The fall of Babylon: Telehealth startup once valued at $2B goes bankrupt, sold for parts
How a Once $2 Billion Valuation Evaporated into Bankruptcy and Asset Sales
The tale of Babylon Health's downfall is both perplexing and disheartening, especially for those who held high hopes for the transformative power of telehealth. Once a London-based startup valued at nearly $2 billion, Babylon Health was backed by influential figures like the founders of DeepMind and well-funded health insurance companies. Yet, the company's shares in the U.S. became worthless, and its operations turned insolvent, leading to the U.K. subsidiary formally entering administration. The administrators, Alvarez & Marsal, sold a significant portion of Babylon's assets to eMed Healthcare UK, a new subsidiary of U.S. company eMed.
You might wonder what led to such a catastrophic downfall? The answer lies in a series of unfortunate events. Babylon Health had expanded into the U.S. market with a $4 billion+ SPAC plan in 2021. Although it seemed like a strategic move, it was more of an escape route to distance the company from ongoing issues in its core business. Concerns about Babylon's patient safety and corporate governance practices had been raised for years. These issues eventually caught up with the company, leading to the loss of significant contracts, including an NHS deal with the city of Wolverhampton.
The company's search for a buyer led them to Swiss health tech startup MindMaze and AlbaCore, a shareholder of Babylon. However, the acquisition talks fell apart, and Babylon's shares were delisted from the New York Stock Exchange. The U.S. business was put into Chapter 7 insolvency, shifting focus back to its U.K. operations. Finally, the U.K. operations went bankrupt, and the assets were sold.
The acquisition by eMed Healthcare UK brings hope for the continuity of Babylon's services. eMed, once a startup itself, focuses on telehealth services for managing tests, assessments, and prescriptions for various conditions, including COVID-19. However, can eMed turn around a business that so spectacularly failed under its previous ownership?
The story of Babylon Health serves as a cautionary tale for the telehealth industry. It's a vivid reminder that rapid expansion, high valuations, and even backing from influential figures can't mask underlying issues in patient safety and corporate governance.
In the end, the fall of Babylon Health is a sobering lesson for all stakeholders in the telehealth sector. It's a story filled with complexities, from its meteoric rise to its sudden collapse. Will eMed be able to salvage the remnants of Babylon Health and turn it into a profitable venture? Only time will tell.
Source: TechCrunch