The president and chief operating officer of Theranos – a long-time confidant of CEO Elizabeth Holmes – is retiring as the blood testing firm is facing federal scrutiny and shuffling its leadership.
President and COO Sunny Balwani, according to Theranos’ statement Wednesday, was a key figure in its production development and growth. As no date is set for his retirement, he is said to stay on through transition.
“Sunny has made invaluable contributions to Theranos’ technology and business. His passion for the Theranos mission and his leadership in core product initiatives has made a tremendous impact,” part of the statement read, also thanking the COO for his “extraordinary service.”
Theranos said it has begun its search for multiple executive posts. Emphasizing organization structure changes, it added three new figures to its board of directors – Fabrizio Bonanni, former executive VP of Amgen Inc; Richard Kovacevich, former chief executive of Wells Fargo & Co; and William Foege, former CDC director.
The Palo Alto, California-based company has been the subject of different federal investigations probing the accuracy and reliability of its tests. Following controversial faulty, erratic blood test results, health regulators proposed sanctions such as revoking the California laboratory’s license and prohibiting Holmes or Balwani from running another laboratory for two years.
Theranos spokesperson Brooke Buchanan, however, said that Balwani’s retirement was not due to the proposed sanctions, and highlighted Theranos’ reorganization as key to its next evolution.
Theranos was founded in 2003. The 31-year-old Holmes once promised to revolutionize the diagnostic industry with finger-prick tests, which are touted to determine a variety of health conditions with just a few drops of bloods.
Many concerns against the company were brought to attention following an inspection report of the laboratory released in March, detailing shortcomings such as failure to meet quality control standards. Freezers were not kept at the required temperatures, documentary signatures were missing, and unqualified personnel were hired, to name a few.
Prior to its recent statement, Theranos had largely pinned the blame on a lab director, a dermatologist working part-time for it.
Faulting the former employee without faulting the COO as well, though, proved implausible, with the Centers for Medicare and Medicaid Services (CMS) previously showing rejection of Theranos’ stance in its 45-page March18 letter threatening the CEO and COO ban.
In the series of Wall Street Journal articles, some concerning details include email conversations between Balwani and a former lab employee, where the latter raised questions on the accuracy of their proprietary technologies and potential impropriety in Theranos’ handling of its proficiency tests.
Balwani met Holmes back in the early 2000s at Beijing University, where they were both studying Mandarin. In 2009, Balwani joined the company as its president – a time when Theranos, now employing 1,000, only had up to 50 employees.
In a previous interview, Balwani called Holmes "probably the most important inventor" of her time, adding her creativity for problem solving and ablity to simplify complex tasks ahead.
“I will continue to be the company’s biggest advocate and look forward to seeing Theranos’ innovations reach the world,” Balwani said in the press release announcing the recent developments.
Photo: Steve Jurvetson | Flickr