Babylon, the troubled digital health company that’s been looking for a buyer, told the Texas Workforce Commission it would “permanently close” its Austin headquarters as of August 7 and immediately lay off 94 employees, according to a notice filed with the agency.
The U.K.-based company, which went public in a 2021 SPAC deal, has been struggling for months to secure financing for its business. The pitch from the company led by founder and CEO Ali Parsa was that artificial intelligence software could make primary care more affordable and accessible, but it was far from profitability. In 2022, Babylon reported a net loss of $369.8 million on $1.1 billion in revenue. In the first quarter of 2023, the company had $77.7 million of cash and cash equivalents with $52.1 million of that being held for the pending sale. The New York Stock Exchange suspended trading and delisted Babylon at the end of June.
Earlier this week, Babylon announced that a proposed “business combination” including Swiss-based digital therapeutics company MindMaze and Babylon creditor AlbaCore Capital LLP would “not proceed.” Babylon said it was “focused on continuing the day to day operations of its UK business,” but would be “exiting its core US business and plans to safely transition its US members to other providers.” The press release gave no indication of timeline, how many total U.S. employees were affected and who would serve Babylon’s existing U.S. patients. Babylon did not immediately respond to a request for comment.
In the U.S. market, Babylon entered into value-based contracts with insurers, meaning it would get a lump payment to take care of each patient’s needs and get to keep any “savings” from delivering care at lower cost. But this also meant the company was on the hook for overages. As of December 2022, Babylon had around 261,000 U.S. value-based care patients, according to its annual report. Babylon’s website suggests it has partnerships with insurers in 12 states, mainly with Medicaid plans for low-income patients, including Medicaid plans in California, Georgia, Iowa, India and Mississippi, among others.
The company had around 1,895 employees as of December 2022 and around 35% percent, or 660 people, were based in the U.S.. Under the federal Worker Adjustment and Retraining Notification Act, known as WARN, certain employers must provide at least 60 days notice of mass layoffs with some exceptions. “We reasonably believed in good faith that providing such notice would have made it impossible for us to obtain the needed capital we sought with multiple parties over the last several months,” Babylon wrote in the WARN notice filed in Texas.
The company said it “diligently pursued several financing and transaction options,” but it could not reach a deal. “[A]s a result, we are now forced to cease operations, liquidate its 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 katiedjennings@protonmail.com.
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