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.
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.