Babylon Health announced plans Wednesday to be taken private as it reported a first-quarter loss more than twice the size of a year ago.
The Austin, Texas-based company said it entered into an agreement with AlbaCore Capital Group, a London-based investment manager, and its affiliates to accept $34.5 million in interim funding. In return, AlbaCore plans to take the company private, provide additional financing and create a long-term employee incentive plan, according to a Wednesday regulatory filing.
Babylon, an AI-enabled virtual diagnosis and medical appointments company founded in 2013 in London, went public in October 2021 through a special purpose acquisition corporation merger with Alkuri Global Acquisition Corp. At the time, a Babylon spokesperson said the transaction was expected to bring the company around $575 million in gross proceeds and give it a $4.2 billion valuation.
Babylon opened at $250.25 per share and the stock climbed as high as $292.75 per share on Oct. 27, 2021. On Wednesday, it opened at $3.14 per share.
SPACs streamline the process of a stock market launch, acquiring companies, taking them public and raising money through initial public offerings. SPACs must spend the money they raised within two years or return it to investors.
Babylon boasted significant growth ahead of going public. In an October 2021 blog post, CEO Dr. Ali Parsa wrote the company's revenues had grown by 394% from 2020 to 2021, and by 472% in 2021's first half.
In November 2021, Babylon secured a term loan facility with AlbaCore. The initial agreement issued Babylon $200 million through 2026.
The company and AlbaCore declined to comment beyond the regulatory filing and a news release. In a statement, Parsa said the company had thoroughly explored strategic alternatives and a sale of the independent physician association business.
In October, Babylon announced it intended to divest Meritage Medical Network, an association of approximately 1,800 doctors providing physical care in California, to focus on its core business. It previously said proceeds from the sale were expected to provide enough capital for the company to reach profitability. No transaction has been announced.
Babylon's sale to AlbaCore is expected to be finalized in June and involves the creation of a company capitalized by AlbaCore and other investors. It will occur without approval of or payment to Babylon’s current common stock shareholders or other equity investment holders, according to the filing.
Babylon on Wednesday reported a quarterly net loss of $63.2 million, or $2.53 per share, compared with a net loss of $29.1 million, $1.71 per share, in 2022's first three months. The company canceled its earnings call.
Parsa previously predicted the company would be profitable in the near term. "It might be the end of [2024] or the beginning of [2025]. It doesn’t matter,” he said at the J.P. Morgan Healthcare Conference in San Francisco in January. “We will break even.”
Correction: An earlier version of this story wrongly stated that Saudi Arabia’s Public Investment Fund, one of the company's largest public shareholders, sold its shares last year.
