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Theranos cuts majority of remaining workforce to bolster cash reserves

Announcement comes roughly a month after company and CEO Elizabeth Holmes settled SEC investigation.

Beth Jones Sanborn, Managing Editor

Theranos laid off the majority of its remaining workforce this week, taking staff count down to two dozen or less from 125, a significant drop from previous headcounts that numbered around 800, according to a report in the Wall Street Journal.

This is the third round of layoffs for the struggling blood-testing firm since October 2015, when previous reports found the company was misleading investors about the efficacy of its much-lauded blood testing capabilities and technology.

[Also: Theranos shuts down labs, wellness centers, lays off more than 300 workers]

In the years that followed, the company has thrown out results for nearly a million blood tests from Arizona and California.Theranos closed the labs in those states in 2016 after federal inspectors found numerous issues including indications the labs were producing unreliable test results. This time last year, Theranos reached a $4.65 million settlement with the Arizona Attorney General's office that included full refunds for every Arizona resident who purchased a Theranos blood test between 2013 and 2016. The refunds are regardless of whether Theranos was paid for the tests, or whether the test results were voided or corrected. 

[Also: Theranos avoids bankruptcy with $100 million loan from Fortress]

In late 2017, Theranos announced it had secured a $100 million loan from private equity firm Fortress Investment Group to sustain the business, but only got $65 million upfront, the report said. The rest was contingent on the company reaching certain product and operational benchmarks, including FDA approval for a blood test meant to detect Zika virus on the technology Theranos started pushing after closing their labs, called the miniLab.

[Also: Theranos reaches $4.65 million settlement with Arizona Attorney General office]

Earlier this month, Theranos CEO Elizabeth Holme resolved an investigation by the U.S. Securities and Exchange Commission that examined the offer and sale of Theranos securities from 2013 to 2015.

"The Company and Ms. Holmes fully cooperated with the SEC throughout its investigation. As part of the settlement, the Company and Ms. Holmes agreed to comply with applicable federal securities laws. Ms. Holmes will pay a $500,000 fine and will not be eligible to serve as a director or officer of a publicly traded company for a period of 10 years. She will also return approximately 18.9 million shares of stock and relinquish her super-voting equity rights. As part of the settlement, neither the Company nor Ms. Holmes admitted or denied any wrongdoing," the company said in a statement.

Twitter: @BethJSanborn
Email the writer: beth.sanborn@himssmedia.com

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