Theranos penalised, Holmes banned from owning labs

Theranos Inc chief executive officer Elizabeth Holmes has been banned for two years from owning or operating laboratories as part of US regulators' sanctions against the troubled blood-testing startup.

The once high-flying Silicon Valley company was also penalised an undisclosed amount, and lost its eligibility to get payments from federal health insurance programmes for lab services, according to a statement late Thursday from Theranos, citing a notice it received from the Centers for Medicare and Medicaid Services.

The closely held firm is shutting down its Newark, California, lab and plans to rebuild it, Holmes said.

The sanctions follow an inspection of the lab by federal health regulators that found failures so severe as to jeopardize patients' health, reports Bloomberg. In May, Theranos said it was cancelling or altering tens of thousands of results, including two years of results on some of the company's proprietary machines.

The federal health regulator's sanctions don't take effect for 60 days. The company is ending any patient testing in the Newark lab for now, but will continue to provide services through its Arizona facility while it works with CMS to ''resolve and remediate'' outstanding issues during the period, Theranos said in the statement.

The company had promised to revolutionize the blood-testing industry - dominated by Quest Diagnostics Inc and Laboratory Corp of America Holdings - with cheap, less painful tests that used only a finger-prick of blood and could be run on what the company has said are its breakthrough analyzers.

Regulators have had doubts for some time. In January, CMS sent Theranos a scathing letter detailing deficiencies at its Newark lab that the department said was putting patients' health and safety in ''immediate jeopardy'' (Theranos under increasing regulatory fire).

Soon after, Theranos told the agency that there was ''no evidence of systemic errors'' at its lab and that ''no patient impact is expected''. In March, the agency said the company hadn't backed up those claims and threatened fines and potentially sanctioning company executives from working in the industry for as long as two years (Theranos may lose licence; top execs face ban).

In recent months, as Theranos has faced questions over whether its technology worked, it has said that it stopped using its own devices and is submitting individual tests for FDA approval. Three class action lawsuits have been filed against the company, claiming consumer fraud and false advertising.