Theranos CEO Holmes
barred from operating lab for two years
Send a link to a friend
[July 09, 2016]
By Ankur Banerjee and Natalie Grover
(Reuters) - Theranos Inc founder and CEO
Elizabeth Holmes, once touted as the Steve Jobs of biotech for her
company's innovative blood-testing technology, has been barred by a U.S.
regulator from owning or operating a lab for at least two years.
Dealing the biggest blow yet to the privately held company, the Centers
for Medicare & Medicaid Services revoked a key certificate for its
California lab and terminated the facility's approval to receive
Medicare is the government's medical insurance program for the elderly,
while Medicaid is for the poor.
The sanctions, which also include an unspecified monetary penalty, come
six months after the regulator sent a scathing letter to the company,
saying its practices were jeopardizing patient health and safety.
Theranos said late on Thursday that it would continue to service its
customers through its Arizona lab.
In a separate statement, the company said on Friday that it was working
closely with the agency to resolve the sanctions.
"It's important to note that the CMS review pertained to the operations
of the company's Newark lab, not its technologies," Theranos said,
adding that the regulator provides 60 days to initiate an appeal.
The company, once valued at $9 billion, was founded by Holmes in 2003 to
develop an innovative blood testing device that would give quicker
results using just one drop of blood.
However, its fortunes waned after the Wall Street Journal published a
series of articles starting in October last year that suggested the
devices were flawed and inaccurate.
Forbes magazine said last month that the company's value had fallen to
about $800 million, while Holmes' own net worth had shrunk to zero from
about $4.5 billion - a figure the magazine had said had made her the
richest self-made woman in America.
[to top of second column]
Elizabeth Holmes, founder and CEO of Theranos, speaks at the Wall
Street Journal Digital Live (WSJDLive) conference at the Montage
hotel in Laguna Beach, California, October 21, 2015. REUTERS/Mike
"Everyone wanted her to succeed," Steve Brozak, president of WBB Securities,
told Reuters, noting that the basic blood diagnostics sector has not had a
significant advance in technology in 90 years.
Walgreens Boots Alliance <WBA.O> terminated its relationship with the company
last month and closed operations at all 40 Theranos Wellness Centers at its drug
stores in Arizona.
Theranos is also facing a class action lawsuit filed in May accusing it of
endangering customer health through "massive failures" that misrepresented test
The Palo Alto, California-based company is also being investigated by other
federal and state agencies, including the U.S. Securities and Exchange
Commission and the State Department of Health in Arizona.
(Reporting by Natalie Grover and Ankur Banerjee, additional reporting by Amrutha
Penumudi in Bengaluru; Editing by Sriraj Kalluvila, Ted Kerr, Anil D'Silva)
[© 2016 Thomson Reuters. All rights
Copyright 2016 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.