Babylon running out of runway, likely to hit the barriers and lights at the end unless there’s a miracle. On 7 August, Babylon, in a tersely written announcement, stated that their 23 June agreement to execute the ‘Take Private Proposal’ with AlbaCore Capital to merge with another of their holdings, MindMaze Group SA, has fallen through and will not proceed. No reasons were given for this surprising development six weeks later.
The release is headlined in the usual guarded terms of being “in discussions of new strategic alternatives” for their US and UK businesses but the reality is in the release copy.
- Babylon is selling its UK businesses. The company is pursuing the divestiture of its UK business to third parties to provide financing to assure the continuity of Babylon’s operations. There is non-surprising coverage language in the release that “it cannot provide assurance that any of these initiatives will result in Babylon entering into a definitive agreement for or completing a divestiture” which means that the UK businesses may close without a transition.
- Babylon will be transitioning its US business to other providers. It is exiting its core US business. As to the transition, no providers are disclosed as of this time.
- The sale of the Meritage Medical Network IPA is still pending.
- After the bridge financing by AlbaCore Capital that was provided in May along with AlbaCore’s interim funding proposal of $34.5 million, Babylon is out of money. It is actively seeking additional financing but cannot assure that it will fund continued operations or that a third party sale will be executed in time.
- This anticipates a complete shutdown of operations, not a reorganization. “The applicable entities of the Group will file for bankruptcy protection or implement other alternatives for an orderly wind down and liquidation or dissolution, which may include commencing Chapter 7 proceedings under the U.S. Bankruptcy Code and/or a UK administration for the applicable entities of the Group in the near term.” For American readers, UK administration for insolvent companies is similar to US bankruptcy procedures in equivalents of US Chapter 11 reorganization and Chapter 7 asset sale and closing. Administrators for Babylon would be appointed by the High Court in London.
Any sales to third parties for any of the above are subject to AlbaCore approval. The proceeds will go to AlbaCore to settle Babylon’s indebtedness to them. As before, common shareholders of Babylon will be shut out as their shares are near worthless today at $0.28.
Babylon is headquartered in Jersey (Channel Islands) along with Austin, Texas. The company was once a leader in the UK telehealth scene with remote consults and cooperative deals with GPs that received considerable criticism, then expansion to the US after their SPAC with Alkuri Global Acquisition in October 2021. Shares reflected the telehealth bull market of the time with a share price of $272 per share. The SPAC cracked like so many others, deflating shares to double then single digits to around $6 in May. Despite some success in the US market with payers, developing chronic care management programs for high-risk patients, reorganizing as a foreign private issuer to a domestic one, and the reverse share split on 15 December 2022, this last ‘rabbit out of hat’ didn’t work and apparently AlbaCore’s deal with a forced merger with a very different company, MindMaze in neurotherapeutics, didn’t work either. ‘Wicked Tuna’ indeed.
At present, there are no further announcements or changes on the website, nor any confirmed layoffs, a situation which undoubtedly will change.