Walgreens stores in the fall of 2013.
Holmes’s name was listed among the paper’s coauthors but
Balwani’s was not. After their breakup and his departure from the
company in the spring of 2016, Balwani seemed to have dropped off
the face of the earth. Holmes had moved out of the 6,555-square-foot
house he owned in Atherton (acquired for $9 million in 2013 through
a limited liability company), and it wasn’t clear if he continued to live
there. For a time, there was speculation among former Theranos
employees that he had fled the country to elude federal investigators.
Those rumors were put to rest on the morning of March 6, 2017,
when Tyler Shultz entered a conference room at the offices of Gibson,
Dunn & Crutcher on Mission Street in San Francisco. Standing among
the half dozen lawyers present to take his deposition in the Partner
Fund litigation was the familiar diminutive figure with the angry scowl
who had terrorized Theranos employees. Balwani was a named
defendant in the lawsuit, so his presence was unusual and seemed to
have but one purpose: to intimidate the witness. If that was indeed the
goal, it didn’t work. Over the next eight and a half hours, Tyler focused
on giving truthful answers to the questions he was asked and blocked
out the silent presence of his irascible former boss at the other end of
the conference table. Seven weeks later, Theranos settled the case for
$43 million on the eve of Balwani’s own deposition. (Soon after, it
settled the Walgreens lawsuit for more than $25 million.)
By late 2017, Theranos was running on fumes, having burned
through most of the $900 million it raised from investors, much of it
on legal expenses. Several rounds of layoffs had reduced the size of its
workforce to fewer than 130 employees from a high of 800 in 2015. To
save on rent, the company had moved all its remaining staff to the
Newark facility across San Francisco Bay. The specter of a bankruptcy
filing loomed. But a few days before Christmas, Holmes announced
that she had secured a $100 million loan from a private-equity firm.
The financial lifeline came with strict conditions: the loan was
collateralized by Theranos’s patent portfolio and the company would
have to meet certain product and operational milestones to get the
money.