Walgreens has officially cut its ties with the troubled blood-testing firm Theranos. The termination will close 40 of wellness centers in Arizona.
In a statement released on June 12, Walgreens announced that it is no longer offering services of Theranos testing in all of its stores in Arizona effective immediately. Testing centers based in the state are among the major sources of revenue for the embattled startup. The store closures come after the pharmaceutical giant stopped offering the said services in Palo Alto, California branches.
Losing Walgreens is another major blow to Theranos, which has relied mostly on Walgreens' good reputation with investors. Walgreens has more than 8 million customers each day all over the United States. Being one of the startup's early supporters, Walgreens helped Theranos catapult into the consciousness of investors and the general public. In the past year, Theranos has been receiving backlash after Wall Street Journal ran stories questioning its methodology. The firm is also under investigation by a number of federal agencies.
Walgreens' decision is likely inevitable particularly because its relationship with Theranos has tainted the company's reputation and image with the public and potential investors.
"In light of the voiding of a number of test results and as the Centers for Medicare and Medicaid Services (CMS) has rejected Theranos' plan of correction and considers sanctions, we have carefully considered our relationship with Theranos and believe it is in our customer's best interests to terminate our partnership," said Brad Fluegel, Senior Vice President and Chief of Health Care Commercial Marker Development Officer of Walgreens.
It is not yet clear if Theranos will receive compensation from Walgreens in order to end their relationship, as the company did not disclose any financial report.
As early as January this year, Walgreens has instructed Theranos to stop sending tests to its California laboratory, which is under investigation by the CMS, and that no new samples must be delivered to its Newark laboratory until resolution of the current investigation.
Walgreens has also announced that it is going to help its customers transition into a new center in the next coming days.
How Theranos Lost Its Footing
In 2003, Theranos planned to become a revolutionary diagnostic center claiming to topple larger rivals such as Quest Diagnostics and Laboratory Corporation of America. Using only a few drops of blood, Theranos can help diagnose diseases.
By 2014, however, the startup became the subject of investigations from a number of federal agencies after it has failed to provide its testing methodology and after it was found to have voided several results.
Theranos founding CEO Elizabeth Holmes was once the richest self-made woman, but was later on revalued and removed from the wealth list of Forbes.
Photo: Steve Jurvetson | Flickr
