Bad Blood

John Carreyrou

📚 GENRE: History

📃 PAGES: 368

✅ COMPLETED: April 6, 2020

🧐 RATING: ⭐⭐⭐⭐⭐

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Short Summary

After breaking the story that took the company down, Wall Street Journal reporter John Carreyrou details the wild history of Elizabeth Holmes and Theranos, a start-up medical company in Silicon Valley. Carreyrou takes readers through the lies, corruption, and shady behavior that made Holmes one of biggest frauds in history. 

Key Takeaways

1️⃣ Be Ethical — Former Theranos CEO Elizabeth Holmes is one of the more corrupt and shady people Silicon Valley has ever encountered. Her constant lies and faulty medical devices were really dangerous and could have seriously hurt a lot of people. She was unethical and only seemed to care about herself.

2️⃣ Seek The Facts — Safeway and Walgreens were two of the first companies to seriously commit to Theranos medical devices, mostly because they believed the lies Holmes was telling them. The leadership group at both of these companies ignored a lot of red flags and followed Holmes blindly.

3️⃣ Speak Up — Several former Theranos employees finally blew the whistle on Holmes by speaking with The Wall Street Journal. Speaking out against Theranos was actually a bit dangerous, but it was the right thing to do. What Holmes was doing was really scary.

Favorite Quote

"By positioning Theranos as a tech company in the heart of the Valley, Holmes channeled this fake-it-until-you-make-it culture, and she went to extreme lengths to hide the fakery."

Book Notes 📑

Prologue

  • Theranos — A start-up medical company in Silicon Valley with a cutting-edge blood sampling system.
    • Elizabeth Holmes — Founded the company at 22 years old. She first thought of the idea while attending Stanford university.
    • Theranos was going after a huge market. It was targeting pharmaceutical companies. These companies spent a lot of money on clinical trials to test new drugs every year.
      • Theranos wanted to make its blood systems indispensable to these companies, making a huge profit in the process.
  • How the Theranos blood system worked:
    1. Drops of blood go into a white plastic cartridge the size of a credit card.
    2. The cartridge slots into a rectangular box the size of a toaster. The box was called a “reader.”
    3. The reader extracted a data signal from the cartridge and pinged it wirelessly to a server that analyzed the data quickly and pinged a result.
  • 2006 — Holmes delivers a presentation to a large European pharmaceutical company. 
    • The presentation went well and it looks like Theranos would get the business.
      • Two of the company’s readers malfunctioned during the presentation, but Holmes found a way to manipulate the results and lie her way out of it.
  • Theranos 1.0 — The company’s first blood testing machine/reader.
    • This model was very unpredictable. It did not always work.
      • Theranos manipulated the machine’s results to make it look like a reliable device when showing it off to potential investors.
  • The Theranos readers were designed to let patients draw their own blood and ping it to a pharmaceutical company, which would analyze the sample and immediately be able to recommend a reduced or increased drug dosage based on the results.
    • This process would save pharmaceutical companies a ton of money. It would also help patients get quick results on their blood samples.
  • Henry Mosley, the company’s Chief Financial Officer confronted Holmes about all of the lying going on one day. She fired him.

Chapter 1

  • Holmes wanted to be an entrepreneur at a young age.
    • Her parents were very successful. Her father worked in government and her grandfather was a successful entrepreneur himself.
  • Holmes chose to study Chemical Engineering at Stanford University.
    • She ended up dropping out of Stanford after doing a summer internship in Asia.
  • 2004 — Holmes started her company.
    • At first, it was called “Real Time Cures.”
      • Later, she changed the name to Theranos, which is a hybrid of the words “therapy” and “diagnosis.”
    • To start, Holmes received a $1 million donation/investment from a family connection.
      • She was able to collect investments up to $6 million by the end of 2004.
  • Holmes’ Vision — Holmes wanted her blood readers in every home so patients could test their blood regularly and send results to their doctor via a central server. The doctor could then make drug dosage changes quickly.

