Blood-testing startup Theranos has reportedly laid off the bulk of its remaining employees in a bid to avoid bankruptcy. CEO Elizabeth Holmes announced the layoffs to staff at an all-hands meeting at the company’s Newark, Calif. offices.
The layoffs claimed at least 80 percent of the company’s remaining workforce. Out of 125 staff members, less than two dozen remain. The company had nearly 800 employees in late 2016.
The downward spiral started after the company was accused of lying about the effectiveness of its blood testing machines. Theranos claimed to have developed a revolutionary technology capable of diagnosing diseases using tiny pinpricks of blood. Those claims were later found to be largely inaccurate and overstated.
Round after round of layoffs have followed the company’s revelations that its blood testing innovations were not as they appeared. The company has seen its value plummet and funds dwindle. The company was once valued at $9 billion.
In March, the Securities and Exchange Commission charged Holmes with fraud. The SEC claimed that the company raised $700 million in investments using an “elaborate, years-long fraud in which they exaggerated or made false statements about the company’s technology, business, and financial performance.”
Last month, Holmes paid a $500,000 penalty to settle fraud charges with the SEC. The settlement also required her to return 18.9 million shares attained during the period when fraud was occurring and relinquish her voting control of Theranos. Holmes must also avoid serving as an officer or director of a public company for 10 years. Theranos neither admitted nor denied any wrongdoing in that settlement.
The company is now trying to stave off bankruptcy. If Theranos ends up being sold or liquidated, more than $750 million must be returned to allegedly defrauded investors and other shareholders before Holmes can profit from the sale. Holmes is also still under criminal investigation by the U.S. attorney’s office in San Francisco.
Last December, Theranos was able to secure $100 million in debt financing from Fortress Investment Group. However, the company will only be able to access the full amount if it meets certain product and operational milestones. It has not yet been able to meet those conditions.