Outcome Health, a hot $5 billion startup, reportedly misled its advertisers

Rishi and Shradha 2

A startup that raised $500 million in May at a $5 billion valuation misled its advertisers, The Wall Street Journal reports

Chicago-based Outcome Health delivers educational health footage alongside advertisements from pharmaceutical companies to doctors’ offices and waiting rooms. There were more than 50 investors in the May round, including CapitalG, Alphabet’s growth-equity fund; Pritzker Group; Goldman Sachs; and Leerink Transformation Partners.

Outcome Health has said it’s in 40,000 healthcare practices and works with 20% of healthcare providers in the US. By 2020, CEO Rishi Shah said he hoped to be working with 70% of all healthcare providers. The company also has plans to hire 2,000 more employees by 2022

But according to the report from The Journal, between 2014 and 2016, Outcome charged for more screen installations than it actually performed. Employees reportedly also doctored screenshots that were meant to show that certain ads had run in a particular doctor’s office. 

Outcome said in a statement sent to Business Insider:

“Outcome Health exists to activate the best health outcome possible for every person in the world. We are proud of the company we have built, helping doctors and patients make more informed decisions while having high rates of meeting our clients’ performance goals. We have rigorous policies and practices that deliver on contractual terms with transparency to our customers when campaigns experience issues.

“When we have a shortfall in media delivery, we strive to identify the issue as quickly as possible and address it with our client through “make-goods” or “bonus media” provisions, such as extending a campaign or increasing the number of doctors’ offices we reach for that campaign.

“We would also note that incidents that the Wall Street Journal identified occurred between 2014 and 2016. The company also strongly denies having a practice of misreporting campaign information to customers. The company’s policy has always been to accurately report information to every customer on every program. If there was any misconduct by any employee, we will deal with it very strongly and take appropriate action.” 

In October, Forbes reported that Outcome refunded Pfizer $4 million for its advertisement campaign after reportedly not getting the results from the campaign that it was looking for. 

Read the full report at The Wall Street Journal

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Amazon Studios VP suspended after Rose McGowan said she told the exec that ‘HW’ raped her, and that she ‘was ignored’

Rose McGowan

Actress Rose McGowan has been very active on social media over the past week, following the multitude of sexual harassment and assault allegations against film producer Harvey Weinstein.

And on Thursday, McGowan tweeted that the head of Amazon’s studio knew that “HW” assaulted her, and ignored it. “HW” most certainly refers to Harvey Weinstein.

McGowan tweeted at Jeff Bezos, the founder and CEO of Amazon, that she “told the head of your studio that HW raped me.” McGowan is likely referring to Amazon Studios chief Roy Price.

“Over and over I said it,” she continued. “He said it hadn’t been proven. I said I was the proof.” (Last week, The New York Times reported that the “Scream” actress reached a $100,000 settlement with Weinstein in 1997, according to a legal document.)

Price was suspended from Amazon on Thursday evening amid a harassment claim against him from a producer who worked on an Amazon show, and hours after McGowan published her own alleged account of communications with the studio executive on Twitter.

“Roy Price is on leave of absence effective immediately. We are reviewing our options for the projects we have with The Weinstein Co.,” read a statement from an Amazon spokesperson who was cited by The Hollywood Reporter. The statement does not mention any specific allegations against Price.

Last September, McGowan said she had “just sold my show to Amazon,” and indicated that she would write and direct it. But on Thursday, McGowan tweeted that when she heard that a “Weinstein bailout” was in the works at Amazon, she asked the company to “do the right thing.” 

“I was ignored,” McGowan tweeted. “Amazon won a dirty Oscar. I called my attorney and said I want to get my script back, but before I could, Amazon Studios called to say my show was dead.”

You come talking that trash we’ll pull your card. Tough face contest lost to @rosemcgowan #eazye #rosearmy pic.twitter.com/DZPMdZPZ0w

— Roy Price (@RoyPrice) July 15, 2016

In August, Amazon Studios boss Roy Price was investigated for allegedly making inappropriate sexual remarks to Isa Hackett, a producer on its series “The Man in the High Castle.” His attorney at the time was Lisa Bloom, who was part of Weinstein’s team before she dropped Weinstein in dramatic fashion over the weekend, as allegations of sexual assault broke. (Bloom told BuzzFeed News Thursday that her representation of Price “has concluded.”)

