Theranos, a tech company that claimed to revolutionize blood tests, continues to take hits with news breaking Monday that the company is now the subject of a criminal investigation.
The company came under fire in October 2015, when The Wall Street Journal reported problems with its testing procedures.
Christopher Weaver, John Carreyrou and Michael Siconolfi of The Wall Street Journal had the day’s news:
Federal prosecutors have launched a criminal investigation into whether Theranos Inc. misled investors about the state of its technology and operations, according to people familiar with the matter.
Walgreens Boots Alliance Inc. and the New York State Department of Health have received subpoenas in recent weeks seeking documents and testimony about representations made to them by the Palo Alto, Calif., blood-testing company, some of the people said.
Walgreens has been Theranos’s main conduit to consumers since the companies announced a partnership in 2013 that now includes 40 Theranos wellness centers at drugstores in Arizona. The New York agency received an application from Theranos for a laboratory license in the state.
People familiar with the matter said the subpoenas seek broad information about how Theranos described its technologies and the progress it was making developing those technologies.
Investigators are also examining whether Theranos misled government officials, which can be a crime under federal law, some of the people said.
Such subpoenas don’t necessarily mean prosecutors are actively seeking an indictment. People familiar with the matter said the investigation is at an early stage.
Reed Abelson and Andrew Pollack of The New York Times explained how the SEC is also investigating the struggling company:
In a note to outside partners, the company said that the Justice Department had requested documents and that the investigation was active. The note also said that the Securities and Exchange Commission was investigating the company.
The note detailed a growing list of inquiries from federal and state officials, many of which have looked into the company’s claims about its technology. The United States attorney’s office in San Francisco, which Theranos said was conducting an investigation, declined to comment, as did the S.E.C. Theranos would not elaborate about the exact nature of its investigation.
The company said the investigations began after The Wall Street Journal published articles about Theranos.
“The company continues to work closely with regulators and is cooperating fully with all investigations,” Brooke Buchanan, a spokeswoman for Theranos, said in an email.
The company is not facing any formal accusations. Investigations into companies often do not lead to any charges.
Sheelah Kolhatkar and Caroline Chen of Bloomberg included quotes from a recent interview CEO Elizabeth Holmes gave to NBC’s “Today Show”:
In an interview broadcast on NBC’s “Today” show Monday before the investigations were announced, Holmes said she was “devastated” that her company didn’t catch the lab problems. She vowed to fix the problems and said the company would survive.
“We’ve taken the approach of saying, ‘Let’s rebuild this entire laboratory from scratch so that we can ensure it never happens again,’” Holmes said on the show. “I feel devastated that we did not catch and fix these issues faster.”
Theranos said some of the regulatory probes came after news reports published by the Wall Street Journal. The inquiries are focused on asking for documents and are ongoing, the Palo Alto, California-based company said.
Walgreens spokesman Jim Cohn declined to comment. The pharmacy chain has about 40 stores in Arizona with Theranos “Wellness Centers” on site. Ryan White, an SEC spokesman, declined to comment. A representative for Intermountain Healthcare, a Utah hospital system which is supposed to run a pilot study using Theranos’ technology, also didn’t immediately respond.
