New York judge denies investors' request to freeze $225M for Outcome Health founders

Wednesday, 15 November 2017, 06:35:06 AM. A New York state judge has denied a request from big-name investors in Outcome Health to freeze $225 million set to be distributed to two founders of the Chicago-based startup under fire for allegedly misleading advertisers and investors.
A New York state judge has denied a request from big-name investors in Outcome Health to freeze $225 million set to be distributed to two founders of the Chicago-based startup under fire for allegedly misleading advertisers and investors. The investors — including units of Goldman Sachs and Google and a fund co-founded by Illinois gubernatorial candidate J.B. Pritzker — last week sued Outcome Health, CEO Rishi Shah and President Shradha Agarwal, alleging fraud as the company secured $487.5 million in funding and rose to a valuation of $5.5 billion. The company places screens in doctors’ offices that run educational content about health topics for patients along with advertisements from drug companies. The screens and educational content are free to doctors. Outcome Health makes money off the ads. Of the $487.5 million the company received earlier this year, $225 million was to be distributed to Shah and Agarwal, according to the lawsuit. That money was to be held in a subsidiary of Outcome Holdings. A court document Outcome Health filed last week says Shah and Agarwal have considered using a portion of that $225 million to pay down the company debt “and otherwise stabilize the business.” The suit asked the court to order that those funds remain available, but on Monday a judge denied the request. “Rishi and Shradha remain hopeful they will be able to use the funds for investing back into the business they built, which continues to meet the important needs of patients and...Read more
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