Report: Theranos Offering Investors Company Shares to Avoid Lawsuits

Theranos, the discredited blood testing biotech company, reportedly offered extra shares to investors in an attempt to convince them not to sue the company.

The Wall Street Journal reports that biotech company Theranos has begun offering extra shares to investors who may consider suing the company after “federal health regulators last year investigated and revoked the testing license from Theranos’s main lab and banned Ms. Holmes from the lab industry for at least two years.”

The sale of these shares has not yet been announced publicly, but the Wall Street Journal reports that anonymous “people familiar with the matter” have stated that the majority of investors have agreed to the deal. The shares being sold reportedly belong to Theranos founder and CEO Elizabeth Holmes.

Holmes was recently barred by federal regulators from running a medical lab for two years due to the fabrication of Theranos technology performance tests to get FDA approval for their Edison test machines. Holmes’ potential sale of her stock would mean she would no longer be the majority shareholder of Theranos. Recent investors to Theranos who paid out approximately $600 million could reportedly receive as many as two extra shares for each share they purchased, according to the Wall Street Journal.

Following the scandal surrounding Theranos technology, Forbes estimated that the company’s valuation had dropped from around $9 billion to $800 million.

Theranos has already been sued by one of their investors, a San Francisco-based hedge fund called Partner Fund Management. The fund had invested as much as $100 million into Theranos and is seeking to recover their investment along with damages, citing the company’s “series of lies, material misstatements, and omissions.”