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Theranos and Walgreens Have Finally Settled Their Bitter Lawsuit

August 1, 2017, 7:19 PM UTC
CA: Corporations In California
A logo sign outside of the headquarters of Theranos in Palo Alto, California on January 24, 2016. Photo by Kristoffer Tripplaar *** Please Use Credit from Credit Field ***
Photograph by Kris Tripplaar — Sipa USA / AP

Elizabeth Holmes’ heavily criticized startup Theranos has taken one more step on its quest for redemption, settling a nasty legal spat with former partner and pharmacy giant Walgreens (WBA), the company announced Tuesday.

Walgreens sued Theranos last fall after reports emerged that the latter firm’s finger-prick blood testing technology didn’t work as advertised and produced inaccurate results, on top of lab improprieties that regulators said could pose “immediate jeopardy” to patients. Walgreens was offering Theranos’ tests at 40 of its “Wellness Centers” in Arizona and California. At the time, Walgreens claimed that Theranos had consistently misled it and took months to reveal that 31,000 of its blood test results had to be voided. In turn, Theranos claimed that Walgreens failed to meet its contractual obligations under the companies’ arrangement.

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“The agreement will result in the dismissal of Walgreens’ lawsuit against Theranos, with no finding or implication of liability,” said Theranos in a statement regarding the new confidential settlement.

The firm went on to tout the steps it’s taken since being castigated by federal regulators for the lab deficiencies and allegations that its proprietary technology didn’t work as advertised, which also galvanized a number of investor lawsuits. “Over the past 16 months, the Company has built a new senior management team, changed the composition and structure of its Board of Directors, installed an expert technology and scientific advisory board, and implemented a new quality and compliance program. Theranos recently closed on a recapitalization of its recent investors, unifying their support as the Company moves toward commercializing its innovative technologies.”

Theranos is barred from returning to the blood testing business for two years and was forced to pay $30,000 in civil penalties by the Centers for Medicare & Medicaid Services (CMS). The company announced earlier this year that it would pay $4.65 million to its Arizona customers over the possibility that their blood test results were faulty.

Holmes is attempting to shift Theranos away from its much-maligned original tech and build up a new device called the “miniLab.”