Outcome Health Explained

Outcome Health is a Chicago-based healthcare technology company founded by Rishi Shah. Its registered name is ContextMedia Health LLC. It is majority owned by Littlejohn & Co., a private equity firm.[1] Its founders were indicted and convicted by a federal grand jury on multiple charges of fraud and also sued by the SEC, with veteran tech investor Howard A. Tullman describing Outcome as "our version of Theranos."[2]

History

In May 2017, a funding round with Goldman Sachs, CapitalG, Pritzker Group, and others invested $600 million in Outcome Health, giving it a $5.6 billion valuation.[3] This is the largest single funding round in Chicago since Groupon in 2011, when it raised $950 million in its fifth funding round.[4]

According to a report in The Wall Street Journal unnamed former employees and advertisers accused the company of overcharging their customers for advertisements and misquoting third-party analyses and falsifying documents on the ads' performance. According to the accusations, Outcome Health reported that the ads appeared on more video screens than they had installed.[5] Lanny Davis, a company spokesperson, responded by saying a law firm had been hired to "review allegations about certain employees' conduct that have been raised internally."[6]

In November 2017, COO Vivek Kundra left the company.[7] Also in November, several advertisers stopped working with Outcome Health and investors sued the company claiming fraud and breach of contract.[8] [9]

As of January 2018, Outcome Health decided to settle outstanding investor lawsuits in exchange for having Shah and Agarwal step down.[10]

In June 2018, Matt McNally, former chief media officer at Publicis Health, was announced as the company's new CEO.[11]

On November 25, 2019, four former executives were indicted[12] for falsifying ad performance statements to secure bank loans of nearly $1 Billion. Former CEO Rishi Shah, former President Shradha Agarwal, and former CFO Brad Purdy were charged with several counts of mail, wire and bank fraud, money laundering.[13] On April 11, 2023, Shah, Agarwal, and Purdy were found guilty of multiple counts and await sentencing, facing up to 30 years in prison.[14]

External links

Notes and References

  1. https://www.outcomehealth.com/outcome-health-completes-comprehensive-recapitalization-and-secures-significant-new-equity-capital Company press release
  2. John Pletz, Crain's Chicago Business, December 2, 2019
  3. Web site: This 31-Year-Old Is Worth $3B For Bringing Drug Marketing Into Your Doctor's Office. Alex. Konrad. Forbes. 27 August 2017.
  4. Web site: Chicago's newest billionaire, 31-year-old Rishi Shah, is self-made. Chicago Sun-Times. 27 August 2017.
  5. Web site: Lynley. Matthew. Startups advertising In-office medical advertising startup Outcome Health reportedly misled advertisers. Tech Crunch. 13 October 2017.
  6. News: Winkler. Rolfe. Outcome, a Hot Tech Startup, Misled Advertisers With Manipulated Information, Sources Say. 13 October 2017. The Wall Street Journal. October 12, 2017.
  7. News: Winkler. Rolfe. 2017-11-04. Outcome Health Loses Operating Chief Vivek Kundra. en-US. Wall Street Journal. 2020-09-24. 0099-9660.
  8. News: Winkler. Rolfe. Vranica. Suzanne. 2017-11-05. Drug Advertisers Suspend Deals With Outcome Health. en-US. Wall Street Journal. 2020-09-24. 0099-9660.
  9. News: Winkler. Rolfe. 2017-11-08. Investors Sue Ad Startup Outcome Health for Alleged Fraud. en-US. Wall Street Journal. 2020-09-24. 0099-9660.
  10. Web site: 'Uphill battle' predicted for Outcome Health after settlement with investors. Ally. Marotti. chicagotribune.com. 20 February 2018.
  11. News: Outcome Health names advertising executive as new CEO. Marotti. Ally. chicagotribune.com. 2018-09-20. en-US.
  12. Web site: 4 health company executives accused in $1B fraud scheme. ABC News. en. 2019-11-26.
  13. Web site: Sandler. Rachel. Former Outcome Health Executives Indicted In Billion-Dollar Fraud Scheme. 2020-08-28. Forbes. en.
  14. Web site: 2023-04-11 . Former Executives of Outcome Health Convicted in $1B Corporate Fraud Scheme . 2023-04-12 . www.justice.gov . en.