A Cincinnati health tech is merging with a startup once celebrated as a rare Chicago "unicorn" tech company but later disgraced with a massive fraud scandal.
Kenwood-based PatientPoint, which makes digital waiting room screens, announced Tuesday it is merging with Chicago-based Outcome Health. Terms of the deal were not disclosed, but the new company will operate under the PatientPoint brand. The combined company will also be majority owned by investors from L Catterton and Littlejohn & Co., which acquired a majority stake in Outcome Health in 2019.
PatientPoint says it acquired Outcome Health to help it expand its business and market share. The combined company will be led by PatientPoint’s CEO Mike Collete, and is expected to serve nearly 150,000 health care providers and impact roughly 750 million patient visits each year.
"By leveraging the best talent and technology from both PatientPoint and Outcome Health, we will be well positioned to expand our suite of innovative patient engagement solutions to deliver improved patient outcomes and a more personalized, relevant patient experience,” Collette said in a statement. "We also commend CEO Matt McNally and COO Nandini Ramani for leading Outcome Health's incredible turnaround and rebuilding client trust.”
McNally was brought in as Outcome Health’s CEO in 2018 after founders Rishi Shah and Shradha Agarwal stepped down from their day-to-day roles following a fraud scandal.
Founded in 2006 originally as Context Media, Outcome Health sells ads on screens in doctors' office waiting rooms and on exam room wallboards. It became Chicago's most valuable tech startup in 2017 when it raised $487 million at a roughly $5 billion valuation. It was sued by its investors for fraud later that year after the Wall Street Journal reported several Outcome employees misled advertisers on the effectiveness of the company’s ads.
In 2019, Outcome Health agreed to pay $70 million as a result of a Department of Justice fraud investigation. And later that year, Shah and Agarwal were charged in federal court, along with former Outcome CFO Brad Purdy and executive VP Ashik Desai, for their role in a "massive fraud" scheme where Outcome clients were allegedly over-billed for ads that were never delivered, and revenue figures were allegedly falsified in an effort to raise nearly half a billion dollars from outside investors.
The DOJ investigation said that of the $487 million equity investment, $225 million went directly to Shah and Agarwal.
Desai pleaded guilty to the charges in 2019 and is cooperating with the investigation. But Shah and Agarwal pleaded not guilty to the charges and are now awaiting their trial, which is set to take place on Feb. 22, 2022. They face up to 30 years in prison if convicted.
PatientPoint has approximately 400 employees, while Outcome has roughly 220, according to a spokesperson. Those headcounts are expected to change as the companies navigate their integration.
Meg Garner contributed to this report.
