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Theranos under fire over lab test accuracy

Elizabeth Holmes, founder and CEO of Theranos.
David Orrell | CNBC
Elizabeth Holmes, founder and CEO of Theranos.

One of the most valuable Silicon Valley startups is under fire.

Theranos, the medical technology firm founded by Elizabeth Holmes, may have exaggerated the success of lab tests conducted on its own machines, The Wall Street Journal reported Thursday, citing several former employees.

The Journal was also told by the former employees that some company workers were skeptical about the accuracy of Theranos' in-house marquee testing machine, the Edison.

David Boies, the company's outside lawyer, told the WSJ that Theranos is not using the device for all its test, saying the transition is "a journey."

One worker even said in a complaint to regulators that the company failed to report test results that raised concerns about how precise the Edison system is.

Boies and Heather King, Theranos' general counsel, both denied claims that the tests are inaccurate to the Journal. King added the company has been "upfront and transparent with regulators" about its procedures.

Theranos later said in a statement: "Today's Wall Street Journal story about Theranos is factually and scientifically erroneous and grounded in baseless assertions by inexperienced and disgruntled former employees and industry incumbents. Theranos presented the facts to this reporter to prove the accuracy and reliability of its tests and to directly refute these false allegations, including more than 1,000 pages of statements and documents."

"Disappointingly, the Journal chose to publish this article without even mentioning the facts Theranos shared that disproved the many falsehoods in the article," the company added.

A WSJ spokesperson later told CNBC the newspaper "fully stands by [author]John Carreyrou's article about Theranos, which was richly sourced and thoroughly researched."

Boies did not immediately respond to CNBC's requests for comment.

Theranos was founded in 2003 after Holmes dropped out of Stanford University and is valued at $9 billion.

Click here to read the full report.

Programming note: Elizabeth Holmes will be on CNBC's "Mad Money" tonight at 6 p.m. ET.