News

Theranos to lay off 340 employees

Palo Alto company shutting down its blood-testing centers and clinical labs

Palo Alto-based health-technology company Theranos announced on Wednesday, Oct. 5, that it will lay off 340 employees, or about 43 percent of its workforce.

Company CEO Elizabeth Holmes announced the layoffs in an open letter on the company's website, stating that the firm would close its clinical labs and Theranos wellness centers, affecting approximately 340 employees in California, Arizona and Pennsylvania. The company will return its attention to its miniLab platform, a portable device designed to process and analyze very small samples of blood.

"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," Holmes wrote.

Theranos has a new executive team leading work toward obtaining Food and Drug Administration clearances, building commercial partnerships and pursuing publications in scientific journals, according to the company.

"After 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," Holmes said in her statement. "We are profoundly grateful to these team members, many of whom have devoted years to Theranos and our mission, for their commitment to our company and our guests."

Theranos was started in 2003 by Holmes, who left Stanford University's School of Engineering to create technological innovations to quickly process laboratory tests from small, less-invasive blood samples. One of its goals is to make medical testing financially accessible to everyone, according to the company's website. Theranos publishes all its prices and offers its tests at at least 50 percent below Medicare reimbursement rates.

The company opened its wellness centers in late 2013 to officer blood tests by taking just a few drops of blood rather than entire vials. But the company has gone through a turbulent period. An October 2015 investigative report by the Wall Street Journal alleged that the company, which then had a $9 billion valuation, was relying on conventional, third-party machinery rather than its own technologies to do most of its lab testing and that some of its testing was not reliable. The company vociferously denied those allegations.

In July 2016, Theranos' Newark lab was sanctioned by the Centers for Medicare and Medicaid Services for deficiencies found in 2015, and Holmes was banned for two years from operating the lab. The company said in a statement that it was shutting down and rebuilding the Newark lab from the ground up, as well as rebuilding quality systems, adding expert leadership and changing its quality and training procedures.

In August, Theranos filed an appeal and the sanctions are on hold until a hearing scheduled for the end of this year.

The company faces class-action lawsuits claiming its testing on its Edison machine is inaccurate and potentially put thousands of patients at risk. The company denied the accusations, according to multiple news reports.

Theranos announced in April that the Securities and Exchange Commission and the U.S. Attorney's Office are investigating the company for allegedly misleading investors.

In June, Walgreens ended its business relationship with Theranos and shut down the wellness centers at its stores, the drugstore announced. Theranos responded with a statement that the company was disappointed that its partnership with Walgreens ended.

In another blow, Theranos voluntarily withdrew its Zika virus blood test, which it had submitted for Food and Drug Administration approval, the company announced on Aug. 31.

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Comments

39 people like this
Posted by resident
a resident of Downtown North
on Oct 6, 2016 at 2:37 pm

Why don't the Feds just shut these folks down already? Haven't they been charged with multiple frauds and crimes? Who is trusting them for real medical procedures anymore?


16 people like this
Posted by ...doesn't mean they aren't out to get you...
a resident of Another Palo Alto neighborhood
on Oct 6, 2016 at 3:00 pm

The promise of being able to get really low-priced testing, in real time, is reason enough for everyone involved to look at this very, very carefully. It's not out of the question for malfeasance to happen with so much at stake. It's also not out of the question for the company to face undue persecution given what competitors face if they deliver. Things go wrong when companies innovate like this, and I truly hope this is not a case of a kind o kneejerk CYA -- which, I have no idea why people do that because it never leads to anything good.

If Theranos was being deceptive and playing on people's hopes, they should have the book thrown at them much harder than this. If they are being unduly persecuted by people with an agenda taking advantage of innocent problems, in order to derail what they are doing - which could save Medicare billions if they are successul, and save lives every day - really, I want people involved on the government side to go the extra mile to figure it out.


Posted by Grrrrr
a resident of Another Palo Alto neighborhood

on Oct 6, 2016 at 5:53 pm


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1 person likes this
Posted by maguro_01
a resident of Mountain View
on Oct 6, 2016 at 6:41 pm

@resident - You are throwing around the word "charged", a legal term, rather loosely and too easily.

For your consideration: The US is paying around twice per head for medical care than any other developed country. Yet it is #42 in life expectancy last I looked (CIA World Factbook online). Indeed, we read that medical care errors are the third leading cause of death in the US, though I haven't seen a comparison with other developed countries.

Medical care/insurance plus the financial sector use at least 1/4 US GDP. Both are, of course, very necessary, but 1/4 or more GDP only tells us that they are at ground zero in our world famous Pay-To-Play political system. Their inexorably growing expense is not sustainable. In the long run, who will lose?

You can buy a bottle of water for a dollar and change in a convenience store. Suppose you were on foot in the desert and it's way over 100 degrees and you clearly only have a few hours at most. Then someone shows up and offers to sell you a bottle of water. What would you pay for it? $1000, $10,000, more? That's called "value pricing" and what drug companies are starting to do. They can do that less because of the patent system but more enabled by the monopoly granted by FDA processes which we have some reasons to distrust. Often the really basic research was on the taxpayer's dime also. Even given the huge expense of necessary drug tests, we see that value pricing has little to do with expenses.

