Theranos News: Second Major U.S. Inspection Failed Just Before Closing All Labs

Theranos failed a second major inspection and the company kept it under wraps, according to a Wall Street Journal report.

The testing lab in Scottsdale, Arizona was found to have “deficiencies” by inspectors from The Centers for Medicare and Medicaid Services, the Journal reported Tuesday. The inspection happened in September 2016, just a few days before Theranos decided to close all of its labs in October. It is unclear why the company decided to wait to announce the closure of the lab.

“After months of careful consideration, and prior to CMS’s unannounced inspection in Arizona, Theranos decided to close its laboratories,” Theranos' general counsel David Taylor told The Wall Street Journal. "Theranos has been responding to the deficiencies raised by CMS and will continue the process of revising or voiding test results as appropriate until we are satisfied that we have taken all necessary remedial action."

This comes after the one-drop blood test company, which was once worth $9 billion, was hit with sanctions after a 2015 report by The Wall Street Journal revealed numerous shortcomings, including unreliable test results.

Theranos shut down its California lab last year after it failed an inspection there. Theranos announced earlier this month it would cut down its workforce, leaving just 220 workers, and called the layoffs “re-engineering.”

The company is facing multiple lawsuits, including one from former partner Walgreens, and Theranos founder Elizabeth Holmes has been banned from operating any of her labs for two years, a move that was appealed by the company.

Under the company’s new strategy, it has been focusing on the miniLab, which is a new blood-testing device about the size of a printer. It is yet to gain approval from federal regulators.

Meanwhile, the company announced the creation of a new technology advisory board and made some changes in its existing board on Tuesday. Retired Marine Gen. James N. Mattis, who was part of the board, resigned last month after President-elect Donald Trump picked him for secretary of state. Mattis's name is not listed on Theranos's board of directors web page.