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Elizabeth Holmes- Case Archive
personpersonBrian GrossmanBrian GrossmanPFM Health Sciences investment manager involved in the firm's Theranos diligence and investments.← All People
WitnessPFM Health Sciences

Brian Grossman

PFM Health Sciences investment manager involved in the firm's Theranos diligence and investments.

AppearedFederal Criminal Trial
1,759 lines·16 proceedings·12 mentions

About

Brian Grossman testified for the government about PFM's evaluation of Theranos and his work as a portfolio manager and head of the firm's healthcare team. He described the questions, meetings, company materials, investment assumptions, and financial analysis that informed PFM's decision to invest.

PFM's work included industry and regulatory research, technical review, outreach to physicians and consultants, patient testing, internal debate, and financial modeling. Grossman also described constraints on that work. Theranos restricted direct access to Walgreens and UnitedHealth, limited company-specific disclosures to some outside experts, and supplied only part of the technical information PFM sought. PFM reviewed samples rather than complete data or FDA filings and relied in part on company representations, including statements about CLIA certification.

On cross-examination, Grossman acknowledged that PFM knew of concerns involving intellectual property, execution, regulation, assay accuracy, venous draws, delayed results, and patient experience. He confirmed projections of $249 million in 2014 revenue and $1.558 billion in 2015, along with a $20.3 billion discounted-cash-flow valuation for the United States opportunity. The defense emphasized PFM's sophistication, its independent diligence, and its responsibility for its financial model and investment decision.

Grossman responded that restricted access and incomplete information constrained PFM's diligence. He explained that early forecasts relied heavily, though not exactly, on Theranos assumptions, while later years used PFM's methodology. He also distinguished the initial hub-and-spoke investment premise from later device deployment and described PFM's investor presentation as a high-level overview rather than a complete account of every diligence issue.

Cross-examination also developed limits in Grossman's memory of specific meetings, analyses, and conversations, sometimes requiring contemporaneous documents to identify events. On redirect, Grossman returned to venous draws, forecast reliance, model omissions, third-party costs, and the investment premise.

Trial Record (16)

FederalFederal Criminal TrialAug 31, 2021 – Jan 3, 2022Called by prosecution

Brian Grossman testified for the government about PFM's Theranos diligence, investment assumptions, and financial modeling. Cross-examination emphasized PFM's sophistication and knowledge of risks, while Grossman said restricted access and incomplete technical information left the firm relying in part on Theranos representations.

Day 4

OpeningOpening Statement by the ProsecutionRobert S. LeachMentioned

Summary

The prosecution alleged that Elizabeth Holmes and Ramesh Balwani defrauded Theranos investors and patients through misrepresentations about the company's technology, partnerships, finances, retail rollout, and test accuracy. It previewed insiders, investors, patients, outside organizations, and records that it expected would support the wire-fraud and conspiracy charges.

Mentioned in this proceeding.

Day 11

Day 18

Day 33

DirectBrian Grossman — DirectBrian GrossmanRobert S. Leach4highlights386lines spoken

Summary

Grossman described PFM's extensive Theranos diligence, the technology and business claims he attributed to Holmes and Balwani, information about third-party machines he said was not disclosed, and the three PFM-related investments documented by admitted agreements and wire information.

Highlights (4)

evidence eventExhibit 1404 was admitted, and Grossman explained that PFM repeatedly asked about accuracy, commercial capabilities, and technological limitations; he testified that Holmes said there were no analytical techniques Theranos could not perform on its proprietary technology.Open in transcript →
Quote“IT WOULD HAVE RAISED A WHOLE SERIES OF QUESTIONS ABOUT WHAT THE TECHNOLOGY WAS CAPABLE OF DOING.”— Brian GrossmanHe explained why disclosure of third-party testing equipment would have changed PFM's technical diligence.Open in transcript →
testimony highlightGrossman described tours of Theranos's Newark manufacturing facility and Palo Alto CLIA laboratory, where he saw Minilabs but no Siemens or other third-party blood-testing machines.Open in transcript →
Quote“SO THEN I'M ASKING, IS THERE A WAY THAT WE CAN SEE A PART OF THE LAB THAT DOESN'T HAVE THIS PROPRIETARY PATENT PENDING AUTOMATION SO THAT WE CAN MAKE SURE THAT YOU ACTUALLY ARE USING YOUR OWN PROPRIETARY TECHNOLOGY IN A CLIA LAB ENVIRONMENT?”— Brian GrossmanThe statement captures PFM's attempt to verify laboratory operations despite restrictions on access.Open in transcript →
CrossBrian Grossman — CrossBrian GrossmanLance A. Wade4highlights587lines spoken

