Risk & Compliance

Ex-Controller Testifies in Trial of Theranos CEO

So Han Spivey said Theranos provided investors with revenue projections that did not match the reality of its finances.
Matthew HellerSeptember 15, 2021

Blood-testing startup Theranos provided investors with revenue projections that did not match the reality of its finances, the company’s former controller has testified in the fraud trial of founder and CEO Elizabeth Holmes.

So Han Spivey, who also goes by Danise Yam, said Holmes gave her a revenue estimate of $100 million for 2015 when she was working with an analytics firm on pricing stock options for Holmes and other employees.

But Spivey said she did not prepare a document that Theranos gave to investors showing it expected to generate $140 million in revenue in 2014 and $990 million in 2015.

“Did you ever provide financial projections to investors?” asked prosecutor Robert Leach. “No,” Spivey replied.

The controller, who managed finances at Theranos from 2006 to 2017, was the first witness called by the government in the trial of Holmes, a onetime Silicon Valley darling who faces a dozen counts of wire fraud and conspiracy to commit wire fraud for allegedly making false statements about her company’s technology.

Spivey’s testimony, which concluded on Tuesday, “supported one of prosecutors’ key contentions: That Ms. Holmes deliberately lied to investors, business partners, and patients to keep afloat a startup she said would change the world by testing for illnesses with just a few drops of blood,” The Wall Street Journal said.

According to the government, Theranos’ actual revenue fell from $1.4 million in 2010 to $518,000 in 2011 and down to zero in 2012 and 2013. By 2013, the company was burning roughly $2 million a week in cash. By 2015, Spivey said, its accumulated deficit had reached $575 million.

“Her testimony painted a picture of a company that saw its cash dwindling as revenues shrank,” Protocol reported.

Holmes’ attorneys countered that much of the discrepancy came from deferred revenue, noting that Theranos had signed revenue-generating contracts with companies like Merck and Pfizer and that the losses were normal for a Silicon Valley startup with heavy R&D expenses.

Spivey testified last week that Theranos went years without having its financial statements audited, which she thought was unusual for a private company.

Photo by Ethan Swope/Getty Images

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