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By Christopher Weaver and Ezequiel Minaya 

Theranos Inc. said Riley Bechtel, chairman of the construction giant Bechtel Corp., had retired as a director of the embattled blood testing startup.

Mr. Bechtel has been replaced by Daniel Warmenhoven, former chief executive officer of data-storage firm NetApp Inc. The company said Mr. Bechtel "has health issues," and that the switch was effective immediately.

Mr. Bechtel was named as an investor in Theranos in a Wall Street Journal article earlier this week. The article identified other wealthy individuals and families that led Theranos's most recent funding round, including Rupert Murdoch, executive chairman of Wall Street Journal parent News Corp.

Theranos founder Elizabeth Holmes said in a statement that the firm is "proud to call [Mr. Bechtel] a shareholder and will miss him on our board."

Theranos said Mr. Bechtel had joined its board in 2014. Mr. Warmenhoven is also a board member at the closely held Bechtel Corp.

In a statement issued by Theranos, Mr. Warmenhoven said, "Theranos' inventions position it to meaningfully contribute to accessible, affordable health care across a broad range of settings."

"I have confidence in the company's return to its technology roots, and I look forward to helping guide it to success," he said.

The company faces serious challenges. Federal health regulators sanctioned it in July, barring Ms. Holmes from the lab industry for at least two years. It faces lawsuits by investors and patients and civil and criminal federal probes.

The company is appealing the sanctions. It has said the suits are without merit and that it is cooperating in the investigations.

In October, it closed it lab testing operations. Ms. Holmes said at the time the company would focus on developing new lab devices to sell commercially that would enable cheaper blood tests to be done on small samples.

On Thursday, the company also announced that it was retiring its board of counselors structure as part of "an ongoing evolution and consolidation of the company's corporate advisory framework." The move is effective Jan. 1. A call seeking further detail wasn't immediately returned.

Members of the scrapped counselors group were once part of the board of directors but were shifted to the newly created body in 2015 after critics said that while influential former government officials, they offered little in expertise in the sector.

The advisers included former U.S. cabinet members Henry A. Kissinger and George P. Shultz, as well as former U.S. senators.

It was the grandson of Mr. Shultz, a former secretary of state, who was the first of Theranos' employees to raise concerns with state regulators of the company's lab practices.

Write to Christopher Weaver at christopher.weaver@wsj.com and Ezequiel Minaya at ezequiel.minaya@wsj.com

(END) Dow Jones Newswires

December 01, 2016 21:43 ET (02:43 GMT)

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