Theranos Axes 43% of Workforce, Shifts Focus to miniLab

Theranos says its new focus on its miniLab customizable sample processing unit will result in the elimination of 43% of its workforce—about 340 jobs—as the embattled company shuts down its clinical labs and blood-drawing sites or “Wellness Centers.”

Layoffs will affect employees in California, Arizona, and Pennsylvania, Theranos said.

The job cuts and closings come more than 2 months after Theranos CEO Elizabeth Holmes unveiled miniLab at the 68th American Association of Clinical Chemistry (AACC) Annual Scientific Meeting & Clinical Lab Expo in Philadelphia, declaring: “It’s the beginning of the next phase of the company.”

The tabletop miniLab unit is designed to integrate into a single miniature platform the company’s different testing methods—including hematology, immunology, clinical chemistry, immunochemistry, and nucleic acid amplification—using a small sample of blood.

“Our ultimate goal is to commercialize miniaturized, automated laboratories capable of small-volume sample testing, with an emphasis on vulnerable patient populations, including oncology, pediatrics, and intensive care,” Holmes wrote in an “open letter” announcement posted on the company’s website yesterday.

In that letter, Holmes disclosed plans to shut down Theranos’ labs in Scottsdale, AZ, and Newark, CA, as well as five wellness centers that send blood samples to the labs.

The Newark lab was the focus of sanctions imposed in July by the Centers for Medicare & Medicaid Services (CMS). CMS is one of numerous federal and state agencies that have investigated the business model and diagnostic tests of Theranos, which once claimed that its diagnostic technology could run scores of tests using drops of blood.

CMS’ sanctions included revoking the lab’s CLIA certificate and banning Holmes from owning, operating, or directing a lab for at least 2 years.

Theranos responded in August by saying it will appeal the CMS penalties, adding that it has made substantial progress toward correcting the deficiencies identified by the agency and moving the company forward—a theme Holmes repeated yesterday: “We have a new executive team leading our work toward obtaining FDA clearances, building commercial partnerships, and pursuing publications in scientific journals.”

Following an FDA inspection in August, Theranos withdrew its request for the agency’s Emergency Use Authorization for its miniLab Zika virus blood test. The company never commented on a report in The Wall Street Journal that the inspection found Theranos collected some data supporting the test’s accuracy without implementing a patient-safety protocol approved by an institutional review board.

Theranos maintains that better days are ahead for the company, which employed 790 as of August 1.

“We are fortunate to have supporters and investors who believe deeply in our mission of affordable, less invasive lab testing, and to have the runway to realize our vision,” Holmes added.