Walgreens has terminated its three-year partnership with blood analysis startup Theranos, citing the myriad bad test results and an ongoing federal investigation as the reason for ending the relationship “effective immediately.”
Theranos promised the drugstore chain it could detect hundreds of diseases using just one drop of blood – a promise which turned out to be too good to be true after an inquiry from the Centers for Medicare & Medicaid Services (CMS) and an FDA inspection cast doubts on its technology.
The startup is also under a criminal investigation by the U.S. Attorney’s Office for the Northern District of California and faces a couple of mounting lawsuits.
Walgreens officials released a statement late Sunday saying it had told Theranos it was now severing the partnership and shutting down lab testing at all 40 Theranos blood draw locations within Arizona.
“In light of the voiding of a number of test results, and as the Centers for Medicare and Medicaid Services has rejected Theranos’s 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,” said Walgreens’ senior VP and chief healthcare commercial market development officer Brad Fluegel.
The end of the partnership is a huge blow to Theranos, which relies on its Walgreens test sites as a crucial source of revenue. It also helped the startup compete with bigger labs like Quest Diagnostics and Lab Corp.
Forbes recently downgraded Theranos’ worth from $9 billion to about $800 million, in light of all the issues. The loss of its major revenue partner may further drop the value of the company.
Of course, Theranos is still under investigation, which could affect it even further. CMS is expected to inform Theranos of its decision on whether it will place sanctions on the company in the next two weeks. The government agency had earlier suggested the ousting of founder Elizabeth Holmes from the industry for at least two years.
“Quality and safety are our top priorities and we are working closely with government officials to ensure that we not only comply with all federal regulations but exceed them,” said Theranos spokesperson Brooke Buchanan. “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.”