he embattled blood-testing company Theranos on Wednesday night announced a major retrenchment, saying it will shut down its clinical labs and blood collection sites.
About 340 employees in Arizona, California, and Pennsylvania will be laid off, the company indicated in an open letter signed by CEO Elizabeth Holmes and posted to the company’s website. That’s nearly half of the 790 workers the company said over the summer that it employed.
“After many months spent assessing our strengths and addressing our weaknesses, we have moved to structure our company around the model best aligned with our core values and mission,” Holmes wrote.
Theranos’s new plan: to devote its “undivided attention” to developing a new technology, dubbed the miniLab, which is intended to condense the process of running blood tests normally done with several large machines into a single tabletop platform. The technology could be sold to hospitals and doctor’s offices, a pivot from Theranos’s previous consumer-focused tests.
It’s unclear whether the new strategy can keep Theranos afloat: At a scientific meeting over the summer, Holmes touted the miniLab but didn’t present any validated data or a timetable for getting the new product to market. And there are other companies, without the baggage that Theranos carries, working on similar portable lab tests.
Theranos, which once aimed to revolutionize laboratory testing by doing blood tests with just a single fingerprick of blood, has been under both civil and criminal investigation. Federal regulators concerned about substandard practices at one of its labs earlier this year banned Holmes from owning or operating a clinical lab for two years. Holmes had appealed that decision; it was not immediately clear Wednesday night whether regulators had ruled on her appeal.
The company also faces a welter of civil lawsuits from patients who say Theranos’s blood tests delivered inaccurate results. Theranos itself has acknowledged problems with its blood testing technology and invalidated thousands of test results earlier this year.
In her open letter, Holmes wrote that the company,which has long been notorious for bucking the standard of presenting its data to the scientific community, will be “pursuing publications in scientific journals.”
Wednesday’s announcement marks perhaps the most significant retreat for a company that had once been valued at $9 billion, higher than any other venture-backed private company in health care. More recently, Forbes had valued it at $0.