Embattled blood-testing company Theranos Inc. will lay off about 41 percent of its employees after facing months of lawsuits, regulatory setbacks and scrutiny.
Setbacks For What Was Once A Very Promising Startup
Theranos was once one of the most promising Silicon Valley startups and catapulted its founder Elizabeth Holmes to fame and fortune.
In 2015, Holmes was on the top of Forbes' list of America's Richest Self-Made Women, with a net worth of $4.5 billion. Following a series of company setbacks, Holmes' fortune was down to virtually nothing.
The company now has difficulty getting back on course after federal regulators discovered a range of compliance issues over the past year and a half. Last year, the company voided two years of test results from its proprietary blood-testing device. It is also being sued by patients and investors.
Lost Major Business Partnership With Walgreens
In June last year, Theranos' major business partner Walgreens said that it will end its collaboration with the company and decided to close all the blood-draw sites in all of its stores. The pharmacy chain faces lawsuits that patients filed against Theranos.
Walgreens representatives said that Theranos misled the company about its technology and that it failed to accomplish the goals that the two companies have established in a contract.
Regulators likewise meted out harsh sanctions, even imposing a ban on Holmes to prevent her from owning or operating a clinical laboratory for a period of two years.
Two Waves Of Downsizing The Company
In October 2016, Theranos said that it will close its labs and wellness centers in different states. It also announced that it will lay off 340 people.
Now, the company is having its second wave of layoffs. It will fire 155 employees and leave a core team of 220 individuals in what it described as "further re-engineering."
"The company has identified a core team of 220 professionals to execute on its business plans, and informed 155 employees that their positions have been eliminated," the company said in a statement. "These are always the most difficult decisions; however, this move allows Theranos to marshal its resources most efficiently and effectively."
The remaining employees will focus on developing the company's new product, a tabletop blood testing product called the miniLab, and bring it to the market.
Holmes presented the blood-testing technology at a scientific conference session in the summer but it disappointed a crowd of scientist expecting that her presentation would reveal what went wrong with Theranos' proprietary and highly secretive blood testing device that was instrumental in making the company one of the hottest startups in recent years.
Theranos' miniLab is a self-contained laboratory that allows a robot to run a number of tests on samples. The miniLab contains different modules that allow it to conduct a series of tasks that traditionally would require multiple and separate machines.
"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 said.