Report: Theranos founder Elizabeth Holmes could face ban

Elizabeth Holmes, founder and CEO of Theranos, speaks at the Clinton Global Initiative's closing session on September 29, 2015, in New York City.

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Once promising blood-testing startup Theranos is in hot water again.

Health regulators have proposed pulling the federal license for the company's California laboratory and banning its founder and CEO, Elizabeth Holmes, and company president Sunny Balwani from the blood-testing business for two years, according to the Wall Street Journal (subscription), which cited a March 18 letter to the company from the Centers for Medicare and Medicaid Services, or CMS.

The letter from the agency found that Theranos had not corrected problems at its lab in Newark, California, and faced possible sanctions as a result, the newspaper reported.

Theranos said that CMS has not imposed sanctions on its Newark lab.

"Due to the comprehensive nature of the corrective measures we've taken over the past several months, which has been affirmed by several experts, we are hopeful that CMS won't impose sanctions," the company said in an emailed statement. "But if they do, we will work with CMS to address all of their concerns."

Theranos spokeswoman Brooke Buchanan confirmed receipt of the agency's letter, saying the company had responded within the required 10 days and that it has been in regular contact with regulators since.

"They are reviewing our response," she said. "It's all hypothetical at this point," she said, adding that the possible sanctions reported by the Journal "include the worst-case scenario of potential consequences."

CMS, the top federal overseer of clinical labs, said practices at the Newark facility "pose immediate jeopardy to patient health and safety" in a January letter to the company.

"Any tests that are discussed in recent audits by CMS, we've stopped," Buchanan said of the Northern California lab, which continues to operate in a small way in the microbiology area. The company's lab in Phoenix has also been audited and has cleared any regulatory hurdles.

"It's business as usual in Arizona," said Buchanan of the lab, which the company says has conducted more than 6 million tests blood since Theranos launched its business in 2014.