Youngest Self-Made Female Billionaire Elizabeth Holmes in Harsh Spotlight Amid Theranos' Criminal Probe
— -- Elizabeth Holmes, CEO of Theranos medical testing company, is in a much harsher spotlight today than less than two years ago when Forbes declared her the world's youngest self-made female billionaire.
Theranos, the company founded by the Stanford University dropout, said Monday it's under investigation by the U.S. Securities and Exchange Commission and the U.S. Attorney's Office for the Northern District of California. The company shared a memo with external business partners under the subject line, "Regulatory Update," which was obtained by ABC News.
"In the past, we have generally not commented on the specifics of these inquiries out of deference to our regulators and in light of specific requests for confidentiality," the memo stated. "However in light of consistent press attention in this area we want you to hear about them from us."
Privately held Theranos, based in Palo Alto, California, was once valued at $9 billion. The company had touted its ability to make blood-testing more accessible and affordable, using a much smaller sample of blood, from a finger prick, than other labs require for testing.
Theranos, which is still in business, became the target of regulators and negative publicity after the Wall Street Journal reported in October on questions concerning the accuracy of its testing, and the degree to which the company was living up to its claims of new technology. Holmes denied the report, questioning its unnamed sources and calling it "false" and "misleading." The Wall Street Journal responded that it stood by its reporting.
“These are inquiries for document requests that those agencies initiated in the wake of the wave of negative press attention over the past six months,” Theranos spokeswoman Brooke Buchanan said in a statement to ABC News today about the regulatory investigations, without providing specifics.
“The company continues to work closely with regulators and is cooperating fully with all investigations.”
Holmes founded Theranos when she was a 19-year-old college student, with the intention of replacing needles to draw blood, with finger pricks.
"We define Theranos as: Detecting the onset of disease in time for therapy to be effective," Theranos states on its website.
The company partnered with Walgreens to create 40 Theranos Wellness Centers in some Walgreens locations in Arizona. In January, Walgreens announced that it had told Theranos to stop sending lab tests from its Wellness Centers for analysis at Theranos’ lab in Newark, California, and had suspended Theranos lab services at a Walgreens store in Palo Alto.
A spokesman for Walgreens declined to comment today when asked if those orders are still in effect.
Despite the fallout, Holmes, 32, still has a net worth of $3.6 billion, according to Forbes.
Meanwhile, the investigations by the SEC and U.S. Attorney's Office "are focused on requesting documents," Theranos said in its memo.
