$187,500. That’s the immediate financial hit to the City of Des Moines following the amended incentive agreement with OpenLoop Health Inc, a company whose rapid ascent is now demonstrably in reverse. The revised contract, approved February 23rd, reveals a stark recalibration of expectations, lowering job creation targets from an ambitious 400 to a mere 100 by July 10, 2028. This isn’t simply a case of adjusting to unforeseen circumstances; it’s a clear signal of a fundamental disconnect between projected growth and actual performance, and a cautionary tale about the risks inherent in tying public funds to aggressive tech valuations.
Follow the money, and the story quickly becomes less about a flooded office tower and local staffing shortages – the explanations offered by Dr. Jon Lensing, OpenLoop’s CEO – and more about a company grappling with legal challenges and a shifting business model. The initial $250,000 forgivable loan, now partially clawed back, was predicated on OpenLoop becoming a major Des Moines employer. The reduction in required jobs, coupled with the extension of the deadline, suggests the city recognized the original terms were unattainable, but also felt compelled to salvage some return on its investment. This amendment isn’t a reward for success; it’s damage control.
The scale of OpenLoop’s initial promise is crucial context. In January 2023, Lensing claimed the company had 175 workers. The original agreement hinged on quadrupling that number within a relatively short timeframe. Now, the city is content with a net increase of just over 57 jobs, provided 60 meet a high-quality job wage threshold of $78,724 annually – a figure 18% higher than the average Polk County wage. This shift highlights a move towards prioritizing job quality over sheer quantity, but it also underscores the diminished expectations for OpenLoop’s overall impact on the local economy. The simultaneous termination of a separate $167,000 incentive package with the Iowa Economic Development Authority, which OpenLoop hadn’t even begun to claim, further solidifies this picture.
Based on the original desmoinesregister.com report.
However, the narrative of simple “growing pains” doesn’t hold under scrutiny. While Lensing cites recruitment difficulties and the Sixth Avenue tower flooding as obstacles, OpenLoop is simultaneously facing two significant class-action lawsuits. One concerns a potential data breach impacting 1.6 million individuals, a crisis that carries substantial financial and reputational risk. More damagingly, a November 2025 lawsuit alleges the company knowingly sold a fraudulent, unapproved weight-loss drug – described by plaintiffs’ attorneys as “modern day snake oil.” This accusation, if proven, strikes at the core of OpenLoop’s business ethics and could trigger regulatory intervention far beyond the scope of a flooded office. The company’s silence on these legal battles, despite inquiries from the Des Moines Register, speaks volumes.
The company’s evolution from an “Uber for healthcare” – matching medical professionals with temporary shifts – to a telehealth provider, and now seemingly a direct-to-consumer pharmaceutical venture, reveals a pattern of pivoting in response to market opportunities. This adaptability isn’t inherently negative, but the alleged sale of unapproved drugs raises serious questions about risk management and regulatory compliance. The move from a prime downtown location at 317 Sixth Avenue to leased premises at 909 Locust Street, while framed as a response to the flooding, could also be interpreted as a cost-cutting measure reflecting financial strain. The required $2.5 million investment in improvements to the new space, a condition for receiving the remaining incentive funds, will be a critical indicator of OpenLoop’s financial health.
What this means for your wallet: The OpenLoop situation serves as a reminder that venture capital-fueled growth isn’t always sustainable. While the direct financial impact on Des Moines taxpayers is limited to the $187,500 repayment, the broader lesson is about the due diligence required when public funds are used to incentivize private companies. Investors should be wary of companies that rely heavily on aggressive growth projections and are simultaneously embroiled in legal disputes. Consumers, meanwhile, should exercise extreme caution when purchasing health products online, particularly those marketed as quick fixes or lacking FDA approval. The key question now is whether OpenLoop can navigate these legal challenges, rebuild trust, and demonstrate genuine, sustainable growth – or if this amended contract represents the final chapter in a once-promising Des Moines startup.
