Indian-American Rishi Shah, who quit college 10 years back to pursue entrepreneurial dreams, has become tech’s newest billionaire. And his business partner, Shradha Agarwal, is close behind.
Their windfall came with a USD 600 million infusion of venture capital into Outcome Health, the Chicago health care tech company they founded in 2006. It’s now valued at USD 5.6 billion.
Shah grew up in the Chicago suburb of Oak Brook, the son of a doctor who emigrated from India; his mother managed his father’s medical practice. The initial idea for a company providing content to doctor’s offices was inspired, Shah says in an interview to local media, by his sister.
“My sister has type 1 diabetes,” Shah says. “If she gets on an insulin pump and she is able to achieve better blood sugar control and she is checking her blood sugar more effectively, the device manufacturer wins, the insulin manufacturer wins, the blood glucometer wins, the doctor wins, but the payor wins most of all. And she wins personally.”
He attended Northwestern University as a transfer student, where he met a woman named Shradha Agarwal, now Outcome’s president. Originally working on a campus magazine, they eventually founded a company called ContextMedia, out of Northwestern in 2008, funding it by taking loans that have over the years reached a combined USD 325 million instead of giving up equity. Knocking on doctor’s office doors around the Chicago area, the two found little appetite for their idea.
Some doctors didn’t see the value in digital education in their offices; others who did wanted to see revenue to feel comfortable committing to such a fledgling product. Without signing them, however, the entrepreneurs had no revenue with which to placate them. They eked out $1 million in revenue that first year. “Then we were off to the races,” says Shah, doubling most years since. “We had to build a profitable business, or at least a break-even business, from scratch,” says Shah. “We had no margin of error.”
Outcome Health is not only the newest unicorn company, having earned the honor just last week, but it is also already valued in the top 30 on the list of roughly 200 non-public companies worth $1 billion.
CEO Rishi Shah, 31 and president Shradha Agarwal founded ContextMedia in 2006 while the two were at Northwestern University. The company began to sell its video monitor services to physicians and hospitals without any outside investment.
Over the next decade, the company grew and big-time investors noticed, but Shah and Agarwal passed up offers in order to scale organically and retain ownership. In January, the company changed its name to Outcome Health as it slowly pushed towards its first major round of funding.
According to Crain’s, the company took in more than $130 million in revenue last year and posted an operating profit margin of roughly 40%. Outcome Health doubled its revenue in each of the last two years, and it also grew with its acquisition of AccentHealth last November.
Today, Outcome Health helps both patients and doctors by providing touch screen monitors to hospitals and health care offices around the country. The company installs large, interactive video boards that allow physicians to better explain a patient’s current health care needs or problems through the use of video, graphics and interactive visual aids.
Outcome Health also utilises specialised software to assist physicians and patients for everything from treatment decisions to medical warning signs.
Outcome tries to maximise how both doctors and patients spend their time, which helps unclog those stereotypically crowded waiting rooms. According to one of the company’s online testimonials, Neil Baum, a New Orleans-based urologist, cut the time it takes him to explain a common urological procedure from 12 minutes to less than five minutes through the use of Outcome Health’s Digital Anatomy Board.
Outcome Health often provides its services to medical providers for free. The company makes most of its money from insurance providers, drug makers, health care marketers and pharmaceutical companies.