Digital health firm Babylon Holdings Ltd. is reportedly teetering on the edge of collapse after its merger plans with another healthcare company fell through.
The United Kingdom-based company, known for its app that connects patients with doctors, has filed a notice of intention to appoint administrators in the U.K. High Court, indicating a potential cash shortage, Bloomberg reported Wednesday (Aug. 30).
Babylon did not immediately reply to PYMNTS’ request for comment.
Founded in 2013 by entrepreneur Ali Parsa, the company offers online consultations with physicians to private patients and large corporations, according to the Bloomberg report. Its GP at hand app has gained popularity in the U.K., with around 100,000 patients utilizing its services to access National Health Service (NHS) doctors remotely.
Babylon reported in January that it had facilitated over a million U.K. telehealth appointments in the 12 months to October 2022. It said it was working with a network of over 870 U.K. virtual healthcare providers and topped $1.05 billion in annual revenue in 2022.
In November 2022, Parsa told shareholders during an earnings call that access to quality healthcare is being threatened by risings costs and the economic downturn. Parsa added that “the significant increase … in the cost of capital will inevitably result in the unfortunate weakening or disappearance of some of the innovative solutions needed to tackle the current challenges facing the healthcare sector.”
The company had previously rejected a London listing and opted to go public in New York through a special purpose acquisition company (SPAC) in October 2021, valuing the firm at $4.2 billion, the Bloomberg report said. However, its shares took a nosedive, leading to layoffs and efforts to sell parts of the business.
In June, Babylon announced its merger plans with Swiss company MindMaze Group SA, following a proposal from its lender, AlbaCore Capital LLP, per the report. The proposed merger aimed to transfer Babylon’s core operating subsidiaries to MindMaze. However, the merger collapsed earlier this month.
Babylon stated Aug. 7 that it is exploring strategic alternatives to secure the best outcome for its U.K. business, but it has also warned that it may not have enough funds to continue operations, according to the report. By filing a notice of intention to appoint administrators, the company gains temporary protection from creditors for 10 days, indicating the possibility of falling into administration.
The company’s U.S. subsidiary in Austin, Texas, filed for Chapter 7 bankruptcy earlier this month, leading to the closure of its operations, the report said.