Babylon Health Prepares for U.S. IPO via Merger with Groupon-Alum Led SPAC

London-based healthcare technology startup Babylon Health is preparing to list its shares publicly in the United States through an all-cash merger deal with a blank check company led by former Groupon CEO, Rich Barton.

The digital health firm's plans come at a time when public market interest in biotech and medtech companies continues to grow. This trend has seen several healthcare-focused special purpose acquisition (SPAC) firms raise billions of dollars through initial public offerings (IPOs).

According to sources close to the matter who spoke on condition of anonymity, Babylon will become one of many recent UK-based health tech startups that have chosen a U.S.-listed SPAC merger route over an IPO.

Babondoned Regulatory Approval Bid

The planned listing comes just days after reports emerged earlier this month indicating that Babylon had abandoned plans for its first-ever bid to secure full regulatory approval from the UK's Medicines and Healthcare products (MHRA) watchdog.

This decision follows months of intense scrutiny by regulators over concerns about safety issues with some aspects of the startup’s AI-powered triage system, which uses machine learning algorithms to rapidly diagnose patients remotely.

In a statement at the time, Babylon said that it remained committed to its goal of delivering better healthcare outcomes through technology but noted that regulatory hurdles had forced them to reassess their strategy.

Meanwhile, in an unrelated development earlier this week, sources close to the matter revealed that former CEO and co-founder, Bhavin Shah has sold a significant portion of his stake in Babylon worth over $100 million.

Barton-Led SPAC Partner

The news about Barton's involvement with the London-based startup comes just weeks after reports emerged indicating that another prominent UK health tech firm was also exploring a U.S. listing via an SPAC merger deal.

According to sources familiar with the matter, who spoke on condition of anonymity due to ongoing talks and sensitive nature of the discussions, this second unnamed company is in advanced late-stage talks over potential tie-up terms.

The recent surge in interest from investors for healthcare stocks listed through special purpose vehicles (SPVs) like SPACs has been partly driven by growing demand for remote care services since the onset of COVID-19 pandemic.

This trend is expected to continue even after restrictions ease as more people opt for convenient and cost-effective alternatives that do not require them to physically visit a doctor's office.

In an interview with Bloomberg earlier this month, Barton noted that while SPACs have faced criticism from some quarters over concerns about lack of transparency in their business operations prior to listing - he believes they offer startups like Babylon 'an attractive alternative' for accessing the public markets more quickly and cheaply than traditional IPO routes.

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