Hackett added further detail to her claims in an interview with The Hollywood Reporter, published Thursday. 

“I am calling on you [Jeff Bezos] to stop funding rapists, alleged pedos and sexual harassers,” McGowan tweeted Thursday. “I love Amazon but there is rot in Hollywood.”

In response to McGowan, a representative for Weinstein told Entertainment Weekly: “Any allegations of non-consensual sex are unequivocally denied by Mr. Weinstein.”

Amazon has also been criticized for the multi-part deal it has with Woody Allen, for movies and a TV show. Amazon spent $80 million to lure Allen onto streaming, according to The Hollywood Reporter.

rose tweets

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The Army is eyeing a number of high-tech upgrades to its arsenal

US Army M4 rifle

  • The Army is exploring a number of improvements and additions to its arsenal.
  • A main goal is enhancing the accuracy and lethality of weapons US soldiers carry.
  • The Army is also looking to centralize its testing and acquisition process in order to maintain its competitive advantage.

The US Army has been looking to swap out the M4/M16 rifle platform carried by US soldiers in one form or another since the 1960s.

The service currently has its eye on the Next Generation Squad Weapon, but its arrival is years away, and doubts about the Interim Combat Service Rifle make it unclear if US troops will get a new weapon in the intervening period.

Despite that uncertainty, the Army is looking at a number of upgrades to the weapons and ammunition currently carried by its soldiers.

A recent Army study examining existing threats analyzed how to build the new rifle, its ammunition, and its fire-control system in tandem to enhance its capabilities, all while fitting it into the service’s overarching modernization strategy.

According to Army Times, the study has produced several important findings — chief among them that fire control, or how the weapon is aimed, would have the largest impact on the new rifle’s development. But the service also wants to avoid needing constant upgrades.

“For the next generation, we wanted to make one end-all solution,” Brig. Gen. Brian Cummings, head of the Army’s Program Executive Office Soldier, told Army Times. “With the M4, when you look at it, it’s got all these things hanging on top of it. We keep evolving it by putting things on it.”

Army researchers are evaluating new designs for bullets and casings, as well as new materials for both rounds and propellants. Private firms have researched using polymers in weapons systems for some time, and one firm, Textron Systems, is now working on developing and refining polymer weapons and cartridges to lighten the load carried by US troops.

The company says its 6.5 mm carbine — an intermediate caliber the Army has its eye on — has the lethality of a 7.62 mm weapon and is lighter than many 5.56 mm rifles, the caliber the Army currently uses.

US Army soldier M4 carbine rifle

New sighting technology is also under consideration, meant to make it as hard as possible for soldiers to miss what they aim at. Some devices being reviewed would allow soldiers to aim a rifle without bringing it to their face. Other additions in mind are thermal imaging and range finders that evaluate wind, distance, and ballistics.

Personnel at the US Army’s Armament Research, Development, and Engineering Center are currently working on four programs focused on optics systems that identify and track targets, provide guidance and compensate for environmental conditions, improve firing speed and hit probability, and evaluate wind conditions.

An official overseeing the rifle’s development likened the initiative to a “mini-Manhattan project,” in reference to the World War II program that developed nuclear weapons. He said advancements in rifle technology over the next few years could outstrip those made over the last 40.

A version of the NGSW could see the field by 2022, with more advancements coming by 2025.

The Army is poised to introduce a new sidearm much sooner, however.

Army pistol handgun Sig Sauer P320

Cummings, the Army PEO chief, told Army Times that the first 2,000 of 195,000 new M17 handguns will be distributed among members of the 101st Airborne at Fort Campbell in Kentucky in November.

By the end of the year, the new sidearm will be given to 3rd Cavalry Regiment troops stationed at Fort Hood in Texas and to members of the Security Force Assistance Brigades.

The M17, a Sig Sauer-made 9 mm pistol, was picked as the Army’s new Modular Handgun System in January, and it’s meant to offer improvements in accuracy and ergonomics. It will be compatible with a silencer and will have interchangeable grips and standard or extended-capacity magazines.

