Walgreens is running from its partnership with Palo Alto-based Theranos, and fast, according to "people familiar with the matter," The Financial Times reported.
Walgreens lawyers are examining the contract to see if there is a way to terminate its deal with the blood testing startup, which hosts 40 clinics in Walgreens' Arizona stores.
The source told The Financial Times that Walgreens executives are wary of the negative publicity associated with the Theranos partnership and not confident the company can quickly clear up regulatory issues. CMS found deficient practices at Theranos' Newark, Calif.-based lab during a November inspection and the company submitted a plan of correction in February. It also faced scrutiny last fall over its "nanotainer," or tiny vial, of blood, which the FDA declared an uncleared medical device. Theranos said it addressed the issues from the FDA inspection.
If Walgreens finds a way to pull the plug, Theranos would suffer significantly. The startup's $350 million deal with grocery chain Safeway collapsed last fall, making Walgreens one of its most important partners.
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