There are many similarities between Theranos and Outcome: young, charismatic founders have dropped out of prestigious private universities and won the trust of high-profile investors.
But there are also key differences. Theranos was trying to create a blood test technology that consumers would use directly. Its technology was never proven and Theranos never became a money-making business.
The result, however, is real business with most of the major pharmaceutical companies advertising on screens the company has installed in thousands of doctors’ offices. At its peak, Outcome said it generated more than $100 million in annual sales.
Prosecutors claim the company billed customers for more advertising than they received, increasing revenue by 20% to 25%. Those financing were used to obtain two loans totaling $485 million and to raise $488 million from investors.
Unlike Theranos, Outcome’s founders cashed in on the go. According to court documents, Shah and Agarwal received more than $260 million in payments from loans and investments, though they were forced to pay back some of them in a settlement with investors. private. Shah retained an 80% stake in the company, which prosecutors say was once worth more than $4 billion.
That was the cause of Outcome’s downfall. After reading about the massive fundraising round, a company employee contacted a Wall Street Journal reporter “to tell him the truth about how business at Outcome was,” according to documents filed by the company. court. The Journal’s story in October 2017 sparked an investor lawsuit and investigations by the Securities & Exchange Commission and the Justice Department.
Kevin O’Brien, a former federal prosecutor and partner at Ford O’Brien Landy, a New York-based firm specializing in white-collar defense, said the money Shah and Agarwal pocketed would be making defense more difficult. “If the money goes to trial, it will be devastating because it involves motives.”
The case involved more than 10 million documents, including emails and voice messages. The government expects more than 1,000 exhibits and more than three dozen witnesses.
