Babylon Holdings Limited

Babylon reported fourth-quarter 2022 revenue of $289 million, up 2.5x year over year, and full-year 2022 revenue of over $1.1 billion, up 3.5x year over year. Q4 adjusted EBITDA loss was $48.9 million, with an adjusted EBITDA margin of negative 16.9%, versus negative 68.5% in Q4 2021. Revenue from value-based care increased 177% year over year to $268 million in Q4 2022, and U.S. VBC membership rose 1.6x year over year to over 261,000 members. Cash and cash equivalents were $104.5 million at December 31, 2022, including $61 million classified as held for sale. Looking ahead, management reduced 2023 adjusted EBITDA loss guidance to approximately negative $100 million to $120 million and said adjusted EBITDA profitability is now expected by mid-2024.

Ali Parsa framed the quarter as evidence that Babylon is aligned with broad healthcare shifts: care moving into community and home settings, value-based payment models, digitization, and AI. He emphasized that 2022 marked a deliberate pivot from growth to profitability, while still delivering strong revenue growth and improved business-level profitability. His tone was confident and upbeat, highlighting early wins in commercial engagement, AI-driven risk identification, and progress toward a more scalable, digital-first care model.

David Humphreys focused on execution against profitability. He cited $289 million of Q4 revenue, $48.9 million of adjusted EBITDA loss, and the improvement in expense ratios: cost of care delivery expense was $283 million in Q4 and 98% of revenue, technology expense was $16 million or 5% of revenue, and SG&A was $53 million or 18% of revenue. He also pointed to $125 million of annualized cost savings already executed, cash and cash equivalents of $104.5 million, and said the business is assuming a sale of the IPA business in the middle of 2023 when discussing guidance.

Analysts focused heavily on the IPA business, asking whether Babylon might retain part of it, how much cash a sale would bring, and whether the deal is necessary to get to profitability. Management said it is considering strategic alternatives, including potentially keeping some or all of the IPA business, but still wants to fully finance the company. Questions also centered on the path to mid-2024 profitability, with management citing a better revenue mix, especially commercial growth, improved cost-of-care margins, and the full run-rate benefit of the $125 million cost cuts. Analysts pressed on Medicaid risk and commercial ramp; management said there are one or two older Medicaid contracts under discussion, but no major roll-off, and that new commercial lives could come on during 2023, not only at the next benefit year.