The Failure of Elizabeth Holmes and Theranos: A Summary
- besociety
- Oct 3, 2025
- 3 min read
Updated: Nov 21, 2025
Theranos was started by Holmes when she was 19 and studying at Stanford. The business aimed to create a machine that allowed a person to diagnose blood conditions without the use of a needle. The tagline on their website was “one drop of blood can change everything”—an ambitious claim and an even more ambitious project to take on—but the founder believed in it and subsequently dropped out in her sophomore year to focus on growing the business. Her confidence seemed to pay off, as she attracted large investment from big names in Silicon Valley, such as Tim Draper (a family friend) and Larry Ellison, the co-founder of Oracle. The traction for the business was growing, with the former CEO Elizabeth Holmes securing interviews with the likes of Forbes and The New York Times. In 2014, after raising $400 million, the business was valued at $9 billion, making Holmes a billionaire as she held a 50% stake in the company.
2015 was a mixed bag for the business. In July of that year, they received approval from the FDA to test for herpes using its finger-prick technology. However, the company had fallen victim to two whistleblowers who came forward, claiming that employees were tampering with statistical data and test results from the business’s own ‘Edison Machine,’ which only accounted for a small number of the company’s tests and were inaccurate. The story was published by The Wall Street Journal later that year, which released a series of exposés about Holmes and the suspected fraud. This led to the FDA pressuring Theranos to stop blood testing, and a month later, the FDA concluded that Theranos technology was unclear. The bad press was just the start of the problems for Holmes, as in November 2015, Theranos’ partnership with Safeway had fallen through after a $350 million investment to build clinics for Theranos in supermarkets across the United States.
The following year did not improve for Theranos, as they had several clashes with the CMS (Centers for Medicare and Medicaid Services). The first came in January, when they were issued a warning about their California lab not being up to standard and putting patients at risk. They were told they had 10 days to rectify the problem. This had a knock-on effect, with more partnerships being discontinued. Walgreens, which had a partnership with Theranos since 2013, announced they would no longer be sending blood samples to the company’s lab in California. This later led to a completely severed partnership when Walgreens announced they would be closing all 40 Theranos wellness centres. The second clash came in July, when Theranos was banned by the CMS from running labs for two years.
After a rough few years for the business, Elizabeth Holmes and board member (and ex-boyfriend) Sunny Balwani were charged with fraud by the SEC. The SEC claimed that the business was aware that The Edison could only perform a small fraction of the tests they claimed it could. In 2022, Holmes was sentenced to over 11 years in prison for four counts of defrauding investors. Since then, her sentence has been reduced twice, but she must serve 85% of it regardless of good behaviour and reductions. Sunny Balwani was later sentenced to 13 years in prison; his sentence has also been reduced by two years.
In 2016 the CMC banned Theranos for operating blood tests until 2018, that same year Theranos was dissolved
Written by: Alexander Jackson
Position: Vice President
Date: 24/09/25
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