Walgreens filed its lawsuit under seal in Delaware, accusing Theranos of breach of contract. Walgreens is seeking $140 million in the suit, according to the Wall Street Journal. In a statement, Theranos said it will “respond vigorously to Walgreens’ unfounded accusations.”
The two companies first allied in 2013, as Theranos promised to upend the blood testing industry by performing a battery of tests from only a drop of patients’ blood. Walgreens bought into the idea, offering Theranos’s Edison technology in 40 of its stores in Arizona.
But Theranos’s claims gradually came unraveled in 2015 after a series of reports from the Wall Street Journal, culminating in two years of voided of test results and a federal crackdown that banned Theranos’ senior leadership from running laboratories.
Walgreens terminated its relationship with Theranos in June, shutting down the 40 so-called wellness centers that offered the company’s services.
The lawsuit, sealed because of nondisclosure agreements between the two companies, is the latest blow to Theranos’s crumbling business. Last month, one of the company’s major investors filed a lawsuit claiming Theranos made “a series of lies, material misstatements and omissions” in soliciting its investment. The company has disputed the suit’s merits and claimed the plaintiff, Partner Fund Management, “is engaging in revisionist history.”
Theranos has retreated from its initial business of offering consumer-focused blood testing. CEO Elizabeth Holmes now plans to develop a new technology that could be sold to labs and doctor’s offices. With that pivot came major layoffs, with the company roughly halving its workforce by cutting 340 employees last month.
But Theranos is pressing on.
“We’re disappointed that Walgreens filed this lawsuit,” the company said in a statement. “Over the years, Walgreens consistently failed to meet its commitments to Theranos. Through its mishandling of our partnership and now this lawsuit, Walgreens has caused Theranos and its investors significant harm”
Separately, Theranos faces an ongoing criminal investigation by the Securities and Exchange Commission and a battery of lawsuits from patients who say the company’s tests yielded dangerously inaccurate results.