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Federal health regulators have proposed banning Theranos Inc. founder Elizabeth Holmes from the blood-testing business for at least two years after concluding that the company failed to fix what regulators have called major problems at its laboratory in California. In a letter dated March 18, the Centers for Medicare and Medicaid Services said it plans to revoke the California lab’s federal license and prohibit its owners, including Ms. Holmes and Theranos’s president, Sunny Balwani, from owning or running any other lab for at least two years. That would include the company’s only other lab, located in Arizona. (Carreyrou and Weaver, 4/13)

Federal regulators have threatened a series of stiff sanctions against Theranos, the embattled blood-testing company, including closing down its flagship laboratory and potentially barring its chief executive from owning or operating its labs for two years. The sanctions, which have not been made final, were included in a strongly worded letter from officials from the Centers for Medicare and Medicaid Services. It is the latest blow to the credibility of Theranos and Elizabeth Holmes, its chief executive, who seemingly became a self-made billionaire by promising to upend the clinical testing industry. (Abelson and Pollack, 4/13)

Theranos has responded to the letter and is waiting for the agency to finish reviewing the privately held company's proposed solutions, Theranos spokeswoman Brooke Buchanan said. In the meantime, "CMS has not imposed any sanctions on Theranos or its executives," and the sanctions proposed by the agency in its letter were "the worst-case scenario," Buchanan said. The Centers for Medicare and Medicaid Services declined to comment, noting that the letter was not intended to be made public. (Peltz, 4/13)

Theranos has positioned itself as a cheaper, more efficient alternative to traditional medical tests. It claimed it could process up to 70 lab tests on just a few drops of blood. It is valued at more than $9 billion and has been billed as a classic industry disruptor. But in October 2015, a scathing report in the Wall Street Journal called much of its technology and testing methods into question. CMS's concerns became public in January, after the agency conducted a routine survey of the lab and found five areas in which it fell short of compliance standards. Theranos responded and said it had addressed the issues, but in the March letter, CMS said it wasn't adequate. (O'Brien, 4/13)