The rise and fall of blood-testing start-up Theranos can be tracked on the Walgreens website.
Theranos, founded by charismatic tech entrepreneur Elizabeth Holmes, skyrocketed to a $9 billion valuation with promises of accurate finger-prick blood tests. In 2013, it landed a partnership with the pharmacy chain Walgreens, which proceeded to roll out Theranos Wellness Centers in select Arizona and California stores.
An archived version of Walgreen’s page for Theranos Wellness Centers from March 2014 is brimming with optimism for the then-recent partnership.
“A few drops is all it takes,” the site promised. “Goodbye, big bad needle.”
Near a map of the U.S. with all of Arizona and California shaded in, the website invited customers to “find Theranos Wellness Centers at these locations, with more opening soon.”
Now, the Walgreens website for the Wellness Centers is practically a tombstone. In lieu of pie-in-the-sky language about the end of needles, there is a link to the Theranos website. The map of the U.S. now shows a tiny cross-section of the border between California, Arizona, and Nevada.
The promise of “more opening soon” is gone. In its place: “You can find Theranos Wellness Center locations inside select Walgreens in the greater Phoenix, AZ area.”
It is understandable that Walgreens, which did not respond to The Daily Beast’s request for comment, would quietly tone down its Web presence for the Theranos partnership.
Ever since a searing October 2015 Wall Street Journal investigation called the reliability of Theranos’ proprietary tech into question, and alleged that most of its tests had been conducted via the more traditional method of venipuncture, the Silicon Valley startup has been on the backfoot and Walgreens has avoided comment on the partnership.
Walgreens initially stood by Theranos but, by the end of October, a representative told the Journal that the pharmacy chain would no longer open new Wellness Centers. The partnership remained in place but the rollout stopped at just over 40 locations. The fate of the secretive start-up has been and is still tied to the pharmacy chain: All but three of the Wellness Centers listed on the Theranos website are inside Walgreens stores.
More scrutiny followed the October Journal investigation. First, the FDA called for regulatory approval of its small “nanotainer” collection tube and issued two lab inspection reports, noting a lack of auditing.
Then, in January 2016, the Centers for Medicare and Medicaid Services (CMS) noted in a letter to Theranos that “the deficient practices of the [Newark, California Theranos] laboratory pose immediate jeopardy to patient health and safety” after a November 2015 onsite visit.
The CMS letter reportedly prompted Walgreens to send a letter of its own to Theranos, threatening to end their partnership if the issues with the Newark laboratory were not resolved.
Theranos promised to “take corrective action” but, according to a February Financial Times report, lawyers for Walgreens continued to scrutinize the company’s contract with Theranos in an attempt to end the partnership.
Neither Theranos nor Walgreens provided direct comment for the FT report but, according to their sources, Walgreens executives had largely given up hope that Theranos could “resolve its regulatory problems” and were “frustrated” by the storm of negative publicity.
A “person familiar with the matter” told FT that “[Walgreens executives] have been unhappy with the relationship and it’s really a question of working through the contractual and legal arrangements.”
“They’re not interested in the Theranos deal,” the source added.
A Theranos adviser, however, told FT that Walgreens might not have a legal basis to end the partnership. But Theranos has only been hit with more bad news since then, which raises questions about the strength of its contract with Walgreens.
In late March, a peer-reviewed study in The Journal of Clinical Investigation (PDF) concluded that results from Theranos blood tests varied significantly from two leading laboratories that require venipuncture draws, and that this variation “could potentially alter clinical interpretation and health care utilization.”
In a letter, Theranos claimed that there were “major problems” with the study and cited a “potential conflict of interest” for one of its authors (PDF). The company promised The New York Times that it would publish its own data in peer-reviewed journals in the next few months.
Before it could, the Journal broke news this week of another CMS letter, dated March 18, threatening to revoke Theranos’ lab license and banning Elizabeth Holmes from the blood-testing industry for at least two years if the company could not correct problems at its California laboratory.
Walgreens has yet to comment on this new CMS letter, and has declined to comment to major newspapers.
But Theranos spokeswoman Brooke Buchanan gave The Daily Beast no hint of the start-up’s reportedly strained relationship with Walgreens.
“Our relationship remains strong with Walgreens in our partnership with Arizona,” she said.
Buchanan noted that Theranos responded to the March 18 CMS letter and has been in “constant communication” with regulators since then, stressing that none of the proposed sanctions have been levelled so far. When asked if the sanctions could affect the Walgreens partnership if implemented, Buchanan declined to comment.
Buchanan also noted that the Wellness Centers in Arizona Walgreens stores process tests in a different laboratory than the California lab under federal scrutiny, and that they have recently seen “some of the highest traffic days” in those centers and in that laboratory.
When asked if media reports about the alleged inaccuracy and unreliability of Theranos’ proprietary technology were putting strain on the Walgreens partnership irrespective of the regulatory difficulties in California, Buchanan said, “No, because they’re not true.”