Investments

Theranos Puts $100M Hole In Murdoch’s Pocket

Even Rupert Murdoch, famed and mega-wealthy media baron, may be feeling the pinch of this failed investment.

News came earlier this week that Murdoch, News Corp. chairman, is likely to lose as much as $100 million having invested in Theranos, the blood testing company that is under regulatory scrutiny. Murdoch takes his place alongside other wealthy backers who brought as much as $632 million in funding to the company through the past two years. Other substantial investors include Cox Enterprises, which also, according to The Wall Street Journal, sank $100 million into the firm that was built and promoted on the premise and promise of revamping blood tests by utilizing only a few small drops of blood.

WSJ reported that those investments came amid a rising valuation for Theranos and cumulatively represented $725 million sold to outsiders raised since the firm’s 2004 inception. The newest funding round, which involved Murdoch, valued the shares at about $17 a piece (with the marquee names crowding into the funding at its height, perhaps illustrating the perils of groupthink), while the earliest backers had bought in for $0.15 a share. Other large investors include Walgreens at $140 million (the drugstore chain recently filed suit against Theranos), amid plans to bring blood testing locations into its drugstores. There had also been a $30 million investment from Safeway. The grocer had initially planned, and then scrapped, clinics to have been opened at hundreds of locations across the country, reported WSJ.

Some due diligence seems to have been in the offing, as Murdoch and other investors had toured Theranos’ operations and had seen the blood testing devices. In the wake of investigations into equipment and blood testing practices, the firm has shut down all of its testing facilities, while, earlier this year, investigations had started to find problems tied to inspections.

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