Theranos and the Blood Test That Wasn't

The story

In 2003, a 19-year-old Stanford student named Elizabeth Holmes left college to start a company called Theranos. Her idea was exciting. Instead of drawing tubes of blood from your arm, a tiny finger-prick sample could be run through a small machine to check for hundreds of diseases, quickly and cheaply. If it worked, it could change health care.

Over the next decade, Theranos became one of the most celebrated startups in Silicon Valley. It raised more than $700 million from investors, according to the SEC, and private investors valued it at about $9 billion at its peak. Famous business leaders and former government officials joined its board. Theranos partnered with the Walgreens drugstore chain to offer its tests in stores in Arizona and California. Holmes appeared on magazine covers.

But the technology did not do what Theranos said it did. In October 2015, Wall Street Journal reporter John Carreyrou published an investigation, based partly on former employees, showing that Theranos ran most of its tests on altered machines made by other companies rather than on its own device, and that its results were often unreliable. Regulators began investigating. In 2016 Theranos lost its Walgreens partnership, cut about 40 percent of its staff, and saw Holmes barred by regulators from owning or running a lab for two years. Real patients had received inaccurate results from its tests.

In March 2018, the SEC charged Theranos, Holmes and former company president Ramesh "Sunny" Balwani with an "elaborate, years-long fraud" against investors. The SEC said they had exaggerated the technology, falsely suggested it had been used by the U.S. military in battlefield conditions, and projected more than $100 million in revenue for 2014 when the company actually brought in about $100,000. Holmes settled without admitting or denying the charges; she paid a $500,000 penalty, gave up control of the company, and was barred from leading a public company for 10 years. Theranos shut down later in 2018.

Federal prosecutors then brought criminal charges. In January 2022, a jury found Holmes guilty of four counts of defrauding investors. The same jury found her not guilty on four counts of defrauding patients, and could not agree on three other counts. At trial, Holmes testified for days, blamed lab directors for problems, and accused Balwani, her former boyfriend, of abuse. He denied it. In July 2022, a separate jury convicted Balwani on all 12 counts against him, including fraud against patients. Holmes was sentenced in November 2022 to 11 years and 3 months in prison, and Balwani to nearly 13 years. The judge ordered them to pay $452 million to victims. Holmes reported to prison in May 2023, and an appeals court upheld her conviction and sentence. In 2025, she asked President Trump to commute her sentence, and the request was still pending in 2026.

Theranos is a powerful warning for anyone who starts a business. It is normal for founders to be hopeful and to talk about what their product will become. But there is a bright line between describing a dream and telling investors and customers that the dream is already real. In health care, where people make decisions about their bodies based on test results, crossing that line can hurt far more than a bank account.