Chapter 2

  • Ed Ku — An engineer at Theranos hired in 2006. He was tasked with making the Theranos 1.0 reliable.
    • To work properly, the Theranos 1.0 needed a lot of fluids in the cartridge to read the blood.
      • It was extremely difficult to pull this off and get the fluids to work correctly.
  • Each reader was $200 to make. And it could only be used once. The company was testing hundreds of thousands of readers.
  • 2007 — Former employees take the Theranos idea and try to use it with animals.
    • Holmes caught wind of this and filed a lawsuit.
    • Holmes then put severe surveillance on employees. She was paranoid.
  • 2007 — Theranos designs a small robot that makes the Theranos 1.0 operate much better.
    • This was designed by a rival engineering team that was competing with Ed Ku and his team.
      • Homes had pitted these two teams against each other unnecessarily. It was described as “survival of the fittest.”
    • The small robot was referred to as “The Glue Bot.” It was later renamed to “The Edison.”
      • Holmes then fired Ed Ku and his team of engineers.
  • The Edison was a dramatic shift from the micro-fluid contraption in the original Theranos 1.0 device.
    • Holmes was excited about The Edison, but it was far from a perfect or finished product.

Chapter 3

  • Holmes worshipped Steve Jobs and Apple.
    • She often compared herself to Jobs. She liked to dress like him too with all-black outfits and turtlenecks.
  • 2007 — Theranos recruited some of Apple’s employees.
    • Anna Arriola — Former Apple employee hired as the Chief Design Architect at Theranos.
      • She was responsible for the look of The Edison. Holmes wanted a touchscreen interface, just like the iPhone.
      • Holmes also wanted Arriola to make a case for The Edison.
  • People were constantly being fired at Theranos.
    • Announcements were never made. Other employees were getting curious about what was going on.
  • The Engineering and Chemistry departments were not communicating with each other.
    • Overall system tests on The Edison were not being conducted.
  • The Edison was still viewed by most employees as too unreliable to use on people or in trials.
    • Because Holmes was using The Edison in medical trials, everyone outside the firm assumed it was a reliable device, but that was not the case.
  • Holmes was using The Edison in Tennessee in a trial focused on cancer patients. Obviously, this was a high stakes trail.
    • Arriola resigned after confronting Holmes about stopping the Tennessee study to correct The Edison.
  • In addition to manipulating her devices, Holmes always exaggerated the company’s financial numbers at board meetings.
    • She was super shady. 
  • Shanock Ray, Theranos cofounder, departs from the company.
    • After a bunch of drama, Holmes bought all of his shares for super cheap. This made her even more powerful and even more in control of voting at the company.

Chapter 4

  • 2008 — Theranos moved buildings to Palo Alto, California.
    • One of the company’s employees tested pricking his finger and found it difficult to transfer the blood into the reader.
      • Holmes dismissed it and blew it off as not important.
  • January, 2008 — Theranos has its second meeting with Novartis, a big pharmaceutical company located in Switzerland.
    • All three Edison readers produced error messages in front of a room full of Novartis executives.
      • Holmes blamed a minor technical glitch for the issues.
    • This event produced even more skepticism internally with Theranos employees.
  • After the Novartis embarrassment, the Theranos Board of Directors called for a secret meeting. 
    • The board decided to remove Holmes as CEO.
      • Holmes somehow convinced the board to change its mind. She then scapegoated and fired a bunch of people.

Chapter 5

  • Holmes’ childhood neighbor was a man named Richard Fuisz, who was a medical guru. He made a lot of medical inventions and sold them for big money.
    • Fuisz was vindictive in nature. He didn’t like to be slighted in any way. When he heard that Holmes was doing big things at Theranos, he was insulted that she had not consulted him for his medical expertise.
  • One day, Fuisz looked over the Theranos website and thought of an idea that would rival The Edison.
    • He patented the idea.
  • 2008 — Holmes finds out about the patent. She began to pursue suing Fuisz for stealing the idea.
    • All of this broke apart the Holmes and Fuisz family friendship. The two families were pretty tight before this.

