Theranos is in hot water with allegations of inadequate testing leading to faulty and inaccurate results. The diagnostic firm is currently under investigation by a multitude of federal agencies and has taken a hit from these controversies, especially financially. Last year, Forbes listed Elizabeth Holmes as the wealthiest self-made woman in America, valuing her net worth at $4.5 billion. This year, things are looking a lot different.

Forbes revisited their calculations, and they now estimate Holmes’s net worth at zero.

Their valuation is based on the 50 percent stake she owns in Theranos. In 2014, the company was valued at $9 billion, and private investors purchased stock based on that billion dollar number. However, Forbes spoke with multiple experts and venture capitalists who say Theranos is worth much less than previously thought, sitting at around $800 million. Since their yearly revenues are now showing to be below $100 million, the latter number makes a lot more sense.

Forbes breaks it down like this: Theranos raised $724 million and owns credit for their intellectual property. Naturally, financial backers are the first to get paid from any revenue or resources available. What’s left over then goes to private investors because they own preferred stock, while Holmes owns common shares. These investors own equity that is referred to as “participating preferred shares,” which means that in case of liquidation they would be paid handsomely. While Theranos has made no plans to liquidate (at least publicly), doing so would put Holmes at the very bottom of the pay-day food chain. That means in a worst case scenario, Holmes could walk away from Theranos with literal pennies.

Forbes says that Theranos’s inability to be forthcoming with their testing and financial data is the main reason they lowered the valuation of the company itself.

But this doesn’t mean Holmes’s legacy will end up a footnote on the story of female medical entrepreneurs. There is still time for Theranos to turn things around if they are willing to be more conspicuous and thorough with their business practices.


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