If someone has a serious medical problem, charging them their net worth and more for a treatment is not marketing, it's extortion. The Right does seem to think that ideally people should die in net worth order. It's not a surprise if some people can buy experimental treatments and the like and it's fine if they pioneer a technology so that the price can come down with development. And while they are test subjects, interestingly the medical device company isn't paying them, they pay the medical device company. What's to complain about? But now we see that in the US life expectancy between most of the population and upper income people has a widening gap, hardly the same thing.

It does appear that Theranos wasn't ready for prime time even with reasonable ideas and Walgreen's apparently wasn't very good at DD. And the Theranos BOD was of no apparent use, at least to startup. Big investors often connect a startup to experienced management, essential for medical anything, but must not have done that or done it poorly - Holmes was 19 when the company was started in 2003.

In any case the company's latest tabletop device and focus hopefully will provide a reliable technology at real cost savings and can be licensed or certified in other countries and sold there, especially India and China. The devices could be made here or there. If that's not possible, then move the whole thing to India or China.

There are many wearable device startups in this area who hope to provide real-time medical data at some point who may have to rethink their whole plan or just go for export after being certified in the recipient countries.


43 people like this
Posted by BP
a resident of Barron Park
on Oct 6, 2016 at 8:30 pm

Elizabeth Holmes should be in jail. For endangering the lives of patients, and stealing money from investors for her fraudulent behavior.

John Carryeou should receive a Pulitzer.


41 people like this
Posted by 340
a resident of Midtown
on Oct 6, 2016 at 9:08 pm

Sounds like 340 tech workers may no longer require housing in Palo Alto


21 people like this
Posted by musical
a resident of Palo Verde
on Oct 7, 2016 at 2:02 am

Sounds like those 340 lay-offs were in Arizona, Pennsylvania, and across the bay in Fremont/Newark.


35 people like this
Posted by Truth Be Told
a resident of Midtown
on Oct 7, 2016 at 9:39 am

Truth Be Told is a registered user.

Elizabeth Holmes should indeed be in jail! She has NO qualifications in the healthcare field, NO knowledge of hematology, microbiology or pathology.

One of her original employees, a PhD with a lot of qualifications, had a crisis of conscience about her and what she was doing! He was the first whistle blower, and she planned to fire him-- which he feared so much he committed suicide ( we knew him personally).

The FDA is aware that Ms Holmes and her company are frauds, but seem to be dragging their heels in shutting her down completely.


30 people like this
Posted by A BIG Question
a resident of Midtown
on Oct 7, 2016 at 10:56 am

A BIG Question is a registered user.

I understand that Elizabeth Holmes had no more than a high school degree, never had any education in the field of hematology or blood testing, had no medical education of any kind.

So how did she get past the FDA so long?

How did she get venture capital??


11 people like this
Posted by Steve
a resident of Old Palo Alto
on Oct 7, 2016 at 1:02 pm

have a question. She was one of the youngest billionaires in the country. Does anyone know what she is worth today? Did she cash out before the shutdown and run with the money?


7 people like this
Posted by musical
a resident of Palo Verde
on Oct 7, 2016 at 7:14 pm

@Truth, my condolences regarding your whistle-blower friend. I certainly hope these 340 lay-offs have more fortitude in the face of being fired.

When Ms Holmes was starting in this business, all those who questioned her qualifications were villified as sexist bigots.


12 people like this
Posted by Any Updates
a resident of Midtown
on Oct 12, 2016 at 1:53 pm

Any Updates is a registered user.

Have there been any updates on the FDA's case against Elizabeth Holmes?

Is the Justice Dept involved, or is it only the FDA? If so, why is it taking so long? She has apparently caused people harm, perhaps even caused deaths.

This is no small matter!


14 people like this
Posted by lawsuit
a resident of Midtown
on Oct 12, 2016 at 11:52 pm

PAFM is now suing Theranos according to the Mercury News:
Web Link


16 people like this
Posted by Hedge Fund Woes
a resident of Midtown
on Oct 13, 2016 at 2:26 pm

Hedge Fund Woes is a registered user.

Partner Hedge Fund is suing Holmes, Theranos, and a former Theranos CFO for fraud!


7 people like this
Posted by A Plea
a resident of Midtown
on Oct 14, 2016 at 10:16 am

A Plea is a registered user.

Will some powerful government agency PLEASE shut down Theranos in its entirety before Ms Holmes causes any more harm with her misdiagnoses?

If she hasn't killed someone yet, she will eventually. She must be stopped!


5 people like this
Posted by Unbelievable
a resident of Midtown
on Oct 17, 2016 at 1:49 pm

Unbelievable is a registered user.

[Post removed.]


Like this comment
Posted by Jane
a resident of Southgate
on Oct 17, 2016 at 2:10 pm

Theranos, HP, Yahoo: Makes it look bad for female top executives in Silicon Valley. Is this a conspiracy? As a woman, I feel sad.


3 people like this
Posted by musical
a resident of Palo Verde
on Oct 17, 2016 at 10:44 pm

@Jane, take pride in our top defense contractor, a significant Silicon Valley employer.


Sorry, but further commenting on this topic has been closed.

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