In searing $140M lawsuit, Walgreens alleges Theranos broke every promise

Enlarge / Elizabeth Holmes, Theranos CEO (credit: Getty | CNBC)

Theranos, the disgraced blood testing startup once valued at $9 billion, broke all of its promises and “failed to meet the most basic quality standards and legal requirements” in its contract with Walgreen Co. That’s according to a scathing lawsuit (PDF) from the US drugstore giant, which owns neighborhood Walgreens.

The two companies had teamed up in 2012 to offer Theranos’ low-cost, finger prick-based blood tests to Walgreens’ customers in “Wellness Centers” that would be set up within Walgreens’ drugstores. According to the court documents, Theranos had spent two years wooing Walgreens into the deal, promising “disruptive” proprietary technology that would be of the highest quality and receive regulatory approval.

But the deal imploded and the relationship soured after media reports in late 2015 revealed problems with Theranos’ technology, testing standards and accuracy, and its dealings with regulators. In July of 2016, federal regulators levied hefty and unprecedented sanctions on Theranos after inspections found deficiencies that posed “immediate jeopardy” to patient health and safety. Regulators revoked the certification of one of Theranos’ labs and banned the company’s founder and CEO, Elizabeth Holmes, from the laboratory business for at least two years.