The embattled company is engaging in a major pivot, shutting down its clinical labs to focus on its desktop miniLab platform. 

Chris Newmarker

Theranos will shutter its clinical labs and Theranos Wellness Centers--a move that will affect about 340 workers in Arizona, California, and Pennsylvania, CEO Elizabeth Holmes announced in an open letter posted on the company's website this week. 

The move is a major shift for Theranos as well as Holmes, who once touted a vision of reliable, fast finger prick blood tests for the masses. Now the company is focusing on a technology that could very well be sold to health providers: a tabletop miniLab.

"Our ultimate goal is to commercialize miniaturized, automated laboratories capable of small-volume sample testing, with an emphasis on vulnerable patient populations, including oncology, pediatrics, and intensive care. We have a new executive team leading our work toward obtaining FDA clearances, building commercial partnerships, and pursuing publications in scientific journals," Holmes said in the open letter. 

The move marks a major pivot--and an uncertain one, too, since other companies with less baggage are working on similar lab test platforms, says STAT.

Holmes, in fact, tried to focus on the miniLab during an August 1 talk at the American Association for Clinical Chemistry annual meeting in Philadelphia, only to be dogged by questions about Theranos blood testing. 

Things started to unravel for Theranos in October 2015 after a Wall Street Journal exposé called into question the accuracy of Theranos's tests. (The Wall Street Journal team behind the Theranos stories recently won the Silver in the annual Barlett & Steele Awards for Investigative Journalism.)

Things got worse from there. A CMS report in January described hematology testing practices at the company's Newark, CA, lab as "deficient," saying they posed "immediate jeopardy to patient health and safety." Two months after that, a study in the Journal of Clinical Investigation found that Theranos's blood tests were unable to match the accuracy of more conventional tests. Another Wall Street Journal article claimed the company knew its technology had problems, but still used it on patients. CMS has since disclosed that the company failed 87% of its quality-control tests for one hormone test.

Walgreens in June announced it was severing ties and booting the struggling blood-testing company out of 40 of its Arizona drugstores. And Theranos is in the process of appealing tough CMS sanctions that, among other things, banned Holmes from the lab testing business for at least two years. 

Meanwhile, Theranos is facing a string of federal class-action lawsuits, and the company is reportedly under investigation by the U.S. Justice Department and the SEC. 

Holmes, meanwhile, doesn't appear to be going anywhere. She's majority owner of the venture capital-supported company.

Chris Newmarker is senior editor of Qmed. Follow him on Twitter at @newmarker.

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[Image courtesy of Theranos]