TTA Where *Is* Spring?: 23andMe’s bankruptcy–the full story & views, Walgreens cleans up, new product launches, mental health in the balance, more!

 

28 March 2025

There’s a lot of spring cleaning on the agenda, with the week opening with 23andMe’s bankruptcy. Clearly the story this week in health tech–and for a reputed 14 million customers frantic about their genetic data. Walgreens continues to settle before selling, three product launches, and clinician mental health is in the balance. And we have a thoughtful contribution from Iris Telehealth on how telepsychiatry can defuse mental health crises before law enforcement is called in. 

Weekend reading: 23andMe updates, a view at variance from the former co-founder, and a deeper historical analysis (Post-bankruptcy legal moves, a view by an ousted co-founder, and Sergei Polevikov’s deep dive)

News roundup: Walgreens settles 10 year running false claims suit for $5M; UniDoc to buy AGNES Connect; launches from Klarity Health, Tunstall UK, HSE Ireland; VITAL WorkLife survey finds yawning gap in clinician/management mental health perceptions (Walgreens continues to cleanup on aisle 3, health kiosks expand connectivity and analysis, three launches, and the sad state of clinician mental health)

Perspectives: As police step back from mental health calls, telepsychiatry steps forward

Breaking: 23andMe files for Chapter 11 bankruptcy–whither customer data and security? An impact similar to Theranos (Updated as the story broke. And why this has turned into a watershed for health tech like Theranos was.)

Last week: Spring–time to clean up the picnic table. The Walgreens financing took an interesting turn, with WBA chairman Pessina doubling his table stakes. Foodsmart lays out a spread for a new CEO from Amwell. A semi-independent NHS England proved to be an unsteady table for the UK Government–off it goes to the thrift store. Veradigm closed its 2022 books–but their table is a bit wobbly. Elsewhere, two mergers, and Congress keeps limited Federal telehealth flexibilities into September. And our guest Perspectives returns with another view on telehealth and accessibility to addiction treatment.

Short takes: interesting takeaways from the Veradigm earnings call, VA cuts ~6 EHRM contracts; mergers for DispatchHealth-Medically Home, Wysa-April Health (‘Standalone’ for Veradigm may be a bumpy road, as costs are cut at VA, and mergers mark ‘hot’ hospital-at-home and telementalhealth)

News roundup: NHS England to be abolished, absorbed into UK DHSC, while IT glitch shorts 5,200 from screenings; Veradigm *finally* files 2022 financials (updated), VA-Oracle EHR now promises 13 installs in 2026 (Government change whacks NHS England, Veradigm reports 2022 at last, and VA to resume more Oracle installs in 2026)

Breaking: Stefano Pessina to near-double stake in Walgreens after Sycamore Partners takeover–reports (Sr. Pessina surprisingly puts a LOT more chips on the table)

Can kicked down road: telehealth flexibilities extended to 30 September (That takes care of the next six months, but the real story is what the FY2026 budget portends for telehealth expansion)

Perspectives: Telehealth Expands Access to Addiction Treatment and Specialized Care, But Navigating Regulations Remains Key (More on how telehealth prescribing affects addiction care)

Breaking: telehealth nutrition provider Foodsmart taps former Amwell COO Kurt Knight as CEO (Moving from traditional telehealth to lead a newly ‘hot’ part of healthcare)

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Weekend reading: 23andMe updates, a view at variance from the former co-founder, and a deeper historical analysis

23andMe passes the ‘First Day Motions’ test in Federal bankruptcy court. On Wednesday, 23andMe received permission from the court to, during their Chapter 11:

  • Pay employee wages and benefits
  • Compensate certain vendors and suppliers in the ordinary course of business for goods and services
  • Enter into the term sheet of the $35 million debtor-in-possession financing agreement (DIP Facility) with JMB Capital Partners
  • Begin the process of selling substantially all of its assets* through a Chapter 11 plan or pursuant to Section 363 of the US Bankruptcy Code.

The court also approved the bidding procedures that take place over the 45-day clock that started with the bankruptcy petition on 23 March. Bidding is conducted by the company and Moelis, their independent investment banker.

  • Qualified bids must agree to comply with 23andMe’s consumer privacy policy and laws regarding treatment of customer data.
  • Any sale transaction involving the transfer of customer data requires court oversight and regulatory approvals.

Additional first day orders on the Kroll (claims agent) website are the retention of two law firms, Goodwin Procter LLP and Lewis Rice LLP by the Special Committee of the board of directors, and the continued use of cash management systems, intercompany transactions, honoring certain prepetition obligations, and priority on administrative expense to postpetition intercompany claims against debtors.

The next step is the ‘Second Day’ hearing that follows up on financing, with the entry of an order approving the DIP Facility and ‘additional requested relief’ that isn’t specified in the 23andMe release

*Given that thousands, perhaps tens or hundreds of thousands of a reported 14 million users, are deleting as much data as they can from the 23andMe database, what will the value of that genetic database be? Regarding that database, will there be a third-party ‘guard’ on that database appointed by the Court?

The TTA summary of the bankruptcy 24-26 March  This Editor likened the 23andMe implosion to that of Theranos–a watershed event that forces a rethinking of how we treat the privacy of customer medical data not covered by HIPAA, such as genetic data, as we approach (or try to approach) the mountain called ‘personalized medicine’.

23andMe’s co-founder, Linda Avey, essayed in LinkedIn yesterday that 23andMe was a missed opportunity to create a grand genomic dataset that would combine blood work, deeper gene sequencing, and wearable date culminating into actionable insights. The data is now fragmented among many holders.  In her conclusion, she was polite but unsparing: “Without continued consumer-focused product development, and without proper governance, 23andMe lost its way, and society missed a key opportunity in furthering the idea of personalized health. The 14+ million people who bought into the concept deserve to see their data moved to a secure platform with new leadership and vision. Consumers, however, should be careful sharing their data if they don’t trust its secure and ethical use”.Ms. Avey, a scientist and venture investor, was forced out of the company in 2009.

23andMe’s failure is more significant than Theranos as an example of reality versus the hype. Theranos was a near-straight up fraud with blood labs that didn’t work. 23andMe had a technology that worked and could with accuracy your ancestry and genetic risk factors, though the latter got them into trouble with the FDA with a cease-and-desist in 2013 [TTA 2 April 2014] that they didn’t emerge from till late 2015. But ancestry and genetic risk are ‘one and done’ readings. It’s not an ongoing business model. How do you get members to return and pay for more tests, even if they lose money? How do you get investors? Pivot to research and ‘therapeutic development’. The reality, as Anne Wojcicki herself admitted, is that there’s no money in diagnosis and prevention. “No one makes money in healthcare by keeping you healthy” and  “There’s no profit motive for people to get this information. A doctor does not make money if they give a diagnostic”–and this was said by her in 2019.

So how did the company become valued at $6 billion by 2021? Work the story, work the hype around preventative healthcare to get more venture rounds and then a SPAC facilitated IPO. “Personalized healthcare”.  A “research platform powered by engaged customers”.  While the real money was in selling the data to Pfizer, Genentech, and GSK–and that started back in 2015. All couched in ‘personalized healthcare’ and research.

