Bombshell report puts Theranos in the hot seat, alleges blood test inaccuracies & false claims
- Theranos is a blood testing lab which offers more than 240 tests, including tests for everything from pregnancy, to potassium levels and thyroid, to cancer and cholesterol. The initial premise of the company was that just a single finger prick of blood could yield accurate test results.
- A bombshell investigative article in the Wall Street Journal reported on allegations that Palo Alto, CA-based Theranos has misrepresented its lab-testing business. According to the report, its primary testing device, known as Edison, has handled a relatively small percentage of the tests, with most testing being handled by traditional machines, such as Siemens. Much of this was revealed by internal and former employees.
- Until this point, Theranos, run by CEO and founder Elizabeth Holmes, has been hailed as a hot start-up with immense potential and a unique technology. Currently, Theranos has a market valuation of $9 billion—half of which belongs to Holmes.
Despite strong protests from Holmes, asserting the "factually and scientifically erroneous" nature of the article, which was written by John Carreyrou, the WSJ stands by its reporting. The upshot of the article is that Theranos has not only misrepresented its technology, but has only been using the Edison for about 10% of the tests. In addition, there have been numerous instances of inaccurate test results, based on the vast differences between results produced by Theranos and those from other labs. Even healthcare providers have steered patients away from Theranos because of fears of innacuracy.
Theranos has had some successes, including achieving its first FDA clearance (for a blood test for herpes) in July. Also, it has been tremendously successful at fundraising. In addition to concerns about accuracy and allegations that Theranos mishandled its profeciency testing, the company has not disclosed its financials.
Holmes has pushed back by trying to get people to retract what they told the WSJ, and by publicly denouncing the report, both via a written statement as well as tweets. Based on the seriousness of the allegations, the problems are probably just starting for Theranos, and the company will have to offer a more detailed answer to investors and the public.