Telehealth scaleup Babylon has announced the collapse of its proposed merger with Swiss healthtech unicorn MindMaze, leaving the beleaguered company on the brink of bankruptcy.
The news comes just a month and a half after Babylon agreed a deal with MindMaze to be taken private, which would have seen shareholders' stakes entirely wiped out while securing Babylon new funding. MindMaze would also have paid off some of the UK healthtech's debt.
According to a company statement released on Monday, the failure of the merger means that Babylon has “no binding commitment for additional financing to continue its business operations” and as a result is looking to sell its UK business and exit the US market.
The statement said the bank was also in discussions with “potential strategic partners” about additional funding, but that the company “cannot provide assurance that it will be able to secure sufficient liquidity to fund the operations of the group’s businesses”.
Babylon’s net losses more than doubled to $63.2m in Q1 2023 on the same period a year earlier, while its revenues rose by only 17%.
Babylon was a darling of the early tech scene in the UK, receiving funding from investors like Hoxton Ventures, Kinnevik and VNV Global. But since a botched US listing in 2021 that saw the company’s share price drop more than 99%, it's struggled to regain momentum.
Monday’s statement said that Babylon was exiting its core US business and “plans to transition its US members to other providers”.
Last month, Babylon told Sifted that CEO Ali Parsa remained in charge of the company and had no plans to leave. Sifted has reached out to Babylon to find out if this is still the case.