The country maxim, ‘closing the barn door after the horse has bolted’, applies. In fact, the horse is in town and having a growler of beer at the local tavern. The Newark, California lab is shut and the principals, including the CEO Ms Holmes, are technically prohibited from operating a lab for at least two years (that means you, Ms Holmes) starting in a month. Messrs Guggenheim and Wurtz (or similar) should have been on board years ago. Even small companies in our field realize they HAVE to do this!
This also doesn’t affect the interesting interest that DOJ and SEC have in Theranos. [TTA 10 July]
However, this Editor will take the contrarian view that somehow, some way, the ‘fix’ is being worked out, if not in. Don’t make reservations for the fire sale quite yet. The ban on Ms Holmes won’t take place for another month, minimum. That gives time for David Boies, their legal supremo, and his firm to stall for more time, and time for some calls to ask favors from friends, of which he has many in this administration. More than likely, Boies on behalf of Theranos will appeal the CMS rulings to an administrative judge. Ms Holmes may take the hit, but may get a handsome payday to depart despite her reported control, if the investors can salvage something out of the company.
At HQ, they may be rehearsing saying ‘mea culpa, mea culpa, mea maxima culpa’ three times, kneeling deeply, in preparation to Going Forth And Sinning No More.
The Object Lessons taught by the Theranos Troubles, to us in healthcare tech, continue.
WSJ, Theranos Hires Compliance, Regulatory Executives (if paywalled, search on the headline)–do see the comments, the pitchforks are out! For a marvelous demonstration of Silicon Valley Shuffle Stepping, see the SF Chronicle on how Zenefits, another unicorn that got into trouble, isn’t like Theranos at all (it isn’t, but then again they don’t do health-critical blood testing, just benefits management and software). And this is our 17th chapter on The Theranos Story–to see the previous 16 (not including mentions), see here.