Walgreens, an early partner and validator for Theranos, sued the latter last fall for breach of contract and sought $140 million in damages. Now, sources say, the pair have reached a tentative agreement to put the suit to rest.
Theranos told investors that the companies had reached a tentative agreement in which Theranos would pay Walgreens less than $30 million, people familiar with the matter told The Wall Street Journal. However, the deal wasn’t finalized and the terms could change, they said.
Walgreens once operated 40 Theranos Wellness Centers in its Arizona stores and served as a primary source of revenue for the blood-testing company. But after the Centers for Medicare & Medicaid Services flagged Theranos’ Newark, California, laboratory for deficiencies, the drugstore giant asked its lawyers to examine its contract with Theranos for ways to exit the partnership. In June, it terminated the deal.
In November, Walgreens filed suit in Delaware, charging that Theranos misrepresented its technology when the companies originally teamed up. At the time, Theranos hit back at its former partner: “Over the years, Walgreens has consistently failed to meet its commitments to Theranos. Through its mishandling of our partnership and now this lawsuit, Walgreens has caused Theranos and its investors significant harm,” the company said in a statement.
Though Theranos started the year with about $187 million, the WSJ reported that the company is increasingly strapped for cash. The embattled company told investors that it had $54 million left in its coffers to address claims, people familiar with the matter said.
And the company has been settling left and right—in May, it settled two lawsuits with San Francisco-based Partner Fund Management, which backed Theranos to the tune of $96.1 million in 2014. And in April, Theranos settled with the Arizona Attorney General to pay $4.65 million to Arizona residents who had paid for the company’s blood tests.
Also in April, Theranos promised CMS that it would not operate a lab for two years in exchange for a reduced monetary penalty of $30,000. The agency handed down sanctions on the company in July 2016 because of problems at its Newark lab that "pose immediate jeopardy to patient health and safety." These included banning the lab’s owners and operators from running a lab for two years and pulling its CLIA certificates. Though the sanctions would not kick in for 60 days, CMS imposed a civil penalty of $10,000 for each day of noncompliance.