Outcome Health Jan. 26 announced it has struck a deal with its investors to settle allegations of fraud and end a public legal battle that has stretched for months, resulting in Indian Americans Rishi Shah and Shradha Agarwal stepping down from their chief executive officer and president posts, respectively.
Shah and Agarwal, in stepping down from their management roles with the company, transitioned to chair and vice chair of the board of directors, which will search for the new CEO, the company said.
The newly expanded board will also include three new independent directors and two investor representatives, it said
"Shradha and I are reinvesting $159 million in Outcome Health which will further strengthen and scale its technology platform, automated processes and overall customer operations," Shah wrote in a post on the company's website, adding that $77 million of the reinvestment will be used to pay down debt.
During the search for a new chief executive, Nandini Ramani, the company's chief operating officer, will serve as the company's executive leader.
"Nandini brings a depth of expertise from Twitter and Oracle, where she has led revenue, technology and operations," Shah added. "She will continue to mobilize our resources to actualize our commitment to operational excellence and customer satisfaction."
The agreement settles all litigation between the company and its investors, according to the news release.
“We’re enthusiastic to move into this new chapter of growth with our customers and partners to transform the health care industry and fulfill our mission to activate the best health outcomes possible for every person in the world,” Shah added.
Founded in 2006 as ContextMedia, the company places screens in doctor’s offices that run educational content about health topics and advertisements from drug companies, according to its website.
It had not raised outside money until last year, when it secured $487.5 million in funding from big-name investors and rose to a valuation of about $5.5 billion, the Chicago Tribune reported.
In November, those investors — including units of Goldman Sachs and Google, and a fund co-founded by Illinois gubernatorial candidate J.B. Pritzker — sued the company, Shah and Agarwal, alleging Outcome Health misled advertisers and investors about the company’s performance (see previous article here).
The investors filed court documents indicating they received subpoenas from the Justice Department, according to the report.
In recent months, pharmaceutical advertisers have pulled tens of millions of dollars in ads from the fast-growing company and hospitals have backed away, it said. More than one-third of Outcome Health’s 535 employees took a voluntary buyout, and it called off a headquarters move, the Tribune added.
“All parties agree this was in their mutual best interest,” said the December statement from the company and the building’s owners, Boston-based Beacon Capital Partners, Chicago-based Callahan Capital Properties and Montreal-based Ivanhoe Cambridge.
Outcome Health had planned to put its name on the building and add 2,000 employees in the space after it moved from a nearby Wabash Avenue building, according to the Tribune.
“Our focus right now is on making decisions that will help Outcome Health to continue to be successful in 2018,” Shah said in a statement at the time. “We appreciate the flexibility of the building owners to work with us in reaching this agreement.”