Theranos’ COO retires as the troubled bio-tech startup overhauls its organizational structure

Sunny Balwani, the president and chief operating officer of Theranos, the beleaguered medical diagnostics startup currently under federal investigation for allegedly making misleading claims about its blood analysis technology, is stepping down as the company reorganizes its structure.

Theranos said in a blog post that Balwani will retire. Theranos also plans to create a new structure with separate divisions for technology and clinical operations. It is currently looking for new executives to lead both divisions.

TechCrunch has emailed Theranos for more information about what each new division will oversee and what prompted Balwani’s retirement.

Balwani is also leaving Theranos’ board, which will add three new directors: Dr. Fabrizio Bonanni, who held senior positions at biotech companies Amgen and Baxter International; epidemiologist Dr. William Foege, a former director of the Centers for Disease Control who is probably best known for his role in the eradication of smallpox; and Richard Kovacevich, who was CEO of Wells Fargo from 1998 to 2007.

Both Foege and Kovacevich were already members of Theranos’ board of counselors; their new appointment as directors will give them a “more direct role in decision-making and shaping the company,” said the announcement.

Theranos is currently under investigation by several government bodies about whether it misled investors about its technology and operations, including the Securities and Exchange Commission, the U.S. Attorney’s Office for the Northern District of California and the State Departments of Health in Pennsylvania and Arizona.

The Center for Medicare and Medicaid Services is also investigating the company for “serious deficiencies” in its testing practices that might have put patient wellbeing at risk. If sanctions are imposed by the CMS, that means Balwani and Theranos founder/CEO Elizabeth Holmes may be banned from owning or running any lab for at least two years.