Dive Brief:
- Digital health firm Babylon’s planned merger with neurotherapy company MindMaze has dissolved, and the company is shutting down core operations in the U.S. while searching for a buyer for its U.K. business.
- The digital health company said it will transition its U.S. members to other providers, and it’s continuing to pursue a previously announced sale of its independent physician association, Meritage Medical Network.
- Babylon is also in talks to secure additional funding so it can explore its divestitures and continue operating. But it may file for bankruptcy if it can’t sell its businesses or raise more cash, according to a press release.
Dive Insight:
Babylon, which provides virtual primary care services, was founded in the U.K. a decade ago and later expanded into regions including the U.S.
In 2021, the company announced it would go public through a merger with a special purpose acquisition company. The deal valued the digital health firm at $3.5 billion.
But the company later struggled financially, posting a $63.2 million net loss in the first quarter this year compared with a loss of $29.1 million during the same period in 2022. Babylon’s stock price had also declined significantly, prompting it to implement a reverse share split late last year to avoid being delisted from the New York Stock Exchange.
In May, Babylon announced it would go private as part of a deal with investment manager AlbaCore Capital Group, giving the company additional funds to support its operations. The following month, Babylon said it would combine with AlbaCore-backed MindMaze, a company that offers video game-like neuro-rehabilitation, therapy and monitoring.
MindMaze did not respond to a request for comment. In a release, Babylon said any sales of its business units aren’t expected to exceed the amount it owes to AlbaCore, so its shareholders won’t receive any payout.
Public health technology companies struggled on the public markets in 2022, particularly those that chose the SPAC route. Public exits for digital health firms have disappeared, according to consultancy Rock Health.
