Tuesday, November 8, 2016

Walgreens Is Suing Disgraced Blood-Testing Startup Theranos

Walgreens filed a lawsuit against disgraced blood-testing startup Theranos on Tuesday.

The retail pharmacy giant once helped float Theranos to a $9 billion valuation, vaulting its founder and CEO, Elizabeth Holmes, to tech industry stardom. But in October 2015, The Wall Street Journal exposed major problems with the company's marquee product, which claimed to be able to run 240 different tests on a single drop of blood.

Theranos vehemently denied the report, but new revelations kept coming. Nine months later, Walgreens abandoned the scandal-struck company, vowing to no longer use its laboratories to test blood from patients at its walk-in clinics. Theranos' valuation plummeted, wiping out much of Holmes' $4.5 billion net worth ― held largely in company stock ― seemingly overnight.

Walgreens is now accusing Theranos of violating some nondisclosure and confidentiality agreements that were part of its original partnership with the startup, according to court filings.

Walgreens spokesman Jim Cohn confirmed to The Huffington Post that the suit had been filed Tuesday in Delaware. He declined to comment further.

But John Carreyrou, the star Wall Street Journal reporter who led the investigation against Theranos, said on Twitter that Walgreens is suing for $140 million. 

A major hedge fund investor said last month that Theranos had used a “series of lies” to convince it to invest $100 million, and sued the startup for fraud. That same week, Theranos announced plans to lay off 40 percent of its staff and get out of the blood-testing business.

Theranos did not respond to a request for comment.

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