April 18, 2023

Last week, a jury in the United States convicted Rishi Shah and Shradha Agarwal for their roles in a fraud scheme. Shah, Agarwal, and Brady Purdy targeted Outcome Health’s “clients, lenders, and investors and involved approximately $1 billion in fraudulently obtained funds,” the U.S. Justice Department said in a statement.

Outcome was a Chicago-based health technology start-up which installed television screens and tablets in doctors’ offices around the United States and then sold advertising space on those devices to clients, most of whom were pharmaceutical companies.

Outcome was founded in 2006 by Shah and Agarwal and originally named Context Media. Shah, 37-years-old, was the former CEO while Agarwal, also 37, was the former president. Brad Purdy, 33, was the former chief operating officer and chief financial officer.

According to evidence presented in court, the Justice Department states, “Shah, Agarwal, and Purdy sold advertising inventory the company did not have to Outcome’s clients, then under-delivered on its advertising campaigns…Shah, Agarwal, and Purdy lied or caused others to lie to…make it appear as if the company was delivering advertising content to the number of screens in the clients’ contracts…the scheme targeting Outcome’s clients began in 2011, lasted until 2017, and resulted in at least $45 million of overbilled advertising services.”

In 2016 and 2017, Shah, Agarwal, and Purdy used the inflated revenue figures and “lied to investors and lenders” to raise nearly $1 billion in debt and equity financing. Shah and Agarwal paid themselves a total of $263 million in dividends from the fund raise.

Shah reportedly defrauded pharmaceutical customers including Novo Nordisk and investors including Goldman Sachs Group and Google’s parent company Alphabet.

In 2017, Shah and Agarwal made rosy public forecasts about Outcome’s business prospects. In September that year, for instance, Shah said in a statement that Outcome Health’s “new global headquarters (in Chicago) gives us room to add 2,000 employees by 2022.” Agarwal stated that the company impacts “500 million patient visits annually across the country… This global headquarters will allow us to…accelerate our product and technology roadmap to introduce new forms of health intelligence into the important decisions that are made at the moment of care.”

The statement said that Outcome, which had more than 600 employees, placed “140,000 interactive tablets and screens with relevant health information and intelligence deployed in waiting and examination rooms at physician practices; and (that its) venture arm has invested $25 million in 45 companies, primarily in the Chicagoland area.”

“Companies like Outcome Health are a critical part of Chicago’s future - driving job creation, innovation and economic growth across the city,” Chicago’s then Mayor Rahm Emanuel said in the statement.

In 2017, Outcome raised $488 million in equity at a valuation of $5.6 billion. Based on this valuation, Shah was estimated to have a net worth of $3.7 billion, according to Forbes.

Shah was born in Oakbrook, a suburb of Chicago. His father Upendra Shah is an endocrinologist and his mother is Sonal Shah; they are both immigrants from India. Rishi Shah finished high school from Hinsdale Central High School, in a western suburb of Chicago. He attended Northwestern University, Chicago, but dropped out to start Context Media.

In 2019, Outcome Health was bought by Littlejohn, an U.S. private equity firm, for an undisclosed price. In 2021, Outcome was merged with PatientPoint to form PatientPoint Health Technologies.

Ashik Desai, Outcome’s former chief growth officer, and two other employees pleaded guilty and co-operated with the prosecutors. Desai was the key witness for the prosecutors. One of the prosecutors in the case was Saurish Appleby-Bhattacharjee for the Northern District of Illinois. Given his co-operation, Desai will likely receive a lenient prison sentence.  

Lawyers for Shah, Agarwal and Purdy argued that Desai was responsible for the criminal conduct at the company. The three defendants, who pleaded not guilty, are expected to appeal their conviction.

Shah was convicted on 19 counts, including for mail and bank fraud and money laundering. Agarwal was convicted on 15 counts. They are both expected to be sentenced by a judge in the coming months, with each count potentially involving a maximum prison term of ten or more years.     

In November 2017, Shah told students at Northwestern University that focus is the key to his business success. He said that “Focus will give you the internal constitution or conviction and energy required to persevere through all the friction you’ll face.”  

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