Meta Health agrees to out-of-court settlement with former executives of two subsidiaries 

HEALTHCARE technology company Meta Health has reached an out-of-court settlement with two former executives of its wholly owned subsidiaries, Gainhealth and 5Digital.

In a bourse filing on Wednesday (Jan 10), Meta Health said both units have entered into and executed a written settlement agreement with Dr Vasanthan Metupalle, the former chief medical officer of 5Digital, and Jagannathan Padmaja Sakthi, a former director of Gainhealth who is also Dr Vasanthan’s spouse.

In May 2023, Gainhealth and 5Digital commenced legal proceedings against Dr Vasanthan, Sakthi, as well as 1Life Healthcare and Aventres Enterprise Limited, two entities which were not part of Meta Health.

All were accused of deceiving the group following the discovery of “alleged irregularities” in some of Gainhealth’s sale transactions in March 2023. The lawsuit filed sought to recover some of the group’s losses and wrongful payments made in connection to the transactions.

Meta Health announced on Sep 15, 2023, that Gainhealth and 5Digital had been awarded about S$1.4 million in damages and costs. Of that sum, about S$1.3 million will be payable with interest at 5.33 per cent per annum from the date the originating claim was filed.

In its update on Wednesday, Meta Health said that Dr Vasanthan and Sakthi have agreed, among others, to pay the full amount of damages claimed by Gainhealth and 5Digital in the lawsuit, as well as contribution towards costs.

The settlement amount will be paid in two tranches, with the first tranche payable once Dr Vasanthan sells his share of a certain property. The second tranche will be payable within 10 calendar months thereafter or by Dec 31, 2024, whichever is the earlier.

In addition, Gainhealth and 5Digital will proceed to file a notice of discontinuance in the lawsuit once they receive the first tranche of the settlement amount from Dr Vasanthan and Sakthi.

Following this, no further action will be taken by both subsidiaries against the defendants regarding the matters raised in the suit, including any further enforcement action arising from any judgments obtained in the suit. Gainhealth and 5Digital will also inform the Singapore Police Force that the suit has been “settled amicably”, Meta Health said.

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The company noted, however, that should Dr Vasanthan and Sakthi breach any terms of the settlement agreement or default in payments prior to the suit’s discontinuance, they shall be deemed to have “irrevocably and unconditionally consented to final judgment being entered against them in the suit”, and will have no right to any recourse or defence against such final judgment.

Accordingly, Gainhealth and/or 5Digital is also entitled to commence a fresh legal action against them arising from and/or in connection with such breach.

The settlement is expected to have a positive impact on the consolidated net tangible assets per share and earnings per share of the group for the current financial year ending Dec 31, 2024.

Shares of Meta Health closed at S$0.011, up S$0.001 or 10 per cent on Wednesday, before the announcement.