Babylon Health collapsed because it moved from a simple, capped subscription (about £149 a year for app-based GP access) into large US health-plan contracts where it carried the cost of members' care. Losses grew, contracts worth nearly half its 2022 revenue weren't renewed, and its US entities filed for Chapter 7 in August 2023. Its UK assets sold for about £500,000.
Key takeaways
- Babylon agreed to go public through a SPAC at a $4.2 billion valuation in June 2021 and listed on the NYSE in October 2021.
- It shifted from selling GP access to managing health plans' members' care in the US, a much riskier business.
- Contracts with Centene-affiliated health plans, nearly half of 2022 revenue, weren't renewed. A rescue deal collapsed in August 2023.
- Its US entities filed for Chapter 7 liquidation on 9 August 2023; UK assets sold to eMed for about £500,000.
- The insurance model works when you underwrite costs you control and keep any one customer under 10% of revenue (top five under 25%).
In 2013, a doctor named Ali Parsa set out to make healthcare affordable for everybody on the planet.
Eight years later, his company was about to list on the New York Stock Exchange at a $4.2 billion valuation.
Two years after that, its UK business was sold for about £500,000.
That's not a typo. Five hundred thousand pounds.
How does that happen?
What did the book say about Babylon in 2022?
In Chapter Two, I used Babylon Health as my example of Model #6, the Insurance Model, and specifically of "how a smaller business could leverage the insurance model."
Babylon gave you an app. The app's "GP at Hand" service let you chat with a doctor 24/7. It charged £149 (about $200) a year. In return, customers got peace of mind: they knew they could reach a doctor at any time.
I wrote that "in a post-COVID-19 and increasingly remote world, it's a brilliant spin on the insurance model."
As a subscription design, I still think it was. As a company, Babylon went somewhere very different.
What's happened since?
Here's the timeline, using the published reporting:
| Date | What happened |
|---|---|
| June 2021 | Agrees to go public via a SPAC merger with Alkuri Global at a $4.2 billion valuation, claiming 24 million patients covered and $79 million of 2020 revenue (up 394%) |
| October 2021 | Lists on the NYSE |
| 2022 | Expands aggressively in the US, contracting with health plans to manage the care of their members |
| Q1 2023 | Net loss of $63.2 million, up from $29.1 million a year earlier |
| 2023 | Contracts with Centene-affiliated health plans, nearly half of 2022 revenue, are not renewed |
| Early August 2023 | A take-private rescue deal with MindMaze collapses |
| 9 August 2023 | US entities file for Chapter 7 liquidation, with $100 million to $500 million in liabilities |
| September 2023 | The UK business, which had served more than 700,000 patients, goes into administration; assets sold to eMed for about £500,000 (about $620,000) |
From a $4.2 billion valuation to a fire sale in a little over two years.
Why did Babylon fail?
I see three mistakes, and each one maps to a framework in the book.
Mistake 1: It underwrote costs it couldn't control
The £149 subscription was a classic insurance model. Babylon set the price, and the main cost was its own doctors' time. It could manage that.
In the US, Babylon took on a different job: managing the care of health-plan members. Now its costs depended on how sick those members got and what their care cost. That's real insurance risk, the kind insurers hire actuaries to price.
The insurance model is powerful. But only when you price the risk correctly and control the costs you've promised to cover.
Mistake 2: It broke the "rule of one"
The O in my MOATS framework stands for One: no single point of failure. One of the moat factors is low customer concentration, and the rule of thumb I use is no client above 10% of revenue and your top five under 25%.
Babylon lost nearly half its revenue when one group of contracts wasn't renewed.
No business survives that easily. A loss-making one with a collapsed rescue deal didn't survive at all.
Mistake 3: Growth money hid broken unit economics
SPAC money funded rapid expansion. Revenue grew fast. But revenue growth on contracts that lose money is just a faster way to run out of cash.
I learned a small version of this lesson myself with my first agency: we were growing fast with ridiculously low margins, and it was precarious. Babylon learned it at a scale of hundreds of millions of dollars.
