from the U.S. Food & Drug Administration.

In the meantime, Theranos will have to contend with looming lawsuits that could place more strain on its balance sheet. Walgreens, for example, is seeking $140 million in damages from its former partner and some investors also have sued the company.

So it looks like it’s a race against the clock to see if Theranos can get FDA approval and start generating some revenue or extra funding before its money runs out.

Even if the firm does get the regulator’s blessing, Holmes will have to convince a skeptical public exposed to almost two years of negative press that Theranos’ products and practices are sound.

You might also like:
5 Lessons for a Corporate Turnaround from an Auto Industry CEO
7 Turnaround Tips From an Interim CEO
Boards: Choose a CEO for Long-Term Growth, Not Just a Turnaround
8 Leadership Tactics From a CEO Who Orchestrated a Successful Turnaround


  • Get the CEO Briefing

    Sign up today to get weekly access to the latest issues affecting CEOs in every industry
  • upcoming events