Embattled Indian American Founders of Medical Firm Step Down as Part of Settlement Deal
Rishi Shah and Shradha Agarwal will step down from the positions of the chief executive officer and president, respectively, at Outcome Health.
Indian American entrepreneurs Rishi Shah and Shradha Agarwal, who were the chief executive officer and president, respectively, will be stepping down from their positions at Outcome Health, a $5.5 billion valued company in the United States, to settle allegations of fraud.
The company, which provides health education technology to improve patient outcomes at physician practices nationwide, announced on Jan. 26 that it has settled all litigation with its investors. The company places digital screens in doctors’ offices that run health-related content as well as advertisements from drug companies.
“As a result of the settlement, the equity investors, lenders and company’s founders are recommitting $159 million to Outcome Health, which will be used to reduce the company’s debt by $77 million and further strengthen and scale its technology platform, automated processes and overall customer operations. Founders Rishi Shah and Shradha Agarwal have moved into the roles of Chairman and Vice Chair of the Board of Directors from their previous positions. The expanded Board of Directors, which also includes three new independent directors and two investor representatives, is launching a search for a new CEO,” the statement from the company said.
The founders raised $225 million in funding last year, which was reportedly set aside by Shah and Agarwal. The $159 million will be part of the $225 million they had raised, the Chicago Tribune reported. The Indian American duo was barred in November from using the $225 million after the investors sued them. A court filing on Jan. 26 said that the money will be used for settlement with the investors, the report added.
The company raised $500 million in July 2017 but after the Wall Street Journal reported that the company had overcharged clients by misleading them about their reach and manipulated campaign results, the investors, including Goldman Sachs and Google and a fund co-founded by Illinois gubernatorial candidate J.B. Pritzker, sued the company in November 2017. Outcome Health denied the allegations and said that the lawsuit was without cause.
The company has so far lost 200 of its 535 employees and shelved its plan of moving to a different headquarters.
Shah had made it to Forbes 400 list as the 206th richest American in October 2017. The net worth of the 31-year-old college dropout was estimated to be $3.6 billion. He was also named as one of the richest Americans under the age of 40.
Shah and Agarwal, both 32, were also included in the Fortune magazine’s list of ‘40 Under 40’ in 2017. The annual ranking list of influential young people under 40, who the magazine calls “disruptors, innovators, rebels and artists” inspiring others, featured them on rank 38.