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Major Investors Sue @OutcomeHealth

The Chicago Tribune is reporting that investors in Outcome Health, including a fund co-founded by gubernatorial candidate J.B. Pritzker and units of Goldman Sachs and Google, have sued Outcome Health and two of its founders, alleging that they committed fraud to secure almost $500 million in funding earlier this year – see our October 12, 2017 story ‘Did @OutcomeHealth Mislead Advertisers?’ here [1].

The lawsuit, filed Tuesday in state court in New York against Outcome, Shah and Agarwal, follows a Wall Street Journal report last month that said some employees charged pharmaceutical companies for ads on more video screens than Outcome Health had installed.

The investors, which include funds managed by Goldman Sachs Group, Chicago-based Pritzker Group Venture Capital, Google’s parent Alphabet and others, allege in the suit that they were misled.

You have to ask who the hell does due diligence on these sorts of deals because with a little look at some of their (original) figures and a deep dive into BroadSign’s playlist reporting would have surely proven that a lot of what was claimed was pie in the sky!

The original USD 487.5 million investment included USD 100 million from a Goldman Sachs-managed fund and USD 50 million each from Pritzker’s fund, a fund tied to Alphabet and one affiliated with Emerson Collective, an organization run by Laurene Powell Jobs, according to the suit.

All of the funding together, somehow managed to value Outcome Health at USD 5.5 billion and interestingly as the Chicago Tribune pointed out, landed Rishi Shah on the Forbes 400 ranking of the richest Americans, with an estimated net worth of USD 3.6 billion.

The investors asked the court to award damages and require Shah, Outcome Health President Shradha Agarwal and Outcome Health to return their investments in exchange for tendering their shares and it (the suit) alleges that Shah took steps to move funds after the Wall Street Journal report, and it asked the court to order that those funds remain available.

Sanford Michelman, an attorney for Outcome Health, said in a statement that the lawsuit’s claims have no merit.