New Chicago ‘Healthcare Unicorn’ Is Really Just A Media Company

Written by Dana Sanchez

Investors have helped push Rishi Shah’s startup, Outcome Health, to a $5.6 billion valuation — not bad for a tech company that’s replacing brochures with touchscreens in doctors’ offices. The company’s biggest source of revenue in 2016 was advertising.

The firm has been described as a healthcare unicorn. Shah, 31, is Chicago’s newest billionaire, Chicago Sun Times reported in June. A college dropout who quit to pursue his entrepreneurial dreams, Shah and his business partner Shradha Agarwal in late May received $600 million in venture capital for their firm.

Investors in Outcome Health include Chicago-based Pritzker Group Venture Capital, Goldman Sachs Investment Partners, CapitalG (Alphabet/Google’s growth equity investment fund), Leerink Transformation Partners, and Balyasny Asset Management.

It’s the first infusion of investment money for Outcome Health, founded in 2006, but it’s more notable for its size, Chicago Sun Times reported:

Not since Groupon has a company raised that kind of capital in a single round of funding. In 2011, Groupon raised $950 million from investors in a fifth round of funding.

Outcome Health says it’s fixing an informational gap and cutting down on time doctors spend with patients in their offices, which often lack cutting-edge tools when it comes to technology. “Patients have the world’s information at their fingertips through their smartphones, but step inside an average physician’s office and they will be greeted by brochures, pamphlets, books and perhaps a desktop if they are lucky,” Med City News reported.

Because doctors are busy and overbooked, patients often only have just a few minutes at an appointment to discuss treatment options with their doctor. “And whatever you decide, you have to live with for the next three months,” Shah said. “You can’t change it until you and your doctor meet again.”

The company expects to be in 70 percent of doctors’ offices in the U.S. by 2020 and to expand overseas. There’s talk of an IPO.

Outcome Health wants to put more touch screens all over doctors’ offices — not just in waiting rooms but in exam rooms, where tablets deliver personalized information to patients before they consult their provider, and treatment rooms, where tablets give patients support while they receive treatment.

Some of these tools reduce the time it takes a doctor to explain a procedure from 12 minutes to less than five minutes, shortening interactions with patients.

There were just eight healthcare unicorns in the U.S. at the end of 2016, and Outcome Health wasn’t one of them, Med City News reported. Neither was Theranos, once valued at $9 billion for claiming it could run multiple blood tests on a single drop of blood at a fraction of the usual price. Theranos was forced to close its labs by U.S. regulators over inaccuracies in testing, Bloomberg reported.

The first thing you see when you go to Outcome Health’s website is a doctor saying, “That wallboard saved my patient’s life:”

The intended outcome of its marketing is clear, ForbesIndia reported: You’re meant to think it provides sophisticated medical technology that helps save patients’ lives:

Outcome, it says, provides “health intelligence to more than half a billion patients a year.” But Outcome is really a media company … It installs tablets and interactive screens in doctors’ offices that display medical information from Outcome’s 100 or so content partners—cancer data in an oncologist’s waiting room, say, or 3D depictions of anatomy for specialists to share with patients. It also displays ads, mostly from pharmaceutical companies such as Pfizer and Merck. Shah says Outcome had nearly $200 million in revenue last year, the biggest chunk from advertising… hardly lifesaving.

Outcome Health was previously named ContextMedia, Med City News reported.

The $5.6 billion valuation shows confidence in Outcome’s goal to be in a majority of doctors’ offices in just three years, ForbesIndia reported. “It also means that Shah’s 71 percent stake in Outcome is worth about $3.4 billion, even after accounting for company debt:

Such eye-popping numbers have some muttering about another Theranos. Investors say the company has long been profitable and does more than marketing. Perhaps Outcome fans did learn something from Theranos, though: They have a put option that lets them cash out their shares in six years, whether Outcome goes public or not. Just in case.

 

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About Dana Sanchez
Dana Sanchez is the editor of Moguldom.com and AFKInsider.com. She has worked in digital and print news media as a business writer and news editor. She has a master's degree in mass communications from the University of South Florida. Prior to working in news, Dana worked in advertising.

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