Land and expand, gone wrong
In Chapter Seven I describe land and expand: win a customer with an attractive first offer, then grow the account. Babylon "expanded" into a new country and a new, much riskier business model at the same time. Expansion should grow what already works. It shouldn't swap a simple, capped product for an uncapped one.
How exposed is your business?
Score your business on the five MOATS factors, including customer concentration, with the free MOATS Scorecard.
Does this mean the insurance model is broken?
No. It means the version of it matters.
Some of the healthiest insurance-style subscriptions in 2026 are local and capped. A dental practice selling a membership with two check-ups, cleans and a discount on extra work. A vet with an annual wellness plan. A physio with a set number of sessions a month. Each one covers the practice's own time, with limits, and reprices every year.
Look at how dental practices are replacing insurance with membership plans and how vets built a wellness membership. That's Babylon's original idea, done safely.
What you can steal
- Only underwrite what you control. Cover your own time, services and products. Never promise to cover third-party costs you can't cap, like specialist fees or outside repairs.
- Cap your exposure. Set visit limits, include fair-use terms, and state them clearly at sign-up.
- Reprice annually. If usage creeps up, your price must follow. Build that review into the calendar.
- Watch your concentration. If any one customer is more than 10% of revenue, or your top five are more than 25%, treat it as a risk you need to reduce. Babylon lost nearly half its revenue with one non-renewal.
- Price from real costs. Before you launch a plan, work out the cost of a heavy user, not an average one. The subscription price calculator helps you check that the fee still works after costs, GST and fees.
The lesson
The insurance model sells peace of mind. Your business needs some too.
Babylon's £149 subscription was a good idea. The company's mistake was leaving that simple, controllable model for a business where it carried risks it couldn't price, with too much revenue resting on too few customers.
So, a question for your own business: if your biggest customer left tomorrow, would you still be standing?
If the answer is "not sure," start with my guide to the MOATS framework. For clinics, the medical practice membership guide and the insurance model guide show how to build a plan with the risk capped.
Frequently asked questions
What was Babylon Health's subscription?
In the UK, Babylon sold app-based access to a GP for about £149 (roughly $200) a year. Members could chat with a doctor and use health tools at any time. That's the insurance model: the customer pays for peace of mind and access, whether or not they use it. The fee was fixed and the service was the cost Babylon controlled.
Why was Babylon's US business so risky?
In the US, Babylon contracted with health plans to manage the care of their members. That meant its costs depended on how sick those members got and what their care cost, which Babylon couldn't cap the way it could cap GP appointments. It also concentrated revenue in a few big contracts, so losing one hurt badly.
How much money did Babylon lose?
Its net loss in Q1 2023 alone was $63.2 million, up from $29.1 million a year earlier. When its US entities filed for Chapter 7 in August 2023, they listed liabilities of $100 million to $500 million. The 2021 SPAC deal had valued the company at $4.2 billion.
Can a small clinic use the insurance model safely?
Yes, if it only covers costs the clinic controls. A dental or physio membership that includes set check-ups, a discount on extra treatment and fair-use limits is an insurance-style plan with a known cost. The danger starts when a plan promises to cover third-party costs, like specialist or hospital bills, that the clinic can't predict or cap.
What is a SPAC?
A SPAC (special purpose acquisition company) is a listed shell company that raises money and then merges with a private business, taking it public without a traditional IPO. Many SPAC deals in 2020 and 2021 were done at high valuations based on forecasts. Babylon's was one of them.
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Robert Coorey, MBA
Robert is the author of The Subscription Playbook and Feed a Starving Crowd and a Director at BPAG Accountants in Sydney. More about Robert.
Sources
- Reuters, Telehealth startup Babylon to go public via $4.2 billion SPAC deal (3 Jun 2021)
- Healthcare Dive, Babylon files for Chapter 7 bankruptcy (18 Aug 2023; updated 5 Sep 2023)
- Fierce Healthcare, Babylon closes US business after MindMaze deal collapses (2023)
- HLTH, Bankrupt digital health company Babylon sells U.K. assets for just $620,000 (20 Sep 2023)
- Wikipedia, Babylon Health
Facts and prices checked 27 October 2026. Spotted something out of date? Tell us.