Elizabeth Holmes- Theranos, Grace - To Grass

From $4.5 Billion To Nothing: Forbes Revises Estimated Net Worth Of Theranos Founder Elizabeth Holmes.

Last year, Elizabeth Holmes topped the FORBES list of America’s Richest Self-Made Women with a net worth of $4.5 billion. Today,  FORBES is lowering our estimate of her net worth  to nothing. Theranos had no comment.

Our estimate of Holmes’ wealth is based entirely on her 50% stake in Theranos, the blood-testing company she founded in 2003 with plans of revolutionizing the diagnostic test market. Theranos shares are not traded on any stock market; private investors purchased stakes in 2014 at a price that implied a $9 billion valuation for the company.

Since then, Theranos has been hit with allegations that its tests are inaccurate and is being investigated by an alphabet soup of federal agencies. That, plus new information indicating Theranos’ annual revenues are less than $100 million, has led FORBES to come up with a new, lower estimate of Theranos’ value.

FORBES spoke to a dozen venture capitalists, analysts and industry experts and concluded that a more realistic value for Theranos is $800 million, rather than $9 billion. That gives the company credit for its intellectual property and the $724 million that it has raised, according to VC Experts, a venture capital research firm. It also represents a generous multiple of the company’s sales, which FORBES learned about from a person familiar with Theranos’ finances.

At such a low valuation, Holmes’ stake is essentially worth nothing. Theranos investors own preferred shares, which means they get paid back before Holmes, who owns common stock. According to VC Experts, investors in Theranos own a particular kind of preferred equity, called participating preferred shares, which take

precedence to common stock in the event of a liquidation. FORBES is not aware of any plans to liquidate. If that were to happen, participating preferred investors would get their money back and more before Holmes gets a cent.

It is possible that at some point, Holmes may be able to raise money at a higher valuation than $800 million from her existing investors, but we are not betting on it.

Here are three reasons FORBES lowered our estimated value of the blood testing company:

1. Too much is unknown. Everything but the $9 billion valuation is secret. Theranos said it would replace traditional blood tests, in which a needle is used to extract blood into a vial, with machines that could do dozens of tests on a drop of blood taken from a finger. But it has presented no data proving its systems work.

2. Theranos has not delivered. Holmes has been promising to publish data for six months, but hadn’t submitted a single paper as of April. She initially presented the Food and Drug Administration’s approval of a single test for herpes virus as proof that her technology worked, and that a startling 120 more approvals would follow. Instead, the FDA introduced restrictions that led Theranos to stop using its finger-stick tests, and no approvals have followed. Theranos has voided thousands of the finger stick tests, according to a May report from The Wall Street Journal.

3. Theranos’ target market may not exist. Outside experts are skeptical of the idea that Theranos could be worth nearly as much as incumbents like Laboratory Corp. of America (market capitalization: $13 billion) and Quest Diagnostics (market capitalization: $11 billion). Theranos, which charges less per test, would need to dramatically improve margins on its tests (which it has said it can do), as well as get many more people to take its blood tests.

"Trying to displace low-cost lab tests is just such a tough area,” says Robert Nelsen of ARCH Ventures, the top-ranked healthcare venture capitalist on the Forbes Midas List. Margins are low, and it is difficult for new technologies to become established. 

Robert Kocher, a healthcare-focused partner at venture capital firm Venrock, says if Theranos’ technology works, it will find more value selling its machines than trying to recreate LabCorp and Quest’s infrastructure from scratch.

Holmes will be making a presentation on Theranos’ data at the annual meeting of the AACC, formerly the American Association for Clinical Chemistry, in August. Perhaps that will shed some light on what data Theranos has to support the use of its technology. In the meantime, given the difficulties at Theranos, Holmes falls off the list of America’s Richest Self-Made Women and off all of FORBES’ other wealth lists.

THE ABOVE ARTICLES WAS WRITTEN 6 YEARS AGO, Culled :Forbes.

FAST FORWARD TO 03/01/2022:

Elizabeth Holmes Is Found Guilty On Wire Fraud Charges.

Elizabeth Holmes, the former Theranos CEO who was accused of defrauding investors, doctors and patients who used her company’s blood testing machines, was found guilty on four counts of wire fraud and conspiracy to commit wire fraud Monday, according to the Associated Press. 

Jurors in federal court in San Jose, California, also found the 37-year-old not guilty on four additional counts, and they could not agree on a verdict on a final three counts after seven days of deliberation.

The four guilty counts were tied to wire fraud and conspiracy against investors, the not-guilty counts were related to wire fraud and conspiracy against patients and doctors, and the three deadlocked counts concerned specific wire transfers.

Holmes pleaded not guilty to two counts of conspiracy to commit wire fraud and nine counts of wire fraud, which carry a maximum 20-year sentence behind bars and a $250,000 fine plus restitution for each count. 

In the three-month-long trial, prosecutors argued that Holmes was “well aware” Theranos’ machines could not perform dozens of tests using only a few drops of blood despite claiming so, misrepresented her company’s revenue and used modified third-party machines to mislead investors and partner organizations in an attempt to gain money and fame.

Prosecutors can bring a new trial on the three deadlocked counts, according to the Wall Street Journal.

Culled: FORBES. 

WOW!