Theranos to shut down controversial blood clinics and fire 340 people
It’s sure looking like the end of the road for Theranos.
After months of hounding from regulators and investigative journalists, the blood-testing startup said in a statement Wednesday that it’s closing its blood-drawing sites, called “Wellness Centers”, and clinical labs. CEO Elizabeth Holmes wrote that the decision “will impact approximately 340 employees in Arizona, California, and Pennsylvania.”
Ever since the Wall Street Journal first reported about serious accuracy issues with the company’s blood-testing technology nearly a year ago, the once high-flying startup and its celebrity CEO have experienced a rapid reversal of fortune.
After the initial report, more damaging stories about Theranos’ technology trickled out, and the company was forced to void two years’ worth of test results. Meanwhile, regulators began a series of investigations and issued penalties that have effectively spelled doom for the company and its founder.
They include a criminal probe from federal prosecutors over whether Holmes misled her investors and the public; an inquiry from the Securities and Exchange Commission; a possible FBI investigation; and, most punishing, a two-year ban for Holmes from operating blood-testing labs, issued in July by the Centers for Medicare and Medicaid Services.
Theranos’ commercial partners have all but abandoned the company, having lost faith in the startup’s claims that its proprietary technology could produce cheaper, accurate blood tests that required using less blood. Walgreens, Theranos’ biggest corporate partner, killed its deal and shut down all its Arizona in-store Theranos testing centers in June.
In December, the Centers for Medicare and Medicaid Services sent a letter to Theranos stating that the company’s blood results with its Edison machines, which had been used in Walgreens clinics, were extremely troubling. In fact, the regulators wrote, they posed “immediate jeopardy” for some patients.
Since the Theranos scandal broke last year, Holmes has remained firmly in the spotlight, even as her company has come undone.
The 32-year-old Holmes, who’d graced the covers of outlets like Forbes, Inc., and the New York Times Style Magazine, was initially hailed as the world’s youngest self-made female billionaire. After the Journal article, she defended Theranos vociferously on TV to CNBC’s Jim Cramer. In the weeks and months after, however, she came to acknowledge the startup’s severe problems, while still loudly defending its work.
Even as her company unraveled, Holmes continued to enjoy her profile as a business celebrity. In mid-September, she was spotted at the after-party for the launch of tennis superstar Serena Williams’ fashion line. At one point during the evening, the Fader reported, she was seen “standing back to back” with the R&B singer Mario.
Now that Holmes and Theranos are out of the commercial lab game, Holmes says the company will shift focus to its latest product: a newer, different, smaller blood-testing device called the “miniLab.”
“We will return our undivided attention to our miniLab platform,” Holmes said in the release. “Our ultimate goal is to commercialize miniaturized, automated laboratories capable of small-volume sample testing, with an emphasis on vulnerable patient populations, including oncology, pediatrics, and intensive care.”