Far, far more on this is over at AI Health Uncut, Sergei Polevikov’s Substack site. Grab your cuppa and/or lunch. It has more financial facts, particularly around 23andMe’s early years, and the botched opportunity of the Lemonaid acquisition. Everyone is a loser when it comes to 23andMe, except the Lemonaid founders who walked away with $100 million in cash (but lost $300 million in stock). It comes to the sad and numerically relentless conclusion that 23andMe was actually bankrupt since 2018. It was chasing ‘an impossible dream’ and was dishonest about its business model. The end result was that public trust in health tech erodes again–and that investors and founders trust each other a lot less. (And Mr. Polevikov also dubbed 23andMe another Theranos.)

Editor’s note: AI Health Uncut may be paywalled. I encourage our Readers to support Sergei’s work on Substack–for a modest annual subscription amount, you gain full access to his work, past and present, charts, videos, and articles.

TTA’s defrosting March: digging into the Walgreens-Sycamore LBO, Hinge Health’s IPO, another Wojcicki lowball bid for 23andMe, opioid telehealth, Elizabeth Holmes tries *again* on appeal, more!

 

14 March 2025

Financings have come alive and we dig dig dig into them, between the huge LBO for Walgreens, the Hinge Health preliminary IPO filing, and ModMed’s majority stake sale. Anne Wojcicki keeps trying to buy her own company for dimes, but put a slightly sweeter offer on the table–if you like waiting. Elizabeth Holmes is waiting for the courts to see it her way. And our guest Perspectives from the field presents a view of improving telehealth policy on opioid use treatments.

News roundup: MSK is ‘it’ with Hinge Health’s IPO filing, Vori Health’s $53M raise, Dario Health’s 33% revenue increase; CoachCare buys VitalTech, ModMed investor sells majority stake, Health NZ uses Excel–only; Holmes gets rehearing extension (IPO, investment unfreezes despite market turmoil, and two ‘I can’t believe it’ stories from NZ and Ms. Holmes’ continuing appeals)

Sycamore Partners taking on 83% debt in financing their Walgreens leveraged buyout–some observations (Another season for leveraged buyouts, including a walk back to the LBO Golden Age of the 1980s. Can Walgreens do better than this?)

Update: Wojcicki increases 23andMe per share offer to $2.94 from $0.41–but there’s three contingency ‘catches’, and more (Another amazing penny-ante offer for 23andMe. Will the board succumb? Is there a choice?)

Perspectives: How the DEA Telehealth Extension Impacts Patient Access to Opioid Use Disorder Treatments & Buprenorphine Prescriptions (A clinician’s view from the field) 

The $10 billion Walgreens take-private deal with Sycamore: what you need to know (We look into the deal’s devilish details, and what Walgreens might look like in a year or two)

Last week: Breaking news on ongoing stories dominated this week, with much of the industry off at HIMSS. As predicted last week, Walgreens Boots Alliance nears a take-private acquisition that would break up this legendary company. 23andMe went from a strong offer backed by an investor to their exit in a week, with the CEO’s latest lowball bid rejected in 24 hours. Masimo seems to have turned their business corner and made Mr. Market happy, but can’t shake off legal entanglements with their former CEO. And the last sad dregs of Theranos played out in the Ninth Circuit Court of Appeals, with Holmes’ and Balwani’s likely last appeals denied.

Masimo updates: optimism around healthcare despite ’24 losses, former CEO Kiani files notice in California on compensation owed (A turnaround for Masimo in 2025, but there’s a new California legal tangle with their former CEO)

Theranos’ denouement: Holmes and Balwani lose their appeals (Ninth Circuit saw District Court errors as ‘harmless’ to verdicts and sentencing, $452 million restitution stands–but Holmes gets a People cover) 

Breaking: 23andMe sale bids slide from $2.53 per share to $0.41 to none in 11 days, as board rejects CEO’s offer (Unbelievably, investor exits in a week, Wojcicki’s solo low bid rejected by board in a day)

Breaking: Sycamore Partners’ $10B deal for Walgreens may close this week–reports (Updated for debt financing details) (A legendary public company to go private and break up into three parts.)

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Telehealth & Telecare Aware – covering news on latest developments in telecare, telehealth and eHealth, worldwide.

News roundup: MSK is ‘it’ with Hinge Health’s IPO filing, Vori Health’s $53M raise, Dario Health’s 33% revenue increase; CoachCare buys VitalTech, ModMed investor sells majority stake, Health NZ uses Excel–only; Holmes gets rehearing extension

Companies in MSK therapies (and more) were the ‘IT’ this week:

Hinge Health’s IPO filing this week the talk of healthcare finance. In the teeth of a roiling market (for no good reason at all in C), Hinge’s SEC S-1 filing of a preliminary prospectus has many agog. Hinge had a 33% 2024/2023 revenue growth to $390 million and $468 million in billings, 2,250 employer clients and approximately 20 million contracted lives as of the end of last year. Net loss was reduced substantially, to $11 million from 2023’s $108 million.

Not disclosed in the filing are the number of Class A shares on offer (on the NYSE under HNGE) or the pricing range. According to FierceHealthcare’s and TechCrunch’s IPO specialist source at Renaissance Capital, Hinge Health could raise $500 million in its IPO. It already has substantial funding through 10 rounds, the last 2021’s Series E of $400 million, totaling $826 million .(Crunchbase) Its backers who are prepping for a partial or full exit are 8% shareholders Coatue, Tiger Global Management, Whale Rock Capital Management, Bessemer Venture Partners, Insight Partners (19%), and Atomico (15%). Founders Daniel Perez (CEO) and Gabriel Mecklenburg (director) own 18.9% and 8.2%, respectively. It is one of the largest and most successful in a highly crowded market in MSK therapy and virtual physical therapy, with Sword Health its largest competitor–and also talking IPO. And like others, it has diversified into other medical areas: pain management (Enso) and female pelvic health.

Surprisingly, Hinge Health was first incorporated in 2012 as a private limited company in England and Wales. It was incorporated in Delaware in 2016. Release, Mobihealthnews

One of Hinge’s competitors, Vori Health, scored a $53 million Series B funding round. New Enterprise Associates (NEA) led this round along with previous investors  AlleyCorp, Intermountain Health’s Intermountain Ventures, Echo Health Ventures, and Max Ventures, bringing their total funding since 2020 to $109 million. Vori’s model is physician-led with patients working with a virtual care team organizing care from diagnosis to therapy, prescriptions, labs, and imaging. They claim results of 91.6% of patients reporting clinically significant pain improvement, 78-90% reduction in elective orthopedic surgeries, a 42% decrease in opioid utilization, and up to a 68% reduction in depression and anxiety among patients. The funding will be used to deepen its value-based care initiatives (including evolving toward models with two-sided population health risk), invest in advanced data analytics for more precise targeting of high-risk members, and enhance its AI-powered technology platform and clinical programs to benefit patients, employers, and health plan partners. Release, Mobihealthnews

Another competitor which has considerably branched out from MSK is Dario Health. Their 2024, marked by the dizzyingly funded acquisition of Twill telementalhealth [TTA 29 Feb 2024] bumped up in full-year by 32.9% to $27.0 million, from $20.4 million in 2023. Net loss was reduced to $42.7 million from 2023’s $59.4 million. While still in MSK, Dario has branched out into diabetes, hypertension, weight management including GLP-1 therapy with MedOrbis, and behavioral health in-person and app based management in a B2B2C model for members of health plans and other payers, self-insured employers, providers, and consumers. Back in January, they completed a $25.6 million private placement of 25,606 shares to extend their cash runway. Release, Mobihealthnews

