The digital-first, value-based care company Babylon on Thursday said it plans to go public through a special purpose acquisition corporation merger with Alkuri Global Acquisition Corp.
Babylon is one of many companies to jump on the burgeoning trend of partnering with a SPAC to hold an initial public offering.
As of April 2021, SPACs have acquired companies and raised capital in 313 IPOs, in comparison to 248 IPOs throughout 2020, according to Statista.
SPACs are companies that streamline the process of a stock market launch, acquiring various companies, taking them public and raising money through IPOs to start the process over again. Additionally, SPACs must spend the money they raised within two years or return it to investors.
In an email, a Babylon spokesperson said the transaction with Alkuri Global Acquisition Corp. is expected to bring the company around $575 million in gross proceeds and give it a $4.2 billion equity value.
"We're at a critical moment in the evolution of healthcare — if there's any time to step on the gas to capitalize on this significant market opportunity, it's now," the Babylon spokesperson said. "Babylon is poised to re-engineer the $10 trillion healthcare market to … shift the focus from reactive sick care to preventative healthcare, resulting in better patient health, improved patient experience and reduced costs."
Babylon was founded in 2013 by Dr. Ali Parsa with the goal to "put accessible and affordable quality healthcare in the hands of every person on Earth."
Currently, the company provides services to approximately 24 million people across the U.S., Canada, Europe, Africa and 13 countries in Asia. It experienced 400% revenue growth in 2020, and in 2021 the company's revenue is already up by over 370%.
One of the company's services, Babylon 360, uses AI-technology and doctors' expertise to set members' personalized health goals and help them stay out of the hospital. The service also provides 24/7 access to a personal care team for medication and treatment.
According to Babylon's survey data, over 40% of the company's consultations resulted in patients avoiding ED or urgent care visits, creating cost savings.
Sari Kaganoff, general manager of consulting at Rock Health, said while SPACs have been around for 30 years, they did not appear in the digital health scene until 2020. According to data from Rock Health, there were 3 SPACs in digital health in 2020 and there are 13 so far in 2021.
She said companies that have gone public through SPACs are 10 years old on average and raise $171 million, and companies that take the traditional IPO route are 15 years old on average and raise around $227 million.
Michael Yang, managing partner with OMERS Ventures said it is not surprising that SPACs have moved beyond technology and software companies to health-related companies like Hims & Hers Health and Clover Health Investments.
"For health tech companies it allows them to continue to grow, access capital and pursue their vision and their strategies," Yang said.
He said Babylon is associated with a cohort of other privately-held health technology companies that are all active in the SPACs space, which makes for dynamic business between competing investors and companies.
The transaction is anticipated to conclude by the end of 2021, and Babylon and Alkuri Global plan to trade together on Nasdaq under the new symbol BBLN.