WSJ: $350M Theranos-Safeway deal dissolving, adding to startup's recent woes
- According to the WSJ, Safeway and Theranos are dissolving a $350 million agreement dating back to 2011, in which Theranos would provide blood-testing services through Safeway-installed clinics.
- Safeway has installed 800 clinics in its stores since 2011 but Theranos has failed to ramp up services and provide them as agreed, according to the article. The clinics are largely being used for flu shots and travel vaccinations instead of Theranos' proprietary blood draw method.
- Theranos has disputed the WSJ's story, calling the coverage "inaccurate, misleading and defamatory."
The deal was bolstered in part by the former Safeway CEO's enthusiasm for health and wellness. The CEO, Steven Burd, helped push the installation of 800 clinics throughout Safeway's stores over a four year period, according to the WSJ. However, the blood-testing services never really got off the ground. Theranos missed several deadlines and Safeway began to have concerns over the accuracy of Theranos' finger-prick method.
When Theranos did initial testing on Safeway employees, some employees were tested twice—once using the finger-prick method and the other using a traditional blood-draw method. Comparisons between the two showed worrying discrepancies. Furthermore, Theranos began to send blood samples from the Safeway clinics back to a central processing lab—delaying results.
Theranos has pushed back strongly against the WSJ's coverage of the Safeway deal and prior reporting on the accuracy of its finger-prick blood tests. In a recent statement, the company underscored its commitment to its methods. But, for now, the deal with Safeway appears to be on the brink of dissolution.
This is the latest in a series of negative media attention that Theranos has been receiving in recent weeks, especially from the Wall Street Journal. The publication reported bombshell allegations that the company's finger-prick test wasn't being used to conduct much of its blood analysis, leading to the FDA asking the company to only use its technology for its single approved test, for herpes.