UPDATE: Sept. 5, 2023: "Substantially all" of Babylon’s UK assets were sold to U.S.-based healthcare services firm eMed last week, according to an Aug. 31 filing with the Securities and Exchange Commission. The new organization will focus on managing day-to-day operations of the digital health firm’s U.K. business and Babylon's remaining parts will be "wound down," according to the SEC filing. The deal "ensures the least possible disruption for Babylon users” in the U.K., which previously served more than 700,000 patients, according to professional services firm Alvarez & Marsal, who were appointed as administrators for Babylon's U.K. business.
Dive Brief:
- Digital health firm Babylon filed for bankruptcy in Delaware last week for two of its subsidiaries, according to court filings.
- The Chapter 7 bankruptcy filings for Babylon Healthcare and Babylon Inc. come as the company shuts down core operations in the U.S., after a take-private deal with digital neurotherapy company MindMaze collapsed. Under Chapter 7 bankruptcy, a company liquidates its assets and goes out of business.
- Both filings on August 9 list liabilities between $100 million and $500 million. After administrative expenses are paid, unsecured creditors — or those who didn’t obtain any assets as collateral — won’t receive any payout.
Dive Insight:
Babylon went public in 2021 through a merger with a special purpose acquisition company, a then-popular method for digital health companies to hit the public markets and quickly raise cash. At the time, the SPAC deal valued Babylon at $3.5 billion.
But, like a number of other companies that pursued SPAC mergers, Babylon later struggled financially and faced a declining stock price and mounting net losses. In the first quarter, Babylon reported a $63.2 million net loss, growing from a $29.1 million loss during the prior-year period.
The company, which offers virtual primary care services, announced it had received a lifeline in May, when investment manager AlbaCore Capital amended its loan for up to an additional $34.5 million to support the company’s operations as it restructured and went private. About a month later, Babylon said it finalized plans to combine with AlbaCore-backed MindMaze.
The deal collapsed in early August. Days before it announced the deal’s failure, Babylon disclosed it received notice from insurer Centene that its affiliate plans wouldn’t renew their contracts, which the company said represented nearly half its revenue in 2022.
Babylon plans to search for a buyer for its business in the U.K., the company said earlier this month, and is “winding down” operations in Rwanda, according to a Forbes report.
Babylon did not respond to a request for comment.
