Theranos has settled its lawsuits with a
hedge fund that invested $US96.1 million in the company.
Partner Fund Management originally sued Theranos in October 2016, alleging the company had “engaged in securities fraud and other violations.”
And in April, court filings reported by The Wall Street Journal alleged that Theranos used a shell company to purchase commercially available lab equipment and faked blood tests in presentations with prospective investors and business partners.
The settlement terms were confidential, Theranos said in a release.
“Theranos is pleased to have resolved both lawsuits with PFM,” Theranos’ general counsel David Taylor said in a news release. “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.”
Before October 2016, Theranos’s business model was based around the idea that it ran blood tests using proprietary technology that requires only a small amount of blood.
This is the third major settlement that Theranos has arrived at in recent weeks.
- On April 17, Theranos said that it had settled up with Centres for Medicare and Medicaid Services, the government agency responsible for regulating blood-testing labs. As part of the settlement, Theranos has to pay $US30,000, and the company won’t be able to own or operate a clinical lab within the next two years. In return, the CMS is no longer revoking Theranos’s CLIA certification, which is needed to run a blood-testing lab.
- On April 18, Theranos agreed to pay Arizona $US4.65 million to refund anyone who paid to take one of Theranos’s blood tests, and will also pay $US225,000 to cover civil penalties and attorneys’ fees.
Theranos has been under fire since October 2015 after the Journal published an investigation that questioned the accuracy of its blood test. One of the company’s locations was shut down, and its founder — Elizabeth Holmes — was barred for two years from running a clinical lab.
The company faces lawsuits from investors, patients, and its once partner Walgreens, which ended its relationship with Theranos in June 2016 and is accusing Theranos of breaching its contract. Theranos has said it will “respond vigorously to Walgreens’ unfounded allegations.”
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