In its first earnings call as a public company, Babylon Health, one of the world’s fastest-growing digital healthcare companies worldwide, on Friday (Nov. 12) announced strong financial and operating results for the third quarter that ended Sept. 30.
In terms of headline numbers, the firm reported 371% year-over-year growth in revenue to $74.5 million, up from $15.8 million in Q3 2020, touting its digital-first model that is driving growth in value-based care revenue.
These results follow strong financial results for the nine-month period that ended Sept. 30, during which the firm generated 203.2 million in revenue, a significant 430% jump from the $38.3 million in 2020.
“We are at the beginning of what we think will be an overhaul of the healthcare industry, [and] those who have a digital-first model have a significant structural advantage over others,” Dr. Ali Parsa, the company’s CEO and founder, told analysts on a call. “This has been our maiden quarter, [and] we will continue to deliver more strong quarters on the back of a tailwind of a transformation of an analog industry that is reactive to a digital industry.”
The company said the launch of value-based care contracts will add an estimated 135,000 members, including 80,000 in Georgia, California and Mississippi and 55,000 in the U.K., putting Babylon on track to managing over 350,000 people globally by the beginning of 2022, more than double that of the beginning of 2021.
The company is currently contracted to serve 24 million people in 15 countries across four continents, having facilitated 13 million virtual consultations and interactions worldwide.
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Prior to its initial public offering (IPO) on the New York Stock Exchange, during which it raised about $460 million of new capital, the telehealth unicorn announced a “long-term partnership” deal with Microsoft, which Parsa said would be “beneficial to both of our end customers.”
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The two organizations intend to explore opportunities to use their combined artificial intelligence (AI), machine learning and cloud technologies to reduce overall healthcare cost through digital-first pathways.
Babylon’s digital health software solution and its cloud services have since been made available on the Microsoft Azure marketplace, reaching more than four million monthly active users across 140 geographies.
US Future Looks Bright
In January of 2020, the London-based HealthTech startup launched its AI-powered medical chatbot service in the United States in partnership with the U.S. Medicare insurance company Centene and FirstChoice Medical Group.
In April of this year, the firm acquired Meritage Medical Network to complement these strategic partnerships, and as of Sept. 30, Babylon directly manages approximately 100,000 people through the Babylon 360 platform in the U.S.
Parsa said the focus is to “win” in the U.S., where the company is currently seeing “fantastic” tailwinds. He attributed the company’s growth in the country primarily to its digital-first solution and the depth of its technology, which is pushing costs down and enabling a speed of deployment unfamiliar to other industry players.
“We are not seeing a lot of competition [there] right now, partly because most of our competitors are brick-and-mortar first, and therefore it’s much more difficult for them to roll out across 60 out of the 62 counties in New York, […] where we could deploy our services in a matter of weeks, as opposed to building clinics, which would have taken years,” he said.
The Q3 financial results showed that technology costs accounted for a nosedive from 135% of revenue for the same period last year to 36%, which the company said was an indication of the operational leverage of their technology platform.
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