Spiraling microbiome tester uBiome files for bankruptcy protection

In its bankruptcy filing, refund claims from insurance giants top uBiome's list of largest creditors, including millions for Cigna, UnitedHealthcare and Blue Cross Blue Shield. (Pixabay)

Just shy of the one-year anniversary of a successful, $83 million venture capital round—meant to catapult the at-home microbiome test company into its first foray in drug development—uBiome has filed for Chapter 11 bankruptcy protection.

The company’s downward spiral entered the public spotlight in late April: FBI agents raided uBiome’s San Francisco headquarters, confiscating computers and documents, as part of a probe into its billing practices and potential financial connections to prescribing physicians. The search brought to a head parallel inquiries by insurance companies, California state regulators and other law enforcement agencies.

Since then, uBiome saw the replacement of its pair of founders and co-CEOs, Jessica Richman and Zac Apte, plus the departure of its subsequent interim chief and general counsel John Rakow; underwent an administrative takeover by members of a consulting firm specializing in corporate restructuring; suffered layoffs of about half its international staff, including lab managers, which put testing on hiatus; and had it revealed that the data underpinning its flagship clinical test may have been flawed from the start


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Now, the company said it hopes to be sold within 75 days of its filing, while investigations by the Department of Justice and the SEC continue.

RELATED: FBI raids uBiome’s San Francisco HQ over insurance billing practices

According to previous reports, the FBI’s search centered around claims that uBiome would double-bill insurance companies for multiple microbiome tests derived from the same sample, or charge insurers multiples more for home-based consumer tests it marketed for $89.

In its bankruptcy filing, submitted in Delaware, refund claims from insurance giants top the company’s list of largest, outstanding creditors. 

This includes Cigna, with a claim for $2.13 million; UnitedHealthcare, seeking $2.08 million; and Horizon Blue Cross Blue Shield of New Jersey, with $1.44 million. All three are marked as “disputed” by uBiome.

Going forward, the company said in its filing that it will continue to market its at-home Explorer consumer test, and maintain limited staff, alongside pending plans to stock a new version of the test in CVS stores next month.

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