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Babylon Holdings Limited
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== Risk == In March and May of 2023, Babylon Health initiated two lines of credit, referred to as the Bridge Facility and the Additional Bridge Facility. These agreements came with restrictive debt covenants, which are stringent conditions. In addition, Babylon Health is planning to execute certain transactions according to a strategy to privatize the company, as laid out in the Framework Agreement. However, these plans may be modified if satisfactory proposals from third parties surface during this interim period. It is important to note, however, that there are no guarantees that the Additional Bridge Facility and the Framework Agreement will be implemented in a way that secures Babylon Health's necessary funding. It is also possible that Babylon Health may not be able to acquire additional financing, or if they do, it might not be on terms that are favorable to them. If these transactions are carried out, they have the potential to significantly dilute, or even completely wipe out, the economic interests of Babylon Health's shareholders. This could subsequently result in a change in the company's ownership or control. Babylon Health previously financed their operations through the sale of their equity securities, revenue from operations and debt financing. They had $338.7 million of indebtedness as of March 31 2023. Babylon holdings have risks associated with financing their operations and despite high growth rates remain in net loss, and continued debt. They require additional funding, which has created significant doubts on whether they will be able to receive this funding as they continue over the next 12 months. To aim to combat their financial worries they are considering strategic alternatives, including restructuring or refinancing debt, seeking additional debt or equity capital, selling assets or other measures such as putting Babylon into administration under UK law. This will also face risks and uncertainties in executing their business plan until this alternative strategy has been implemented. Another risk Babylon faces is with the efficacy of their platform. With limited AI funding and some reviews questioning the impact and value of their service Babylon can come under scrutiny if proven to be ineffective. To mitigate this, funding is needed to constantly evolve and improve their software and fix any outstanding errors. A risk related to this is whether Babylon's service is creating value to the correct target groups. Some criticism form NHS practitioners has suggested Babylon's model using new technology may attract the wrong customer base. Some have said their service may be counter productive since younger healthier individuals are using the app and gaining NHS referrals when they are mostly healthy. This is wasting valuable NHS time an resourcing through directing care away from those who may be older and need this service more prominently, to those who would not have otherwise used NHS services for a smaller illness as Babylon's platform makes this easier to do so. '''Risk summary''' * Operations are dependent on physician owned entities so a damage to those relationships will drastically effect Babylon’s operational ability * Significant portion of Babylon’s revenue is coming from a small number of customers. This leaves Babylon very dependant and therefore vulnerable to this group. If opinions change, a huge revenue source will be lost immediately. * Babylon’s move to go private without paying shareholders could negatively impact sentiment towards the firm. This could result in long term damage to the company’s reputation which could negatively affect its growth prospects. * Babylon’s move to go private is in place to restructure the business which is currently accumulating losses. If the company restructuring fails to have the desired effect, Babylon could continue to be unprofitable until eventually, available funding dries up. * The healthcare industry is a heavily regulated industry, with many licenses and authorisations required for participation. If any of these are lost, Babylon’s may lose the right to operate some its services, ending revenue streams and preventing Babylon from being able to grow in the market.
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