NYC-based CoachCare is acquiring Carrolton, Texas-based VitalTech. Both companies monitor chronic conditions via remote patient monitoring (RPM) and are about the same size. Acquisition cost was not disclosed. VitalTech CEO Jeh Kazimi and the under 50 person VitalTech staff will be joining CoachCare. CoachCare claims that they cover 200,000 patients in 3,000 locations. Release

Investor Warburg Pincus sells majority stake in ModMed to Clearlake Capital. The investment was not disclosed, but reports indicated the valuation of the EHR and practice management system company is estimated now at $5.3 billion. Summit Partners and ModMed cofounders Daniel Cane and Michael Sherling maintain a minority share. ModMed has been for sale on and off since 2022, most recently in January, but was looking at acquisitions last fall. Original reporting was from the Financial Times. Axios, Bloomberg Law, Release

And you think you might be behind the times? Health New Zealand likes to keep it simple…very simple. They run all their financial management on a single Microsoft Excel spreadsheet. HNZ spends NZ $28 billion and replaced 20 district health boards to consolidate their efforts, increase efficiencies, and reduce costs. According to their health minister, HNZ operates an estimated 6,000 applications and 100 digital networks. The Deloitte survey found at least five major issues, from hard-coded financial data making updating and sourcing difficult to do and trace, to simple human errors. Is that all? So if you need a chuckle… TechRadar

And even more head-shaking is Theranos’ Elizabeth Holmes challenging the courts, yet again. A report through Reddit, posted by legal maven mattschwink, tells us that she, through her attorneys, two days after the Ninth Circuit upheld both her and Sunny Balwani’s verdicts [TTA 5 Mar], filed on 26 February to extend the time to file a motion for a rehearing. It was granted on 3 March. The filings are noted on the public site Court Listener. Given the track record of these courts, the likelihood of a rehearing by a larger panel in the Ninth Circuit or even by the US Supreme Court on finding some kind of error in both the original verdict and appeal is akin to a snowball lasting in the Bryan, Texas prison courtyard on July 4th. But she does get attention.

TTA’s Windy March: Walgreens nears split up sale, 23andMe fails to sell, Masimo on the upswing, no reprieve for Theranos’ Holmes and Balwani |

 

Breaking news on ongoing stories dominated this week, with much of the industry off at HIMSS (that’ll be next week!). As predicted last week, Walgreens Boots Alliance nears a take-private acquisition that would break up this legendary company. 23andMe went from a strong offer backed by an investor to their exit in a week, with the CEO’s latest lowball bid rejected in 24 hours. Masimo seems to have turned their business corner and made Mr. Market happy, but can’t shake off legal entanglements with their former CEO. And the last sad dregs of Theranos played out in the Ninth Circuit Court of Appeals, with Holmes’ and Balwani’s likely last appeals denied.

Masimo updates: optimism around healthcare despite ’24 losses, former CEO Kiani files notice in California on compensation owed (A turnaround for Masimo in 2025, but there’s a new California legal tangle with their former CEO)

Theranos’ denouement: Holmes and Balwani lose their appeals (Ninth Circuit saw District Court errors as ‘harmless’ to verdicts and sentencing, $452 million restitution stands–but Holmes gets a People cover) 

Breaking: 23andMe sale bids slide from $2.53 per share to $0.41 to none in 11 days, as board rejects CEO’s offer (Unbelievably, investor exits in a week, Wojcicki’s solo low bid rejected by board in a day)

Breaking: Sycamore Partners’ $10B deal for Walgreens may close this week–reports (Updated for debt financing details) (A legendary public company to go private and break up into three parts.)

Last week: After a brief hiatus, we’re back and in a new format! What’s hot: Sycamore taking Walgreens private is on, Wojcicki may finally take 23andMe private, Teladoc fights back against a short seller investor, Veradigm in the body board shop, UHG’s and HHS’ big layoffs, and Deep Dives into Transcarent and the no-way-pristine VC Business.

These just in: drug compounders sue FDA over semaglutide scarcity removal; Sycamore’s Walgreens buy plans begin to show (Prepared to move?)

23andMe gets a $74.7M offer from Wojcicki and New Mountain Capital–this time for real? (What’s the alternative?)

Short takes: a guide to HIMSS25, Google Watch clears loss of pulse detection, OpenEvidence’s AI-powered $75M raise, Retrieve Medical to buy Cúratus, HerMD women’s health closes (What will HIMSS be like?)

This Just In: Walgreens settles PWNHealth/Everly Health arbitration award for $595 million, reduced from $1 billion (Making the way ready?)

Has VA ‘done its homework’ and ready to restart the Oracle Cerner EHR Modernization? Timing and costs still not set. And 1,400 ‘non-mission critical employees fired. (updated 27 Feb) (VA and Cerner meet the new Committee)

Teladoc responds to Blue Orca’s report on BetterHelp’s AI ‘therapy’ (updated) (Rebutting allegations by Blue Orca)

News roundup: DOJ investigating UHG on Medicare Advantage billing upcoding; Teladoc’s BetterHelp therapists using AI?–a short seller alleges; Hims whacked by FDA ending compounded GLP-1s (updated); some fired FDA staffers in CDRH reinstated (Teladoc’s short seller alleges AI use, GLP-1 compounding pulled by FDA)

Veradigm changes up, expands its board in agreement with major investor; adds directors, chair to step down (Another shareholder step-in and cleanup on Aisle 5)

The wrapup line on ViVE (Now the premier digital health meeting venue)

Breaking: Will telehealth extensions survive past 31 March? ATA addresses rumors. (Still being worked on)

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Theranos’ denouement: Holmes and Balwani lose their appeals

It’s been two years since Theranos was in the news. In April 2023, both Elizabeth Holmes and Ramesh ‘Sunny’ Balwani started serving their lengthy sentences for multiple charges of fraud (11 years, 3 months and 12 years, 9 months respectively, generally reduced to 85% of sentence). Last week, the three judges of the US Court of Appeals for the Ninth Circuit in San Francisco ruled to uphold both trials on investor fraud and the award of $452 million in restitution. The original verdicts were made in separate trials in the US District Court for the Northern District of California by Judge Edward Davila, but the appeals were considered together. [TTA 12 June 2024]

Neither appeal of the separate trials proved that any errors were significant enough, nor any testimony excluded, that would provide grounds to overturn the verdict.

The key issues centered on legal errors made by the District Court in allowing certain witnesses’ testimony to veer into ‘expert territory’, which is an error, but that “any error was harmless”. For instance, both defenses concentrated on Kingshuk Das, MD, the final Theranos lab director who worked there March 2016 to June 2018 and voided two years of Edison Lab tests. He testified about his experience at Theranos (fact witness) but in court was allowed to express his opinion as a scientist though he was not qualified by the court as an ‘expert witness’. That is a separate procedure that involves a special qualifications hearing (Daubert hearing) that did not take place with Dr. Das. The appeals panel found that Dr. Das should have been qualified as a expert witness and would have easily done so. Not doing so was an error that was not challenged by Holmes’ team at the time. But the court’s error was harmless. Dr. Das’ testimony on the Edison devices’ reliability and accuracy was supported by other testimony. The testimony regarding the device was one of many other misrepresentations made to investors that the jury had to review. 

Another issue was the CMS report on the labs, issued in January 2016 after much of the deception had already taken place. Holmes’ appeal team argued it should have been excluded as misleading to the jury. It was admitted into evidence as relevant to Holmes’ state of mind, intent, and knowledge about the labs’ conditions. The District Court did not “abuse its discretion” in permitting it for that limited purpose.

