Beleaguered blood diagnostics startup Theranos has reached a settlement with hedge fund management firm Partner Fund Management (PFM).
PFM invested $96.1 million in Theranos Series C-2 round in 2014, helping topop the company up to a $9 billion valuation. However, the hedge fund opened a lawsuit against Theranos last yearsaying the company had tricked it into investing through a series of lies, material misstatements, and omissions. PFM further accused Theranos in a separate lawsuit of engaging in securities fraud and other violations by fraudulently inducing PFM to invest and maintain its investment in the company.
Theranos was under regulatory scrutiny at the time. However, the company insisted the PFM lawsuit was without merit and that it would fight it vigorously.
Terms of the settlement are confidential, but PFM had sought to recoup itsinvestment in the case and was also asking for damages. Whatever the terms were, according to a Theranos company statement, PFM will dismiss all claims against Theranos and its officers and directors.
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, said Theranos General Counsel David Taylor.
Theranos still faces numerous other lawsuits including from former customers and one from previous partner Walgreens, which is seeking $140 million from the company for breach of contract. Earlier this year, thecompany began offeringElizabeth Holmes sharesto other investors if they would promise not to sue the company.
Holmes was previously barred from operating in her own labs and Theranos was forced to shut down its California lab. The company has since shut down its remaining labs, laid off 41 percent of its workforce and refocused on a tabletop miniLab instead of its previous one-drop blood testing technology.
Despite these other hurdles, including the many cases Theranos may still have to contend with in court, the company says the settlement allows it to now go forward with plans to market its new miniLab product.
But perhaps this and some other recent wins are enough to help the company turn things around. In April, Theranos was cleared by the Centers for Medicare & Medicaid Services (CMS) and also reached aresolution with the Arizona Attorney Generals office, which also previously filed a claim against the company.