May 31, 2017
By Mark Terry, BioSpace.com Breaking News Staff
One of healthcare’s latest tech billionaires didn’t develop a new drug or device. Instead, Rishi Shah, founder of Outcome Health, installs tablet computers and large-format touch screens in physician’s waiting rooms and offices. Today the company announced a financing round that valued the company at $5 billion pre-money. That means the 31-year-old Shah is now worth about $3.2 billion.
Outcome Health raised just under $600 million from investors, including Goldman Sachs Investment Partners, Alphabet’s growth equity investment fund CapitalG, Leerink Transformation Partners, Pritzker Group Venture Capital, Balyasny Asset Management, and others. Some of those “others” include strategic health systems and healthcare stakeholders.
“Outcome Health and its investors share a commitment to activate the best health outcome possible for every person in the world,” Shah said in a statement. “We believe achieving this at scale will require building a ubiquitous network that brings together all sides of healthcare to support patients and healthcare providers whenever, wherever and however they make critical healthcare decisions.”
One of the company’s products is its Digital Anatomy Board, which the company says, “facilitates effective communication through 3D anatomical diagrams that physicians can annotate during patient consultations to visualize the patient’s medical condition, related symptoms and treatment options.”
At the moment, the majority of the company’s revenue comes from the biopharma industry. Clients include Allergan , Bristol-Myers Squibb , GlaxoSmithKline , Merck , and Pfizer . This is largely through a variety of advertising and infomercial-type content.
Forbes describes the use of Outcome’s tablets in infusion centers, where patients receive chemotherapy treatment. This often involves sitting in a chair for hours at a time. “Nurses make sure each tablet is set up with information relevant to a patient’s cancer,” Forbes writes. “The tablets also offer meditation apps, and allow patients to watch movies. They also get drug ads. ‘The tablet’s user experience also provides a number of opportunities for partner messaging, such as banner ads and full-screen interstitials,’ an Outcome Health marketing video says.”
Shah, the company’s chief executive officer, dropped out of Northwestern University. While there, he met Shradha Agarwal, now the company’s president. They founded ContextMedia in 2008, taking out loans that eventually reached a combined $325 million. They did so to avoid giving up equity in the company. They spent a lot of time marketing to physicians in the Chicago area, without a lot of luck. Their first year they managed to bring in $1 million in revenue.
“Then we were off to the races,” Shah told Forbes. They have since doubled revenue most years since. “We had to build a profitable business, or at least a break-even business, from scratch. We had no margin of error.”
In November 2016, ContextMedia acquired AccentHealth and changed the name to Outcome Health. Forbes notes, “The current funding round makes Shah and Agarwal very rich, if illiquid. Shah had an 80 percent stake going into the fundraise (Forbes applies a 20 percent discount because the company is private, leading to a $3.2 billion net worth). Agarwal’s 20 percent stake before the round would be worth $800 million using a similar discount.”
On one level, Outcome falls clearly into what pharmaceutical companies refer to as “point of care” marketing. That traditionally meant the brochures and handouts found in doctors’ offices. But Outcome explodes the concept, although one might question the desire of people to be constantly bombarded with video content, infomercials and advertisements everywhere they go, including their doctor’s waiting rooms.
Shah argues that it’s more than point-of-care marketing, and the company is generating revenue across the balance sheet—from direct-to-consumer marketing, from general marketing, from R&D aspects because of tie-ins to clinical trial information. He’s also working on approaches for healthcare providers and with Medicare on new payment models.
“We’ve created a multi-sided network that gives payers and life science companies a seat at the table,” Shah told Forbes. “They can help doctors and patients make the best decision every time.”
Outcome Health claims its tablets or screens are in 40,000 doctor’s offices, or about 20 percent. It has about 100 content partners. Doctors can pay for the screens, but 99 percent of them don’t, opting for an advertisement-supported version.
By 2020, Shah has the ambitious goal of working with 70 percent of all healthcare providers.
“This idea at this point was simple,” Shah told Business Insider. “We want to be in every exam room in the world. We want to bring all the available information and intelligence in the world to help docs and patients make the best decision every time.”
