Outcome Health

Documented cause

Outcome Health was founded in 2006 as ContextMedia by Rishi Shah and Shradha Agarwal in Chicago, placing digital health education screens in doctors' waiting rooms and exam rooms that displayed health content alongside pharmaceutical advertising. The company grew steadily and rebranded to Outcome Health in 2016. In 2017 it raised $487.5M from Goldman Sachs, Google Capital (Alphabet), Pritzker Group, Balyasny Asset Management, and the Illinois Teachers' Retirement Fund, at a $5.5B valuation. A Wall Street Journal investigation in 2018 revealed the company had systematically billed pharmaceutical clients for advertising on approximately 26,000 more screens than actually existed — inflating screen installation counts, viewership metrics, and impression data to collect payments for services never rendered. The SEC charged Shah, Agarwal, and CFO Brad Purdy in 2019. Purdy and Agarwal pleaded guilty and cooperated. Rishi Shah was convicted at trial in May 2023 on twelve counts of fraud. He was sentenced to seven and a half years in federal prison.

Alternative account: Outcome Health placed digital screens in doctors' waiting rooms to display pharmaceutical advertising, charging drug companies based on impressions and engagement. The company raised $487M in 2017 from Goldman Sachs, Google, and others at a $5.5B valuation. Federal prosecutors later charged that company executives had systematically inflated screen counts and engagement metrics, defrauding pharmaceutical advertisers of hundreds of millions. CEO Rishi Shah and other executives were convicted of fraud in 2022.

Lesson

Failure anatomy