Years after its well-documented rise and near fall, the shoe has finally dropped for Chicago-based tech startup Outcome Health.
Following a 10-week trial, an Illinois federal jury convicted three former Outcome Health executives of defrauding customers and investors out of about $1 billion Tuesday afternoon.
Former Outcome Health co-founder and CEO Rishi Shah, co-founder Shradha Agarwal and chief operating officer Brad Purdy were each found guilty on more than a dozen counts. The three leaders have not been sentenced yet.
The Associated Press reported that a spokesman for Shah said he plans to appeal and “will exhaust every avenue to overturn this result.”
Prior to the controversy that would come to dominate its reputation, Outcome Health’s rags-to-riches story was fairly well known in the industry.
Founded in 2006, the point-of-care (POC) platform for physicians had 16 employees by 2011. By the end of 2017, the company had more than 500 employees and achieved a valuation of nearly $5.5 billion.
The company’s business model was built around revenue from POC pharmaceutical ads for some of the largest drugmakers. By mid-2017, Outcome Health was working with 28 of the top 30 pharma companies.
However, in October of that year, Outcome Health was accused of misleading advertisers with manipulated data. This led to lawsuits from the likes of Goldman Sachs and Google, which had invested millions in the company.
Ultimately, Outcome Health paid a $70 million fine to the Department of Justice. Meanwhile, Shah and Agarwal stepped down from their roles at the start of 2018 as part of the settlement but retained the titles of chairman and vice chair, respectively.
In November 2019, the U.S. Attorney’s Office of Northern District of Illinois charged Shah, Agarwal and Purdy, along with three other Outcome Health workers, for their roles in an alleged fraud scheme that totaled $1 billion.
Amid the legal troubles facing its former leaders, the company hired Matt McNally to serve as CEO in June 2018, a position that he held until March 2021. McNally steadied the ship in his nearly three years at the helm, teaming with Verywell and merging with PatientPoint to establish one of the largest advertising networks in the POC space.
Additionally, Outcome Health set out to improve its brand following the controversy by offering customers a third-party performance audit and joining the Interactive Advertising Bureau.