Nanalyze

5 Reasons Why Theranos Could IPO Soon

The term “unicorn” is often bandied about in the venture capital community and refers to a privately held startup company that has reached a $1 billion valuation. The biggest unicorn in the meadow today happens to be Xiamoi, the hardware company that backed Ninebot and which has managed to achieve a valuation of 46 unicorns or $46 billion. Not far behind in 2nd place is Uber with a valuation of 41 unicorns. So which healthcare startup is the most highly valued unicorn at the moment? We might have made guesses such as Proteus, 23andMe, or Nanthealth,  but while these 3 companies are all healthcare unicorns, they’re not the biggest one. The biggest one today is a company you may never heard of called Theranos. And it’s one exciting company valued at 9 unicorns or 4.5X as many unicorns as Nanthealth.

In 2003, Elizabeth Holmes dropped out of Stanford at the age 19 to found Theranos. Since then, the Company has taken in $94 million in funding and at current valuations, has made Elizabeth the world’s youngest self-made female billionaire. The value proposition is a simple one. Theranos claims they can run up to 30 common laboratory tests within hours using just a few drops of your blood obtained by using a small lancet on your fingertip as opposed to sticking a needle in your arm and withdrawing a large vial of blood as is the typical practice. Most notably, the price points for Theranos’ 200 blood tests are incredibly low and if the company has its way, will be incredibly accessible as well.

Here’s a use case. You’re a student at the University of Phoenix and you just woke up on a Saturday morning. After a few too many adult beverages at one of those notorious sorority parties on campus, you realize you exposed yourself last night to a high-risk sexual encounter. You think about making an appointment with your doctor and having one of those awkward conversations but instead, you pop into one of the many Walgreen locations where the Theranos tests are offered:

Theranos_Phoenix_Locations

You fill out the test order form and while there are over 200 tests you can choose from, you opt for the “Sexual Health” package which pretty much covers all the bases and costs just $59.95.

Theranos_Order_Form

You submit the form and the technician (who has no idea what you’re being tested for) takes your blood sample using a small lancet on your fingertip. The entire process is over in about 20 minutes and the results are available in 24-48 hours, with the actual average being around 4 hours.

Some could argue that the availability of this test promotes irresponsible behavior, but that’s not the point we’re trying to make here. The point is that if you live in the Phoenix area, you can now access over 200 blood tests for a fraction of the price that would be charged at a laboratory. A pregnancy test for around $5? A fertility test for around $35? Those are incredibly low price points. Most importantly, these tests are accessible and the process is a comfortable one, especially if you’re as scared of needles as the founder of Theranos is.

So what technology is being used here? The Theranos process has been notoriously secretive but is known to use microfluidics. A quick USPTO patent search shows 41 patents assigned to Theranos. Right now, Theranos tests are only offered in Walgreens in Arizona because as of last April, Arizona became the first state to pass legislation that allows any lab test to be ordered by a consumer without a doctor’s request. Just 3 months later we see Theranos tests available in 16 different cities in Arizona. No doubt Theranos believes that other states will follow and ultimately would like to see their test platform available in all 8,217 Walgreen stores located in all 50 U.S. states.

So here are 5 reasons we think Theranos may IPO soon:

  1. Biotech IPOs have been hot this year. Theranos has a value proposition easily understood by everyone; the cheapest blood tests anywhere made accessible to everyone.
  2. The Company has to believe other States will pass similar legislation that Arizona has and they’ll need capital to rapidly expand their offering when that happens.
  3. With the richest valuation of any private healthcare company today, Theranos had their last funding round 5 years ago. Draper Fisher Jurvetson has participated in 3 rounds of funding with their last participation 9 years ago. Investors have to be looking for an exit soon.
  4. FDA approval of the Theranos hardware, software, and testing platform occurred earlier this month.
  5. Awareness is growing and it is becoming increasingly difficult for Theranos to continue operating in stealth mode
Theranos_Google_Searches

Google Trends: Theranos

If all the billions of blood tests performed each year in the U.S. used the Theranos platform, the Company estimates they could save Medicare $98 billion and Medicaid $104 billion over the next decade. When Theranos finally files that S-1, it’s going to be one exciting read.

Do you want to trade stocks for free? For the rest of your life? TD Ameritrade has completely eliminated commissions for  stocks, ETFs (domestic and Canadian), and options. Open up an account with TD Ameritrade today and make brokerage fees a thing of the past.

  • David Mehaffey

    Sign me up for IPO Theranos. Gotta be a winner. 12 years now? Long time investment.

  • Paul shapiro

    I would like to participate in the Theranos IPO
    Please inform me how to do so.

    • VIDAL MORFIN

      Me too. Please inform me as well.

      • Nanalyze

        Thank you for the comments guys. There is no Theranos IPO to participate in yet because they haven’t announced one. When they do, we’ll publish an update.

        • Adam Tran

          What a pity to hear that Theranos is under investigation for fraud. I hope Mrs Holmes will get over and clear it soon. Please update me via email how to invest in Theranos IPO or even the IPO starts.

  • nancy acito

    Would like to receive more information!

  • Mike C

    I wonder if Theranos CEO and other stock holders , including VC like Draper, been influenced by the potential of a big IPO payday, and that big money influence has clouded their vision in terms of refining, testing, validating their core technology. As you can read in the WSJ, Theranos has a credibility problem. They cannot answer straightforward questions about how they have done validation tests, and their Edison machine does not seem to work. Only one out of a promised 240 tests can be done with a nano-tainer quantity of blood; the rest seem to require a full needle draw. I’ll pass on Theranos IPO unless there is some short play – they may be worth far less than $9 billion.

Don’t have your M.D.?

We can help. Our MBAs will keep you informed about life sciences.