UBiome: the new Theranos? FBI raid much hyped Digital Health Startup offices
Following an FBI raid that disrupted its operations, San Francisco-based lab-testing startup uBiome announced on Wednesday that co-founders and co-CEOs Jessica Richman and Zac Apte have been placed on administrative leave.
The startup, which was founded in 2012 and ranked No. 50 on the most recent Inc. 5000 list of fastest-growing private companies in America, appointed general counsel John Rakow as interim CEO. "We intend to cooperate fully with government authorities and private payors to satisfactorily resolve the questions that have been raised," Rakow noted in a press release.
The FBI raid took place on Friday and centered around potentially illegal billing practices.
Sources told CNBC uBiome has been double-charging insurers for its gut-health tests without notifying them, prompting federal agents to break down the company's door and request access to employee computers.
Multiple other entities are investigating uBiome's billing practices, including the California Department of Insurance and insurers including Anthem, Aetna, and Regence, according to The Wall Street Journal.
The company has raised $105 million in venture capital and had 2017 revenues of $32.1 million, a 5,423 percent increase from 2015. But in January, uBiome laid off 50 of its then-300 employees, and its lab tests--dubbed SmartGut, SmartJane, and Explorer--have been under scientific scrutiny for years.
The company has repeatedly defended the science behind its tests. "[The] safety and efficacy of SmartGut and SmartJane in detecting known beneficial, pathogenic, and commensal microorganisms that affect our health is supported by significant medical literature," uBiome told the Wall Street Journal on Friday.