Holmes’ team also challenged the exclusion of statements from Sunny Balwani about “owning” the Theranos financial model.

Regarding restitution, the conclusion in the ruling summary was direct: “The panel concluded that any error was harmless because the district court’s factual findings compel the conclusion that the victims’ actual losses were equal to the total amount of their investments.”

The very tough decision was written by Judge Jacqueline H. Nguyen. Her fellow judges were Mary M. Schroeder and Ryan D. Nelson. The decision PDF is here. (It seems quite readable, but was not fully read by this Editor.)

Their chances for further appeal, either in the Ninth Circuit with a larger panel or by the US Supreme Court, as “very unlikely” for the first and “almost inconceivable” for the second, according to Stanford Law professor Robert Weisberg, quoted in the Mercury News.

This Editor recommends a review of the Reddit thread by mattschwink, “Annotating the 9th Circuit review of Holmes appeal”, which was (again) of great assistance in summarizing the appeal issues. He also confirmed for me that Sunny Balwani was moved from the limited facilities at Terminal Island FCI to Lompoc FCI, north of Santa Barbara and a stone’s throw from Vandenberg Space Force Base. Thank you, Matt, again! Press coverage has been minimal: Mercury News, AP, BBC

Immediately preceding the 9th Circuit Court’s decision was a People cover puff piece on Elizabeth Holmes. You may be able to read it all the way through without being amazed at her manipulation and lack of contrition on defrauding investors and patients. It doth make much of her claims that she was sexually abused not only at a college party but also in her years with Sunny Balwani, for which she is in therapy there. She is continuing to research and write patents for new healthcare inventions, presumably between law clerking, advocacy, teaching French, and weekend family visits. The Bryan FCI does not, even in her description, sound like ‘It’s Been Hell and Torture’. (Perhaps she’s seeking a Federal pardon?) More than likely, she will be enjoying the facilities and the visits until April 2032. And then there is the $452 million restitution to somehow scrape up.

No “equal time” exclusive interviews with Sunny Balwani, of course.

It strikes this Editor that, in the words that Orson Welles wrote for his character and that of Marlene Dietrich in ‘Touch of Evil’ that both Holmes’ and Balwani’s futures ‘are all used up’. That is, they will emerge from their respective prisons and live on, but as to any role in medical research, the parade will have long passed them by.

Postscript: The Mercury News published a rather anodyne interview with one of her prosecutors, John Bostic, who is now in private practice as a partner with Cooley in the Bay Area. It’s brief but interesting as to why he was chosen–he was a molecular biology major in college–which helped him to understand the technical aspects of Theranos and make them understandable to judge and jury. The strongest evidence against her? “There was evidence that Holmes knew some things that she was saying were not true, and there was also some evidence of document altering that I think was very easy for the jury to understand.” The one notable takeaway was that Silicon Valley and technology companies shouldn’t ‘fake it till they make it’, which is a lesson they’ve already learned.

Theranos’ Holmes and Balwani appeal fraud convictions, $450M investor restitution

An interesting Tuesday at the Ninth Circuit Court of Appeals in San Jose, California. A three-judge Federal appeals court held hearings yesterday (11 June) on separate appeals on the convictions found and restitution imposed on both Elizabeth Holmes and Ramesh ‘Sunny’ Balwani, the former CEO and president of Theranos. The Holmes hearing was 50 minutes before Judges Jacqueline Nguyen, Ryan Nelson, and Mary Schroeder.

Holmes is seeking a complete overturn of the trial and jury verdict primarily on the basis of Judge Edward Davila including evidence favorable to the prosecution and not including defense-favorable evidence. She was not there as serving her time to mid-August 2032 in Bryan, Texas. Representing her for the defense was Amy Saharia of Williams & Connolly LLP, considered to be one of the US’ top appellant litigators.

  • Favorable to the prosecution was Theranos’ chief scientist Kingshuk Das, MD’s testimony. Dr. Das was the final Theranos lab director who worked there March 2016 to June 2018–and voided two years of Edison Lab tests. Saharia is claiming that the prosecution was improper in putting him on the stand since he was not qualified by the court as an ‘expert witness’ and was allowed to express his opinion, specifically in statements allowed by Judge Davila including “I found these instruments to be unsuitable for clinical use.”

Going back to TTA’s original coverage of 11 Nov 2021 (which the coverage below largely has not), Dr. Das was hired to respond to CMS’ deficiency report that went to the prior lab director two months before. The subject line: “CONDITION LEVEL DEFICIENCIES – IMMEDIATE JEOPARDY.” The report went on to say that “it was determined that your facility is not in compliance with all of the Conditions required for certification in the CLIA program.” and concluded that “the deficient practices of the laboratory pose immediate jeopardy to patient health and safety.” After speaking with Holmes and dealing with her position that it wasn’t an instrument failure, but rather a quality control and quality assurance issue, he voided every Edison lab test made in 2014 and 2015–between 50,000 and 60,000. Holmes was told, but she didn’t believe Das or previous lab directors about the Edison problems. Also testifying was a contract offsite co-lab director in 2014-15 who expressed her reservations to one of Dr. Das’ predecessors –who also happened to be Sunny Balwani’s dermatologist. 

Judge Nelson said during the hearing that “There’s a pretty good story here for Ms. Holmes” and “They do have a pretty good basis for some unfairness here.” in how Judge Edward Davila allowed this testimony.  Judge Nguyen also seemed to agree with the defense position that Judge Davila went too far in allowing opinions from Dr. Das that under the rules would require his being vetted as an expert. Judge Nelson added that the conviction was supported by “pretty overwhelming evidence.” For Dr. Das, the conundrum was that he was called in as the former lab director to testify on Holmes’ knowledge of the problems the Edison lab had but he also had a level of expertise involving the labs. The Federal prosecutor on the appeal, Kelly Volkar, countered with how Judge Davila “carefully parsed” the Das testimony and sustained defense objections during the trial. While having concerns that Das strayed into opinions and Judge Davila allowed it, Judges Nguyen and Schroeder stated that much of Das’ testimony concerned what he observed at the company.

Reportedly, much of the hearing time focused on this one point. Saharia again insisted that “She [Holmes] in good faith believed in the accuracy of this technology” and did not knowingly misrepresent it.

  • Not including defense-favorable testimony was another alleged Davila mistake. In the defense presentation, Judge Davila allowed testimony from former laboratory director Adam Rosendorff without including more evidence of government investigations of his work after quitting Theranos in 2014. These were direct attacks on his competence in running a lab facility. However, in our 6 October 2021 coverage, the defense grilled Rosendorff on his work at uBiome and PerkinElmer; both came under Federal investigation during his tenure.

A final Holmes defense point was made on how these ‘errors’ made by Judge Davila unfairly shaped the jury decision, where she was found guilty by a jury on only four counts of the prosecution’s 11.

The panel did not provide any timeline for issuing a ruling, other than in ‘due course’. This can be anywhere from a few weeks to over a year. The track record for Federal Court appeals tends to be dismal for the defense. 

Far less coverage was given to the separate Sunny Balwani hearing. This centered on the fact that the restitution of $450 million to investors ordered by Judge Davila’s order was incorrect and part of the “nature of investing in a private company.”  His defense counsel, Patrick Looby, also representing Holmes, made a most interesting spin on how fraud did not rob Theranos of ‘residual value’. “The fact that the investors may have had difficulty selling their shares is not owing to the fraud.” Volkar for the prosecution stated that the investors had no opportunity to do any recouping of their losses. Looby also contended that the prosecution presented distorted evidence against Balwani in a different narrative than against Holmes. Balwani was convicted on all 12 charges and is serving 12.9 years at the Federal Terminal Island facility. No timeline for a ruling was reported.

