The Rise and Fall of Babylon Health
In a surprising turn of events, London-based tele-health startup Babylon Health, once valued at close to $2 billion and backed by prominent investors like DeepMind and leading health insurance companies, has filed for bankruptcy. The company’s U.S. operations became insolvent earlier this month, leading to the sale of its assets to eMed Healthcare UK, a subsidiary of U.S. company eMed. This marked the beginning of the end for Babylon Health, as its U.K. subsidiary also went into administration.
The Assets Sold and the Continuing Services
The U.K. administrators, Alvarez & Marsal, stated that the assets being acquired by eMed cover the majority of Babylon Healthcare Services Limited, including its preventative tele-health practice that currently serves around 700,000 individuals in the U.K. through partnerships with major providers such as Bupa, the private healthcare group. However, it is important to note that Babylon’s GP at Hand app and service, which allows U.K. residents to select it as their primary health practice, is not part of the sale and remains operational. The app is owned by three primary partners: Dr. Stephen Jefferies, Dr. Matt Noble, and Rita Bright.
Key Takeaway
Babylon Health, a tele-health startup valued at $2 billion, has gone bankrupt and sold its assets to eMed Healthcare UK. The sale excludes the GP at Hand app, which remains operational. This will cause minimal disruption to Babylon users, and the preventative tele-health practice will continue to serve its clients in the U.K.
The Deal and Business Turmoil
The financial terms of the deal between Babylon Health and eMed have not been disclosed. However, it is understood that the deal includes the transfer of employees to eMed. The shares of Babylon Health in the United States are virtually worthless, with a market capitalization of just over $5,000. This sale and the administration phase in the U.K. come after a prolonged period of business turmoil for Babylon.
Babylon’s expansion into the U.S. market through a $4 billion SPAC plan in 2021 initially seemed like a strategic move. However, it also provided an opportunity for the company to distance itself from concerns about patient safety and corporate governance raised by a U.K. clinician. These concerns had not yet affected Babylon’s business development. Despite losing major contracts in its home market, including a deal with the NHS, Babylon had managed to secure a 10-year agreement to develop an app and health services for the city of Wolverhampton.
The Collapse and Failed Acquisition
However, Babylon’s fortunes took a turn for the worse in 2022 when its shares plummeted, leading to their delisting from the New York Stock Exchange. By 2023, the company was actively seeking a buyer and appeared to have found one in Swiss health tech startup MindMaze. The acquisition negotiations were underway, but they ultimately fell through at the start of August, for unknown reasons.
As a result, Babylon initiated the process of looking for buyers for its assets, putting its U.S. business in Chapter 7 insolvency to refocus on its U.K. operations, which had teetered on the brink of bankruptcy for the past month. Finally, on the recent turn of events, Babylon’s U.K. subsidiary went into administration and eMed stepped in as the new owner of Babylon Healthcare Services Limited.
The Future of Babylon Under eMed
eMed, the acquiring company, was once a startup itself and is now focused on providing tele-health services for remote management of COVID-19 tests, assessments, prescriptions, weight loss programs, and more. However, the profitability of Babylon’s business under its new owner remains a question. It is yet to be seen how eMed will navigate the challenges and resurrect the company that fell apart under its previous management.
In conclusion, Babylon Health’s downfall and subsequent asset sale to eMed mark the end of an era for the once-promising tele-health startup. While GP at Hand continues to operate, the fate of the remaining Babylon services now rests in the hands of eMed.
