Theranos will pull the plug on its clinical labs and Theranos Wellness centers in California, Arizona and Texas, leading to the axing of 340 jobs.
About 40 percent of the company's workforce will be affected by the restructuring of the startup, which is aimed at research and development.
Theranos caught the media's attention in August, when it unveiled the "minilab" during an American Association for Clinical Chemistry conference. The device is a depository for small samples of blood and urine that can be uploaded to a centralized system for detailed analysis.
Theranos repeatedly dissed the tagging of its new device as a "lab on a chip," but experts claim that the description sums up miniLab accurately.
The gadget is still under scrutiny of the Food and Drug Administration, something that executives from Theranos hoped to fast-track under the emergency use authorization for Zika detectors. As the company failed to implement proper patient safety protocols, the regulator denied the approval.
Despite being far removed from the revolutionary device Theranos intended it to be, it may have been the only safe option for the company's survival.
The company has a blog post announcing the laying off of nearly half its staff, as a number of disturbing revelations rolled out in the past year. The increasing number of complaints talked about improperly trained workers and faulty test results.
Theranos is called in court on multiple legal actions, was forced to terminate its California lab facility, and was part of a Congressional inquiry. Things were so problematic with the company that regulators prohibited CEO Elizabeth Holmes from entering her own labs.
The company's blood testing methods showed a disturbing lack in accuracy, leading to sanctions by the Centers for Medicare and Medicaid Services.
Part of the sanctions stated that Holmes cannot own, manage or direct a lab, and denied Theranos access to funding via Medicare/Medicaid systems.
As you would expect, this puts great pressure on the testing arm of the enterprise.
Earlier this year, Theranos said that it will make an appeal to remove the sanctions, but a final resolution in that matter is yet to take place.
The venture refused to make any official comments on the current developments.
Theranos touts that its undivided attention will be focusing on the miniLab platform, which sounds like a good plan.
"We are fortunate [...] to have the runway to realize our vision," Holmes said.
The biotech firm, which used to be a sweetheart of Silicon Valley investors, once held a market cap of $9 billion.
