Babylon Health finally succumbed to poor financial performance over the past few years, with Forbes reporting that the digital health company filed for bankruptcy in the US last week.
Despite repeated attempts at reviving itself, which included a rescue merger by Swiss firm MindMaze that eventually collapsed, the digital health company is seeking Chapter 7 bankruptcy – meaning it will liquidate assets rather than attempt restructuring.
The end of Babylon Health brings the curtains down on a company once touted as the “future of the NHS” by previous UK Secretary of Health, Matt Hancock. A trailblazer in providing remote healthcare, the digital platform helped spur the telehealth market that garnered heightened interest during the Covid-19 pandemic when many medical appointments had to be conducted virtually.
However, the artificial intelligence (AI)-powered digital service encountered difficulties when it was on the receiving end of complaints from the Medicines and Healthcare products Regulatory Agency (MHRA) and UK doctors – who questioned whether the software was missing serious illnesses. Then came financial difficulties, as the company’s two core models – an AI triaging system and digital medical practice – struggled to bring in revenue.
Incurring net losses of $221.4m in 2022 and further poor results in Q1 2023 forced the company to seek restructuring deals. After the MindMaze merger collapse, and a delisting from the New York Stock Exchange due to not meeting financial requirements, the writing was truly on the wall for the telehealth giant.
Medical analyst at GlobalData Shane Dibblee told Medical Device Network: “The bankruptcy of Babylon Health illustrates the fine line digital health applications must follow. Even with products like GP-at-Hand receiving funds from the NHS, investors have been harder to find with rising interest rates while consumers have efficacy and privacy concerns that would need to be addressed.”
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“Traditional manufacturers with larger access to funds are waiting for the market to be developed before making big acquisitions. Pear Therapeutics was a similar company with revenue generating products which went through bankruptcy proceedings and resulted in assets being auctioned for $6m”.
Despite its bankruptcy, the telehealth market it helped catalyse is going from strength to strength. According to GlobalData, the market, which was worth $690m in 2015, is expected to reach $3.8bn by 2030. It experienced a slump after Covid-19 restrictions were lifted but has stabilised and is expected to grow in the next few years. Mental health is an area that will see the greatest usage – GlobalData estimates suggest a 6.5% CAGR for mental health telehealth services.
Indeed, in March, before its collapse, Babylon Health told Medical Device Network that depression and anxiety were amongst the top spending drivers across its patient cohorts. For example, US startup UpLift, which provides patients with digital personalised behavioural care by matching them with therapists and psychiatrists, secured $10.7m in funding in July 2023 to advance its mental health virtual care platform.
GlobalData medical analyst Thomas Fleming commented: “Telehealth boomed during the Covid-19 pandemic, as patients and health care professionals sought alternatives to conventional in-person care. In 2020, over half of patients used telehealth for mental health reasons, while over 40% of patients used it for other indications.
“Telehealth can provide a viable alternative to conventional mental health treatment, where it can be particularly advantageous, as it cuts down on transportation costs, allows patients to be more comfortable in their own homes, and is an inexpensive alternative for outpatient care.”