Outcome Health has entered into a deal with its investors to settle allegations the company engaged in fraud and breach of contract.
A group of investors sued the Chicago-based tech and advertising startup and its two founders in November. Outcome Health, which reported a $5.5 billion valuation in May, installs flat-screens and tablets in physicians' offices to display videos targeted toward select patient groups, including educational content and pharmaceutical advertisements.
The lawsuit, filed in New York State Supreme Court in New York County, followed an Oct. 13 The Wall Street Journal investigation alleging a subset of employees manipulated sales information to mislead pharmaceutical advertisers. The participating investors in the lawsuit included Goldman Sachs Group's asset management arm, Alphabet's CapitalG unit and Norwest Venture Partners.
The recent deal settles all litigation between Outcome Health and its investors, according to a Jan. 26 company statement.
Under the settlement, Outcome Health co-founders Rishi Shah and Shradha Agarwal have stepped down from their roles as CEO and president, respectively. They will continue involvement in the company as chairman and vice chair of the board of directors. The expanded board of directors, including two investor representatives and three independent directors, will launch a search for a new CEO.
Equity investors, lenders and the company's co-founders will also recommit $159 million to Outcome Health as part of the settlement. The $159 million will go toward reducing the company's debt by $77 million and will "further strengthen and scale its technology platform, automated processes and overall customer operations," the statement reads.
Editor's note: Becker's Hospital Review reached out to Outcome Health for comment and will update as more information is available.