Emails Reveal Theranos Never Saw it Coming, Predicted Revenue of Nearly $2 Billion for 2016
12/6/2016 6:40:14 AM
December 6, 2016
By Alex Keown, BioSpace.com Breaking News Staff
PALO ALTO, Calif. – Despite problems with its blood testing technology and repeated questions of its efficacy, Theranos leaders apparently truly believed the technology would lead to revenue of just under $2 billion this year, the Wall Street Journal reported this morning.
In 2014 and early 2015, while soliciting investors, Theranos made bold predictions about its revenue streams, the Journal said. The company told investors it expected revenue of about $1 billion, with net income of about $330 million, by the end of 2015 from its retail pharmacy partnerships. By the end of this year, the company told investors it would have revenue of $2 billion and net income of about $500 million. Theranos expected to develop partnerships with companies beyond Walgreens, including hospitals and drugmakers, the Journal said. Those predictions helped the once white-hot darling of Silicon Valley, raise more than $686 million in its last financing round.
Of course, the wheels fell off those staggering predictions as the company has dwindled from a once $9 billion valuation to around $500 million, according to some analysts. In fact, Theranos directors apparently went back and looked at the projections the company gave to those investors and could not find any basis for the claims, an unnamed source told the Journal.
The company was forced to shutter its blood-testing laboratories and it lost its primary revenue stream when Walgreens terminated its partnership with the beleaguered company. Walgreens has since filed a $140 million lawsuit against Theranos, claiming the company voided 11.3 percent of all blood tests the California-based company provided to customers. The Walgreens lawsuit came on the heels of a lawsuit filed by San Francisco-based investment company Partner Fund Management.
Theranos also faces lawsuits filed by several patients who underwent medical treatments after receiving blood tests results from the company—tests that were later voided by the company as part of a problem with a batch of results spanning two years. Theranos is also the subject of a criminal investigation by the U.S. Department of Justice with investigations centering on whether or not Theranos and its executives misled investors as to the efficacy of its blood-testing products.
At the end of November, the law firm Hagens Berman filed a class action lawsuit against Theranos, alleging the company “knowingly lured investors through false statements of revolutionary blood testing technology.” The complaint basically says Theranos engaged in a publicity campaign to raise billions of dollars despite the fact that company officials, specifically founder Elizabeth Holmes and former president Sunny Balwani, knew the blood-testing product was ineffective.
Also, an email the company sent to its investors this week failed to use the “BCC” setting to hide the names of recipients and provided a look at some of the company backers, which included high profile names. Investors on the list included the Walton family, which owns Wal-Mart, Robert Kraft, the owner of the New England Patriots and the investment group helmed by Mexican billionaire Carlos Slim. Last month, it was revealed that Rupert Murdoch, executive chairman of News Corp., had invested about $100 million into Theranos.
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