×

Theranos says it settled lawsuit with major investor

Elizabeth Holmes
David Orrell | CNBC
Elizabeth Holmes

Theranos said it has settled lawsuits with one of its biggest backers.

The blood-testing start-up said on Monday it had reached a confidential settlement with hedge fund Partner Fund Management, which invested more than $96 million in Theranos in 2014.

Partner Fund Management had accused Theranos of securities fraud, alleging that the company had attracted the investment '[t]hrough a series of lies, material misstatements and omissions."

The fund declined to comment to CNBC.

Theranos has come under fire over the past few years, after Wall Street Journal investigations questioned the efficacy of its blood testing technology, raising flags for regulators. But Theranos has now resolved proceedings with the Centers for Medicare & Medicaid Services, as well as the Arizona Attorney General.

The resolution of these disputes means that founder Elizabeth Holmes can move forward with a plan to surrender some of her stake in the company, according to a press release by the company. The Journal had previously reported the stock tender, noting that in exchange for receiving extra shares, shareholders were to agree not to sue the company.

Holmes plans to give away shares to the "most significant shareholders," almost all of whom agreed to participate in the deal, Theranos' statement said. It was not clear whether investors had agreed not to sue as part of the arrangement.

"Theranos is pleased to have resolved both lawsuits with PFM. Although we are confident that we would have prevailed at trial, resolution of these two cases allows our tender offer to go forward and enables us to return our focus where it belongs, which is on executing our business plans and delivering value for our shareholders," Theranos general counsel David Taylor said in a a statement.

Watch: Theranos founder giving away shares to avoid lawsuits