Dive Brief:

• Digital health firm Babylon announced Friday it had finalized plans to go private and combine with neurotherapy company MindMaze.
• The proposal is an update from AlbaCore Capital, an investor in MindMaze that provided debt financing to Babylon in the run-up to its debut on the New York Stock Exchange in 2021. In May, AlbaCore announced it would take Babylon private and provide an additional $34.5 million in funding.
• The deal is expected to close next month. It will delist Babylon from the NYSE about two years after it went public without any payout to the digital health firm’s shareholders. 

Dive Insight: 

Babylon entered the public markets through a merger with a special purpose acquisition company in the wake of the COVID-19 pandemic, when digital health firms were awash in investor dollars.

A number of digital health companies chose to go public via SPACs, which can be a faster way to raise money compared to a traditional IPO. But analysts also warned that firms choosing to merge with SPACs typically raised less funds and were often less developed than companies that went public through an IPO. 

Healthcare technology companies have fared poorly on the public markets during the past two years. Babylon posted a $63.2 million net loss in the first quarter, growing from a $29.1 million loss in Q1 last year. The company implemented a reverse share split late last year to avoid being delisted after it received a notice from the NYSE that it had been trading below $1 per share for more than 30 consecutive days. 

Babylon, which offers digital primary care services, launched in the U.K. in 2013 and later expanded into new regions, including the U.S. In a press release, the firm said the merger with MindMaze “will form a powerful digital-first global AI-driven healthcare business that will help transform the industry from sick care to predictive and preventative healthcare.”

MindMaze provides video game-like neuro-rehabilitation, therapy and monitoring. The company announced it had raised $105 million in early 2022 and $125 million in October 2021. 

Though the deal won’t offer any payment to Babylon shareholders, the company said the transaction will pay down debt and fund operations.