# Babylon Health (2013 – 2023)

- URL: https://girisimcikafasi.com/en/startup-graveyard/babylon-health/
- Sector: Health
- Country: United Kingdom
- Total funding: $635 million
- Cause of closure: Business model failed

## What did it do?

Babylon Health was an SI-powered healthcare provider that connected patients with doctors, nurses and therapists through its website and mobile app. Users could ask questions by message, hold video consultations and order home blood-test kits. The company started in England in 2013, ran the GP at Hand service for the NHS and expanded to 17 countries.

## Why did it shut down?

According to founder Ali Parsa, members on fixed per-person-fee contracts used the service far more often than expected, and the company lost money on every new member. The shares of the company, which listed on the New York Stock Exchange via a SPAC merger in October 2021 at a $4.2 billion valuation, soon collapsed. The safety of its SI chatbot and its unproven promotional claims also drew heavy criticism. In August 2022 almost half the workforce was cut. In August 2023 the US unit filed for bankruptcy with a view to liquidation, the UK unit went into administration and its assets were sold to eMed Healthcare for £500,000.

## The story

In the end, founder Ali Parsa summed up the problem in a single calculation: the government was paying for two or three consultations a year for a person in this age group, but people were using Babylon six or seven times a year, and the company was losing money on every new member. That was the collapse of a digital health company once valued at $4.2 billion, in a nutshell.

Babylon was founded in 2013 by Ali Parsa, a former investment banker and previously CEO of the hospital operator Circle Health. The idea was to make reaching a doctor as easy as sending a message: users could send questions or photos through the app and hold video consultations. Its $25 million Series A in January 2016 was seen as the largest investment a European digital health start-up had received to date. In 2017 another $60 million came in for super intelligence, and in August 2019 a $550 million round led by Saudi Arabia's Public Investment Fund pushed the valuation past $2 billion. That year the company was serving more than 20 million people and carrying out over 5,000 consultations a day. Babyl, set up in Rwanda with the Gates Foundation, reached around 30 per cent of the adult population.

In the shadow of that growth, questions were piling up. Concerns about the safety of the SI chatbot were taken to British regulators, and the company's promotional claims were widely debated. In October 2021 Babylon listed on the New York Stock Exchange through a SPAC merger at a $4.2 billion valuation; Parsa later described the decision as an utter disaster. The company grew fast in the US by acquiring the 700-physician Meritage Medical Network and other businesses, but its share price collapsed.

In August 2022 Parsa announced cuts affecting almost half the workforce; the GP at Hand service in Birmingham, judged unprofitable, was also scaled back. In August 2023 the US unit went into Chapter 7 bankruptcy for liquidation, operations in Rwanda began to wind down and the UK unit went into administration in September. The assets were sold to eMed Healthcare for £500,000; the private and NHS services in England continued under the eMed brand.

Babylon's story shows that in digital health, making access easier also increases usage, so pricing has to be built on real behaviour. The technology promise excited investors; the unit economics, meanwhile, were quietly working against it from day one.

## Lessons

- Before signing a fixed per-person-fee contract, model real usage frequency with pilot data; once usage doubles, every customer becomes a loss.
- Back your SI claims with independent clinical evaluation; unevidenced promotion in healthcare turns both regulators and doctors against you.
- Use a public listing once your path to profitability is clear, not as a showcase for growth; the high valuation that comes with a SPAC becomes a burden after the first bad quarter.

## Sources

- [Babylon Health](https://en.wikipedia.org/wiki/Babylon_Health)
- [Digital health company Babylon files for bankruptcy in US, will liquidate](https://www.forbes.com/sites/katiejennings/2023/08/15/digital-health-company-babylon-files-for-bankruptcy-in-us-will-liquidate/?sh=11432ad3c0de)
- [Babylon Health confirms $550M raise at $2B+ valuation to expand its AI-based health services](https://techcrunch.com/2019/08/02/babylon-health-confirms-550m-raise-to-expand-its-ai-based-health-services-to-the-us-and-asia/)
- [Babylon claims its chatbot beats GPs at medical exam](https://www.bbc.com/news/technology-44635134)