Troubled Theranos Pink Slips Another 41% of Workforce
1/6/2017 12:09:10 PM
January 6, 2017
By Alex Keown, BioSpace.com Breaking News Staff
PALO ALTO, Calif. – Embattled Theranos has initiated its second round of layoffs in less than six months. Today the company announced it was slashing 155 employees, about 41 percent of its workforce, leaving “a core team of 220 professionals to execute on its business plans.”
Theranos said the job cuts will allow the company to “marshal its resources most efficiently and effectively.”
For the past several months, Theranos has drastically pivoted its business focus, shifting from a company with a focus on blood-testing technology, to a miniaturized portable laboratory. In October, the company terminated 340 people as it shut down its clinical labs and wellness centers following a two-year ban from operating a clinical laboratory. The company, which is appealing the ban, also made some changes in its leadership, with the exit of some high profile employees, including former president Sunny Balwani. Theranos tapped several new leaders with extensive backgrounds in the biotech world, including John McChesney who has experience with medical device development.
Founder Elizabeth Holmes, who has been the focus of so much of the company’s scrutiny, remains as its chief executive officer.
The past year has been rough for the company that was once the darling of Silicon Valley investors and worth, at its height, approximately $9 billion. Since late summer of 2015, Theranos has been under siege as more and more questions arose about the efficacy of its blood-testing technology. Those questions ultimately led the U.S. Center for Medicare and Medicaid to investigate the company’s Newark, Calif. blood testing laboratory where investigators found egregious practices–which lead to the ban on operating clinical labs. The company has faced increasing scrutiny over its product efficacy as well as compliance issues at its California laboratory. Issues at the lab lead the company to void two years’ worth of data sent to customers. The voiding of data caused Walgreens to sever ties with Theranos and shutter the Theranos testing sites in the 40 Walgreens locations across Arizona. That was a big blow to the company as those testing sites were the company’s biggest source of revenue.
The company is also facing multiple lawsuits, including a $140 million lawsuit filed by former partner Walgreens and a lawsuit filed by a Bay Area hedge fund that alleged the biotech company duped investors about the efficacy of its products in order to attract investments of nearly $100 million. Theranos is also the subject of a criminal investigation by the U.S. Department of Justice with investigations centering on whether or not Theranos and its executives misled investors as to the efficacy of its blood-testing products.