WSJ: Theranos did not disclose Ariz. lab inspection failure

Palo Alto, Calif.-based blood testing startup Theranos faces another potentially damning report from The Wall Street Journal alleging the company did not disclose a failed CMS inspection last September.  

"People familiar with the situation" told The Wall Street Journal the company's Scottsdale, Ariz., lab failed an inspection last September, which could result in additional sanctions. After a November 2015 inspection, CMS revoked the certification of Theranos' Newark, Calif.-based lab, barred it from receiving Medicare and Medicaid payments and banned Theranos founder and CEO Elizabeth Holmes from owning or operating a medical laboratory for two years.

CMS found deficiencies in the Scottsdale lab on Sept. 29, 2016, but investors and patients were not informed of the situation, according to The Wall Street Journal. Less than a week later, Theranos announced plans to shutter blood-testing sites and layoff more than 40 percent of its workforce to put increased focus on a device called the miniLab.

Becker's reached out to Theranos regarding the situation and is awaiting comment.

Despite regulatory setbacks, the company has still been able to continue to attract leaders in the scientific community. On Tuesday, Theranos announced eight engineers and biomedical device designers will join its newest board, the Technology Advisory Board.

Read more on the new advisory board here. Read the full WSJ report here.


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