In the final episode of this past season of the HBO show Silicon Valley, a character seeking to justify questionable business practices puts it this way: His core product is solid, if some of the numbers used to bolster it are fake: "It's not like we're lying about it like fucking Theranos," he punctuates his defense.
That's a pretty good snapshot of how far healthcare startup Theranos, based in Palo Alto, has fallen. Once promising a revolution in blood testing and boasting a $9 billion valuation, now the company is the butt of insider industry jokes. Oh, and the latest blow to the company has just arrived, according to the New York Times: The Centers for Medicare and Medicaid Services are making good on a warning letter sent in April and actually banning 32-year-old ex-wunderkind CEO Elizabeth Holmes from owning or operating a blood testing facility for two years.
It's difficult to run a business you can't legally be in, and this appears to be a rare occurrence, so the repercussions here aren't totally clear and the decision itself could be appealed. “We accept full responsibility for the issues at our laboratory in Newark, Calif., and have already worked to undertake comprehensive remedial actions,” Holmes said in a statement.
Responding to Wall Street Journal reports questioning the veracity of some of the company's claims, the Centers for Medicare and Medicaid Services found that all 81 patient results they tested to have been inaccurate. Theranos was warned that its lab needed to be brought into compliance, and the company is now simultaneously under criminal investigation and an SEC probe. Further, the US House of Representatives wants in on the investigation, writing in a letter to Theranos that “Given Theranos’ disregard for patient safety and its failure to immediately address concerns by federal regulators, we write to request more information about how company policies permitted systemic violations of federal law."
Alas, while Holmes is now worth zero dollars — zero with a 'z' — she'll likely stay in the spotlight a little longer. It appears as if she'll be portrayed by Jennifer Lawrence in a film adaptation of the her life.
Theranos will shut down its Newark, California lab and rebuild it from the ground up while continuing to operate its Arizona lab. That latter facility, however, will have a bit less work to do now that Walgreens, a major customer, has terminated its partnership with the company