Theranos, a healthcare technology company focused on blood testing, laid off about 80 percent of its workforce in an effort to avoid bankruptcy for a few more months, reports The Wall Street Journal.
The massive round of layoffs, which is the third round since the company was accused of being misleading about its technology, reduces the company's workforce from about 125 to 24 or fewer. In late 2015, the company had about 800 employees.
While Theranos received a $100 million loan from Fortress Investment Group to keep it afloat, it must abide by various terms of the loan agreement. One of these requirements is obtaining FDA approval for a blood test to detect Zika, which it did not receive. According to the WSJ, the company was still experiencing reliability problems with the test. In addition, another criteria is that the company must keep its cash reserves above $3 million until the end of July, which the latest round of layoffs should enable Theranos to accomplish, according to the report.
However, if the layoffs do not help and the cash reserves dip below the $3 million threshold, Fortress can seize the company's assets and liquidate them.
Theranos founder and CEO Elizabeth Holmes, who recently settled fraud charges brought against her and the company for lying to investors, announced the layoffs at an employee meeting. To settle the fraud charges, Ms. Holmes paid a civil fine of $500,000 and agreed to not serve as a director of any publicly-listed company for 10 years.