The future was almost here. Flying cars buzzing overhead. Colonies on the moon. And Babylon Health, the industry’s leading AI-driven digital-first primary care service, managing population health at scale.
What, no flying cars? No colonies on the moon? And Babylon Health’s U.S. subsidiaries, Babylon Health, Inc. and Babylon, Inc. formed to operate an integrated primary care model combining remote patient monitoring and app-based AI diagnosis, both filed for Chapter 7 bankruptcy, each leaving creditors with estimated debts of from $100 million to $500 million and no funds projected to be available for distribution to unsecured creditors.
Prior to the bankruptcy filings, Babylon Health sought a merger partner. And then, when the merger evaporated, it attempted, to no avail, to find alternate financing.
Founded in 2013, Babylon’s parent entity, Babylon Holdings Limited, went public via a SPAC in 2021, with a pro forma valuation of $4.2 billion – shortly after its IPO, shares hitting a high of $272.50. Fierce Healthcare, an online publication, reported that, in January 2023, Babylon’s founder and CEO, Ali Parsadoust (AKA Ali Parsa), said that the company’s story and stock were “misunderstood”. As of the close of market on August 18th, shares were trading at just 3 cents.
Some actionable lessons for you:
1. AI, like flying cars, offers an amazing future. But like flying cars, the question is when.
2. AI is a tool to be leveraged carefully, not a substitute for an operational business, not a substitute for valuation based on actual profit, and not a substitute for real, live, physician-provided medical advice.
3. Investing alongside the “smartest people in the room” in something thought to be even smarter, often isn’t very smart, certainly at IPO level valuation.
4. Reality is a bitch, even if it’s misunderstood.
