Theranos' Arizona Lab Also Had License Revoked: WSJ

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Update Wednesday, Feb. 22 Remember how during the presidential election Donald Trump managed to lurch from campaign-ending misstep to campaign-ending misstep without those missteps actually ending his campaign?

Well, Theranos ain't no Donald Trump.

You hate to beat a dead unicorn, but The Wall Street Journal keeps stomping on this one's lifeless head.

It would take, say, a graphic cartoon history to lay out every wrong turn Theranos has taken the last year-and-a-half or so. But today's bad news emanates from a Journal report that the Centers for Medicare & Medicaid Services (CMS) has levied harsh penalties on Theranos' now-shuttered Arizona lab, sanctions similar to those earlier imposed by CMS on the company's California facility (also shut down).

The penalties in the more recent case stem from a government inspection of the Arizona lab in September. They include pulling the lab's license to operate, according to the Journal.


Theranos announced it was exiting the consumer blood testing business last October. But the government, which had warned the company that closing the lab would not stop the penalty process, informed Theranos of the Arizona-related sanctions in a Jan. 27 letter. That was obtained by the Journal in a public records request.

Theranos can still appeal the ruling, as it has appealed the CMS penalties related to its California lab. But whatever happens with these cases may be moot as far as the company's ultimate fate is concerned. Last week, the Journal reported Theranos had just $200 million left at the end of 2016, with no money set aside for potential liability in the many lawsuits that have been filed against it. Those suits are all related in one form or another to Theranos' inability to accurately perform the blood tests it said it could.

Theranos and its founder and CEO, Elizabeth Holmes, have pinned hopes for a comeback on a portable blood-testing device called the miniLab. But there's no telling when and if the machine will gain  FDA approval.

Update Thursday, Feb. 16 Citing "people familiar with the matter," The Wall Street Journal is reporting Theranos had $200 million left at the end of 2016, less than a quarter of what it raised from investors.

The number was disclosed in a conference call with investors last month. Investors also were told the firm didn’t generate any material revenue in 2015 and 2016 and hasn’t set aside funds for any potential liability that could arise from its pending legal challenges.

Theranos, once a high-flying blood-testing startup, is being sued by a lot of different parties--patients, investors and its former business partner Walgreens--for hundreds of millions of dollars.

The company's never-ending woes began with a Wall Street Journal investigation published in October 2015. The paper found, among other improprieties, that Theranos failed to report data showing its vaunted technology, supposedly capable of performing dozens of tests from a few drops of blood, may not be accurate.

Penalties stemming from a disastrous federal inspection report of Theranos' California lab eventually forced the company to withdraw from the consumer blood-testing business and to lay off hundreds of workers.

More recently Theranos and its founder and CEO, Elizabeth Holmes, had pinned hopes for a comeback on a portable blood-testing device called the miniLab. But there's no telling when and if the machine will gain the FDA's approval.

Original post

Yesterday ...

Carreyrou, who first broke the news that Theranos was better at press releases and TED Talks than implementing the cutting-edge blood tests it said it could perform, was referring to this article by his Wall Street Journal colleague John Weaver. The Journal, through a public records request, got a hold of a federal inspection report documenting a number of deficiencies at the company's now-shuttered Scottsdale, Arizona lab.

The Sepember 2016 inspection, by the Centers for Medicare & Medicaid Services, found a lack of quality control and incorrect use of equipment for several common tests. Furthermore, CMS found no evidence that Theranos notified doctors or patients that patients' blood glucose results from February-June 2015 may be inaccurate. Theranos also failed to ensure that doctors and patients received corrected reports of incorrect blood coagulation tests from Feb. 17, 2015 through Jan. 20, 2016.

Theranos told the Journal "that notifications to patients and their doctors were part of the company’s efforts to address the problems, but it didn’t immediately respond to an inquiry about how many patients it believed were affected."

Last year, Theranos voided tens of thousands of blood tests performed at its Newark, California lab, which has also been shut down.

Theranos exited the consumer blood testing business in October, saying it would focus on developing a portable blood-testing machine called the miniLab.

One lab expert the Journal talked to, speaking about the Arizona lab inspection, said that the government report shows "failures in nearly every aspect of laboratory operation.”

The company faces an uncertain future, to say the least. It's reputation is in tatters as it faces multiple lawsuits by patients and investors, as well as government investigations.