Executive Summary

Q4 2022 revenue was $289.0M, up 2.5x YoY; Adjusted EBITDA improved to $(48.9)M (−16.9% margin) vs $(80.6)M (−68.5%) in Q4 2021, reflecting cost actions; MLR was ~99% and COCD margin turned positive in the U.K. .
FY23 guidance introduced: revenue $1.1B+ and Adjusted EBITDA $(120)M to $(100)M; profitability timing pulled forward to mid‑2024 from “no later than 2025” previously — a material narrative shift .
Mix shift and commercial push accelerated (Ambetter digital‑first launch across 6 states, ~34k members in Jan’23) while U.S. VBC membership ended 2022 at >261k; management claims key VBC contracts were profitable on Medical Margin even in year one .
Liquidity/strategic alternatives: extended AlbaCore working capital facility up to $30M; cash and cash equivalents $104.5M at 12/31/22 (incl. $61.0M held for sale) as the IPA sale/alternatives process persisted — a key watchpoint for funding runway .

What Went Well and What Went Wrong

What Went Well

Revenue scaled to $289.0M in Q4 and $1.11B for FY22 (3.5x YoY), exceeding guidance, with VBC revenue driving the step‑up; “key” U.S. VBC contracts delivered positive Medical Margins in their first year .
Cost actions (~$125M annualized) tightened losses; Q4 Adjusted EBITDA improved to $(48.9)M vs $(80.6)M YoY; CFO: “delivered high revenue growth… and… beat… Adjusted EBITDA estimates” .
U.K. clinical services achieved COCD profitability; U.S. clinical services expected to be COCD profitable in early 2023, supported by workflow automation and mix optimization .

Quote – CEO Ali Parsa: “We grew our revenue by 3.5 fold and achieved COCD or Medical Margin profitability improvements across our business lines… we now expect Adjusted EBITDA profitability in mid‑2024” .

What Went Wrong

Medical Loss Ratio remained ~99% in Q4 (MLR 99.4%), leaving Medical Margin ~0.6%; claims intensity and early‑contract dynamics continued to cap near-term margins .
Net loss was $100.1M in Q4 (−34.6% margin), reversing a one‑time gain‑driven profit in Q4’21; impairment charges and financing costs earlier in the year also weighed on 2022 results .
Liquidity remained a risk: reliance on a $30M working capital facility; management acknowledged potential need for additional funding and uncertainty around the IPA sale/alternatives .

Financial Results

Core P&L and Profitability (chronological: oldest → newest)

Metric	Q4 2021	Q3 2022	Q4 2022
Total Revenue ($M)	$117.6	$288.9	$289.0
Net Income (Loss) ($M)	$67.4	$(89.9)	$(100.1)
Net Margin (%)	57.3%	(31.1)%	(34.6)%
Adjusted EBITDA ($M)	$(80.6)	$(54.3)	$(48.9)
Adjusted EBITDA Margin (%)	(68.5)%	(18.8)%	(16.9)%
Diluted EPS ($)	$2.13	—	$(4.50)

Notes: EPS for Q3 2022 not disclosed in Q3 6‑K reconciliation table; revenue and Adjusted EBITDA reflect U.S. GAAP in Q4’22 materials .

Segment Revenue ($M)

Segment	Q4 2021	Q4 2022
Value‑Based Care	$96.7	$267.9
Clinical Services	$13.1	$14.4
Software Licensing	$7.8	$6.6
Total Revenue	$117.6	$289.0

KPIs and Margins

KPI	Q4 2021	Q3 2022	Q4 2022
Medical Loss Ratio (MLR)	107.6%	98.7%	99.4%
Medical Margin	(7.6)%	1.3%	0.6%
COCD Margin	(9.7)%	—	2.1%

Additional operating highlights: U.S. VBC membership >261k at 12/31/22; Ambetter commercial launch added ~34k members in Jan’23 .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	FY 2023	—	$1.1B+	New
Adjusted EBITDA	FY 2023	—	$(120)M to $(100)M	New
Adjusted EBITDA Profitability Timing	Company	No later than 2025	Mid‑2024	Raised (earlier)

Note: FY22 revenue guidance (from Q3) was $1.05–$1.10B and was exceeded by actual FY22 revenue of $1.1097B .

Earnings Call Themes & Trends

Note: The Q4 2022 earnings call transcript could not be retrieved due to a document system inconsistency; themes below derive from the press release and slides.

