From Self-Made Billions to Zero, Is Elizabeth Holmes Really Broke?

Founder of Theranos and number 1 on Forbes’s list of America’s richest self-made women, Elizabeth Holmes’ estimated net worth has now been valued at 0 dollars, a humongous drop from her previous $4.5 Billion.

Forbes reported that their estimate of her wealth is based entirely on her 50% stake in her company, Theranos.

Forbes states that Holmes established Theranos, a blood testing company in 2003 with the intention of reinventing diagnostic tests, focusing on greater access to healthcare for all.

On their website, Theranos claims that it was created with the goal of making it possible to conduct lab tests with just a few drops of blood, allowing patients to use a simple finger prick rather than a long syringe of blood.

Theranos, whose shares are not traded on any stock market, was valued at almost $9 Billion based on the prices of private investors purchases.

But since then, new information has indicated that Theranos’ annual revenues are less than $100 million, and has led FORBES to come up with a new, lower estimate of Theranos’ value.

Forbes spoke to a dozen venture capitalists, analysts and industry experts and concluded that a more realistic value for Theranos is $800 million, rather than $9 billion.

That gives the company credit for its intellectual property and the $724 million that it has raised, according to VC Experts, a venture capital research firm.

The problem with such a low valuation is that Holmes’ stake is nothing, since she owns common stock which gets last preference in case of a liquidation.

Meanwhile investors own preferred equity, called participating preferred shares . So, in the event of a liquidation of the company, participating preferred investors would get their money back and more before Holmes gets a cent.

Claims and Counter-Claims

Theranos has been hit with allegations that its tests are inaccurate and is being investigated by multiple federal agencies.

In April, the company was under investigation by the US Securities and Exchange Commission and the US Attorney’s Office for the Northern District of California. It was been probed by the Food and Drug Administration, the Centers for Medicare and Medicaid Services and two state health departments, reports TIME.

However, the Theranos’ website says a different story. Proudly claiming that their test is FDA approved.

Theranos Hits Back

TIME reported that Theranos fired back in a statement, saying that Forbes’ estimate was skewed because it did not have essential data.

Theranos spokeswoman Brooke Buchanan told TIME,

As a privately held company, we declined to share confidential information with Forbes. As a result, the article was based exclusively on speculation and press reports.

Not Another Rags to Riches Tale

Holmes’ boasts of a prestigious family legacy, with equally enterprising ancestors. One of her great-great grandfathers was the founder of Fleischmann’s Yeast company while another one was a famous surgeon and war veteran.

Holmes showed an affinity for science and went on to Stanford, but eventually dropped out.

With her prestigious heritage, we’re certain that Elizabeth’s pockets won’t be too empty if these allegations are indeed true.