Last night the Wall Street Journal’s John
Carreyrou published the latest in a series of
amazing investigative pieces that have singlehandedly
dismantled the hype around Theranos,
the blood testing company that claimed it would
disrupt larger rivals like Laboratory Corporation
of America and Quest Diagnostics.

This article is important, because it is the
moment when the Theranos’ last major defense
of its image crumbled. Until now, Theranos and
those close to the company could claim that its
problems were limited to its laboratory in
Newark, California, and that it had really done a
fine job in Arizona, where most of its testing
centers are.
That claim lies demolished. The Journal reports
that, in order to comply with regulators at the
Centers for Medicare & Medicaid Services,
Theranos has notified thousands of patients that
test results it sent out in 2014 and 2015 were
invalid.

In the past, Theranos has vigorously contested
the Journal’s reporting. This time, it acquiesced,
saying in a statement that it has taken
“comprehensive corrective measures to address
the issues CMS raised in their observations.”
That the problems extended to so many people,
and to Arizona, which Theranos had made its
beachhead into the diagnostics market, leads to a
simple conclusion:
Theranos just isn’t very good at running a
diagnostic testing business.

There will be other shoes to drop. Theranos’ chief
executive and founder, Elizabeth Holmes, is
trying to do what she needs to do to hold on to
her company. CMS has threatened to ban her
from the lab industry for two years, among other
sanctions.

But Theranos’ argument that it can build a rival
to LabCorp or Quest from the ground up is
simply no longer credible. If it ever manages to
do so, it will be far in the future. And the
company is starting from scratch now–or worse.
That leaves another question. What about
Theranos’ revolutionary technology, which aimed
to replace the vials of blood taken by
phlebotomists with mere drops of blood, and the
days of waiting for test results with hours. Does
any of this stuff work?

Sadly, nobody outside Theranos knows. Maybe
Holmes doesn’t know herself. The results from
researchers at Mount Sinai revealed that the
Theranos tests, which may or may not have been
performed on its proprietary technology, were
generally within spitting distance of those of
LabCorp and Quest. The independent scientists
Theranos recently added to its scientific advisory
board say that they have seen promise in the
data.

But Holmes and Theranos have dashed every
opportunity they have been given to build trust.
Way back in September, the company acted like
an approval from the Food and Drug
Administration for a single test, for herpes,
validated its entire technology, when it did not.
Before Carreyrou’s piece, first Holmes responded
to criticism simply by insisting that larger rivals
were out to get her.

That attitude continued until Theranos was facing the scrutiny of an alphabet
soup of regulators, not only the FDA and CMS
but also the SEC and DOJ.
Most importantly, Theranos has failed, again and
again, to present any data outsiders can use to
judge whether its systems work. Back in
December, Holmes described in detail, on stage
at our healthcare conference, a scientific paper
she planned to soon submit. In April, Theranos
said it had still not submitted a single scientific
publication to a medical journal. If Theranos ever
wants trust, it had better start earning it with
science. That means releasing data.