What happened
Next-generation healthcare company Babylon Holdings (BBLN) was hardly the picture of health on Tuesday. The company's stock took a more than 15% tumble on the day, due largely to a dilutive new share issue.
So what
Before market open, Babylon updated investors about that issue, which was first announced on Monday. The digital healthcare services specialist said that it had received $80 million in total subscriptions. These were offered in a private investment in public equity (PIPE) round for investors.
Babylon was offering the subscriptions at just over $0.42 per ordinary share of the company. All told, it is selling just under 190 million of the shares, up from the nearly 146 million announced on Monday.
Two of those subscribers are well familiar with Babylon. The company said that entities affiliated with its two largest institutional investors, Swedish investment companies Kinnevik and VNV Global, were among the issue's initial subscribers.
The PIPE round is anticipated to close on or about Thursday, Nov. 3.
Now what
Babylon said that it aims to utilize the proceeds from the issue "to fund the ongoing development of its digital-first platform and services for managing population health, working capital" and, utilizing boilerplate language from many companies that have issued new stock, it added that the monies could also be devoted to "other general corporate purposes."
None of this was heartening to investors, considering that it currently has less than 344 million shares outstanding, a number that equates to a market cap of just below $191 million. No one likes dilution, no matter how much potential they think their investment might hold.
