Babylon Health, a digital primary care provider, plans to be taken private as it continues to be saddled with mounting losses.
The company went public less than two years ago and, on Wednesday, it reported a first-quarter loss that doubled in size compared to a year ago.
Babylon shares fell 66% Wednesday after reporting a loss of $63 million in the first quarter compared to $29.1 million in the first quarter of 2022.
The company entered into a funding agreement with AlbaCore Capital LLP that will provide up to $34.5 million in interim funding to provide liquidity to support Babylon’s ongoing operations.
As part of a longer-term plan, which includes restructuring the company's debt, the agreement will support Babylon's plans to be taken private.
Babylon's board of directors has approved the funding deal and the take-private proposal as a "constructive step to deliver a longer-term solution to support the company's continued path toward profitability."
This sale will occur without the approval of or any payment to Babylon Holdings Limited’s Class A ordinary shareholders or other equity instrument holders, according to the press release.
The company also had explored strategic alternatives, including additional financing and a possible sale of its Meritage Medical Network/Independent Physician Association business, according to a press release.
The interim funding will be made available to Babylon in May and early June, subject to the satisfaction of certain conditions, the company said.
In the first quarter of 2023, Babylon reported $311 million in revenue, up from $266.4 million in the same period a year ago, primarily due to the growth in value-based care revenue, which increased by 17% year over year to $287.5 million in the first quarter of 2023, according to the company's first-quarter earnings report.
The company canceled its earnings call Wednesday.
As of March 31, the company had cash and cash equivalents of $78 million, including $52 million of cash classified as held for sale.
At the annual J.P. Morgan healthcare conference back in January, Babylon founder and CEO Ali Parsa shrugged off the company's plummeting stock price and said Babylon's story and stock are "misunderstood."
Babylon Health shares have been on a steep slide since reaching a high of $272.50 per share right after its IPO in October 2021 to $10.81 at market close on Friday.
"The story of our stock is almost super simple. We were brought public through a SPAC," Parsa told investors and executives during a presentation Thursday at JPM. "Our SPAC happened in October 2021 at a time when almost all the SPACS fell apart."
Parsa previously predicted that Babylon would be profitable "in the near term."
"It might be the end of next year  or the beginning of the year after . We will break even," Parsa said during JPM.
Founded in 2013, Babylon operates an integrated primary care model that leverages remote patient monitoring to intervene and treat sooner. It offers a healthcare app for AI-powered diagnosis and video appointments, with a value-based care platform called Babylon 360. The company says it supports a global patient network across 15 countries and operates in 16 languages. In 2021 alone, Babylon helped a patient every six seconds, with approximately 5.2 million consultations and AI interactions, according to executives.
In 2022, Babylon reported revenue of $1.1 billion, up significantly from 2021's $323 million. But the company also was dragged down by $221 million in losses, up from a loss of $83 million in 2021.
Looking at the company's performance this past quarter compared to a year ago, net income in Q1 2022 included a $78.8 million gain primarily relating to the company going public so once adjusted for this, net losses improved $44.7 million year-on-year. Net loss improved from $100.1 million in the fourth quarter of 2022 to $63.2 million in Q1 2023.
Many health tech and digital health companies that went public in the past two years have been taking a beating in the public market. Digital health company Babylon has seen its stock plummet 92% in the past year.