The Air Force, Navy, and Marine Corps all plan to adopt the M17, though the Marines are looking at a compact version, the M18.

The Army has said it’s looking at a new weapon for snipers in both the short- and near-term as part of its development of the NGSW. And upgrades are also under consideration for the service’s machine guns.

The Army, Air Force, Coast Guard, and some special Navy units are testing a new sight for the venerable M2 .50-caliber machine gun and the M240 medium machine gun.

The Machine Gun Reflex Sight, made by Trijicon, will fill a “huge capability gap,” a company program manager said, and switch easily between the M240 and the M2, the latter of which now only has iron sights limited by the strength of the gunner’s vision.

M2 browning machine gun

The new sight will make the M2 more deadly and precise by “increasing the probability of first-round effects,” the program manager told Army Times. The sight costs a steep $4,500 a unit, however, with night-capable models running closer to $5,000.

The Navy Surface Warfare Center is also testing a new kind of ammunition for the .50-caliber machine gun that will be able to travel 65 yards underwater.

The company behind it, DSG Technology, says the new rounds, which also come in 5.56 mm and 7.62 mm variants, use special technology to create a bubble and travel through water. That ability is advantageous at sea because it will reduce the likelihood rounds fired at the water will ricochet and hit friendly forces.

The evaluation of new technology and potential upgrades comes as the Army is looking to reorganize how it buys, builds, and tests new weapons. Army Chief of Staff Gen. Mark Milley has said the service needs to centralize the disparate processes involved in development and deployment to regain its competitive advantage against emerging threats.

“Today, our Army is not institutionally organized to deliver modem critical capabilities to Soldiers and combat formations quickly. Our current modernization system is an Industrial Age model,” Milley said in letter sent to general officers earlier this month. “Our recent focus on fighting wars of insurgency and terrorism allowed our adversaries to make improvements on their modernization efforts and erode our advantages enjoyed since World War II.”

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We talked to Morgan Stanley’s head of media research about Netflix, Disney, and cord-cutting (MS, NFLX)

Ben Swinburne Morgan Stanley

When Ben Swinburne joined Morgan Stanley’s equity research team in 1999, companies like Netflix, Amazon, Facebook and Google were in their infancy, if they existed at all.

Now, 18 years later, they’re some of the most highly valued equities on stock markets.

We spoke with Swinburne, now a managing director and head of media research at the bank, about how cord-cutting and the rise of streaming are affecting all companies, from legacy cable providers like Altice to movie studios like Disney.

Here’s what Swinburne says to expect this earnings season from Netflix, Disney, Pandora, and the other 29 companies he covers.

This interview has been edited for clarity and length.

Graham Rapier: What’s on your radar as we approach earnings season?

Ben Swinburne: We’re seeing an acceleration in consumer adoption of over-the-top content. That’s showing up in a lot of different places. We’re seeing significant growth in network usage, both wireless and wired, which is obviously helping the cable industry and leading the charge in terms of taking share in broadband business. We think it will also help drive value for DISH‘s stock because Dish owns a unique portfolio of spectrum assets.

And then on the content side, there are clearly businesses benefiting from that shift, Netflix being the most obvious. But there are other companies who either own unique intellectual property, like MSG, who own the Knicks and Rangers, where we’re seeing the value of that unique IP grow in a market where you have more and more money funneling into over-the-top and trying to reach consumers.

Even on the traditional network side, there are businesses that clearly have some challenges but have really exciting opportunities in that shift. One of those names we tend to talk about is Lionsgate, which owns Starz. Starz and its fellow premium network, like HBO and Showtime, they’ve all typically always been sold at the top end of a pay-TV package that can run $80 to $120 per month. They’re now able to reach the consumer and broadband-only homes in a way that they weren’t before, so that’s quite exciting. There are traditional companies that have easier and more challenging tidbits toward this skinnier bundle and OTT world that we’re clearly moving toward even faster this year.

Rapier: You mentioned Netflix specifically. What will you be watching in its earnings report next week?