Mercury News, AP, Yahoo Finance  The Ninth Circuit also has an unusual web page on the Holmes appeal with case information plus notifications of public proceedings.

Short takes: Holmes legal team appealing Tuesday 11 June; Steward Health asset sale OK’d, needs funding; fundings for Sword Health, Eko Health

Elizabeth Holmes may be in Bryan, Texas serving time, but the appeals go on. Her legal team will appear before the US Court of Appeals for the Ninth Circuit at 9am next Tuesday 11 June. Her initial appeal was filed in December 2022 [TTA 15 Dec 2022] with full 132-page legal briefs in April 2023 [TTA 19 Apr 2023].

Holmes’ team is seeking a complete overturn of the trial and verdict. The appeals center on an unjust conviction based on prosecutorial misrepresentations, such as Holmes being told that the Theranos technology worked and thus not misrepresenting it to investors at that time, and actions by Judge Edward Davila in the presentation of evidence in including evidence favorable to the prosecution and not including defense-favorable evidence. The appeal also includes, according to earlier reports, an accusation that Judge Edward Davila used the wrong legal standard in sentencing Ms. Holmes and thus over-sentenced her. Holmes will not be present for the appeal as is customary.

Her 11 year sentence is currently, based on Bureau of Prisons standards for good behavior, cut down to about 9 years. Her chances are slim that the appeal will succeed, based on overall rates, Judge Davila’s reputation for thoroughness, and his presiding over two identical cases, the other for ‘Sunny’ Balwani with the same evidence and a similar but longer sentence. There is no public word on whether Mr. Balwani is also appealing. He is serving his time at Terminal Island, California. Mercury News  Our back file on Theranos is best accessed through TTA’s search tab, keyword Theranos or Holmes.

Another fine legal mess is unfolding in Texas with the US Bankruptcy Court, Southern District of Texas, hearings on Steward Health’s dissolution.

  • On Monday 3 June, Judge Christopher Lopez approved a two part plan for the asset sale. Part 1 would be about the Massachusetts assets, with most of the system’s hospitals (eight) and its physician group. Bid deadline is 24 June and the first sale hearing is timed for 11 July. Massachusetts is the most contentious of the states Steward operated in, with state regulators taking the most actions against the company. Part 2 is the Florida and Texas asset sale, timed for a bid deadline of 12 August and first sale hearing of 22 August.
  • The US Department of Justice filed an objection 30 May to the sale, stating that it does not allow enough time for their regulatory review of the physician group sale to UnitedHealth Group’s Optum [TTA 18 Apr] and insisting that it must be reviewed before any sale. This effectively holds up the Part 1 sale. FierceHealthcare
  • The other spanner in the works for the DOJ is that Steward is flat out of money to run their hospital and practice assets. Without additional funds, on 14 June they will be broke, busted, skint by two Fridays from now. Steward’s lenders were before Judge Lopez yesterday (4 June) to try working that out. Current debtor-in-possession (DIP) Medical Properties Trust, which put up $75 million, won’t put up any more money until assets are sold. Other lenders want to put up only limited amounts of money. To lure lenders, Judge Lopez approved an emergency motion on Monday to permit a “commitment fee” offer of up to $6.75 million to third-party lenders and up to $750,000 to reimburse one or more lenders for expenses incurred during due diligence. Healthcare Dive. Will that attract another DIP? Only time, and not a lot of it, will tell.

In happier news, there are fundings for two health tech companies:

  • Sword Health announced a $130 million round in an unlabeled mix of primary and secondary sale. Their total funding is now $340 million, with lead from Khosla Ventures. Valuation is up to $3 billion, up 50% from its Series D valuation. The funding announcement was made in conjunction with a product announcement by the digital/remote MSK therapy company for Phoenix, the AI Care Specialist, which will be integrated across their entire offerings. Release
  • Eko Health’s Series D raised $41 million from ARTIS Ventures, Highland Capital Partners, NTTVC, and Questa Capital. Eko’s device and platform enhance the early detection of cardiac and pulmonary diseases during physical exams. Most recently, the FDA cleared Eko’s Low EF detection AI [TTA 5 Apr]. The new funding will be used for US expansion and expansion into key international markets, supported by new strategic investments from Double Point Ventures in the U.S., Singapore-based global investor EDBI (the corporate investment arm of the Singapore Economic Development Board), and LG Technology Ventures, backed by the LG Group of South Korea. Cardiac detection powered by AI are ‘perfect together’, at least for investors. Release, Axios

News roundup: Amwell faces NYSE delisting; Walmart Health slows Health Centers, except Texas; Novosound’s ultrasound patent; Eko’s Low EF AI; Universal Brain; Elizabeth Holmes in ‘Dropout’ + update

Amwell on a six-month NYSE notice to get stock price above $1.  Telehealth provider Amwell received an NYSE notice on 2 April that their Class A stock, in having an average closing price of below $1.00 over a consecutive 30 trading-day period, violated NYSE’s continued listing minimum price criteria. It dipped below $1.00 on 12 March and stayed there. The stock will not be delisted at this time and is now in a six-month ‘cure period’. Amwell has already confirmed its intent to cure the deficiency, including proposing at its upcoming 2024 annual meeting a reverse stock split, subject to stockholder and board of directors approval. Amwell (AMWL) closing price today was $0.72 which represents a 65% decline over the prior year. Amwell is largely owned by institutional shareholders–289–holding 149.2 million shares (Fintel). Amwell IPO’d in the palmy days for telehealth in September 2020, raising $742 million at the time with shares debuting over $25 [TTA 18 Sept 2020]. Amwell’s 2023 was as hard pressed as rival Teladoc’s with a $679 million net loss in 2023, up 150% from 2022’s $272 million loss. The 2024 is not much sunnier, with revenue in the range of $259 to $269 million and adjusted EBITDA in the (less) red between ($160) million to ($155) million, with no breakeven in sight until 2026. Amwell has also released 10% of staff since 2023. Eh, have times changed? Amwell release, Healthcare Dive

Walmart Health pressing the brakes on its Health Centers, concentrating on Texas. Walmart, generally superb at reading the weather, has decided to slow down openings of its primary and urgent care centers, located only in Walmart Supercenters. The previous plan was to open 30 or more centers in 2024, reduced now to 22. 18 of these will be in Texas: eight in the Houston metro starting this month and 10 in the Dallas/Fort Worth region. The remaining four will be in the Kansas City metro. The Health Centers target patients with no or poor insurance coverage in underserved areas and offer a range of services including labs, X-rays, and dental care. The goal of 75 centers has moved forward to early 2025. Healthcare Dive, Drug Store News

A potpourri of news around smaller companies and innovations:

Scotland’s Novosound has patented a wearable, WiFi-enabled ultrasound digital platform, its 21st. The Slanj (phonetic for sláinte, meaning health in Scottish Gaelic) uses thin film printed gel-free, disposable high-resolution sensors to be integrated into other wearables such as smartwatches and other monitors. Novosound’s patent covers both the US and UK. In 2022, they inked a commercial partnership with diagnostics and digital health company PAVmed Inc. for intravascular imaging. Novosound was the first spinoff from the University of the West of Scotland. Mobihealthnews