Summary

Defense counsel emphasized PFM's sophistication, independent diligence, and control over its investment decision, while Grossman maintained that restricted access to Theranos's partners left PFM reliant on company representations.

Highlights (4)

Quote“I DON'T MAKE EVERY INVESTMENT DECISION, BUT I HAVE THE FINAL INVESTMENT DECISION FOR THE PORTFOLIO.”— Brian GrossmanGrossman clarified his ultimate authority over the healthcare portfolio while rejecting the broader premise that he personally made every decision.Open in transcript →
evidence eventEmails admitted as Exhibits 7353 and 7354 traced PFM's introduction to Theranos and showed that Grossman initially knew little about the company before conducting preliminary research.Open in transcript →
testimony highlightQuestioning about venous testing established that Grossman knew Theranos performed venous draws but did not recall asking whether those samples were run on commercial analyzers; he said such use of microsamples on conventional equipment would have troubled him.Open in transcript →
Quote“I WOULD FIND THAT VERY TROUBLESOME BECAUSE THAT EQUIPMENT IS FDA APPROVED TO BE USED WITH THE COLLECTION DEVICES THAT ARE IN THE MARKET, THE LARGER VENOUS DRAWS.”— Brian GrossmanGrossman explained why undisclosed use of microsamples on conventional laboratory equipment would have concerned him.Open in transcript →
ProceduralSealed In-Camera Proceeding Regarding Prior Sealed MatterMentioned

Summary

The court arranged a renewed in-camera discussion of an earlier sealed matter and pressed defense counsel for a timetable to complete Brian Grossman's cross-examination. Counsel expected to finish the next day, and the government agreed to have additional witnesses ready.

Mentioned in this proceeding.

Day 34

CrossBrian Grossman — CrossBrian GrossmanLance A. Wade5highlights730lines spoken

Summary

Grossman acknowledged that PFM knew of technical, regulatory, execution, venous-draw, and patient-experience risks before investing, while maintaining that PFM conducted extensive diligence, viewed many risks as limited or manageable, and relied partly on Theranos representations when access to company-specific outside review was restricted.

Highlights (5)

evidence eventThe court admitted Exhibit 7391, limiting the final January 10 email to Grossman's state of mind rather than the truth of its assertions.Open in transcript →
Quote“MR. BALWANI WAS UNWILLING TO GRANT HIM ACCESS BECAUSE WE WEREN'T ABLE TO DISCUSS ANY -- AS YOU CAN SEE IN THIS EMAIL, WE COULDN'T TALK TO HIM ABOUT ANY OF THE ISSUES WE WANTED HIS INPUT ON.”— Brian GrossmanGrossman described a concrete limitation on PFM's ability to obtain Theranos-specific advice from a proposed outside expert.Open in transcript →
admissionGrossman acknowledged that PFM assumed venous samples were still run on Theranos proprietary analyzers during diligence, although he could not identify a specific investment-period conversation establishing that assumption.Open in transcript →
Quote“THE MODEL REALLY HAS TWO STAGES. IN 2014 AND 2015, WE RELIED HEAVILY ON THE THERANOS ASSUMPTIONS. WE DIDN'T TAKE THEM WORD FOR WORD, NUMBER FOR NUMBER, BUT WE RELIED ON THOSE.”— Brian GrossmanGrossman clarified the relationship between Theranos's supplied forecasts and PFM's own financial analysis after pointed questioning about the models' differing methodologies.Open in transcript →
Show all 5 highlights
evidence eventExhibit 4089 documented the analyst team's preinvestment assessment of assay and regulatory risks, including possible FDA delays and the possibility that some tests would remain venous draws. Grossman accepted that PFM requested the assessment but emphasized its limited data basis and the distinction between CLIA operations and longer-term FDA approval.Open in transcript →
RedirectBrian Grossman — RedirectBrian GrossmanRobert S. Leach5highlights56lines spoken

