Outcome Health, a US-based healthcare technology provider backed by internet and technology conglomerate Alphabet, is being investigated for fraud, FierceHealthcare reported on Friday.
The investigation is led by the US Department of Justice and financial regulator the Securities and Exchange Commission (SEC), and it comes on top of several investors, including Alphabet’s CapitalG unit, suing Outcome Health for alleged falsified data and financial reports.
Founded in 2006, Outcome Health installs tablets and television screens in doctor’s offices to display targeted advertising from pharmaceutical firms.
The company has allegedly inflated the number of advertisements displayed, exaggerating the revenue generated by one campaign more than twentyfold and producing case studies that skewed raw data.
The investigation is supported by a sworn affidavit from Kenneth Eberts, managing director of investment banking firm Goldman Sachs, who served as director for Outcome’s parent company. Outcome has denied the allegations.
Goldman Sachs, Leerink Transformation Partners, Pritzker Group, Norwest Venture Partners, Balyasny Asset Management and Prudence Outcome Holdings have been subpoenaed as has an unnamed pharmaceutical firm.
Outcome Health raised funding in a May 2017 round that valued it at $5bn pre-money. The round was reported as $600m in size by the Wall Street Journal at the time, though the publication now puts the figure at $487.5m.
Goldman Sachs invested $100m at the time while CapitalG, Norwest and Emerson Collective each injected $50m. Leerink, Pritzker, Balyasny and unnamed health systems and healthcare stakeholders also participated.
CapitalG, Goldman Sachs, Norwest and Emerson last week filed a lawsuit against Outcome Health at the Supreme Court of New York City, asking the judge to freeze $225m of their investment due to Outcome knowingly providing falsified information.
The $225m is being held in a subsidiary, but the investors also allege Outcome Health’s co-founders Rishi Shah and Shradha Agarwal have been trying to withdraw the cash.