Also in cardiac, the FDA cleared Eko Health’s Low EF detection AI. This enables a provider to quickly diagnose Low EF (ejection fraction) in a physical exam to assess possible heart failure. The Eko stethoscope and module connects to a tablet and provides a reading within 15 seconds. Trained on a proprietary dataset of over 100,000 ECGs and echocardiogram pairs from unique patients, clinically validated in a multi-site, prospective clinical study of 3,456 patients, it requires only a minimum of specialized training as part of the SENSORA Cardiac Early Detection Platform that can be used just about anywhere. The Eko Low EF was developed in conjunction with the Mayo Clinic. Eko release, MedCityNews

Universal Brain, which has developed a range of wearables that measure brain activity, named three new executives:  Greg Hajcak, PhD, as tChief Scientific Advisor, Vangelis Lympouridis, PhD as Chief Product Officer, and K.T. Venkateswara-Rao, PhD, as Head of Operations. For psychiatric clinical drug trials and psychiatric diagnosis, there is an EEG wearable paired with a digital ERP interface, Neurotique. They also developed a patient neurofeedback treatment system (EEG wearable + digital therapeutic) to augment standard treatment by providing real-time feedback for depressive symptoms.  Release

And for UK Readers weekend viewing pleasure in the UK, the Elizabeth Holmes biopic, ‘The Dropout’ is now available on BBC iPlayer. Hulu produced and originally aired the eight-episode series in March of 2022 (our review here). Hat tip to Editor Emeritus Steve. For US Readers, it is still available on Hulu. Or if you have a VPN, you can set it to a UK-based server and sign up for BBC iPlayer. The only recent (January) news about Ms. Holmes is that the Department of Health and Human Services (HHS) Office of Inspector General (OIG) banned her and Sunny Balwani from all Federal health programs for 90 years, which does strike one as overkill as beyond their reasonable lifetimes. Ars Technica

Based on a Reddit posting on a pop culture chat, celeb Jen Shah, also at FPC Bryan, and Holmes were snapped ‘hanging out’ in the yard. Shah was convicted of heading a telemarketing financial scam that preyed on the elderly. She is serving 78 months in Federal prison and has to pay $6.6 million in restitution–numbers that could fit easily in Holmes’ 135-month sentence and $452 million restitution. And Sunny Balwani, about whom there are no pictures, no Reddit, is apparently still serving his time at Terminal Island near San Pedro, California, not in Atlanta.

‘The Simpsons’ takes on Theranos (by another name, glub glub)

Everyone into the ‘LifeBoat’! Episode #754 of the long-running (35 seasons!) series ‘The Simpsons’ is a complete send-up of The Theranos Story in 22 minutes. This episode, which aired in the US on 29 October, transmutes Elizabeth Holmes into Persephone Odair, the young college dropout creator of a can-sized device that converts salt water to drinkable fresh water. The retrospective documentary and ‘news stories’ framing the tale trace Persephone’s and LifeBoat’s rise to fame and riches, then their fall. Set in SimpsonsWorld, the chief financier is the owner of the local nuclear plant, the zillionaire Montgomery Burns, whom she marries. There is an endless supply of in-jokes and jabs, such as Persephone at a TEDtalk saying “The doubters call this goal impossible, but I prefer to say, ‘I’m possible.’” (=”First, they think you’re crazy…”) and the blatant coverup of the technology (=Edison Lab, but here, if anyone drank the water, a competitor could steal the aqua-tech from the urine). The ‘can of oats’ converter, Persephone’s backstory, and the water, of course, are complete fails. Lots of celebrities make guest appearances, but not Judge Edward Davila or John Carreyrou, the author of ‘Bad Blood’. The plotline of “Thirst Trap: A Corporate Love Story” is featured on the WikiSimpsons here and here. It can be viewed on various streamers and can be purchased on YouTube. SFGATE, Entertainment Weekly, Photo from SFGATE screenshotted via Fox. 

Could DocGo be another Babylon Health or Theranos? CEO resignation may be only the start of their troubles.

Another ‘fake it till you make it’ healthcare enterprise? Only a short month ago, things were fair and warmer for DocGo. They had recently transitioned from a mobile Covid-19 testing company under various contracts back to their original purpose–a telehealth/RPM, mobile urgent care, disease management, and medical transportation provider, with mobile vans covering the NYC metro. Founded in 2015 by Stan Vashovsky, now chairman, new CEO Anthony ‘Al’ Capone had successfully leveraged their mobility into a $425 million no-bid contract with New York City to provide medical services and more for over 19,000 migrants flooding into the city and being housed in the surrounding upstate counties. The company also plumped that they were up for a multibillion-dollar Federal contract with the US Customs and Border Protection agency.

DocGo’s stumbles starting in July continuing into August in both medical and non-medical services to migrants housed upstate put them on the press radar, notably the capital’s paper of record, the Albany Times-Union, in the weeks after their bright Q2 report [TTA 10 Aug, 16 Aug].

On 14 August, some basic checking by the Times-Union uncovered that Mr. Capone’s masters in computer science from Clarkson University not only was never granted but also he never attended Clarkson, according to the university. This degree claim was included in the SEC filing and touted to investors by him as an MS in computational learning theory, a subset of artificial intelligence. His undergraduate degree from SUNY Potsdam was not confirmed by that university or by his spokesperson. Mr. Capone had worked for DocGo since 2017, previously serving as president, chief technology officer, and CPO, becoming CEO only this year. In nearly six years, no one had checked his credentials.

On Friday 15 Sept, Mr. Capone resigned from DocGo, citing typical ‘personal reasons’. His apology and taking ‘full responsibility’ did not save him. He has been replaced by Lee Bienstock, the company president and chief operating officer.  Mr. Bienstock came to DocGo from Google in 2022 and holds an MBA from Wharton (University of Pennsylvania). Times-Union 15 Aug, Release

But…there’s more.

  • The no-bid NYC contract was contested two weeks ago (6 Sept) by the city comptroller, Brad Lander. Mr. Lander, like a corporate CFO, can send back a contract to a city agency, in this case to Housing Preservation Development (HPD). His review cited insufficient budget detail, possible inadequacy of the vendor to provide services, and a few other important items. Unlike a CFO, Mr. Lander’s office is largely toothless and can’t say no. HPD plans to sign off on it anyway as DocGo is quite tight with Mayor Eric Adams. Mayor Adams spoke at the DocGo in-person Investor Day on Tuesday 20 June about their partnership with the city. Adams has already stated that “We are going to move forward with it.” FierceHealthcare  
  • According to the New York Post and Fortune, New York State Attorney General Letitia James and Gov. Kathy Hochul have launched investigations into the company, focusing on how DocGo could contract for logistical operations to transport, house, feed, and care for these thousands of migrants in New York State, an outcome of DocGo’s failures reported last month by the Times-Union.

DocGo is a public company traded on Nasdaq under DCGO. Share prices fell 12% on Mr. Capone’s resignation but rebounded to about 7% down off off the recent $10 high after their mid-August reporting.  Seeking Alpha  DocGo went public through the then-popular SPAC method with Motion Acquisition in November 2021, raising $158 million in cash at that time. Unlike other SPACs, their share price generally hovered around the introductory $10 pricing and recovered fairly quickly from two bad dips to $6 in May and December 2022. NS Medical Device

DocGo’s response to the AG’s office and to the comptroller, the politics of the New York State and City crisis around thousands of migrants flooding housing, the streets, and schools, whether their contracts continue, and their internal financials will determine DocGo’s viability in the future. For those of us with long memories though, DocGo is repeating a pattern: first Peak Hype Altitude, then the Pileup of Problems on their wings, finally crashing to Total Hull Loss. Those are the ominous parallels with Theranos and Babylon Health.

