WSJTheranos CEO Elizabeth Holmes.Theranos' partner in Pennsylvania has asked the blood-testing company to stop doing blood draws. Under the terms of the partnership, Theranos had a green light to perform blood tests at the Capital BlueCross retail store in Enola.
Walgreens is suspending Theranos Lab services at the drugstore chain's outlet in Palo Alto, Calif. (also known as Theranos' hometown). It also suspended its Theranos Wellness Center services in Palo Alto, California, "effective immediately".
Any pulling back by Walgreens could be a serious blow to Theranos, once a Silicon Valley darling that seemed poise to disrupt the blood-testing industry.
Walgreens will no longer contract Theranos laboratories for blood tests after the Centers for Medicare & Medicaid Services reported the startup violated several clinical policies.
Despite the California report, which notes a serious deficiency in the area of hematology, Theranos said in a statement it processes 90 percent of its lab tests at its laboratories in Arizona, which was not part of the survey.
In response to government findings of clinical deficiencies at one of its labs, California-based Theranos agreed to Harrisburg-based Capital BlueCross' request to suspend lab draws until further notice, according to a statement provided by Capital BlueCross.
Theranos has 10 days to show the agency that it's working to fix the problems. The agency gave Theranos 10 business days to come up with a "credible" plan of correction, otherwise the Newark lab risks losing its certification to test human specimens and faces fines of up to $10,000 a day.
"While we support Theranos' vision of providing greater transparency and reduced pricing for lab work, our highest priority at Capital BlueCross is ensuring quality of care for our customers", the insurer stated.