Theranos has secured $100 million in debt financing. Yes, someone gave the blood testing company known for handing out questionable test results money.
First reported by Business Insider, the company reportedly told investors it had secured the money from Fortress Investment Group, a New York-based private equity firm that was acquired by Softbank earlier this year.
Of course, this is debt financing, not equity and Theranos will surely need it as it has been bleeding money, laying off more than half its workforce this year and trying to come up with ways to keep it afloat.
Theranos was a once Silicon Valley darling valued at over $9 billion for its promise to detect more than 200 diseases on a single drop of blood. But the company fell from grace after it was discovered it was giving patients faulty test results. Theranos soon faced several lawsuits and came under federal investigation. It’s co-founder and CEO Elizabeth Holmes was barred from entering her own labs, the labs soon shut down and the company had to pivot — hard — to a disease detecting box contraption instead.
The company has not raised funding since the mess began in 2015. But, last night Holmes reportedly told investors she believed the company would have “sufficient liquidity through 2018” thanks to the new cash infusion.
Of course, the funding is subject to hitting certain product and operational milestones and gives Fortress four percent of the company’s equity, according to the BI report.
Holmes letter to investors also outlined several changes she’s made in the last year to get the company back on track, including quality control and regulatory compliance. The company settled several lawsuits this year and with the Centers for Medicare and Medicaid Services (CMS), the government agency which first scrutinized Theranos’ testing facilities, adding hope that the company may be able to operate its labs again in the future.
Holmes also added in the letter she hopes Theranos will be able to launch its Zika test in the next 18-24 months; something the company has been touting since coming up with the box strategy in 2016.
Holmes also mentioned the possibility of more routine lab testing and “tailored personal sensing systems,” which would be based on Theranos’ many patents.
These moves all sound promising. The real question is if the company can undo the damage it has incurred in the public eye. Will anyone trust that this company is truly on track? At least Fortess seems to think so — enough to lend them financing through the next year.
The news hits on a major holiday weekend and thus it may take some time to get more details from the company, if it is willing. We’ve reached out to Theranos for more and will update this story if and when we hear back.