Walgreens has announced that it's terminating its partnership with blood-testing startup Theranos. All 40 of the "Theranos Wellness Centers" in Walgreen's Arizona drugstores will be shut down immediately, closing what has been a primary link between Theranos and would-be consumers, and further wounding the troubled startup's revenue.
"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 customers’ best interests to terminate our partnership," said Walgreens senior vice president Brad Fluegel in a press statement.
Theranos could be targeted by sanctions after a government investigation
Walgreens halted expansion of Theranos operations in its store last October after a Wall Street Journal article raised questions about the startup's technology. Since then, a number of claims from Theranos about its partnerships and scientific methods have come under scrutiny (it lied about working with GlaxoSmithKline, and comparison studies have shown its blood tests were subpar). In May, the company even voided two years of tests made using its proprietary Edison machine.
The CMS has investigated Theranos and is currently determining whether sanctions will be levied against the company. According to The Wall Street Journal, this decision is expected to come within roughly two weeks' time. In the meantime, Theranos maintains some of its own standalone retail locations, although according to The New York Times, there are no more than five of these in Arizona, and one in California.
Walgreens has been named as a co-defendant in lawsuits against Theranos
Theranos has also been hit with two class action lawsuits in recent weeks for misleading consumers about the accuracy of its blood tests. In one of these, Walgreens was named as a co-defendant. The drugstore chain reportedly failed to test Theranos' technology before it brought the company into its stores in 2013. The initial deal gave Theranos its first shot of publicity, and legitimized the company's operations and its central promise — conducting tests using just a drop, rather than vial, of blood.
A spokesperson for Theranos told The Wall Street Journal: "We are disappointed that Walgreens has chosen to terminate our relationship and remain fully committed to our mission to provide patients access to affordable health information and look forward to continuing to serve customers in Arizona and California through our retail locations."
Correction June 13th, 12:04PM ET: Story has been corrected to clarify that the two years' of blood tests voided by Theranos in May were related to its Edison machine only.