Topic	Previous Mentions (Q2 2022, Q3 2022)	Current Period (Q4 2022)	Trend
Profitability Path	Q2: cost actions announced; restructuring $8–$11M; FY22 Adj. EBITDA guidance reiterated; impairment at Higi . Q3: Adj. EBITDA margin improved to (18.8)%; 2022 guide $1.05–$1.1B; “funded to profitability” with $80M placement and planned IPA sale .	Pull‑forward to mid‑2024; FY23 Adj. EBITDA $(120)M to $(100)M .	Improving cadence and visibility.
Cost Discipline	Q2: operating cost mix shifts; platform/R&D reallocations . Q3: 45ppt YoY Adj. EBITDA margin improvement .	~$125M annualized cost reductions executed; continued SG&A/tech leverage narrative .	Sustained opex leverage.
VBC Portfolio/Mix	Q2–Q3: rapid VBC growth; Medicare & commercial mix rising; 2.7x YoY U.S. VBC membership; medical margin improving .	Ambetter commercial launch across 6 states (~34k members in Jan’23); “key” contracts profitable in year one .	Mix shift to higher‑margin segments.
Clinical Services COCD	Q2: scaling platform, clinic investments . Q3: leverage in clinical delivery costs (6.4% of revenue) .	U.K. COCD profitable; U.S. clinical expected COCD‑profitable early 2023; automation/triage initiatives .	Margin turning positive.
Liquidity/Capital Structure	Q2: going‑concern language; issued $100M notes; warrants exchange . Q3: private placement $80M; plan to sell IPA .	Extended AlbaCore working capital facility up to $30M; cash $104.5M (incl. $61M held for sale) at 12/31/22; additional funding may be required .	Funding risk remains key.
Regulatory/Operational Risk	Q2–Q3: risk adjustment, documentation, reimbursement, ACO REACH risks articulated .	Similar risk disclosures reiterated .	Unchanged risk backdrop.
Capital Markets Actions	—	Reverse share split (1‑for‑25) to regain NYSE compliance (Dec 16, 2022 effective) .	Listing compliance addressed.

Management Commentary

CEO Ali Parsa: “we grew our revenue by 3.5 fold and achieved COCD or Medical Margin profitability improvements across our business lines… Our key VBC cohorts showed profitable Medical Margins even in their first year… we now expect Adjusted EBITDA profitability in mid‑2024” .
CFO David Humphreys: “delivered high revenue growth and strong financial performance to beat revenue expectations and previously guided Adjusted EBITDA estimates… executing nearly $125 million in annualized cost reductions” .
Liquidity/alternatives: working capital facility up to $30M to bridge to IPA sale or alternatives; cash $104.5M at 12/31/22 (incl. $61.0M held for sale) .

Q&A Highlights

The Q4 2022 earnings call transcript could not be retrieved due to a document system inconsistency; as a result, Q&A themes and any guidance clarifications from the live call are unavailable from primary sources.

Estimates Context

Wall Street consensus (S&P Global) for Q4 2022 revenue and EPS was unavailable for BBLNF/BBLN due to missing SPGI/CIQ mapping; therefore, we cannot provide an estimates comparison for Q4 2022. Values would ordinarily be retrieved from S&P Global; in this case, the data was unavailable via the tool.
For context, management stated Q3 2022 results were ahead of consensus for both revenue and Adjusted EBITDA (historical) .

Key Takeaways for Investors

Execution on cost structure is tangible (Adj. EBITDA margin improved to −16.9% in Q4 from −68.5% YoY), and the profitability timeline pulled in to mid‑2024 — a central narrative pivot that can support multiple expansion if funding risk abates .
VBC scale is evident (Q4 VBC revenue $267.9M) with early Medical Margin profitability in “key” contracts; mix shift toward Medicare/commercial and the Ambetter launch are important for unit economics through 2023 .
MLR hovering ~99% shows claims cost discipline is still the swing factor; incremental cohort maturation and engagement gains need to translate into sustained medical margin expansion beyond ~1% .
Liquidity remains the gating risk: near‑term reliance on a $30M facility and outcome of the IPA sale/strategic alternatives; management explicitly notes additional funding may be required — a critical watch item for equity holders .
COCD profitability in the U.K. (and expected in U.S. clinical) suggests operating leverage from automation and workflow design; if replicated in VBC, incremental drop‑through could be meaningful .
Capital markets housekeeping (1‑for‑25 reverse split) addressed listing compliance, but the long‑term equity story hinges on delivering FY23 guide and medical margin improvement amid payer/regulatory risks .

Appendix: Additional Financial Statements (as disclosed)

Consolidated balance sheet and cash flow details included in the 8‑K press release (e.g., total assets $246.1M; loans and borrowings $278.0M non‑current; FY22 net cash used in operations $(311.4)M) .

Babylon Holdings Ltd (BBLNF)·Q4 2022 Earnings Summary