Elizabeth Holmes banned: Will Theranos survive?

This is a new low in the Theranos saga.

News that Elizabeth Holmes, founder and CEO of the medical technology high-flying company, has now been barred by U.S. regulators from operating a blood-testing lab for two years means the company will have even a harder time digging itself out of the credibility hole it finds itself in.

It is also unclear how Theranos can operate going forward.

The company, once valued at more than $9 billion, has been in a downward spiral since a series of Wall Street Journal stories starting in October that raised questions about its technology and its lab practices. The company defended itself throughout.

But the latest blow — the Centers for Medicare and Medicaid Services issued sanctions against the company, which includes fines, cancellation of the firm’s ability to receive Medicare and Medicaid payment as well as pulling regulatory approval of its lab — could be fatal.

In its announcement, the company said that the revocation would not take effect for 60 days.

In the company statement, Holmes said:

We accept full responsibility for the issues at our laboratory in Newark, California, and have already worked to undertake comprehensive remedial actions. Those actions include shutting down and subsequently rebuilding the Newark lab from the ground up, rebuilding quality systems, adding highly experienced leadership, personnel and experts, and implementing enhanced quality and training procedures,” said Elizabeth Holmes, Theranos founder and CEO. “While we are disappointed by CMS’ decision, we take these matters very seriously and are committed to fully resolving all outstanding issues with CMS and to demonstrating our dedication to the highest standards of quality and compliance.”

Geoffrey Baird, associate professor in the department of laboratory medicine at the University of Washington, told the Wall Street Journal that Holmes’s position at the company is questionable:

I can’t think of anything this severe ever happening to a clinical laboratory of this size and scale. I think the company will have to show [Ms. Holmes] the door somehow, which might not be possible under the current governance. This is so rare, and essentially unprecedented in a company of this size, that it is hard to know exactly how they will proceed. Personally, I believe she is obligated to step down immediately.

Photo: Elizabeth Holmes, CEO of Theranos. (Karl Mondon/Bay Area News Group)


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  • Eddie Poe

    Stick a fork in; it’s done.

    • WhoCares

      Idealistically, and in terms of justice being served, I wish it were true. But, banning her from running a blood testing lab and only closing one of the labs, does not provide an ending script for Theranos.

      Of the many options, she could switch gears and sell home based finger stick blood testing kits direct to consumers or Holmes could simply place a friend or relative in charge (they haven’t sanctioned the Phoenix lab) until her 2 year ban expires.

      She doesn’t strike me as the type to walk away until they drag her out.

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