Theranos said yesterday that it reached an agreement with the Centers for Medicare & Medicaid Services and that it will stay out of the blood-testing biz for 2 years in exchange for reduced penalties.
The settlement reportedly resolves all outstanding legal and regulatory proceedings between the 2 groups, Theranos said.
According to the agreement, CMS has withdrawn the revocation of Theranos’ Clinical Laboratory Improvement Amendments operating certificates and slashed the civil monetary penalty against the company to $30,000.
The Clinical Laboratory Improvement Amendments rule that all laboratories meet certain federal requirements and have a CLIA certificate to operate.
The embattled company also said it plans to withdraw its appeal of the sanctions imposed by CMS on its Newark clinical lab.
Today, Theranos agreed to pay $4.7 million to customers in Arizona who used its devices between 2013 and 2016, according to the state’s attorney general, Mark Brnovich.
Brnovich alleged that Theranos misrepresented the method and accuracy of its blood-testing diagnostic services. More than 10% of the 1.5 million blood tests sold to 175,000 Arizona customers were voided or corrected, Reuters reported.
The company said the settlement reflects costs incurred by customers, regardless of whether the test results were voided or corrected.
Theranos has been under fire since the Wall Street Journal reported in October that its blood-testing diagnostic devices were inaccurate. The company, once worth billions, was launched in 2003 by CEO Elizabeth Holmes. Last year, Holmes was barred from owning or operating a lab for at least 2 years.
In March, a WSJ report said that Theranos plans to offer investors additional shares from Holmes’ personal stake if they promise not to sue the company.
Sources familiar with the matter told the news outlet that the deal could cause Holmes to lose majority ownership in Theranos.
Material from Reuters was used in this report.