Downfall of a unicorn: How Theranos fell apart

Last week, Theranos CEO and founder Elizabeth Holmes penned an open letter announcing the blood-testing startup would close its clinical labs and collection sites, laying off hundreds of employees in the process. Moving forward, Holmes wrote, Theranos would instead focus on development of its new testing machine, a device called the miniLab.

Even though Theranos’ fortunes have steadily ebbed over the past year, Holmes’ decision to exit the lab business was still a marked retreat from her original goal to revolutionize the blood-testing business. The move has many investors questioning whether the company can recover or if it will instead get lost in the annals of history. 

Theranos, which Holmes founded in 2003 after dropping out of Stanford University, had been on a meteoric rise, propelled by the promise of running hundreds of tests on just a finger-prick of blood.

Buoyed by a 2013 partnership with Walgreens, Theranos quickly captured the attention of the media and the healthcare industry over the next two years, with Holmes landing laudatory front-page coverage on the likes of Fortune, The New Yorker, Wired and Forbes.

A June 2014 cover article for Fortune, entitled "This CEO is out for blood," touted the potential for Holmes and Theranos to change healthcare and revealed the company had been valued as high as $9 billion. Several months later, Holmes made the Forbes Billionaire list, checking in with an estimated net worth of $4.5 billion.

But the Steve Jobs-esque narrative began to unravel about a year ago, after The Wall Street Journal published the first of many damning articles that questioned the accuracy of Theranos’ technology and Holmes’ promises.

Here is an abridged timeline of how one of the hottest and most valuable startups found itself abandoning the very business it had hoped to revolutionize:

October 15 and 16, 2015 — The Wall Street Journal publishes two front-page articles alleging Theranos used its proprietary testing technology for only a handful of the blood tests offered by the company, raising doubts over accuracy. Theranos immediately pushes back, calling the story "factually and scientifically erroneous and grounded in baseless assertions." 

October 21, 2015 — Holmes goes on stage at a WSJ Live event, defending Theranos and accusing The Wall Street Journal of tabloid journalism. 

October 23, 2015 — The Wall Street Journal reports Walgreens officials have begun to question the accuracy of Theranos' blood-testing technology, and have placed further expansion of the partnership — a deal crucial to the success of Theranos — on hold. 

October 26, 2015 — The Food and Drug Administration posts a report from inspections to Theranos facilities in August and September, flagging the company's so-called nanotainers as "uncleared medical devices." The nanotainers were a key part of Theranos' touted ability to run blood tests on just a finger-prick of blood. 

November 10, 2015 — A partnership between Theranos and Safeway Inc., never publicly announced, reportedly collapses after Theranos allegedly missed several deadlines for rollout, per yet another report from The Wall Street Journal. 

November 23, 2015 — Sonora Quest Laboratories, a rival testing lab, seizes the opportunity opened by Theranos' split with Safeway, inking a collaboration with Safeway to open testing sites inside Safeway stores. 

December 17, 2015  — Roger Parloff, author of the glowing 2014 Forbes cover story profiling Holmes, writes a mea culpa, "How Theranos misled me." 

January 25, 2016 — The Centers for Medicare and Medicaid Services (CMS) sends Theranos a letter detailing findings of a November inspection of Theranos' Newark, California-based lab, outlining five major deficiencies, including one which CMS judged posed "immediate jeopardy to patient health and safety." 

March 18, 2016 — Following responses from Theranos to the January letter, CMS outlines proposed sanctions the company could face, one of which would ban Holmes from the blood-testing business for at least two years. 

March 28, 2016 — A study published in The Journal of Clinical Investigation finds the blood-testing methods used by Theranos are 1.6 times more likely to return abnormal results than standard venipuncture tests for LabCorp and Quest Diagnostics. 

May 11, 2016 — Theranos president and longtime Holmes ally Sunny Balwani retires from the company. At the same time, Theranos adds three new directors, including a former Amgen executive, to its board. A month earlier, Theranos had expanded its scientific advisory board after facing criticism over the lack of scientific expertise at senior levels of the company. 

May 18, 2016 — The Wall Street Journal reports Theranos has voided or otherwise revised 2 years of blood test results from its proprietary Edison device, issuing "tens of thousands" of corrected reports to physicians and patients. 

June 1, 2016 — Forbes revises its estimate of Theranos' value to $800 million from $9 billion. Holmes' net worth is also revised down to zero. 

June 12, 2016 — Walgreens kills its partnership with Theranos, saying it will close all 40 Theranos testing sites in its Arizona drugstores. Theranos expresses its "disappointment." 

July 7, 2016 — Theranos announces CMS has decided to enforce all of its proposed sanctions, including banning Holmes from owning and operating a laboratory for at least two years and stripping the Newark, CA lab of its CLIA certification. 

July 21, 2016 — Theranos hires new compliance and quality executives, and stands up a new Compliance and Quality Committee, continuing its efforts to remake the company's image and compliance focus. 

August 1, 2016 — Holmes presents in front of an audience of industry experts at a meeting of the American Association for Clinical Chemistry. Contrary to expectations, Holmes unveils a new product rather than offer details into the science behind Theranos' existing testing technology. Widely panned at the time, in retrospect the presentation helps set Theranos up for its eventual attempt to pivot away from the clinical lab business. 

August 26, 2016 — Theranos says it will appeal the CMS sanctions in a bid to avoid the 2-year ban for Holmes and losing its CLIA certification. 

October 5, 2016 — Theranos closes its California and Arizona labs, along with its testing sites, effectively exiting the clinical laboratory business. Holmes says the focus of the company will be further developing its miniLab device. 

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