The woman who was once considered the world’s youngest self-made female billionaire now has a networth of zero.
Elizabeth Holmes, 31, is the chief executive of her health technology company Theranos Inc. which promised to make blood tests easier and more affordable for patients. Holmes, a Stanford dropout, reportedly owns 50% of Theranos, which was valued at $9 billion.
After founding Theranos at the age of 19, she worked tirelessly to follow through on her guarantee of delivering more convenient methods of diagnosing patients using a single drop of blood. Today, her company is currently under investigation by several federal and state agencies including the U.S. Securities and Exchange Commission, state health departments in Arizona and Pennsylvania, the Centers for Medicare and Medicaid and the U.S. Food and Drug Administration.
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In a suit filed last week, Theranos was accused of “massive failures” that misrepresented the accuracy and quality of its blood tests. The misrepresentation put patients’ health and well-being at risk, the suit stated.
Forbes reported that private investors, including the likes of Larry Ellison, former CEO of Oracle, bought stakes in the company that indicated a $9 billion valuation. However, the magazine noted $800 million was a more realistic estimate. Additional findings reveal that the company’s annual revenues are below $100 million.
“At such a low valuation Holmes’ stake is essentially worth nothing.”
Forbes explained that investors in Theranos own preferred shares while Holmes, who has a 50% stake in Theranos, has common stock. In the event of a liquidation, participating preferred shares “take precedence to common stock.” If Theranos were to liquidate, investors “would get their money back and more before Holmes gets a cent.”
Holmes is expected to present findings based on Theranos’ data at the annual meeting of the AACC, or American Association for Clinical Chemistry, in August.