DEERFIELD, Ill. — Walgreens filed a breach-of-contract lawsuit against Theranos Inc., its former lab-testing partner, seeking damages of $140 million.
The damages figure represents the amount that the drug store chain said it invested in the Palo Alto, Calif.-based health technology company.
The civil suit was filed in U.S. District Court in Delaware on November 8 under seal because Walgreens was concerned Theranos might assert that the action violated a confidentiality agreement between the firms, The Wall Street Journal reported, citing court records.
The Walgreens-Theranos partnership, announced in 2013, involved opening in-store blood testing centers at 40 locations.
Theranos asserted it had found a way to provide consumers a less invasive and more affordable blood test. The firm’s blood-testing device, called Edison, could perform multiple tests with just a few drops of blood taken from a tiny finger stick, the company said.
But as concerns began to grow that Theranos’ pinprick technology might not live up to the company’s claims, Walgreens began distancing itself from the partnership.
arlier this year Walgreens said it had stopped sending clinical tests to a Theranos lab in Newark while government regulators were reviewing the company. In June, Walgreens told Theranos that it would immediately terminate the partnership and close all of their Theranos Wellness Centers in Arizona.
Hype about its technology, along with the partnership with Walgreens, made Theranos a darling of Silicon Valley venture capitalists. Investments in the company helped drive Theranos’ market capitalization to $9 billion and landed the company’s chief executive, Elizabeth Holmes, atop Forbes magazine’s ranking of America’s richest self-made women, based on her 50% stake in the company. As Theranos’ regulatory problems multiplied, Forbes subsequently lowered its estimate of Holmes’ net worth to nothing.
Holmes expressed disappointment that Walgreens filed its lawsuit and vowed to “respond vigorously” to the allegations. Theranos will seek to hold Walgreens “responsible” for the damage it has caused the company and its investors, she said in a statement. “Over the years, Walgreens 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.”