A booming market for technology stocks and frothy IPO activity has reportedly encouraged Babylon, a virtual GP service used by the NHS, to consider a Wall Street listing. While not confirmed by Babylon itself, the company has declined to comment, Bloomberg recently reported on the start-up’s exploration of a listing. It could be conducted through an IPO but is perhaps more likely via a Spac (special purpose acquisition company) – a kind of listed shell company that offers an ‘oven-ready’ route into public markets.
Babylon’s app links patients to doctors digitally for virtual appointments and symptoms checking. The business model looks increasingly attractive with health care’s digital transformation massively accelerated by the coronavirus pandemic. Bloomberg reports that has encouraged several Spacs to approach Babylon with the proposal of a listing via a reverse take-over. It is thought Babylon is likely to achieve a public valuation of potentially over $4 billion.
Babylon has been recently upping the ante in the USA, focusing on expanding operations in the lucrative market. Ali Parsa, the former Goldman Sacks banker who is the start-up’s founder and chief executive, has also commented that Babylon is “as much of an American company as a British one”.
He has also recognised the pressure Babylon is under to list by acknowledging “public markets are flying right now”. It would not be a surprise if the company’s VC backers have been impressing behind the scenes the apparent opportunity enthusiasm for tech IPOs currently presents.
Babylon is headquartered in west London and the company, founded in 2013, now employs over 2000 people. It has operations in countries that range from the UK, Canada and USA to Rwanda. The service initially grew out of a partnership with the Bill and Melinda Gates Foundation, and gained a strong foothold in Asia through a partnership with insurer Prudential. In the UK, the NHS uses Babylon’s GP at Hand app.
Still loss making, Babylon has benefitted from a quick change in attitudes towards remote, digitally-supported healthcare over the past year. Having raised $500 million at a valuation of around $2 billion from investors including Saudi Arabia’s sovereign wealth fund in 2019, the company was well positioned to expand last year as pandemic conditions increased demand for its apps.
The UK’s health minister Matt Hancock has said he personally uses Babylon’s service as his NHS doctor. His enthusiasm for what is a private company, even endorsing it in a sponsored newspaper supplement, has attracted criticism. Some local health services have also said the service cherry-picks fit young people, leaving local surgeries to deal with more expensive and time-consuming patients.