Exciting UK founded health technology company Babylon Health has confirmed plans to list shares on the US Nasdaq stock market after agreeing a deal with a special purpose acquisition company, or SPAC as they are popularly known.
Babylon will merge with Nasdaq-listed Alkuri Global in a deal that will value the combined company at approximately $3.6 billion, implying an 11.3 enterprise value to sales multiple, calculate analysts at Megabuyte.
EMPLOYEES BENEFITS PACKAGE
Babylon Health calls itself a ‘revolutionary digital health company’ and it provides digital health tools and video doctor appointments, using state-of-the-art artificial intelligence technology. The company also runs physical GP clinics in London and Birmingham that can be used just like any other GP surgery by local residents.
The key part of the business is a paid online subscription-based service, with the cost often picked up by insurers or employers as a perk/benefit for their employees and/or customers.
Babylon Health operates in the UK, US, Canada and Rwanda, where initial trials were run because of the poor access to healthcare services for the population. It also has emerging operations in across the Asia Pacific and Middle East regions, often through partnerships.
Once the deal is sealed it will give Babylon Health up to $575 million of financial firepower, including the $345 million of cash held in Alkuri’s trust account. This fresh funding will be used to bolster Babylon Health’s balance sheet and for growth investment.
EXCITING POTENTIAL
This is the first time that outsiders have been able to get a clear steer on Babylon Health’s financial performance and growth potential. ‘The business is clearly growing very quickly with revenues for calendar 2020 up from $16 million to $79 million, which are expected to increase to $321 million in 2021,’ said Megabuyte’s Lee Prout.
Growth expectations remain bullish for 2022 and 2023 with revenues of $710 million and $1.5 billion forecast.
‘In the current market, and based on its growth trajectory, Babylon’s valuation looks relatively sensible compared to some other SPAC deals,’ said Prout.
‘The other key thing to note from the investor presentation is the explosion of growth in the US having only launched in the country last year but which is expected to contribute 84% of revenues in 2021,’ the Megabuyte analyst said.
‘While remaining focused on growth, Babylon clearly also has one eye on the cost line with it looking to reach profitability in 2023.’
