Babylon to Permanently Close Austin Headquarters and Lay Off Employees
Babylon, the troubled digital health company, has announced the permanent closure of its Austin headquarters and the immediate layoff of 94 employees, according to a notice filed with the Texas Workforce Commission.
Financial Struggles and Delisting
The U.K.-based company, which went public in a 2021 SPAC deal, has been struggling for months to secure financing for its business. Despite the pitch from founder and CEO Ali Parsa that artificial intelligence software could revolutionize primary care, Babylon reported a net loss of $369.8 million on $1.1 billion in revenue in 2022. In the first quarter of 2023, the company had $77.7 million of cash and cash equivalents, with $52.1 million being held for a pending sale. The New York Stock Exchange suspended trading and delisted Babylon at the end of June.
Failed Business Combination
Babylon recently announced that a proposed “business combination” with Swiss-based digital therapeutics company MindMaze and Babylon creditor AlbaCore Capital LLP would not proceed. The company stated that it is now focused on continuing its day-to-day operations in the UK, while exiting its core US business and transitioning its US members to other providers. The press release did not provide details on the timeline, the number of affected employees, or the future of Babylon’s existing US patients.
Value-Based Contracts and Partnerships
Babylon entered into value-based contracts with insurers in the US, meaning it received a lump payment to provide care for each patient and kept any savings resulting from delivering care at a lower cost. However, this also meant that the company was liable for any overages. As of December 2022, Babylon had approximately 261,000 US value-based care patients. Its website indicates partnerships with insurers in 12 states, primarily with Medicaid plans for low-income patients.
Mass Layoffs and Ceasing Operations
Babylon had a total of around 1,895 employees as of December 2022, with 35% of them based in the US. The company cited the federal Worker Adjustment and Retraining Notification Act (WARN) as the reason for not providing 60 days’ notice of the mass layoffs. Babylon stated that it had diligently pursued financing and transaction options but was unable to reach a deal. As a result, the company will cease operations, liquidate remaining collateral, and shut down the business.
This is a developing story and will be updated.
If you are a Babylon employee or patient, you can contact reporter Katie Jennings via the Signal app at +1-646-504-3008 or email@example.com.