Theranos Controversy Explained: Elizabeth Holmes' Blood-Testing Company Fires 41 Percent Of Workforce In Latest Restructuring

Months after it laid off 340 employees, controversy-ridden Theranos announced Friday it will cut down its workforce by 41 percent, firing around 155 more employees. The blood-testing company now has 220 workers.

The Palo-Alto, California, company called the layoffs “re-engineering,” and said: “These are always the most difficult decisions; however, this move allows Theranos to marshal its resources most efficiently and effectively.”

Elizabeth Holmes’ one-drop blood test company was once worth $9 billion but an investigation launched into the company’s technology by the Wall Street Journal in 2015 revealed numerous shortcomings, causing regulators to announce sanctions against Theranos.

Test results using the company's Edison machine were found to be inaccurate by regulators from the Centers for Medicare and Medicaid Services, forcing Theranos to shut down its California lab facility after the company’s license to operate it was revoked in July last year. Holmes has been banned from operating any of her labs for two years, a move that was appealed by the company.

The Theranos has labs in Newark, California, and Scottsdale, Arizona, along with five blood-drawing sites from where samples are sent to the Arizona lab. As the controversy around the legitimacy of the company’s technology gained steam, Theranos lost its partnership with Walgreens drugstores, which closed all of its collaborative blood-collection locations in June 2016.

Under the company’s new strategy, Theranos is concentrating on its flagship innovation, the miniLab, which is a new blood-testing device — about the size of a printer — that was announced in August 2016. It is yet to gain approval from federal regulators.

“We will return our undivided attention to our miniLab platform. Our ultimate goal is to commercialize miniaturized, automated laboratories capable of small-volume sample testing, with an emphasis on vulnerable patient populations, including oncology, pediatrics, and intensive care,” Holmes said in a blog post on the company’s website in October.

Looking forward, Theranos said in the latest statement: “The restructuring follows a period of significant change at the company that has included the building out of its executive team with substantial additional regulatory, compliance and operational expertise.”