Credit Brendan McDermid/Reuters
Theranos, the embattled blood-testing company, announced on Wednesday that it would close its laboratory operations, shutter its wellness centers and lay off about 340 employees, around 40 percent of its work force.
In a letter posted to the company’s website, Elizabeth Holmes, the company’s founder and chief executive, said the company would now focus on an initiative to create miniature medical testing machines.
In making the announcement, Ms. Holmes, who founded Theranos as Silicon Valley’s answer to conventional blood testing, completed the pivot she first proposed this past August. Addressing the annual meeting of the American Association for Clinical Chemistry, Ms. Holmes chose not to defend the company against widespread skepticism over its testing methods, which had promised to use a finger prick of blood at a fraction of the costs of traditional tests. She instead said that the company would develop miniature laboratories, or miniLabs, small devices that could be placed on a table in a doctor’s office and be used to perform numerous medical tests.
On Wednesday, Ms. Holmes said Theranos would “return our undivided attention to our miniLab platform,” which she described as the production of “miniaturized, automated laboratories capable of small-volume sample testing.”
The workers losing their jobs are in Arizona, California and Pennsylvania. A company spokesman said Theranos would have no additional comment beyond Ms. Holmes’s letter.
The decision to abandon its clinical labs is the latest setback for Ms. Holmes, a self-made billionaire who founded Theranos when she was 19. She became a darling of Silicon Valley and was able to persuade several high-profile investors to back Theranos, valuing her privately held company at an astounding $9 billion.
After a series of heavy-hitting articles in The Wall Street Journal cast doubt on whether her technology actually worked, the company found itself under intense scrutiny from federal regulators, including the Food and Drug Administration.
In July, the agency, which was concerned about how Theranos operated its labs and the effectiveness of its testing, imposed severe sanctions, including a ban on Ms. Holmes from owning and operating a medical laboratory for two years. Theranos said it would appeal the ban.
While Wednesday’s announcement did not address the status of various investigations into the company, including one by the Securities and Exchange Commission, Ms. Holmes appeared to try to address concerns that Theranos was overly secretive about its technology, as well as the skepticism among many of the scientists who saw her presentation in August.
“We have a new executive team leading our work toward obtaining F.D.A. clearances, building commercial partnerships and pursuing publications in scientific journals,” she said.