Chapter 6

  • Ramesh “Sunny” Balwani — Holmes’s boyfriend. They lived together. He was 20 years older.
    • He was the Executive Vice Chairman at Theranos.
    • Sunny was basically a d-bag. They met in Beijing when Holmes was on a trip with Stanford.
    • Sunny‘s background was in technology. He was an entrepreneur.
      • He made a lot of money off of a start-up business prior to joining Theranos.
    • Sunny‘s expertise was in software and coding. He had worked at Microsoft previously.
  • The Edison had to be exactly 34°C to work properly.
    • Two 11-volt heaters were inside the device to try to get the right temperature at all times.
      • In colder climates, the heaters struggled to maintain the right temperature.
  • Blood samples also had to be diluted properly for The Edison to work right.
    • Sunny always blamed the wireless connection for issues instead of any of the actual reasons.
  • The 15-month Tennessee study failed. The company that was trying out The Edison on cancer patient was not impressed with the device.
  • 2009 — The swine flu in Mexico gives Theranos an opportunity.
    • Sunny goes down to Mexico with a couple of Edison devices to take patients’ blood in an effort to try to predict where the swine flu would spread.
      • The Edison frequently did not work or gave incorrect blood results. Bad.
  • 2009 — Theranos was operating on a loan. It was barely surviving. The company had blown through all of its cash.
  • 2010 — Sunny and Theranos try to use The Edison on swine flu patients in Thailand.
    • There were rumors that Sunny was bribing people to get blood samples.
      • Unlike in Mexico the year prior, the local authorities in Thailand were not allowing Theranos access to patients.
  • Employees were not allowed to say goodbye to colleagues when leaving the company. 
    • Holmes and Sunny prohibited any talking. They were obsessed with controlling the narrative.
  • Friends began to worry about Holmes. She had built a wall around herself.
    • Sunny, a terrible influence, was the only one she allowed in.

Chapter 7

  • 2010 — Holmes and Sunny give a presentation and pitch to Walgreens.
    • Jay “Dr. J” Rosan — Executive with Walgreens. He was very impressed.
    • A few weeks later, Theranos and Walgreens agreed to a pilot project.
      • Target — 30–90 Edison readers in Walgreens stores by 2011.
    • Walgreens also committed to pre-purchasing $50 million worth of Theranos cartridges. The company agreed to invest another $25 million as well.
    • Again, Theranos lied to Walgreens about their testing and lied about having a lab.
    • Two Walgreens executives wanted to have blood taken by The Edison then go to Stanford to get the blood taken again by doctors, then compare the two results for accuracy.
      • Homes made excuses for why Theranos would not do that.
  • September, 2010 — Theranos and Walgreens meet again.
    • At this meeting, Walgreens executives had their blood taken by Theranos. But Theranos kept dodging Walgreens about giving them the results.
      • Theranos clearly had something to hide.
      • Walgreens stayed with it because they were scared that rival companies like CVS would partner with Theranos if they DIDN’T have the partnership in place.
    • Theranos claimed they were supported by Johns Hopkins University.
      • This was false. They were not endorsed by Johns Hopkins university.
  • 2010 — Theranos has a presentation and pitch to Safeway and CEO Steve Burd.
    • Safeway signs a deal with Theranos. Safeway invested $30 million.
  • Dr. J and other Walgreens executives ignored the red flags. They loved Theranos. 

Chapter 8

  • Theranos begins trying to make a new invention called “The MiniLab.”
    • The MinLab was the size of a computer printer and was able to run many tests on just 160 microliters of blood taken from a pricked finger.
    • Theranos claimed it could run up to 40 tests on one sample of blood.
  • Throughout the MiniLab’s development, Holmes and Sunny kept pushing the engineers and chemists hard.
    • Holmes and Sunny seemed to want to run with the prototype. Employees disagreed. You need to test the device numerous times and adjust it before putting it out to the public for use.
      • Many engineers and chemists quit throughout the development process.

