Walgreens wants off of Theranos’s sinking ship.
The drug store chain announced today that it is shutting down all 40 Theranos Wellness Centers in its Arizona stores, terminating the long-term partnership deal it signed with the diagnostic startup in 2013.
“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 and Chief Health Care Commercial Market Development Officer, said in a statement.
When Elizabeth Holmes founded Theranos 13 years ago, she had all the makings of a Silicon Valley star—a 19-year-old female entrepreneur who dropped out of Stanford to change healthcare with breakthrough blood-testing technology. But a Wall Street Journal investigation last year has sent the company into a tale spin. The company was unable to prove its claim of detecting over 240 diseases, did not consistently use its pinprick technology, and its lab results were often inaccurate.
Less than a month after Theranos voided its test results from 2014 and 2015 due to inaccuracies, Walgreens has severed all ties with the company. The startup and its founder are embroiled in a criminal probe by the U.S. Justice Department and an investigation by the U.S. Securities and Exchange Commission.
Earlier this month, Forbes slashed Holmes’s net worth from $4.5 billion to zero when the company saw its value plummet from $9 billion to $900 million.
Regarding Walgreens’ decision, the company issued the following statement:
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. 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.
Walgreens was the startup’s first and only retail partner so far. The goal was to set up wellness centers in the over 8,000 Walgreens stores nationwide. But as negative buzz about Theranos hit, Walgreens went into damage control mode.
In January 2016, a Centers for Medicare and Medicaid Services (CMS) investigation found deficiencies at a Theranos lab in Newark, California, that posed “immediate jeopardy to patient health and safety.” Following that, Walgreens ceased testing in Newark, and also halted laboratory testing services in Palo Alto in light of the CMS investigation.