PALO ALTO — Theranos will eliminate 340 jobs in a wrenching reorganization that also includes the closing of its clinical labs and Theranos Wellness Centers, the embattled blood test maker said Wednesday in a blog post.
“We have moved to structure our company around the model best aligned with our core values and mission,” Elizabeth Holmes, Theranos founder and the chief executive officer of the privately held company, stated in an open letter posted on the company’s online site.
In August, the company said it had about 790 workers. That means the job cuts disclosed Wednesday amount to 43 percent of its workforce.
“We will return our undivided attention to our miniLab platform,” Holmes said in the letter. “Our ultimate goal is to commercialize miniaturized, automated laboratories capable of small-volume sample testing.”
Theranos will, instead, focus tests for on what it calls “vulnerable patient populations” that include oncology, pediatrics, and intensive care patients.
The job cuts affect employees in California, Arizona, and Pennsylvania, Holmes said.
Theranos has a large lab in Newark and has operated Wellness Labs in Palo Alto and Redwood City, according to a search through Google maps. The company has taken down a page on its website that listed its locations.
“We have a new executive team leading our work toward obtaining FDA clearances, building commercial partnerships, and pursuing publications in scientific journals,” Holmes said in the letter.
A drumbeat of bad news and occurrences began to batter Theranos starting with a Wall Street Journal investigative report in October 2015 that alleged the company had overstated the capabilities of its proprietary device, nicknamed “Edison,” for testing blood through finger pricks.
“Theranos has over-promised and under-delivered, and it has caught up with them,” said Tim Bajarin, principal analyst with Campbell-based Creative Strategies, which tracks the tech sector.
During the course of the last 12 months, Theranos recalled and corrected tens of thousands of test results from the Edison device, the Food and Drug Administration banned using Edison for all tests with one exception, and the company lost a $350 million deal with Pleasanton-based Safeway. Walgreens also terminated its relationship with Theranos.
Federal regulators also have banned Holmes from owning or operating a laboratory for two years. Regulators also revoked a certification for the company’s Newark lab, a decision that took effect Sept. 5.
“Theranos can probably survive if it takes its focus to things such as the mini labs,” Bajarin said. “But their reputation has been harmed. They have to come up with a major breakthrough, or their business will always be challenged.”