Chapter 9

  • February, 2010 — Safeway’s earnings were dropping quickly.
    • CEO Steve Burd explained to analysts that Safeway was going to right the ship with a “wellness play”, referring to the partnership with Theranos.
      • The deal with Theranos was two years in the making by this point.
      • Safeway had already begun redesigning its stores to make space for wellness clinics that would use Theranos devices.
        • Redesign of its stores costed Safeway $350 million.
  • Burd really liked Holmes. He looked past a lot of things and gave her the benefit of the doubt a lot. Theranos routinely made excuses for delays during the partnership.
  • Safeway employees were the first to try The Edison. But rather than the device drawing the blood, physicians did it. The results took two weeks to get back.
    • This is the opposite of how The Edison was supposed to work. The Edison was supposed to take the blood, send it, and get instant results.
      • The results were often incorrect in many cases as well. Safeway employees began to get suspicious of Theranos.
      • Burd ignored all of these red flags.
  • The Theranos lab was a disaster. It mishandled blood, didn’t pay bills, etc. 
    • When one employee brought attention to all of this, she was fired and sued by Theranos.
      • Safeway was not aware of any of this.
  • Safeway was all-in on Theranos and really counted on this partnership to bring in money.
    • Theranos continued to delay the launch. Safeway was starting to get angry.
  • 2013 — Safeway Board of Directors fires Burd.

Chapter 10

  • 2011 — Holmes has a meeting and pitch with military members. She was hoping to bring Theranos devices to the battlefield in Afghanistan.
    • Lieutenant Shoemaker was in charge of regulations for medical devices and immediately questioned Holmes and Theranos.
      • Theranos was essentially trying to bypass a bunch of regulations. Shoemaker wasn’t having it.
      • Shoemaker insisted that Theranos get food and drug administration (FDA) approval before he would sign off on any battlefield experiment.
  • 2012 — FDA sends an inspector to Theranos. Holmes lied to him a bunch.
  • A high-ranking General in the Army really wanted to try a Theranos experiment on his men, thinking that the devices would be a game-changer.
    • The General was mad at Shoemaker for getting in the way.
      • They eventually came to a compromise that allowed a Theranos experiment to happen, but Theranos never did do the experiment. They simply could not get their act together, as usual.

Chapter 11

  • Theranos sues Richard Fuisz for allegedly stealing information on Theranos and using it to create his own product, which he patented.
    • The lawsuit claimed Richard used his son, John, to steal patented information on Theranos.
      • John worked for a law firm that Theranos used to file their original patent.
  • Theranos hires David Boies to go after Fuisz. Boies had reputation as one of the best, most fierce lawyers in the country.
    • Boies goes after John Fuisz, trying to paint him in a bad light and bring up past transgressions to sway the jury, even though there was no evidence that John had stolen Theranos information and gave it to his dad.
      • John played right into his hand. He made a threat while on the stand because he was so mad about the whole accusation.
  • The Fuisz family claimed that Holmes didn’t really invent her devices.
    • They claimed Ian Gibbons was actually responsible. His name was on most of the Theranos patents.
  • Boies accepted stock as payment for his services from Theranos. 
    • This made him more than a legal representative. He was a serious part owner of the company.

Chapter 12

  • Ian Gibbons was one of the key scientists at Theranos.
    • Gibbons was a good dude. He was insistent that the Theranos devices perform correctly and perform like a true blood test should. This rarely happened, which made him frustrated when Holmes didn’t seem to care and went forward with the devices anyway.
  • Gibbons was not a fan of Holmes’s management style and how much she lied to people.
  • 2010 — Gibbons is fired by Holmes after talking junk about her to another employee.
    • He was eventually allowed to come back, but it was in a demoted role.
  • Gibbons was getting distraught because Theranos wasn’t trying to get things right like he was.
  • Fuisz wanted to use Gibbons as a witness against Holmes and Theranos.
  • Gibbons admitted to his wife that Holmes’s contributions to the company’s inventions were very small.
    • This would result in invalid patents.
  • Gibbons did not want to be involved in the case. He hated Theranos at this point, but felt he needed to keep his job.
  • May, 2013 — Gibbons intentionally overdosed.

