Finalist in the AoM 2020 Dark Side Case Competition, Critical Management Studies division of the Academy of Management 2020

Elizabeth Holmes and the Rise and Fall of Theranos Inc.

Case Code: LDEN169
Case Length: 9 Pages
Period: 2005-2020
Pub Date: 2021
Teaching Note: Available
Price: Rs.300
Organization : Theranos Inc.
Industry : Healthcare and Services
Countries : United States
Themes: Entrepreneurship, Business Ethics, Leadership & Values, Ethics in Marketing
Global Economic Impact of Coronavirus – Assessment and Mitigation (B)
Abstract Case Intro 1 Case Intro 2 Excerpts


The Dark Truths about Theranos

Holmes and Balwani raised US$ 700 million between 2013 and 2015 from investors on the promise of coming out with a revolutionary blood testing technology. That technology did not materialize. They generated funds between 2013 to 2015 through an “elaborate, years-long series of lies and exaggerations about the company’s business, finances, and technology”. Holmes had promised her machine could do 200 tests. In reality, it could perform just a handful. For the vast majority of its tests, Theranos used equipment already available in the market. But Holmes seemed to have lied to the investors about the fact..

The Downfall of Theranos

When the damning WSJ report was published, Holmes went into damage control mode and claimed that all the accusations against Theranos were false, and that her company had supplied over 1,000 pages of documentation that disproved the allegations. “This is what happens when you work to change things. First, they think you’re crazy, then they fight you, and then all of a sudden you change the world,” she quipped..

The Verdict and The Way Ahead

According to the verdict of Edward J. Davila, judge of the US District Court for the Northern District of California, on June 30, 2019, Holmes and Balwani would officially go on trial for the charges against them in San Jose from August 2020. The trial was based on the documents and complaints from the defense presented to the court. Holmes and Balwani would face trial for 20 years in prison and a million dollars in fine starting the next year. Both Balwani and Holmes, had challenged the trial individually..

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