Drug store operator Walgreen Co. has ended its relationship with blood testing company Theranos Inc., delivering another blow to the once high-flying company.
Michael Siconolfi, Christopher Weaver and John Carreyrou of The Wall Street Journal had the news:
Some officials at the Walgreens Boots Alliance Inc. unit had grown frustrated at not getting more details and documentation from Theranos after learning it had corrected tens of thousands of blood tests, including many performed on samples collected from patients at Walgreens pharmacies, according to people familiar with the partnership.
In a news release late Sunday, Walgreens said it had told Theranos it was terminating their nearly three-year-old partnership, effective immediately, and that it was shutting down Theranos lab-testing services in Walgreens locations. It said it would work over the next several days to help transition its customers.
“In light of the voiding of a number of test results, and as the Centers for Medicare and Medicaid Services has rejected Theranos’s plan of correction and considers sanctions, we have carefully considered our relationship with Theranos and believe it is in our customers’ best interests to terminate our partnership,” Brad Fluegel, Walgreens’ senior vice president and chief healthcare commercial market development officer, said in a statement.
The move is a significant blow to Theranos. The 40 Theranos blood-draw sites inside Walgreens stores in Arizona, which the company calls “wellness centers,” have been the primary source of revenue for Theranos and its conduit to consumers, analysts say. The tie-up also has given the blood-testing firm a stamp of credibility since it was publicly announced in September 2013.
Bryan Logan of Business Insider noted that 40 Theranos’ wellness centers at Walgreen’s locations will shut down:
All 40 of Theranos’ wellness centers at Walgreens stores in Arizona will shut down, according to a statement posted on Walgreens’ website.
The pharmacy ended Theranos laboratory testing services at its location in Palo Alto, California in January, meaning that Walgreens will no longer offer Theranos services at any of its stores, the statement said.
The Arizona wellness centers were reportedly Theranos’ primary source of revenue, The Wall Street Journal reported.
In a statement to Business Insider, Theranos spokesperson Brooke Buchanan said “Quality and safety are our top priorities and we are working closely with government officials to ensure that we not only comply with all federal regulations but exceed them.”
Theranos last month voided two years’ worth of blood tests from its flagship Edison machines, forcing the company to issue “tens of thousands” of corrected tests as a result.
Bruce Japsen of Forbes.com points out that Walgreen’s was an early promoter of Theranos:
Walgreens was an early fan of Theranos helping Holmes and the blood test gain credibility with investors and, in some cases, the public at large.
Theranos claimed its Edison blood testing device would disrupt larger rivals like Laboratory Corporation of America and Quest Diagnostics.
But over the last year a series of stories by the Wall Street Journal and investigations from several federal agencies including CMS have called into question Theranos, its tests and its embattled founder and CEO.
The move by Walgreens was expected as pressure mounted on the nation’s largest drugstore chain. The company’s relationship with Theranos has hurt Walgreens image with investors and the public at large as the pharmacy giant is close to finalizing an acquisition of Rite Aid.
