Simply Statistics A statistics blog by Rafa Irizarry, Roger Peng, and Jeff Leek

Theranos runs head first into the realities of diagnostic testing

The Wall Street Journal has published a lengthy investigation into the diagnostic testing company Theranos.

The company offers more than 240 tests, ranging from cholesterol to cancer. It claims its technology can work with just a finger prick. Investors have poured more than $400 million into Theranos, valuing it at $9 billion and her majority stake at more than half that. The 31-year-old Ms. Holmes’s bold talk and black turtlenecks draw comparisons to Apple Inc. cofounder Steve Jobs.

If ever there were a warning sign, the comparison to Steve Jobs has got to be it.

But Theranos has struggled behind the scenes to turn the excitement over its technology into reality. At the end of 2014, the lab instrument developed as the linchpin of its strategy handled just a small fraction of the tests then sold to consumers, according to four former employees.

One former senior employee says Theranos was routinely using the device, named Edison after the prolific inventor, for only 15 tests in December 2014. Some employees were leery about the machine’s accuracy, according to the former employees and emails reviewed by The Wall Street Journal.
In a complaint to regulators, one Theranos employee accused the company of failing to report test results that raised questions about the precision of the Edison system. Such a failure could be a violation of federal rules for laboratories, the former employee said.
With these kinds of stories, it's always hard to tell whether there's reality here or it's just a bunch of axe grinding. But one thing that's for sure is that people are talking, and probably not for good reasons.