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‘T-Rex’: Safeway made big bet on Theranos before sale to Albertsons. Now the blood test co. CEO is on trial

In the middle of the last decade, Safeway Inc. made a big bet. So big, it gave it the codename T-Rex.

Safeway built out 800 clinics in its stores, spending $350 million along the way.

It partnered with Silicon Valley tech darling Theranos to offer blood tests using the company’s revolutionary technology. Theranos said it could diagnose a host of factors in a finger-prick-sized drop of blood in small printer-sized machines — instead of drawing blood from a vein and sending it off to a lab.

But it turns out, the technology didn’t work. And the dinosaur size bet for Safeway fizzled — and Safeway shortly thereafter ended up in the hands of Boise-based Albertsons Companies.

Theranos Inc. CEO Elizabeth Holmes is on trial in California, while COO Ramesh Balwani will face charges early next year.

[Albertsons tried to buy Whole Foods. A worried CEO threw a Hail Mary for Amazon instead]

Safeway’s big bet

The Wall Street Journal noted Safeway’s 2012 deal and the $350 million outlay made up more than half of the grocer’s $596 million net income that year. Safeway also invested $10 million in Theranos, according to the WSJ.

In 2013, Safeway started hiring phlebotomists to staff the new clinics.

But concerns about the faulty technology crept in. Theranos held a clinic at Safeway’s Pleasonton, CA headquarters the WSJ reported. Each employee gave blood both from the fingertip — but also, curiously, with a veinous blood draw. The paper said one Safeway exec got a “frighteningly high” reading on a test for an antigen that indicated prostate cancer. The executive went and got checked through traditional practices – and the Theranos result ended up being faulty.

By spring of 2013, the deal started to fizzle. The high-end clinics Safeway built out didn’t roll out the Theranos devices – but instead began offering flu shots. The next year, Albertsons agreed to acquire Safeway. The companies worked to unravel the partnership as the deal with Albertsons closed.

Safeway and Walgreens – another retailer that agreed to roll out the Theranos product – became an issue in the pre-trial motions, according to Law360. Prosecutors worked to define the two chains as investors, which would extend the statute of limitations on certain charges. A California judge declined to throw out the charges.

During jury selection, one thing related to Safeway did get thrown out. A potential juror, who worked at Safeway, was excused.

Don Day - BoiseDev editor
Don is the founder and publisher of BoiseDev. He is a National Edward R. Murrow Award winner and a Stanford University John S. Knight Fellow. Contact him at [email protected].

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