Echoes of Theranos in Babylon Health? And additional information on GP at Hand.

Was Babylon Health all a fraud, and where would it place on the Theranos scale? There is an excellent article in MedCityNews that if true, exposes Babylon’s technology as, at minimum, far less than ever claimed. From the perspectives presented, their crash was inevitable.

MedCityNews returns to the original debunker, best known to our UK Readers as @DrMurphy11. In February 2020, while Babylon rode a tide of UK hype (not yet in the US), Dr. David Watkins, a consultant oncologist, revealed himself publicly via BBC’s Newsnight [TTA 27 Feb 2020]. He had been documenting Babylon’s chatbot diagnosis problems in GP at Hand to the government’s MHRA (Medicines and Healthcare products Regulatory Agency) and the independent CQC (Care Quality Commission) since 2017. Scenarios offered to the chatbot missed events such as probable heart attack offering instead panic attack (for a female) and gastritis (for a male). According to MedCityNews, Dr. Watkins had earlier debated a Babylon representative in a debate at the Royal Society of Medicine in London, presumably leading to Newsnight host Emily Maitlis interviewing both Babylon’s Dr. Keith Grimes and Dr. Watkins. Dr. Watkins also received emails from past and current Babylon employees confirming that the “AI chatbot”, the Probabilistic Graphical Model (PGM), was not built on any good quality data.

Cardiac activists in the UK and Canada (Carolyn Thomas, the “Heart Sister”, also listed in our sidebar) also criticized how Babylon’s chatbot ‘diagnosed’ possible events at the time. [TTA 9 Jan 2020]. 

Hugh Harvey, Babylon’s former regulatory affairs head from 2016 to 2017, was also interviewed on Newsnight in 2020. After the Babylon failure, he spoke to MedCityNews about how the AI software was ‘jury-rigged’ to impress the BBC. After he left, Babylon continued to misrepresent the accuracy of its AI system. “To publicize the accuracy of its AI system, the firm set-up a promotional event where it pitted its system against the Royal College of General Practitioners exam used to assess trainee doctors. Babylon conducted this test itself rather than turning to an independent body, and Harvey claims that the company cherry-picked the questions included in the test….Babylon announced that its AI scored 81% on the exam, surpassing the average score of 72% for UK doctors.” 

What was at stake? Babylon got where Theranos never did. A year later, it went public via a SPAC in October 2021 at a valuation of $4.2 billion, with the SPAC organizer Alkuri providing $575 million in gross proceeds to Babylon, including $230 million in a private placement from investors such as AMF Pensionsförsäkring and Palantir Technologies. Two years later, its total hull loss was valued at $5,000.

Some of that money, more than $30 million, went to buying Higi, a health kiosk placed in supermarkets and drugstores that is still in operation in 6,000 locations that uses Babylon’s technology. By early 2023, Higi had separated itself in its public releases from Babylon. It’s unknown how the US Chapter 7 will affect the Higi operation.

Now the commentaries by Dr. Watkins and Mr. Harvey are based on their experiences from some years ago. Babylon could have then created a reliable AI system in GP at Hand and their other diagnostic technologies. But generally, it’s very hard to fix the aircraft as it’s being flown.  The situation usually winds up in an episode of ‘Air Disasters’ (‘Air Crash Investigation’ in UK). For those who believe that the problems were never fixed, Dr. Watkins’ analogy would apply. “[Babylon founder and CEO Ali Parsa] should spend some time with Elizabeth Holmes”. Ms. Holmes, as we know, is serving her time in Bryan, Texas for about the next 11 years.  That would be an interesting albeit improbable conversation indeed.

Interestingly, over one month later, there’s evidently no one left at Babylon Health who can pull down the website. It’s fully operational save for this banner on the home page:

Babylon’s US clinical services and appointments are no longer available. For details about your health plan benefits and to find a new provider, contact your health plan.

The investor page, including the stock ticker symbol and last price, is intact. Will the last person out the door turn out the lights and turn off the website?

Additional information on GP at Hand (UK)

This Editor while away sought clarification from Alvarez & Marsal’s press office on the status of GP at Hand. GP at Hand is not part of the administration. The ownership contracted with Babylon for the app. According to their website, there are three partners: Dr. Stephen Jefferies, Dr. Matt Noble, and Rita Bright. How this arrangement will continue is not disclosed. 

This dovetails with their response:

  • GP is a completely separate 3rd party partnership that is a GP practice that contracted with the Babylon Group.
  • It therefore hasn’t gone through any insolvency process and is still contracting with Babylon Healthcare Services Limited (which has remained outside of an insolvency).
  • The GP at Hand practice wasn’t part of the deal because it couldn’t be as it’s not part of the Group.

Previously: Babylon Health in UK administration, assets sold to eMed Healthcare Ltd.

Theranos restitution status: Holmes’ defense claims $250/month repayment *after* release is unfair

Is this thinking ahead or a high-priced legal exercise in futility? The US District Court decisions by Judge Edward Davila pertaining to restitution were clear: $452 million is owed jointly by Elizabeth Holmes and Sunny Balwani to 14 victims, including Safeway and Walgreens [TTA 31 May]. The question is how it will be repaid. The original order by the District Court for Holmes stated only a $25 per month payment while she is at the Bryan FPC. The Justice Department has now requested that the error be amended to now stipulate a $250 per month payment, or at least 10% of her income, after completion of sentence. Holmes’ legal counsel has now filed papers objecting to this assessment, which will take place at least nine years in the future. They cite her “limited financial resources”.

It seems that Holmes will have more trouble paying the $25/month from Bryan, as her financial resources will be even more limited. By some estimations, $25 per quarter is the average earning from prison work. What’s also apparent: her legal counsel is costing her much more than that just for the filing.

Balwani, on the other hand, has been ordered to pay $1,000 per month after his release. The District Court also fined him $25,000 for reasons not disclosed in news sources. Holmes has not been fined. 

One wonders how the lenders will be repaid–proportional checks for pennies? Monthly or quarterly? This Editor is sure that the Murdoch family interests will be waiting eagerly for the payment, while the investments for Murdoch and most others were written off years ago. The small investors whose investment advisors bought shares on the secondary (resale) market get not even that penny.

Much has been made of her net worth circa 2015 when her Theranos stock was valued on the bubble at $4.5 billion, but that was then and this is now. The Feds continue to search for hidden assets held by both Holmes and Balwani. CBSNews, NY Post

Mid-week roundup: Holmes turns herself in, ChatGPT as good ER explainer, VA Spokane to cut staff to pay for Oracle Cerner EHR problems?, former Cerner campus conversion

Holmes’ time at Bryan begins. Today (30 May) in a Texas morning, Elizabeth Holmes self-surrendered to the Federal Prison Camp (FPC) at Bryan to begin her 135-month sentence (11 years+). With good behavior and enrollment in certain programs, she may serve about 85% or about 9.5 years as No. 24965-111. The ‘shakycam’ video link here from Sky News (scroll to 3:18) initially from across the street then at the fence shows her delivery in a NY state-plated Ford Expedition to the facility parking lot. Her parents give her paperwork to the officers, then she with the officers walk into the camp facility, with a goodbye wave by partner Billy Evans (ballcap by the car). After all the drama, the denouement is bog-standard save for the paparazzi. She is wearing glasses, a tan sweater and blue jeans, the latter two which will be exchanged for a uniform. Many might be surprised that the prison camp has green grass lawns and trees, without towers or impenetrable fences. This is a low security facility for 650 women on 37 acres, but it remains a prison with all the schedules and restrictions that entails.

