BTIG downgraded Babylon Health (NASDAQ:BBLN) to “sell” from “neutral” with a price target of zero, reflecting concerns around earnings, cash flow and cash needs, and the structure of a possible go-private transaction.
Shares of Babylon closed at $2.05, down $5.03, in heavy trading on May 10.
Citing the company’s 8-K, analyst David Larsen notes a statement that essentially says that in the absence of other acceptable transaction proposals, Babylon will be sold to a newly formed entity capitalized by certain investors.
The 8-K also states that the sale is able to occur without the approval of or any payment to Babylon’s Class A ordinary shareholders or other equity instrument shareholders, which is part of existing debt agreements.
“Because Babylon specifically stated in their press release that they plan to implement the take-private proposal, we view it as very possible that shares of Babylon may trade to zero,” he said.