‘Revolutionary’ blood-tester Theranos admits criminal probe

Theranos, the embattled US blood-testing laboratory, said on Monday that federal officials were conducting a criminal investigation into the company, adding to a series of questions from officials about its inner workings.

In a note to outside partners, the company said that the Justice Department had requested documents and that the investigation was active. The note also said that the Securities and Exchange Commission was investigating the company.

The note detailed a growing list of inquiries from federal and state officials, many of which have looked into the company's claims about its technology.

The United States attorney's office in San Francisco, which Theranos said was conducting an investigation, declined to comment, as did the SEC. Theranos would not elaborate about the exact nature of its investigation.

The company said the investigations began after The Wall Street Journal published articles about Theranos.

''The company continues to work closely with regulators and is cooperating fully with all investigations,'' Brooke Buchanan, a spokeswoman for Theranos, said in an email.

The company is not facing any formal accusations. Investigations into companies often do not lead to any charges.

Theranos, founded by Elizabeth Holmes, a Stanford University dropout, became a symbol of how technology could revolutionise health care after it said it had discovered a way of performing blood tests from a single finger prick at a fraction of the cost of a conventional laboratory. The company earned a valuation of $9 billion, and Holmes, who continued to have a majority stake, seemingly became a self-made billionaire.

A scathing article in The Wall Street Journal called into question whether Theranos's technology actually worked, and the company came under the scrutiny of its two main regulators, the Food and Drug Administration and the Centers for Medicare and Medicaid Services.

In the letter, Theranos said some of the investigations have been closed, including the FDA's. But Medicare officials are continuing to look into Theranos and deciding whether to revoke certification of its prime laboratory in California. If lab operations are closed as part of government sanctions, Holmes and Theranos's chief operating officer could be barred from the industry for two years. (See: Theranos may lose licence; top execs face ban).

'Numerous deficiencies'
Examiners from Medicare inspected the lab, in Newark, Calif, last fall and found numerous deficiencies, one of which they said posed ''immediate jeopardy to patient health and safety.''

That deficiency involved Theranos's test for the clotting ability of blood, a measurement used to help determine the correct dose of the blood-thinning drug warfarin. Too much warfarin can cause internal bleeding, while too little can leave a patient vulnerable to a stroke.

After receiving the regulators' findings in January, Theranos submitted a plan to correct the problems in February. But in proposing sanctions, the new letter from regulators said that the company's response ''does not constitute a credible allegation of compliance and acceptable evidence of correction for the deficiencies cited.''

Theranos said that investigations by two state health departments, in Arizona and Pennsylvania, had been closed.

On the ''Today'' show on Monday mornings. Holmes said she was alarmed by the quality problems at Theranos's flagship laboratory in California. ''I feel devastated that we did not catch and fix these issues faster,'' she told the interviewer.

Holmes said Theranos had stopped testing in that laboratory and took the approach of saying, ''Let's rebuild this entire laboratory from scratch so that we can ensure it never happens again.''

The discussion was about testing-quality deficiencies found by federal regulators. Nothing was said on the ''Today'' show about federal criminal investigations.

The investigations by the Justice Department and the SEC were reported earlier by Bloomberg and The Wall Street Journal.

Holmes drew the news media's attention when she first began publicizing her vision of bringing laboratory testing to the masses, including allowing customers to order tests without going through a doctor. But it was always unclear exactly how and whether Theranos's technology worked.

After doubts about the tests emerged, the company's fall from grace came to symbolise the hype that surrounds unproven technology.

When asked whether Theranos would survive, Holmes replied, ''Absolutely.'' She added, ''I know what we've built and I know what we've created and I know what it means to people. And it is a change that needs to happen in the world.''