Safeway and the other Theranos partnerships

analysisSafeway Inc., the supermarket chain, is a Delaware corporation based in Pleasanton, California (SEC Central Index Key 0000086144). Theranos signed a Master Purchase Agreement with it in 2010, in which, according to the HHS Departmental Appeals Board, Theranos represented that it was a "health care provider" and "covered entity" under health-privacy law. The SEC's complaint describes a national grocery chain, which it calls "Grocery A" without naming it, that contracted with Theranos in September 2010 after Holmes told its chief executive that Theranos had miniaturised the conventional laboratory and that its analysers were deployed on the battlefield. ^{1 2 3}

analysisSteve Burd, who led Safeway for more than 20 years, testified at Holmes's trial that Safeway investigated Theranos's claims before signing and prepared more than 900 stores for the machines; business news coverage of his testimony added that the deal was valued at nearly $400 million, that 969 stores were remodelled, and that Safeway ended the partnership in 2015, two years after his retirement. In cross-examination the defence sought to show that Safeway had not been duped, and Burd agreed that he knew Theranos did not have many customers. The criminal court later counted Safeway among the victims of the investor fraud and awarded it $14,500,000. ^{4 2 5}

analysisPress reports describe the programme from the outside. Citing a national newspaper's unnamed sources, a regional business journal reported in November 2015 that Safeway was negotiating to end a programme, code-named T-Rex, for Theranos tests in 800 in-store clinics, on which it had spent $350 million without the clinics ever performing the planned blood tests, and that it had also invested more than $10 million in Theranos; Safeway executives were reported to have doubted results given to employees tested at headquarters; no statement by Safeway is in the record. Theranos's general counsel declined to discuss the executives' statements but called the newspaper's questions and information "inaccurate and defamatory". A regional news site, summarising that newspaper's reporting in 2021, wrote that the deal began to fizzle by the spring of 2013 after at least one faulty result for an unnamed executive at the headquarters clinic and was unwound as Albertsons acquired Safeway. ^{6 7}

analysisSafeway figures in the fraud cases as an investor and a victim. Before Holmes's trial, according to the same regional news site's summary of press reporting, prosecutors sought to define Safeway and Walgreens as investors; after Balwani's conviction the U.S. Attorney said he had conspired to induce both to invest on the strength of false pharmaceutical endorsements and revenue projections. ^{7 8}

analysisAccording to the Ninth Circuit, Theranos's partnerships with pharmaceutical companies began in 2008 and 2009 to study its technology and soon soured: a Pfizer representative testified that he believed Theranos's answers to technical due-diligence questions were oblique, deflective or evasive and that the companies had no meaningful dealings after 2008, and Holmes admitted that she had put the logos of Pfizer, GlaxoSmithKline and Schering-Plough on reports about Theranos's technology. A relationship with the Department of Defense to explore the Edison device in combat never materialised; General James Mattis testified that the device was never put into the field. ¹

analysisHolmes testified at her trial, as business news coverage reported, that an early goal was to partner with large retailers and that she approached all of them, including Target, CVS, Walmart, Walgreens and Safeway. A health-care trade publication reported in July 2015 that Theranos had signed a strategic alliance with the Cleveland Clinic earlier that year and planned to offer direct-to-consumer tests with the Harrisburg insurer Capital BlueCross to its 1.3 million enrollees in Central Pennsylvania; a start-up data publisher lists AmeriHealth Caritas and Capital BlueCross as insurers for which Theranos became the laboratory provider in Pennsylvania. The company's claims at the time, including that its technology was FDA-approved, were its own statements. ^{1 2 3 4}

analysisOne patient-fraud count of the indictment concerns a transfer of $1,126,661 on August 3, 2015 from Theranos's Wells Fargo account to the media agency Horizon Media, Inc. to buy advertisements for the Wellness Centers. Holmes was acquitted on the patient counts and Balwani convicted on them; Horizon Media appears only as the payee. ²