Swinburne: Obviously they’re going to report subscriber results and guide to the fourth quarter, so that’ll be a big focus. Longer term, we really believe the company has significant profit potential, and they’re just starting to generate earnings today. We believe there’s a path to significant margin for this business. The cost structure is largely fixed, and what I mean by that is there’s no relationship really between how many customers they have, how much revenue they generate, and how much they’re spending, particularly on content. To the extent that they can drive pricing or customer growth that will translate into greater and greater margin over time. So the fact that they’ve introduced some new price increases recently tells you that their path toward profitability is improving and accelerating more than the market has previously realized.

Rapier: Most of Netflix’s growth in recent quarters has come from abroad while the US subscriber growth has decelerated. How do you see this playing out?

Swinburne: The US market is obviously the one where they’ve got furthest along in terms of penetration, but they’ve done really well in international markets as well, so I think the international opportunity is certainly significant. On the US side, there are 80 million paid TV households in the United States and a roughly similar number of broadband homes, so there is certainly room for Netflix to grow.

There are 80 million paid TV households in the United States and a roughly similar number of broadband homes, so there is certainly more room for Netflix to grow.

What I think Netflix is doing around distribution is quite smart. They have an agreement with T-Mobile, for example. They have an agreement with Comcast on the X1. So when you look at 2 hours or more of viewing a day in a Netflix home, that level of engagement would suggest this can be a fairly widely adopted, if not mass market product, in the United States.

What they’ve proved is that the model can be replicated in other markets. I’m not sure they’ll get to US penetration and US profits in every market — there are markets that culturally don’t watch as much television as we do and don’t spend as much money as we do. I’m not sure that’s going to dramatically change, but Netflix may be serving these markets in a way they haven’t been served before from a product perspective.

The history would tell you that the company, if given time, can ramp in almost any kind of market. It’s probably intuitive that a market with a relatively developed economy like the US and the UK, and certainly English language with a strong technology adoption curve, strong broadband networks, would be a successful one for Netflix.

Then you look at a market like Brazil — obviously an emerging market, with a much different income per capita, a much weaker broadband-network structure than what you typically see elsewhere, and the product has scaled to profitability and significant penetration rates that should give people confidence that they can scale in other kinds of markets.

Glow Netflix

Rapier: Will competing platforms eat into Netflix’s potential market? Will they be successful on their own?

Swinburne: Over time you’ll see more direct-to-consumer strategies come out of traditional TV businesses that have been wholesaled. You’ll see studios — who also compete with Netflix — be very careful in licensing to Netflix. What Netflix has proven out so far is they have a nice strategy to hedge that risk.

For one, they’ve vertically integrated and are producing a lot of their new programming themselves. That also includes hiring showrunners who are exclusive to Netflix, like the Shonda Rhimes deal that was announced recently. They’re attracting talent to their platform, and between their checkbook size and their global scale and subscribers, it’s a unique place to go make TV shows and movies for.

The other piece is that when most traditional television studios make a show or produce a film, there are equity participants in those assets. Specific producers or directors may own equity in that show, and it’s very important that that talent is happy with how the product is monetized and distributed. So if Netflix is the best place, financially and otherwise, for that show to end up, that’s what will happen more often than not.

Rapier: What about Disney? Can its standalone service compete? What are you looking for in Disney’s earnings on November 9?

Swinburne: On this next earnings call we’ll get greater clarity on the near-term impact to earnings from this shift toward over-the-top. The biggest dilution in 2018 will probably come from their BAM tech acquisition, which closed in September. You’ll start to see some licensing revenue go away because they will be pulling products back for themselves. We’ll get a little more clarity on the impact of all that on the 2018 financials when they report. That obviously will be a big focus for people.

Bigger picture, though, what we have seen in the past several years is that there’s tremendous demand for over-the-top content. It’s not just Netflix, Amazon, and Hulu. We’ve seen lots of other services, traditional services like Starz or CBS All-Access, but also niche services like Japanese anime from Crunchyroll scale to 1 million-plus subscribers relatively quickly in a market that’s very early.

Then we have these virtual MVPDs [multichannel video programming distributors], whether it’s YouTube TV or Sling, that we think are going to reach 4 million subscribers by the end of this year. People are adopting and watching more than ever. When you think about Disney’s brands — Disney, Pixar, Star Wars, Marvel — they’ve got a better chance than probably any other existing content and media company to take advantage of all this.