Summary

Grossman reaffirmed that PFM relied on Theranos and Holmes for representations about venous draws, revenue forecasts, proprietary Minilabs, regulatory status, and military use.

Highlights (5)

testimony highlightGrossman testified that Theranos described venous draws as roughly 1 to 2 percent early in the rollout, with plans to reduce that proportion below 1 percent, and that he was never told it was near 40 percent. He explained that limited venous draws were important to PFM's understanding of the technology and business.Open in transcript →
testimony highlightGrossman said PFM used Theranos's 2014 and 2015 forecasts as important inputs rather than copying them exactly, regarded the company as better positioned to project its revenue, and did not expect a billion-dollar miss during that period.Open in transcript →
testimony highlightGrossman testified that he found no assumptions concerning third-party or Siemens machines when PFM closely examined Theranos's detailed model.Open in transcript →
Quote“WE DID RELY ON STATEMENTS FROM MS. HOLMES IN THAT MEETING.”— Brian GrossmanGrossman directly reaffirmed PFM's reliance on Holmes's statements during their initial meeting.Open in transcript →
Show all 5 highlights
Quote“THE, THE BUSINESS THAT WE WERE INVESTING IN WAS REALLY A HUB AND SPOKE MODEL USING THESE MINILABS TO BUILD SMALL LABORATORIES. THE EXAMPLE IN THE PHOENIX MARKET, 200 SQUARE FEET, THEY COULD SUPPORT THAT WHOLE OPERATION WITH THE MINILABS. SO ROLLING THOSE OUT TO DIFFERENT URBAN AREAS IN THE U.S., LEVERAGING WALGREENS'S RETAIL FOOTPRINT, SAFEWAY'S RETAIL FOOTPRINT WAS THE WAY WE BUILT THE MODEL AND WAS THE BASIS FOR THE INVESTMENTS THAT WE MADE. THE UP SIDE OF BEING ABLE TO DELIVER THESE, DEPLOY THESE INTO A WALGREENS RETAIL SETTING OR ANOTHER RETAILER WAS, WAS AN UP SIDE SCENARIO ABOVE AND BEYOND, YOU KNOW, HOW WE THOUGHT ABOUT OUR, OUR TRANSLATING THESE CONCEPTS, THESE REPRESENTATIONS, THESE STATEMENTS FROM THE COMPANY INTO AN ACTUAL FINANCIAL FORECAST.”— Brian GrossmanGrossman distinguished PFM's core hub-and-spoke investment case from the later possibility of placing devices directly in retail locations.Open in transcript →

Day 39

ProceduralHearing on Admission of Sunny Balwani’s Prior TestimonyMentioned

Summary

The defense sought to admit selected SEC deposition testimony from Ramesh Balwani under two Rule 804 exceptions. The government opposed admission, and the court probed unavailability, self-inculpatory character, corroboration, SEC-DOJ alignment, completeness, and the lack of prosecution cross-examination without announcing a ruling.

Mentioned in this proceeding.

Day 40

Day 42

CrossElizabeth A. Holmes — CrossElizabeth A. HolmesRobert S. LeachMentioned

Summary

Holmes acknowledged that Theranos devices were not clinically deployed with the military, that the company used third-party analyzers, and that key disclosures to investors, Walgreens, and Roger Parloff omitted or misstated aspects of actual laboratory operations. The prosecution also confronted her with divergent revenue projections, laboratory warnings, prototype limitations, special investor-visit workflows, and her knowledge of the troubled 2015 CMS inspection.

Mentioned in this proceeding.

Day 47