Report: Theranos CEO Elizabeth Holmes Now Has Net Worth of Zero

In an astounding fall from corporate and political grace, the net worth of celebrated tech “unicorn” Theranos CEO Elizabeth Holmes has fallen from $4.5 billion to zero.

The calculation was made by Forbes, which put Holmes at the top of its “Richest Self-Made Women in America” list last year. That was, of course, before the Wall Street Journal’s investigative reporting revealed huge problems at her company Theranos, not least of which was the fact that its flagship product didn’t actually work.

“Our estimate of Holmes’ wealth is based entirely on her 50% stake in Theranos, the blood-testing company she founded in 2003 with plans of revolutionizing the diagnostic test market. Theranos shares are not traded on any stock market; private investors purchased stakes in 2014 at a price that implied a $9 billion valuation for the company,” Forbes reports.

That valuation came down quite a bit after Theranos was “hit with allegations that its tests are inaccurate and is being investigated by an alphabet soup of federal agencies,” and it was revealed that the superheated startup’s annual revenues are now less than $100 million.

That makes Theranos worth less than 10 percent of its earlier valuation, and even that assessment might be generous.

“At such a low valuation, Holmes’ stake is essentially worth nothing. Theranos investors own preferred shares, which means they get paid back before Holmes, who owns common stock,” Forbes explains.

It’s uncertain whether Theranos will survive its current travails, but if it gets liquidated, it’s quite possible that nothing would be left for Holmes after investors were paid off. Forbes was not optimistic that Holmes would be able to attract more investors to relaunch the company, which recently had to void two years’ worth of tests performed with its unique Edison technology, supposedly able to run a full panel of tests with just a few drops of blood. Holmes herself may end up banned from the medical testing industry for years to come.

Another blow against Theranos was delivered last week, in the form of two class-action consumer fraud lawsuits from patients who say they were subjected to “unnecessary or potentially harmful treatments,” or prevented from receiving necessary treatments, by the company’s faulty test results.

Theranos has vowed to battle these suits in court, and while Holmes refused to discuss the re-evaluation of her net worth with Forbes, a company spokesman told CNN Money the Forbes piece was “based exclusively on speculation and press reports.”

ZeroHedge puts the tragedy of Theranos in blunt terms, accusing investors and business partners of being totally hypnotized by Holmes, who is compared to the heroine of an Aaron Sorkin drama. She was an incredibly young, attractive, fast-talking entrepreneur who knew the tech world desperately wanted to believe her Cinderella story. Media and political heavyweights lost their damn minds over the narrative of a self-made woman shattering glass ceilings and revolutionizing the medical industry.

Holmes shrewdly surfed those political waves, surrounding herself with a phalanx of celebrity board members who didn’t know much about medicine, but had centuries of Beltway experience between them. She also knew everyone from investors to reporters wanted to get in on the ground floor of the next Apple; she even made a point of dressing like Steve Jobs.

“With a story this good and a heroine this likeable, would you want to be the Grinch raising mundane questions about whether the product actually works?” ZeroHedge asks. Evidently no one did, not even business partners like Walgreens, whose old executives scarcely paused to ask if Theranos technology worked before letting Holmes whisk them off across the corporate dance floor. They have different executives now.

The cold, hard truth is that without Holmes and her blockbuster political fantasy as marketing assets, Theranos might little to offer that isn’t already provided by established heavyweights in the medical testing industry. Forbes wonders if the company can find a big enough market niche to survive the blow to its reputation.

“Holmes will be making a presentation on Theranos’ data at the annual meeting of the AACC, formerly the American Association for Clinical Chemistry, in August. Perhaps that will shed some light on what data Theranos has to support the use of its technology. In the meantime, given the difficulties at Theranos, Holmes falls off the list of America’s Richest Self-Made Women and off all of Forbes’ other wealth lists,” the magazine concludes.

There is still a fascinating untold story waiting to be discovered, if Holmes and her executives ever decide to tell it: what did they think was going to happen? Were they gambling that their engineers would somehow find a way to make the Edison system work while they played for time? How could anyone take a such a gamble with the lives of patients on the line?