Disgruntled investors at Outcome Health last week asked a New York judge to lock down $225 million in funds as investigations play out at the company.
The answer was no. Late Monday, Justice Eileen Bransten refused to freeze the funds and criticized investors for delaying the case by filing amendments to the complaint on Sunday, according to Crain’s Chicago Business.
A group of investors, including Goldman Sachs Investment Partners and Google parent Alphabet fund CapitalG, last week filed for a temporary restraining order to set aside that $225 million, which was part of the $487.5 million raised in Outcome Health's first outside funding round in May.
In a statement after Monday's decision, the attorney for co-founders Rishi Shah and Shradha Agarwal said they "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 doctors alike.”
The requested cash freeze is part of a lawsuit alleging Outcome and its founders committed fraud by using false information to win outside investors. The allegations stem from a Wall Street Journal report that the physician in-office ad platform had misled advertisers by overcharging them or manipulating campaign results. Outcome launched its own investigation and a third-party review and hired a special investigator to look into the allegations.
Outcome denies the allegations and maintains the lawsuit is without cause. "This is the latest negotiating ploy misusing the courts in the interest of enriching Goldman Sachs at the expense of the company, its employees and its customers as there is no merit to the claims," the company said in a statement when the suit was filed.
In the wake of those allegations and lawsuits, at least one big name pharma advertiser, Bristol-Myers Squibb, decided not to renew for this year or 2018, the newspaper reported earlier this week. Several large ad agencies, including Omnicom Group, Interpublic Group, Havas, and Publicis Groupe are advising clients to suspend advertising contracts until audits are complete.
Crain’s noted that it’s unclear when the parties will appear next in court. On the New York State Court electronic filing cite, Dec. 5th is listed as an appearance date for several motions filed both by the plaintiffs and defendants.