Investors were left with hundreds of millions of dollars in losses after the British telemedicine startup founded by Ali Parsa sold its British arm for about $620,000, a bankruptcy filing has revealed.
© 2022 Bloomberg Finance LP
British digital health startup Babylon Health went public in June 2021 at a valuation of $4.2 billion. Just over two years later, the company filed for bankruptcy and one of its core businesses, the UK telemedicine service, was sold for just $620,000 (£500,000).
Insolvency filings made public on September 19 revealed the previously undisclosed sum of the sale of Babylon’s UK operations to US digital health business eMed earlier this month. The report by administrators Alvarez & Marsal also revealed that attempts to sell the entire business failed due to debt burdens and low cash reserves. Representatives for Babylon did not respond to requests for comment. Alvarez and Marsal declined to comment beyond the content of the filing.
These UK operations are the origins of Babylon’s business, which at one point had a contract with the UK’s National Health Service to provide family doctors through telephone and online bookings. But by the time of bankruptcy, it accounted for less than 6% of the group’s total revenue, according to filings.
Shareholders in Babylon, which went public on the Nasdaq through a SPAC merger, were wiped out when the company’s main lender, European credit fund Albacore Capital, took control of the business. Babylon currently owes Albacore a total of $380.5 million in loans, according to filings. Only $34.5 million of this is secured as collateral. The bankruptcy filing says Albacore “will receive distributions, but there will be a shortfall.” Albacore did not immediately respond to a request for comment.
The UK-based Babylon holding company’s estimated total available assets are $35.2 million (£28.4 million), with total liabilities exceeding $378.4 million (£305.3 million). “There are insufficient funds to make distributions to unsecured creditors,” the filing states.
Ali Parsa, Babylon’s founder and CEO, called the company’s decision to go public in a SPAC transaction “an incredible, unmitigated disaster” in an interview. financial times last year. In April 2023, the company asked the U.S. arm of consultancy Alvarez & Marsal to help it rebuild and secure financing after it had less than 13 weeks of cash flow. Parsa did not immediately return a call seeking comment. His Babylon email address is back.
In early August, a proposed “business combination” involving Swiss-based digital therapeutics company Mindmaze and creditor Albacore fell through. A few days later, forbes Babylon reported that it has begun closing its U.S. operations, laying off staff and closing its headquarters in Austin, Texas. forbes Babylon also reported that it would “wind down” its Rwanda operations, which had a 10-year partnership with the government to provide primary care services.
On August 9, Babylon filed for Chapter 7 bankruptcy protection against two of its US subsidiaries for the purpose of liquidation. Babylon reported assets of $309.3 million and liabilities of $389 million, including $34.9 million in secured debt.
Do you have any tips about Babylon? Contact U.S. reporter Katie Jennings at +1-646-504-3008 via the Signal app or katiedjennings@protonmail.com. Contact reporter Ian Martin in the UK. imartin@forbes.com.