Now, that will take time, and it will take some initial investment, but we think particularly on the kids side and how important OTT is to kids viewing and families, there’s a huge opportunity for them globally in a direct-to-consumer Disney environment. That’s different for ESPN, but certainly for the Disney side of the house, the outlook long term is quite bullish.

Rapier: What’s different with ESPN? What will you be watching for in that business segment?

Swinburne: Our eyes are all wide open. ESPN has probably benefited more than any other business in the existing bundle, from a profit perspective. They are facing a market where skinny bundles are the future, so they have to figure out a way to run their business in that environment. The good news there is that they are aware of these challenges. They are moving to an over-the-top product in 2018 that will give them a lot of insight into how sports can work — or not — in an OTT environment, which will inform them quite a bit in how they think about bidding for sports rights in three or four years, when the NFL, baseball, and other big sports deals are up.

The last piece would be that they just had a very successful renewal with Altice, the first distributor renewal in an upcoming cycle and very important to driving the earnings for that particular business in Disney going forward. I think investors should take some confidence out of the Altice renewal that the Disney portfolio of networks — which is not just ESPN but also ABC, Disney Channel — remain incredibly important assets in a competitive cable world.

Rapier: What’s going on in the cable industry? Is there any upside potential in those service providers?

Swinburne: Absolutely. Whether you’re talking about a Disney or Lionsgate, they certainly have value in this new ecosystem. Their content is being consumed at generally higher levels than before and there’s a clear path at least for some of these businesses to build new profit pools in an OTT environment.

On the cable-specific side, Comcast and Charter are two stocks we like. The fact that they are cable businesses is almost a misnomer today. They’re really ISPs.

The fact that they are cable businesses is almost a misnomer today. They’re really ISPs.

Every cable operator has more broadband customers than video customers today. The earnings contribution from broadband is growing rapidly, while the earnings contribution from video is declining. Their exposure to television and cord-cutting is probably a lot lower than people realize. You’ll see the number of devices people have in the home, the data they’re consuming, has been growing 30%, 40%, 50% year-on-year, a trend that’s going to continue. That really plays to the cable industry’s strengths.

Rapier: Is there any competition to these incumbent service providers? Is Google Fiber or something like that even on their radar?

Swinburne: They really have a unique product position in the marketplace; they’ve got the best mousetrap. The cable plant is the most flexible plant in adding capacity inexpensively, where they compete with twisted pair, DSL, they offer much faster speeds. It’s incredibly expensive to build a scaled fiber business across the United States. Google Fiber has essentially stopped adding any new footprint.

Rapier: What haven’t we talked about that’s on your radar?

Swinburne: We’re quite bullish on the music business. There are not a lot of ways to play that in the public markets today. We have an overweight on Pandora; we think they are in a position to disrupt and take share from the traditional radio market from an advertising perspective. That’s a part of media that, after 15 years of declines in spending, has really started to take off with growth in subscription streaming. We think it’s a business that’s going to grow rapidly for a long time.

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Tesla is recalling 11,000 SUVs because its seats could fail in a crash (TSLA)

Tesla Model X

Tesla just issued a voluntary recall for 11,000 Model X SUVs because the seats could fail in the event of a crash.

The electric car maker emailed Tesla customers on Thursday regarding the recall, stating that “a small number of cables in the second row fold-flat seats” may need to be adjusted. The recall affects Model X SUVs built between October 28, 2016 and September 1, 2017.

The issue was traced to a latch that could cause the seat on the left side of the second row to fall forward in the event of an crash.

Tesla said it noticed the issue during recent internal testing. There haven’t been any reports of seat issues in the field.

“We are doing this out of an abundance of caution, because even though we have never seen it happen, if the cable is not properly adjusted, the seat back on the left side of the second row seats could move forward during a crash,” Tesla wrote in the email.

This is the second time Tesla has issued a recall for its Model X SUVs due to problems with the seats’ latch. The automaker recalled 2,700 Model X vehicles in April 2016 because the third-row seats could move if there were an accident. 

Tesla said it can make the adjustment using its mobile service vans so that customers don’t have to take the SUV into a service center.

“Until then, there is no issue with continuing to drive your Model X,” Tesla wrote in the email. “We just ask that you temporarily avoid having two adults sit in the second row left and center seating positions at the same time.”

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