On Monday, Theranos announced the settlement of two lawsuits that were in response to an alleged “series of lies.” Both suits had been brought by Partner Fund Management LP, a hedge fund that invested $96.1 million in the blood-testing company.
In the suits, both filed in the Delaware Court of Chancery, PFM claimed that Theranos mislead investors about the abilities of its blood-testing technology, the Wall Street Journal reports. One suit sought to recoup PFM’s entire investment, plus damages. The other sought to prevent Theranos from making deals with late-stage investors. Those deals, which can now proceed, will provide additional stock to investors who agree not to sue Theranos.
For its cases, PFM collected depositions from Theranos employees and board members, which were unsealed and reported by the Wall Street Journal last month. The depositions revealed allegations that Theranos used a shell company to buy commercially available blood-testing equipment to run tests instead of relying on its own equipment. The depositions also included allegations that Theranos faked blood-test demonstrations to win over potential investors.
Theranos and PFM would not disclose the terms of their announced settlement.
Theranos General Counsel David Taylor said the following in a news release:
Theranos is pleased to have resolved both lawsuits with PFM. Although we are confident that we would have prevailed at trial, resolution of these two cases allows our tender offer to go forward and enables us to return our focus where it belongs, which is on executing our business plans and delivering value for our shareholders.
The settlement follows two others for Theranos: one with the state of Arizona in which Theranos agreed to reimburse all its former customers in the state $4.65 million and pay fines; the other with federal regulators in which Theranos agreed not to run or operate clinical labs for at least two years, plus pay $30,000 in penalties.
Last year, federal regulators levied sanctions that would shut down the company’s labs and ban its CEO and founder, Elizabeth Holmes, from running clinical labs for two years. The sanctions followed problems with the company’s technology and protocols that put patients’ health and safety in “immediate jeopardy,” the regulators reported. Theranos attempted to appeal the sanctions before settling.
Despite the string of settlements, Theranos still faces several other legal battles, including those from other investors, its former partner, Walgreens, and former customers.
The company, which has pivoted from its once highly valued blood-testing business to medical device development, is said to be strapped for cash. It’s said to only have $150 million in cash on hand, which does not account for debts and any payouts from the settlement announced today.