Outcome Health

Outcome Health was a Chicago-based health technology company founded in 2006 by Rishi Shah and Shradha Agarwal that installed screens in doctors' offices to display drug advertisements.^2679111214 In May 2017, the company raised approximately $500 million at a $5.5 billion valuation from investors including Goldman Sachs, Alphabet's CapitalG, and Pritzker Group Venture Capital.^71011121314 In 2023, former executives Rishi Shah, Shradha Agarwal, and Brad Purdy were convicted of fraud for defrauding clients and investors of about $1 billion.⁴⁵⁷⁸

Timeline

Money raised

Outcome Health raised approximately $500 million in its first outside funding round in May 2017.^71011121314 The round valued the company at $5.5 billion post-money.⁷¹¹ Goldman Sachs led the round, with participation from CapitalG, Pritzker Group Venture Capital, Prudence, and 50 South Capital.¹¹ The company's revenue was $180 million as of May 2017.¹¹ Outcome Health also raised nearly $500 million in loans, of which $38 million went to Shah and Agarwal.⁷ Shah and Agarwal received a $225 million dividend from the equity investment.⁶⁷ As part of a settlement with investors, Shah and Agarwal agreed to give back $159 million.⁷ Outcome Health agreed to pay $70 million to resolve federal fraud charges in 2019.⁷¹¹

Investors named in the sources: Goldman Sachs^67911121314, CapitalG^711121314, Pritzker Group Venture Capital^67911121314, Prudence¹¹, 50 South Capital¹¹, Leerink Transformation Partners¹²¹³¹⁴, Balyasny Asset Management¹²¹³¹⁴, Alphabet⁶⁷, Laurene Powell Jobs' investment firm⁷.

What happened

Outcome Health was founded in 2006 by Rishi Shah and Shradha Agarwal while they were students at Northwestern University.^269111214 The company installed video screens in doctors' offices at no cost to providers and charged pharmaceutical companies to run ads on the screens.^6791114 Outcome Health claimed to have screens in 20% of U.S. doctors' offices and to deliver health intelligence to more than half a billion patients a year.⁶¹²¹⁴ The company acquired AccentHealth in November 2016, expanding its network.¹¹ In January 2017, the company rebranded from ContextMedia to Outcome Health.¹¹

In May 2017, Outcome Health raised approximately $500 million at a $5.5 billion valuation from investors including Goldman Sachs, CapitalG, and Pritzker Group Venture Capital.^71011121314 The company planned to use the funding to expand from 20% to 70% of U.S. physician practices by 2020.¹²¹³¹⁴ In October 2017, the Wall Street Journal reported that Outcome Health had misled advertisers about the number of screens installed and the effectiveness of ads.⁴⁶⁷ Investors sued Outcome Health and its founders in November 2017, alleging fraud and breach of contract.³⁹ The lawsuit was settled when Shah and Agarwal agreed to step down from their executive roles and give back $159 million.⁷

Shah stepped down as CEO in January 2018, and Agarwal stepped down as president.¹⁹ In June 2018, Shah and Agarwal resigned from the company's board of directors.⁹ The company faced advertiser makegoods and clawbacks from lenders in the millions.⁴ Outcome Health agreed to pay $70 million to resolve federal fraud charges in 2019.⁷¹¹ In March 2021, Outcome Health merged with PatientPoint to form PatientPoint Health Technologies.⁴⁷¹¹

The combined entity was projected to have nearly $200 million in revenue and $60 million in EBITDA in 2021.¹¹ In April 2023, a federal jury convicted Rishi Shah, Shradha Agarwal, and Brad Purdy of fraud charges.⁴⁷⁸ Shah was convicted on 19 of 22 counts, Agarwal on 15 of 17 counts, and Purdy on 13 of 15 counts.⁷ The fraud involved charging pharmaceutical clients for ads on more screens than were installed and manipulating third-party reports.⁴⁶⁷ The scheme defrauded clients and investors of approximately $1 billion.⁴⁶⁷

Three other employees pleaded guilty to lesser charges, including Ashik Desai, who testified against the executives.⁴⁷ The Securities and Exchange Commission also charged the executives with fraud, and the case was pending as of 2023.⁴⁷ In July 2024, three former executives were sentenced for their roles in the fraud scheme.⁵ The company's legal troubles led advertisers and healthcare providers to pull back from Outcome Health.⁹ About 200 employees took a voluntary buyout, and the company called off a headquarters move.⁹

The state suspended two tax credit agreements with the company.⁹

Legal outcomes

• filedInvestors sued Outcome Health and its founders for alleged fraud and breach of contract in November 2017.³⁹
• settledThe investor lawsuit was settled when Shah and Agarwal agreed to step down and give back $159 million.⁷
• settledOutcome Health agreed to pay $70 million to resolve federal fraud charges in 2019.⁷¹¹
• convictedRishi Shah was convicted on 19 counts of mail, wire, and bank fraud in April 2023.⁴⁷⁸
• convictedShradha Agarwal was convicted on 15 counts of mail, wire, and bank fraud in April 2023.⁴⁷⁸
• convictedBrad Purdy was convicted on 13 counts of mail, wire, and bank fraud in April 2023.⁴⁷⁸
• pleadedAshik Desai pleaded guilty to fraud charges and testified against the other executives.⁴⁷
• pleadedTwo other employees pleaded guilty to conspiracy to commit wire fraud.⁷
• pendingThe Securities and Exchange Commission charged the executives with fraud, and the case was pending as of 2023.⁴⁷
• convictedThree former executives were sentenced in July 2024 for their roles in the fraud scheme.⁵

Where the founders are now

Rishi Shah was convicted of fraud in 2023 and sentenced in 2024.⁴⁵⁷⁸ Shradha Agarwal was convicted of fraud in 2023 and sentenced in 2024.⁴⁵⁷⁸ Shah and Agarwal stepped down from their executive roles in January 2018 and resigned from the board in June 2018.¹⁹ As part of a settlement with investors, Shah and Agarwal agreed to give back $159 million.⁷

Sources

1. The 31-year-old CEO of startup Outcome Health stepped down just 8 months after raising $500 million, Business Insider, 2018-01-29
2. Outcome Health: The fall of a healthcare unicorn and the road ahead - MedCity News, MedCity News, 2018-06-28
3. Investors Sue Ad Startup Outcome Health for Alleged Fraud, wsj.com, Nov 8, 201
4. https://telecareaware.com/, telecareaware.com, Apr 13, 20
5. , justice.gov, Jul 1, 202
6. How a health startup allegedly pulled off a $1B fraud. (Hint: 'Big promises' and 'hot air.'), advisory.com, Dec 4, 201
7. Former Outcome Health executives found guilty of fraud, Fox Business, Apr 13, 20
8. Former Outcome Health executives convicted of fraud, mobihealthnews.com, Apr 12, 20
9. Outcome Health’s former leaders step down from board, Chicago Tribune, 2018-06-21
10. Outcome Health snags $500M in its first funding round, healthcaredive.com, Jun 2, 201
11. Outcome Health Acquisition, Valuation, Funding & Investors | Multiples, multiples.vc, Sep 18, 20
12. Outcome Health ditches bootstraps, raises $500M at $5B valuation | Built In Chicago, Built In, May 31, 20
13. Outcome Health’s Closes First-Ever Round of Funding at $5B Valuation, DTC Perspectives - DTC Pharmaceutical Consumer Marketing Forum and Events, 2017-05-31
14. Outcome Health Raises Financing at $5 Billion Valuation to Accelerate Growth and Transform Healthcare, prnewswire.com, 2017-05-31

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