Elizabeth Holmes has been banned from the lab industry for 2 years - and Theranos' future is in doubt


Elizabeth Holmes Theranos

REUTERS/Carlo Allegri

Theranos CEO Elizabeth Holmes.

Elizabeth Holmes, the founder of blood-testing startup Theranos who was once the darling of silicon valley, has been banned from running a laboratory for two years.

That's raising questions about what is left for the company, which has already been reeling from lost contracts amid doubts about the science behind its tests - which promise to use only a drop of blood to detect diseases.

Holmes is remaining as CEO, and Theranos hasn't can celled its plans to present its scientific data - for the first time ever - next month. 

But the Centers for Medicare and Medicaid Services also imposed other sanctions on the company, including:

  • Revoking the California lab's CLIA license after 60 days
  • Barring the lab from participating in the Medicare program
  • Cancelling the lab's approval to receive Medicare payments
  • Limiting Theranos' hematology CLIA certification
  • A financial penalty 
  • The CMS will direct a portion of Theranos' correction plan

Theranos' problems came into focus last October, when The Wall Street Journal reported that the company's tests weren't producing accurate results and that the company was trying to cover it up.


Since The Journal's report, the company, which once fetched a $9 billion valuation, has lost out on a key deal, had one of its two labs shut down, and wound up under investigation by several government agencies and Congress. Its president and chief operating officer Sunny Balwani has left the company, and it voided or corrected tens of thousands of blood tests in an attempt to make things right with the CMS.

In June, Walgreens, Theranos' biggest partner, abandoned the blood-testing company citing Theranos' decision to void two years' worth of test results and a government agency's rejection of the company's plan of correction.

The termination shuttered an additional 40 Theranos Wellness Centers, where people would have gone to have their blood drawn, in Walgreens stores.

Theranos had been running blood tests since 2013, at one point serving as many as 46 locations. Theranos' blood-testing center in Pennsylvania has remained closed since January.

Here's what Theranos has left (for now):

  • Theranos still operates five locations where people can get their blood tested (four in Arizona and one in California).
  • It still has plans to present its scientific data in an education session at a medical conference in August, when the company will have to show whether its technology is as revolutionary as it seems.
  • Theranos created a medical advisory board in April, with eight scientists from major universities and hospitals, which is meant to find ways to present the data to the scientific community.
  • Its Arizona lab remains open, and Theranos plans to shut down an "subsequently rebuild" the facility in California," Holmes said in a release.

Most of Theranos' commercial operations that put its tests to use hinged on its agreement with Walgreens, and most of Theranos' backing came from Holmes' own relationships. 


Theranos is putting its best spin on this, saying that, "while we are disappointed by CMS' decision, we take these matters very seriously and are committed to fully resolving all outstanding issues with CMS and to demonstrating our dedication to the highest standards of quality and compliance."

But its outlook just grew a lot bleaker.

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