Rishi Shah, co-founder and former CEO of healthcare technology startup Outcome Health, has been sentenced to seven and a half years in prison for his role in a scheme involving about $1 billion in fraudulently obtained funds, the Chicago Tribune reported June 26.
Five things to know:
1. Brad Purdy, former COO and CFO of Outcome Health, received a 27-month prison sentence for his role in the scheme. Co-founder and former President Shradha Agarwal was sentenced to three years of confinement at a halfway house, after which she will be deported to India. The sentences came about 14 months after a jury found the three executives guilty of fraud.
2. Founded in 2006, Outcome Health operated as a digital provider of medical information and advertising in physician offices. The startup installed screens in medical offices free of charge and sold advertising to pharmaceutical companies. The company grew fast, with 500 employees and a reported $5.5 billion valuation in May 2017 with funding from Goldman Sachs, Alphabet and Pritzker Group Venture Capital, among others.
3. During the 2023 trial, prosecutors alleged that the executives lied about how many physician offices had screens and tablets running their content. The trio allegedly used those false numbers to overcharge pharmaceutical companies for ads, and inflated revenue figures used to raise money from investors and secure loans, according to the Tribune.
4. In 2019, Outcome Health resolved a fraud investigation with the Justice Department by agreeing to pay $70 million and cooperate with the agency in its investigation of individual executives at the company. Outcome Health admitted that from 2012 to 2017, former executives and employees perpetrated a scheme to defraud its clients by selling advertising inventory that it did not have.
5. The Justice Department then criminally charged executives for their alleged role in a scheme that "tricked clients into paying for advertising it failed to deliver and served to falsely inflate the value of Outcome Health," according to Assistant U.S. Attorney Brian Hayes.