Drugstore operator, Walgreens (NASDAQ: WBA), formally terminated the nearly three-year-long partnership with blood testing company, Theranos.
Walgreens announced late Sunday, that the company will close all 40 Theranos Wellness Centers in Arizona and will no longer offer any service from the Palo Alto, California-based firm. The announcement comes after Theranos voided or corrected tens of thousands of tests and faces possible federal sanctions for repeated failures at one of its labs.
“In light of the voiding of a number of test results, and as the Centers for Medicare and Medicaid Services (CMS) has rejected Theranos’ plan of correction and considers sanctions, we have carefully considered our relationship with Theranos and believe it is in our customers’ best interests to terminate our partnership,” Brad Fluegel, Walgreens' senior vice president, said in the news release.
Once valued at $9 billion, Theranos has been dogged by questions about the accuracy and quality of its blood testing technology since last fall. Inspections by the CMS uncovered a series of violations at its labs, including one that posed “immediate jeopardy to patient health and safety.” Investigated by the U.S. Justice Department and an investigation by the U.S. Securities and Exchange Commission. In an attempt to appease the CMS, Theranos voided or corrected tens of thousands of 2014 and 2015 test results last month. Theranos is also facing three civil lawsuits over its bunk blood tests, and its valuation dropped to 800 million.
Theranos would its $50 million deal with the nation’s largest drug store chain, Walgreens.
Theranos spokeswoman Ms. Buchanan said, “We are disappointed that Walgreens has chosen to terminate our relationship and remain fully committed to our mission to provide patients access to affordable health information and look forward to continuing to serve customers in Arizona and California through our retail locations.”
Theranos is currently looking for other commercial partners and has made plans to expand it’s testing in Arizona. The CEO and founder, Elizabeth Holmes would reveal data on the company’s proprietary blood technology and field questions about its tests at an annual conference of the American Association for Clinical Chemistry, which will be held in Philadelphia this coming August.