Chapter 13

  • 2012/2013 — Theranos hires marketing agency Chiat/Day to promote the company. Chiat/Day was a popular marketing agency that had worked with Apple in the past.
    • Redesigning the website, creating an iPhone app, new logo, etc. 
    • This move was made ahead of Theranos’s scheduled release in Safeway and Walgreens stores.
  • The marketing campaign used the “Nanotainer” in many of its images.
    • The Nanotainer was a small vile Theranos developed for patients to collect their blood in.
    • The Nanotainer was also used in a Wall Street Journal ad.
  • Quote: “By positioning Theranos as a tech company in the heart of the Valley, Holmes channeled this fake-it-until-you-make-it culture, and she went to extreme lengths to hide the fakery.”
  • Homes wanted bold and basically false claims and statements on every piece of marketing material.
    • Some in the Chiat/Day organization questioned the validity of the statements.
      • There are laws against false advertising.
  • Chiat/Day asked to see documents to support their claims. Theranos refused to provide them.

Chapter 14

  • September, 2013 — The MiniLab had been in development for 2.5 years and was still a big work in progress. It was not a consistent device.
    • One of the issues with the MiniLab’s development was Holmes’s is unreasonable demands.
      • Ex. She wanted the MiniLab cartridge to be a certain size, no bigger. The problem was that it had to get bigger to include all of the necessary features to make it work correctly. She was obsessed with keeping it small to look like an iPad or iPhone. She idolized Steve Jobs and Apple.
    • Another issue was that the MiniLab could only test one sample at a time.
      • Other successful blood analyzers on the market were big in size and could analyze hundreds of samples at a time.
      • This one sample at a time restriction would result in long wait times at Walgreens. It also directly contradicted Theranos’s claim about delivering the fastest results on the market.
  • There were other big issues with the MiniLab as well. The device clearly needed much more time to get right.
    • But the Theranos-Walgreens partnership was set to go live soon. Theranos had delayed going live in Walgreen stores for three years. There was pressure to launch as soon as possible.
  • Instead of running out the MiniLab, which was very flawed, in Walgreens stores, Holmes and Sunny decided to go back to the older device, The Edison.
    • The Edison also wasn’t ready. Theranos, now in complete scramble mode, bought a different manufacturer’s blood analyzer, tweaked it a bit, and tried to pass it off as The Edison.
      • Even after doing this, nothing Theranos provided was ready for commercial use on patients.

Chapter 15

  • 2013 — At about the same Theranos was scheduled to launch in Walgreens (September), Holmes tried to use the launch to get more funding from investors.
    • September, 2013 — Theranos welcomes two hedge fund investors to the facility.
      • Sunny and Holmes tell them a bunch of lies about their testing.
        • Like their devices could run 70 different tests on a few drops of blood.
        • Like Theranos was in close contact with the FDA.
  • One thing helping Theranos was that they had a strong Board of Directors. This appealed to investors and made the company seem legit.
  • After getting a few more investors to contribute money, Theranos was valued at $9 billion.
    • Because of her ownership stake in the company, this meant Holmes had a net worth of $5 billion.

Chapter 16

  • One of the members of the Theranos Board of Directors had a grandson named Tyler Schultz that got a job at Theranos and began to notice the company’s lies.
    • In the lab, The Edison was failing quality control tests.
      • Theranos ignored this. The company continued to operate and test.
  • The Schultz knew what Theranos was doing was shady. He began to send long email messages to Holmes detailing the issues.
    • After nothing was done, the Schultz resigned.
      • He then brought the issues to his grandpa, but he didn’t believe him. His grandpa chose to believe Holmes and Theranos instead.

Chapter 17

  • Fuisz decided to settle the lawsuit with Theranos after two years. 
    • The Fuisz family was outgunned in court. Theranos just had better lawyers.
  • June, 2014 — Holmes gets a cover story with Fortune Magazine.
    • This cover story vaulted her to instant fame.
  • When pitching Theranos to people, one of Holmes’s big points of focus is that the company’s devices could detect cancer early and prevent people from losing loved ones too soon.
  • Another big pitch point was how Theranos devices did not require needles to draw blood. Instead, patients just had to prick their finger.
    • Many people begin to doubt that you could test blood accurately with that small amount of blood.

