When Theranos CEO Elizabeth Holmes presented a new device at a conference this summer, it seemed to be a bid to distract from the company’s much-criticized blood-testing tech. Now, Theranos is abandoning its fingerprick blood tests entirely so it can focus on its new tabletop blood-testing system.
After “many months” of reflection, the company has elected to close its clinical labs and Theranos Wellness Centers in California, Arizona and Pennsylvania, Holmes wrote in a letter on Wednesday. This will affect “approximately 340 employees,” she said, amounting to a 40% cut in its workforce, according to The Wall Street Journal, which reported that Theranos employed 790 as of Aug. 1.
Theranos has been under fire since WSJ exposed problems with its proprietary blood-testing technology. Since then, the Centers for Medicare and Medicaid Services has investigated the company’s Newark, CA, lab and handed down sanctions; the company’s chief operating officer has jumped ship; and its partner, drugstore giant Walgreens, terminated their relationship, shutting down 40 Theranos Wellness Centers in Arizona and losing $50 million by investing in Theranos.
The embattled company has tried various tactics to assert the legitimacy of its blood tests, including stacking its scientific advisory board with lab and pathology experts, forming a new compliance committee and voiding tens of thousands of test results.
At the American Association for Clinical Chemistry’s annual meeting in August, Holmes introduced a totally new device, the miniLab sample processing unit that allows diagnostic testing in a “decentralized setting.” Since the CMS sanctions banned Holmes from operating a lab for two years, the 95-pound device, which doesn’t need to be used in a lab, was seen as a way for the company to get around that setback. While Holmes has appealed the sanctions, Theranos is banking on the new tech to keep the company alive.
“We will return our undivided attention to our miniLab platform,” Holmes wrote in the letter. “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.”