The laboratory practices of Theranos, the embattled blood-testing startup led by entrepreneur Elizabeth Holmes, “pose immediate jeopardy to patient safety,” according to a letter from the U.S. Department of Health and Human Services on Monday.
The Theranos lab was surveyed on November 20 by the Centers for Medicare and Medicaid Services, the primary federal regulator of clinical labs, for compliance with the Clinical Laboratory Improvement Amendments of 1988.
The lab was found deficient for hematology (the study of blood), analytic systems, and other practices. The Wall Street Journal first reported the inspectors’ findings on Sunday.
The Theranos lab, located in Newark, Calif. and led by Sunil Dhawan, was last inspected by regulators in December 2013; at that time, regulators cited the company for several problems, which Theranos said it swiftly addressed.
If the lab does not address these new issues, Theranos could be subject to a civil money penalty of up to $10,000 per day, onsite monitoring, the suspension of its CLIA certificate, and the cancellation of its approval for Medicare payments.
“This survey of our Newark, CA lab began months ago and does not reflect the current state of the lab,” Theranos said in a statement reacting to the letter. “As the survey took place we were simultaneously conducting a comprehensive review of our laboratory’s systems, processes and procedures to ensure that we have best-in-class quality systems.”
It added: “We are still reviewing the report, but we addressed many of the observations during the survey and are actively continuing to take corrective action. A full plan of correction will be submitted to CMS within days.”
This story originally appeared on Fortune Magazine