Chapter 18

  • By cheating on proficiency tests in the lab, Theranos was breaking the law.
    • Alan Beam, Theranos Lab Director, knew the company was doing illegal things and sent shady emails he received from Sunny and Holmes to his personal email. Beam was planning to use those emails against the company.
      • The company caught him doing this because they monitored everybody’s work email.
      • When Beam resigned, Sunny tried to make him delete those emails. Sunny threatened to sue Beam for breaking confidentiality agreements.
        • If he was sued by Theranos, Beam likely would have gone bankrupt after all the legal fees. He decided to avoid being sued and deleted all 175 emails from his personal Gmail account.
  • December, 2015 — Holmes is again profiled on the cover of The New Yorker.
    • A practicing pathologist named Adam Clapper read the story and was highly skeptical.
    • Fuisz immediately contacted Clapper to discuss why they both thought Theranos was a fraud. They needed proof.
  • The Hippocratic Oath — An oath all physicians must take that states they will “Do No Harm.”
    • Beam told fuse all about how Theranos was breaking the Hippocratic oath.
    • Some of Theranos’s shady business includes:
      • Lied to the CLIA, FDA, and investors
      • Used equipment made by other manufacturers
      • Ethical breaches
      • False thyroid results
      • False potassium results
      • False pregnancy results
      • Inaccurate equipment in general
    • Beam was hesitant to pursue anything because he was scared of Theranos.

Chapter 19

  • Clapper, who Beam had also talked with about Theranos activities, contacted John Carreyrou, an investigative journalist at The Wall Street Journal and the author of this book, about looking into Theranos.
  • The fact that Theranos had no peer reviewed sources backing their claims was a red flag to Carreyrou.
    • Also, the fact that Holmes had very little medical or chemical training made him question whether she actually came up with the idea for her devices.
  • February, 2015 — After trying to contact Beam several times, Carreyrou finally got a hold of him.
    • Beam requested anonymity, then spilled the beans on Theranos.
  • There were several significant ethical reasons why what Theranos was doing was so bad:
      1. A false positive result could lead to a patient getting an unnecessary procedure or surgery.
      2. A false negative result could lead to a patient going undiagnosed and dying.
  • The Theranos lab was divided into two sections:
      1. One half of it was for commercial devices from other manufacturers that Theranos tweaked and acted as if was their own.
      2. The other half had Theranos Edison devices, which were faulty and sucked in general. 
      • Inspectors were only shown the first section of the lab when they visited.
  • Theranos was diluting blood samples and running on them on the commercial devices they stole from other manufacturers.
    • The diluting of blood samples altered the blood chemistry. This is really immoral.
  • Essentially, Theranos overpromised on their devices and then cut corners when they couldn’t deliver on the vision.
    • Doing this with medical equipment that people rely on to make big health decisions is so bad.
  • Tyler Schultz reached out to Carreyrou on a burner phone.
    • He asked for anonymity because he also was intimidated by Theranos. But then he spilled the beans.
      • Schultz had smuggled out printed emails before resigning. These very really important. 
  • Carreyrou stopped in Phoenix, Arizona to meet with one doctor and her patient, who had been sent to the emergency room after a Theranos test revealed a ridiculously high result in calcium and other key enzymes.
    • The result was a false alarm and the patient was fine. Just to be sure, the patient took two MRIs in the following week.
      • This example showed the emotions and financial toll an inaccurate test could lead to.
  • Carreyrou found other similar examples in the Phoenix area, where Theranos had clinics located inside Walgreens stores.
    • Carreyrou was beginning to piece everything together with several credible sources and doctors.

Chapter 20

  • Theranos basically ambushed Tyler Schultz, saying they knew he was talking to carry real.
    • They threatened to sue him if he didn’t sign some documents.
    • They stalked him and put surveillance people on him.