Her appeals to the Ninth Circuit Court on her conviction and sentencing, with now the restitution, continue as does the puzzle of how to compensate the victims identified by the US District Court as being owed $452 million payable jointly by her and Sunny Balwani. The order of restitution is here (PDF) There are a dozen identified financial victims from the relatively small (the Eisenmans’ $150,000) to the $125 million of Keith Rupert Murdoch. Both Safeway ($14.5 million) and Walgreens ($40 million) are identified separately. At this point at Bryan, she will be earning between $0.12 and $1.15, earning perhaps $25 every four months based on older data. According to the BBC article today, half of that will go to her victims, said Randy Zelin, a professor at Cornell Law School. The Feds will continue to scrutinize for hidden assets. Mercury News

Our Theranos Saga that started in October 2015 now endeth here, except for news on appeals or changes in circumstances.

On a somewhat lighter note, this non-paywalled Insider article charts the up and downsides of using ChatGPT as an explainer to patients in the ER/ED.  Joshua Tamayo-Sarver, MD, has been an ER doctor for almost 14 years as well as a VP of innovation for two healthcare tech companies, Vituity and Inflect Health. He recently started using ChatGPT4 as an adjunct to treatment, to explain difficult emergency situations to patients and family in simple non-medical language. Dr. Tamayo-Sarver’s article in Fast Company provides a solid narrative of how the simplicity and empathy of ChatGPT’s explaining treatment (in this case of a 96 year old woman with lung edema and dementia) works and helps the staff de-escalate the situation developing with her children and give them a chance to start her correct treatment determined by the doctor, not ChatGPT. (What was her outcome?) As the doctor explains, working with ChatGPT is inadequate for diagnostics, but adequate for ‘hungover intern’ level actions: taking patient history, creating long-form communication for patients and staff, and explaining highly technical information with empathy and compassion.

Will the Spokane VA location which proved to be The Last Straw for the VA with Oracle Cerner from October 2022 pay for it with cuts in staff? This year, Mann-Grandstaff VA Medical Center is projected to run a budget deficit of about $35 million. In a March email, the Mann-Grandstaff director Robert Fischer stated that the Northwest VA VISN (regional) director said this will require Mann-Grandstaff to cut about 15% of staff. Yet the VA chief of VA health care, Shereef Elnahal, has denied this. The controversy around this has prompted VA’s secretary, Denis McDonough, to issue a statement that he will look into these reports but stopped short of confirming that no staff would be cut. Spokesman-Review (Spokane)  Hat tip to HISTalk 31 May

Cerner’s Continuous Campus in Kansas City, Kansas, apparently will be redeveloped. Two local developers are in contract with Oracle to buy the empty 63.5 acre property with twin nine-story office towers. Last week, local authorities approved rezoning with an amended master plan. Developer plans are to convert the north tower to 224 to 232 market-rate apartments above ground-floor commercial space. While the plan for the south tower is to stay as 660,000 square feet of office space plus parking, no interest has come from lessees. According to reports, Oracle’s purchase of Cerner and shutdown of many operations in the area dumped 4.1 million square feet of real estate in the area.  Fox4KC

Breaking & updated–Time’s Up! Ninth Circuit Court to Elizabeth Holmes: proceed to Federal prison. District Court: surrender 30 May, pay $452M in restitution with Sunny.

Breaking/Updated. With the bail pending appeal denied, it was back to Judge Davila and the US District Court to determine a new surrender date to a Federal penitentiary. That date is now 30 May. The Ninth Circuit Court of Appeals ruled Tuesday that Elizabeth Holmes’ appeal did not meet the standard for a further delay of her sentence–that it raised a substantial question of law or fact–and that her motion for bail pending appeal was denied. The ruling by the three-judge panel was brief and is here (PDF) with the pertinent text below:

Appellant’s motion for bail pending appeal (Docket Entry Nos. 36-38) is
denied. Appellant has not shown that: (1) the appeal raises a “substantial question”
of law or fact that is “fairly debatable,” and (2) if that question is decided in
appellant’s favor, the likely outcome is reversal, an order for a new trial on all
counts resulting in imprisonment, a sentence that includes no term of
imprisonment, or a sentence with a term of imprisonment less than time served
plus the expected duration of the appeal process. {USC and Hardy references snipped}

The existing briefing schedule remains in effect.

The appeal remains ongoing. The Ninth Circuit could require a new trial or a fresh sentence, but Holmes will be in prison serving time while the appeals court reviews it. Her chances of receiving any changes as a result of this appeal can be characterized as slim to none.

The defense requested self-surrender on 30 May (2 weeks) and Judge Davila granted it two hours later today (Wednesday). That motion is here with Judge Davila’s order is here. The judge had recommended the Federal Prison Camp (FPC) at Bryan, Texas, but a final assignment confirmation is to be confirmed by the Bureau of Prisons (BOP).  Mercury News

Also Tuesday, Judge Davila set the full amount of restitution to those defrauded by Theranos as $452 million. Both she and Sunny Balwani will be jointly liable for the restitution amount. It is higher than the $381 million the judge used for sentencing purposes [TTA 9 March] but this Editor notes that the AP stated that it is joint. There is an additional $25 million in promissory notes signed by Holmes which are part of a civil action [TTA 25 March]. How this restitution breaks out will require an examination of that restitution decision.

One wonders if Liz or Elizabeth (pictured above) will be the woman serving and paying off this amount, if one believes the incredible tale by Holmes in the New York Times two weeks ago. It’s a lot of bag lunches. Mercury News 

Breaking: Elizabeth Holmes’ surrender stayed by 9th Circuit Court of Appeals

This just in. As expected, Elizabeth Holmes will not be surrendering to Federal prison tomorrow, 27 April. Her defense filed yesterday for an emergency stay in the Ninth Circuit Court of Appeals. The court granted it on 25 April, yesterday. Since she was free on bail at the time of the filing, this emergency stay keeps it in effect until her motion for continued bail pending appeal is ruled on.

The PDF of the two-page notice is here.

While the surrender will be stayed based on the court’s rules, if the court follows the similar circumstances of Sunny Balwani’s stay and appeal, Holmes will have perhaps a month more freedom on bail before a further extension of bail is rejected. The main 100+ page appeal based on prosecutorial misrepresentations and actions by Judge Edward Davila in the presentation of evidence, plus oversentencing. will be reviewed by the court [TTA 19 April], which may take about a year. Neither the extension of bail or the appeal are given much chance of success.

Now what happens? The Daily Mail revealed that she and Billy Evans are living in an oceanfront San Diego rental, with their two children William and newborn Invicta, born on 9 February in San Diego. The residence is supposedly priced at $9 million. They have departed the rental in Silicon Valley and moved to Mr. Evans’ sunnier home town where the family will remain. Evans and his parents are readying a $3 million townhouse. They will be caring for the two children while the inevitable long trip to Bryan, TX–if Bryan will be the Federal facility–happens. To be updated.