Remember the fraud that is failed unicorn Theranos and its similarly fraudulent founder – Clinton Global Initiative guest – Elizabeth Holmes? Perhaps not so much after last month’s announcement by Holmes that her startup would be shutting down its core operations and firing 40% of its workers. However, while we understand her willingness to keep a low profile, the sins of her past are starting to catch up, and as the WSJ reported moments ago, drugstore giant Walgreen, sued Theranos – its former lab-testing partner – in federal court in Delaware, alleging it breached a contract between the two companies.
Walgreens is seeking $140 million in damages, the court records show. That amount represents what it invested in Theranos. The civil suit was filed under seal in a Delaware federal court because Walgreens was concerned Theranos might assert that the action violated a confidentiality agreement between the firms.
In the lawsuit Walgreens is alleging that Theranos misled it about the state of its technology when the two firms initially forged their agreement, which seems like a reasonable pleading. The WSJ notes that the action also alleges Theranos continued to mislead Walgreens, as questions about its technology and operations arose over the past year and put Walgreens and its customers at risk.
As a reminder, Theranos ran blood-draw sites inside 40 Walgreens stores in the Phoenix area and one in northern California. Walgreens had planned to introduce Theranos blood-draw sites at thousands of its stores around the nation. Walgreens also made a sizable investment in Theranos in the form of convertible debt. That investment ultimately totaled the amount Walgreens is seeking in the newly filed lawsuit.
We wish Walgreens the best of luck in collecting. As for Theranos, we can only assume that with the company’s cash dwindling, this and any other such payments will promptly put it out of business.
via http://www.zerohedge.com/news/2016-11-08/walgreens-sues-theranos-seeks-140-million Tyler Durden