Chapter 21

  • Carreyrou meets with Theranos representatives, including the company’s lawyer, David Boies.
    • The meeting ends up being pretty useless. The representatives dodge most of Carreyrou’s questions, citing “trade secrets” for their poor cooperation.
  • Meanwhile, Theranos located another one of Carreyrou’s witnesses/sources and threatened to sue her.
    • They also found out about Alan Beam’s cooperation with Carreyrou and threatened to sue him as well.
  • Theranos basically put the full court press on all of Carreyrou’s sources. The company was doing everything possible to prevent a story from coming out.

Chapter 22

  • In an effort to keep fooling people who inspected Theranos devices, Sunny had one of the software engineers at the company create an application for the devices that would prevent error messages from displaying when the device had an error. 
  • Homes invited Vice President Joe Biden to the Theranos lab to show off the facility.
    • She created an entirely new lab to show him. The company’s actual terrible lab was not shown to Biden. She was trying to fool him too.

Chapter 23

  • Holmes managed to get media tycoon Rupert Murdoch to invest $125 million in Theranos. This investment made Murdock the company’s biggest single investor.
    • Interestingly, Murdoch owned The Wall Street Journal. Holmes tried to leverage Murdoch to stop Carreyrou (a Wall Street Journal writer) from publishing the story. 
  • October 16, 2015 — Carreyrou’s story about Theranos is published. The story was huge. It stunned a lot of people.
    • Investigations into Theranos were immediately launched.
    • The FDA shut down Theranos devices, deeming them unfit for use.
    • Medicare started an investigation
    • Walgreens and Safeway immediately retracted their partnerships with Theranos.

Chapter 24

  • Investigation by the Centers for Medicare and Medicaid Services (CMS) was also launched following the story’s publication. 
    • CMS investigators took a deep look at the Theranos lab. Theranos had previously duped CMS investigators when they visited for a tour of the lab earlier. 
      • Now, the story was out and the investigators knew that shady things were happening in the lab.
  • January, 2016 — CMS investigators found a ton of issues at the lab, as expected.
    • This was big. CMS is a federal entity and they determined that Theranos was putting patients in danger.
      • Theranos could not wiggle out of it now. They were screwed.
  • Carreyrou called a federal source of his and obtained a full CMS report. Theranos was trying to prevent this from happening.
    • The report showed that Theranos’s Edison devices only ran 12 tests. Theranos claimed that the Edison could run 250 tests.
      • The majority of tests that The Edison was supposed to be able to run were actually run on the altered devices from other manufacturers.
    • The report also showed that Theranos devices failed quality control tests a third of the time.
    • The report also showed that Theranos devices were highly inaccurate in general. 
    • Carreyrou posted the report in a follow up story in The Wall Street Journal.
  • CMS later sent a letter to Holmes, threatening to ban her from blood analysis for two years. 
    • Carreyrou obtained the letter and posted it in another follow up story.
  • Despite being buried, Holmes chose not to take full responsibility and instead blamed most of everything on Sunny. She fired him and made him the scapegoat.
  • July, 2016 — CMS banned Holmes and Theranos from the lab business entirely.
    • A criminal investigation into Theranos was also launched in July 2016.
    • The Securities and Exchange Commission (SEC) also launched an investigation.
      • Investors were beginning to sue Holmes for securities fraud and for misleading them into investing in the company.
  • August, 2016 — Holmes reveals the MiniLab to the public. Everybody saw right through it.
  • Walgreens later sued Theranos. Patients also began to sue Theranos.
  • Holmes eventually shut down all Theranos labs.

Epilogue

  • March, 2018 — The SEC charges Holmes with securities fraud.
  • At the time this book was released, Holmes and Sunny were still under criminal investigation. Holmes was headed for trial in August, 2020.  
  • January 2022 — After her trial was moved back due to COVID, Holmes was convicted on four of 11 counts of conspiracy and wire fraud.
    • The basis for the charges was that Holmes lied about the capabilities and accuracy of Theranos blood analyzers.
    • September, 2022 — Holmes is scheduled for sentencing.