Babylon ‘administration’ move will not impact NHS services, claims firm

The company announced this week that it has secured $34.5m from the credit fund Albacore, in a deal set to be finalised this summer, as well as interim funding for May and July. To allow for this, Babylon’s top holding company – which has no operations, employees or commercial arrangements – may be placed into administration. 

HSJ understands Babylon believes the deal will not negatively impact existing NHS services. Instead, it argues the financing would offer certainty after months without long-term funding and in fact reduce the risk of its NHS services being scrapped or scaled back.

However, the company has also previously said  it loses money on every patient it sees through its GP services, meaning its willingness to expand beyond current NHS arrangements is limited.

Babylon offers remote appointments and symptom-checker tools through an app, while its NHS service GP at Hand offers virtual and in-person services to NHS patients in London. It pulled the service out of Birmingham last autumn after it was “no longer financially sustainable”.

Babylon is now based in the US. In a document filed to the United States Securities and Exchange Commission it stated: “Given the continuing challenges we face in raising additional capital, a potential administration of Babylon Holdings Limited under UK law in the very near term while we have sufficient cash on hand to be able to implement an orderly liquidation or restructuring of our liabilities and/or a sale of our assets through a court appointed administrator who will effectively replace the company’s directors, looks increasingly likely as a way to continue day-to-day operations of Babylon and preserve the value of our business and assets for the benefit of our stakeholders.”

It continued: “However, together with our financial and restructuring advisors, we continue to evaluate our strategic options and discuss alternative financing options with our creditors and other parties. Administration under UK law would subject us to risks and uncertainties associated with administration proceedings, and may place holders of our Class A ordinary shares and equity instruments exercisable for the Class A ordinary shares at significant risk of losing all of their investment in our equity.”

A report in the Financial Times said Babylon shareholders would be “wiped out” by Albacore’s takeover of the company’s assets.

In a statement to HSJ, the company explained: “The announced financing with Albacore is expected to provide Babylon with the funding needed to support our long term day-to-day operations.

“In order to effectuate this long term funding transaction and take the company private, the top holding company in the Babylon group (Babylon Holdings Limited) may enter into a short organized UK administration proceeding.  Any administration proceeding would occur solely at the level of the top holding company, which has no operations, employees, or commercial arrangements.  It is not anticipated that any of Babylon’s operating entities would enter any sort of administration or bankruptcy proceeding.”

In a separate statement announcing the sale, Babylon also said it will take place without the approval of Babylon shareholders because AlbaCore will be “exercising rights under its debt agreements”.

Babylon said it expects to become profitable – and therefore self-funding – in mid-2024.