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Fruit Street alleges Sharecare cannibalized diabetes product in $25M lawsuit

Illustration of a glucometer with a dollar sign on the screen.

Illustration: Gabriella Turrisi/Axios

Diabetes management startup Fruit Street is suing digital health company Sharecare (Nasdaq: SHCR), alleging Sharecare cannibalized its diabetes prevention program, Fruit Street CEO Laurence Girard tells Axios.

What's happening: Girard says Sharecare violated the terms of its agreement with Fruit Street by launching its own version of the startup's diabetes prevention program, which was previously offered to its members via Fruit Street.

Zoom out: The suit against employer-facing, serial startup acquirer Sharecare comes as employers pursue more comprehensive health solutions to curb rising costs.

Details: Fruit Street filed the suit Friday in the Superior Court of Fulton County in Georgia seeking compensatory and punitive damages in excess of $25 million.

  • The suit alleges Sharecare breached fiduciary duties to Fruit Street when, in January, it launched a separate diabetes prevention program (DPP) under the brand "Eat Right Now" and began distributing that to its employer and health plan members instead of Fruit Street's DPP.

The other side: In a statement, Sharecare called the suit "meritless" and said it would defend "against unfounded allegations" and "pursue claims against Girard and Fruit Street, including for the more than $3M that Fruit Street owes Sharecare."

  • "Fruit Street and Mr. Girard have failed to maintain the standards of financial stability and integrity we expect of our vendors and working with them was no longer a tenable option," said EVP of corporate communications Jen Hall.

How it works: A public benefit corporation, NYC-based Fruit Street is a CDC-recognized telehealth provider of the National DPP that's raised $35 million from angel investors.

  • Atlanta-based Sharecare is an employer- and health plan-facing digital health company started and led by WebMD founder Jeff Arnold that offers programs including those for smoking cessation, heart disease, diabetes, physical therapy, and behavioral health.
  • In 2021, Sharecare went public via a SPAC with Falcon Capital Acquisition Corp. Since then, the company's stock has plummeted from a high of roughly $12 per share to a low of 94 cents per share as of Friday Dec. 8, 2023.

Flashback: Sharecare says its "diabetes solutions" include Fruit Street's DPP, which it describes as "an interactive, telehealth-based weight loss program that can be accessed by our members through our partnership with Fruit Street Health," per a 2021 SEC filing.

  • Other diabetes tools Sharecare outlines in the filing include "access to Onduo through our partnership with Onduo LLC." Owned by Verily, an Alphabet company, Onduo is a virtual care program for chronic conditions including diabetes and hypertension.

What they're saying: "We put a lot of effort into this relationship to make it work, and now we have to go out and find other customers," says Girard.

  • "The only word to describe it is a feeling of betrayal," he adds.

Editor's note: This article has been updated with a statement from Sharecare.

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