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Theranos Controversy: Second Lab Failed U.S. Inspection

Update Date: Jan 20, 2017 09:00 AM EST

Theranos, a blood-testing startup was embroiled in a string of controversies last year. Now, the company's last laboratory failed a regulatory inspection, prompting its closure.

Theranos' CEO Elizabeth Holmes has experienced being a promising CEO of a rising blood-testing company in Silicon Valley with a value of $9 billion at one point. However, after releasing tens of thousands of inaccurate blood tests, the company is now experiencing a mountain of lawsuits, with Holmes being banned from the blood-testing industry.

The company hadn't disclosed that its second laboratory failed an inspection. The Centers for Medicare and Medicaid Services, the government agency responsible for regulating clinical laboratories, said that it concluded its inspection Sept. 29, 2016, just a few days prior to the company shutting down all of its clinical laboratories on Oct. 5, 2016.

The latest inspection found that the company had more blood tests getting voided in addition to the others it had previously voided over the past two years.

"After months of careful consideration, and prior to CMS's unannounced inspection in Arizona, Theranos decided to close its laboratories," David Taylor, Theranos' general counsel said as reported by the Business Insider.

"Theranos has been responding to the deficiencies raised by CMS and will continue the process of revising or voiding test results as appropriate until we are satisfied that we have taken all necessary remedial action," he added.

Theranos' Promising Start

The blood-testing company promised to identify diseases from just a single drop of blood through its revolutionary hardware, Edison. It was such a groundbreaking technology that popular pharmacy Walgreens partnered with the company to offer wellness centers inside its stores, Engadget reports.

The company's popularity and credibility, however, dwindled in 2016 when they released faulty and voided laboratory results. The company faces many lawsuits especially that the health of its consumers suffered as a result. The customers made health decisions based on voided laboratory results.

The whistleblower, Tyler Shultz, found that when the company tested its Edison machines, any inconvenient data or those that conflicted with the company's narrative were discarded. He added that company paperwork would say that the technology is 95 percent accurate but in reality, it was just 65 to 80 percent.

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