Theranos Closes Labs to Focus on Technology Instead

Despite appealing the Centers for Medicare and Medicaid’s (CMS) sanctions resulting from inspection of its Newark, California laboratory, Theranos has now announced it will shut down its laboratory operations. In July, CMS issued a letter to the company explaining that its corrective action in response to the agency’s notice of deficiencies failed to “constitute a credible allegation of compliance and acceptable evidence of correction” of the deficiencies found in the 2015 inspection. CMS proposed revocation of the lab’s CLIA certificate, cancellation of approval for Medicare/Medicaid payment for all laboratory services, and a civil money penalty. CMS also requested a list of names and addresses of all physicians and clients who used the lab’s services since January 2014. Most importantly, those sanctions included a prohibition against founder Elizabeth Holmes owning, operating or directing a lab for two years.

On Oct. 5, Theranos released a statement saying “[a]fter many months spent assessing our strengths and addressing our weaknesses, we have moved to structure our company around the model best aligned with our core values and mission.” That restructuring includes closing clinical labs and wellness centers—affecting “approximately 340 employees in Arizona, California and Pennsylvania.”

Now, the company will focus its efforts on developing technology—namely the miniLab, which Holmes detailed at the AACC annual meeting in August. The miniLab is a compact device (2.5 cubic feet) containing a mini-robot that processes single-use cartridges with the Theranos Virtual Analyzer remotely dictating protocols for processing. “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,” said the company’s Oct. 5 statement.