The blood-testing company Theranos — until recently a Silicon Valley darling — lost its largest revenue source after Walgreens terminated the companies' relationship late Sunday. Walgreens cited problems federal regulators have had with Theranos' lab testing and potential sanctions over problems found at its labs.

Walgreens' withdrawal is another step in a rapid fall from grace for Theranos — and ends a partnership that was the cornerstone of its early success.

Effective immediately, Walgreens says it is closing all 40 Theranos "wellness centers" in Arizona that conducted blood testing. That means Theranos' services will no longer be offered at any of its stores, the retailer says.

Walgreens was one of the early adopters of Theranos' technology, inking its partnership three years ago.

In a statement, Walgreens Senior Vice President and head of commercial market development Brad Fluegel cited how the company recently voided Theranos blood-test results, which might have affected patient diagnoses. Earlier, this year Theranos said it corrected tens of thousands of test results.

Fluegel also cited federal regulators' ongoing concerns with the steps Theranos says it has taken to improve its reliability and safety.

"As the Centers for Medicare and Medicaid Services (CMS) has rejected Theranos' plan of correction and considers sanctions, we have carefully considered our relationship with Theranos and believe it is in our customers' best interests to terminate our partnership," Fluegel said.

CMS previously reported finding major problems at Theranos' California lab, and the agency is expected to announce within weeks whether it plans to issue sanctions on the company, which could devastate its business. Theranos is also under civil and criminal investigations by the Securities and Exchange Commission and the Justice Department. Last year, the Food and Drug Administration reported problems with the company's proprietary blood-testing device, known as the Edison.

"We are disappointed that Walgreens has chosen to terminate our relationship," Theranos Vice President of Communications Brooke Buchanan said in a statement. She said the company plans to continue serving customers through independent retail locations.

Theranos rocketed to success by offering simpler blood-testing methods using a few drops of blood from a finger prick.

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