A federal jury found three former executives of health tech company Outcome Health guilty of multiple counts of fraud on Tuesday.
Rishi Shah, cofounder and former CEO, Shradha Agarwal, former president, and Brad Purdy, former chief operating officer and chief financial officer, were convicted for their roles in a $1 billion scheme that defrauded investors and clients, largely pharma companies.
The Chicago-based startup, formerly known as Context Media, installed TVs and tablets in doctors’ offices and sold ad space on those devices. According to trial evidence, the executives sold advertising inventory they didn’t have, though they still billed clients as if they had delivered on sold campaigns.
They were also convicted of defrauding investors and lenders. Outcome raised multiple rounds of debt financing in 2016 and nearly $500 million in equity funding in early 2017.
Shah was convicted on 19 counts of mail, wire and bank fraud as well as money laundering, while Agarwal was convicted of 15 counts of mail, wire and bank fraud. Purdy was convicted on 13 counts of mail, wire and bank fraud as well as making false statements to a financial institution.
The defendants could face years in prison, though it’s likely they’ll appeal the verdict. According to the Wall Street Journal, a spokesman for Shah said they’d work to “overturn the result.” Agarwal’s representative said they were reviewing the decision, while Purdy’s lawyer said he was disappointed by the verdict.
Once a big name Chicago tech startup, Outcome’s legal troubles began in 2017 after the Wall Street Journal published an investigation into the company’s advertising practices. The company was later hit by a lawsuit from its investors who argued they had been misled by inaccurate and manipulated ad performance data. They settled with the company, and Shah and Agarwal stepped down from their roles.
In 2019, Outcome and the Department of Justice reached a $70 million settlement alongside an admission that former executives and employees sold falsified advertising inventory from 2012 to 2017. The company merged with patient engagement and education platform PatientPoint in 2021.
Jonathan Letourneau will offer more detail in the HIMSS23 session “Delivering Digital Solutions in Healthcare: A Design Thinking Approach.” It is scheduled for Tuesday, April 18 at noon – 1 p.m. CT at the South Building, Level 4, room S404.