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Theranos' Founder Owes Her Company $25 Million

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Theranos' Founder Owes Her Company $25 Million

Elizabeth Holmes, the founder of Theranos, owes her own company $25 million. This may be an issue since her net worth as of June of 2016 plummeted from $5 billion to zero.

The Wall Street Journal reported Wednesday Holmes owes her failed blood testing company millions of dollars. The debt comes from an agreement between herself and her company in which she was allowed to exercise options to buy more stock of the company without having to pay for the investment upfront.

Theranos dominated headlines over the past few years, as its technologies were said to be able to detect hundreds of diseases and conditions from just a few drops of blood from a finger instead of tubes of blood from a person's veins. But after a series of damaging controversies and FDA investigations, the company closed its testing lab at the end of 2016 and fired hundreds of workers.

The Saga Continues

The debt was disclosed to a small group of Theranos' investors. The company is reportedly looking to exchange Holmes' personal holdings for a promise not to sue the company or its executive team.

Nell Minow, vice chair of the corporate governance consulting firm ValueEdge Advisors told MarketWatch that the deal between Theranos and its founder "subverts the entire premise of an option grant." The deal also implies that any downside to Theranos' value Holmes held in her own hands "is someone else's risk."

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Image Credit: "Nuclear nonproliferation discussion, Elizabeth Holmes, CEO and founder of Theranos," By Glenn Fawcett (https://www.dvidshub.net/image/911248) [Public domain], via Wikimedia Commons

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