Theranos, the troubled blood-testing company, will reduce its workforce by over 40 percent or 155 positions. About 220 employees remain. The company said the reduction allows it to focus on a new product: the miniLab. MiniLab bills itself as a mobile blood tester.
“These are always the most difficult decisions; however, this move allows Theranos to marshal its resources most efficiently and effectively,” the startup said in a statement.
This marks the second round of layoffs. The company let go 340 employees three months ago. In addition, the startup closed its labs.
The Centers for Medicare and Medicaid Services (CMS) banned CEO Elizabeth Holmes from operating a lab for two years. Also, the agency took back its regulatory approval.
The beleaguered company sold much of its real estate to Kilroy Realty Corporation. The tab came to $130 million including the purchase of another building. Kilroy expressed excitement about entering the Palo Alto real estate market.
Furthermore, CMS fined the startup and cancelled Medicare and Medicaid payments for its products and services.
At the time, Elizabeth Holmes released a statement.
The company took full responsibility for its actions and issues at its Newark, California lab. The CEO said staff began correcting the issues. Remedial actions encompassed rebuilding the Newark lab from stratch; hiring new leadership; and implementing better quality controls and training policies. Holmes expressed disappointment in CMS’ ruling and promised to resolve all regulatory issues. She said Theranos committed to high quality and standards.
The Wall Street Journal scrutinized the accuracy of Theranos’ products and services in October 2015. Soon after Walgreens backed out of a partnership with the startup. Theranos voided all tests using its technology as well. Plus, President and COO Ramesh “Sunny” Balwani left the company.
“Some of the most disturbing parts of the Journal‘s first story about Theranos last October concerned email conversations between Balwani and a former lab employee, which the former employee believed showed problems with the accuracy of Theranos’ proprietary technologies and possible impropriety in the way Theranos was handling proficiency tests it was required to perform to keep its regulatory license. The company responded at the time that both the employee and the Journal misunderstood the pertinent science and rules, and that regulators were kept fully apprised of how Theranos was handling the proficiency tests.
In my own conversations with former Theranos lab employees, after the Journal story broke, several bridled at having had to answer to Balwani who, they stressed, had no background in lab science, having spent his earlier career in the software industry.”
The company’s valuation topped $9 billion back then. Those days industry and the public alike hailed Theranos as a trailblazing company. But once faulty, even disastrous, results came to light, problems mounted. Company representatives spoke of new reforms in place. For example, now the startup pursues publications in scientific journals and regulatory acceptance for miniLab.
Elizabeth Holmes Net Worth Declines With Theranos
In the interim, Forbes revised Elizabeth Holmes’ net worth from $4.5 billion to zero. Theranos investors possess preferred shares. Holmes owns common stock. If the company liquidated then investors would get paid back their investment plus more. Holmes would get paid after the investors. Therefore, Forbes pins her value at zero.