Theranos settles with investor on claims it lied about business


After months of speculation as to the future of Theranos, the besieged blood testing startup continues to offset its many legal disputes.

Its latest settlement is with Partner Fund Management (PFM) – a San Francisco-based hedge fund that invested $96.1 million in Theranos in a series C-2 round in 2014.

The company had filed a lawsuit against Theranos in October where it claimed it had been misled into investing “through a series of lies, material misstatements, and omissions.”

It was later revealed by the Wall Street Journal that court filings claimed Theranos had a shell company called ‘Protegic Procurement’ which would purchase commercially-available testing machines and use them to carry out most of its analyses.

According to a Theranos blog post, “The parties’ settlement, the terms of which are confidential, will result in the dismissal of all claims by PFM against Theranos and its officers and directors.”

“Theranos is pleased to have resolved both lawsuits with PFM. Although we are confident that we would have prevailed at trial, resolution of these two cases allows our tender offer to go forward and enables us to return our focus where it belongs, which is on executing our business plans and delivering value for our shareholders,” said Theranos General Counsel David Taylor.

Prior to its settlement with PFM, Theranos had also come to terms with both the Arizona Attorney General and the Centers for Medicare and Medicaid Services (CMS).

The former agreement was made under the terms that Theranos would reimburse all amounts paid by Arizona customers for its service from 2013 to 2016 ($4.65 million) as well as not owning or operating a CLIA-licensed lab in Arizona for the next two years.

Its agreement with the CMS reversed the repeal of its CLIA operating certificates and reduced the agency’s imposed penalties to $30,000.

Theranos is now looking to press on with its tender offer to investors where CEO Elizabeth Banks is offering some of her own stake in the company as additional shares – a proposal PFM had tried to block.

According to Theranos, “holders of approximately 99% of the shares subject to the tender have committed to participate.”

The company still has a major lawsuit to settle with its previous partner Walgreens – a dispute that is seeking $140 million in damages due to a breach of contract.

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Marco Ricci

2 May, 2017