Babylist acquires SourceMD, launches Babylist Health

Babylist, the Oakland, Calif.-based baby registry business, acquired medical equipment supplier SourceMD and is launching a new business called Babylist Health, CEO Natalie Gordon tells Axios exclusively.

Why it matters: The acquisition of SourceMD, which provides breast milk pumps that can be paid for with health insurance, gives Babylist better access to the global mother and child health care market, Gordon says.

Details: Discussions with SourceMD began about a year ago and quickly evolved into deal negotiations, Gordon says.

• The transaction was handled internally, though Farallon Law Group provided legal advice, she says.
• Buying SourceMD sped up Babylist's entry into the health category by 18 months, Gordon says.
• She declined to comment on the size of the acquisition.

Between the lines: Offering health and wellness products, services and content complement the baby registry business with an existing audience of well over 1 million people.

How it works: Babylist has three different businesses, the first of which is directing users to third-party retailers via its registry, for which Babylist collects a fee.

• The second is providing content for parents about them and their babies.
• The third is directly selling products to customers as a specialty retailer.

By the numbers: Babylist generated more than $240 million last year in revenue and is growing double-digits this year, Gordon says.

• The company announced a $40 million Series C round in November 2021 at a post-money valuation of $400 million, per PitchBook. (Gordon says the total amount raised is under $50 million.)
• Investors include Norwest Venture Partners, Halogen Ventures, 500 Global, Next Play Capital and Marcy Venture Partners.

• The company cited a report estimating the size of the global market for mother and child health care to be $574 billion.

What's next: While Babylist Health is focused on breast milk pumps, the launch of the division and the ability to process health insurance opens the door to selling other products covered by insurance, Gordon says.

What we're watching: Running a profitable business gives Babylist options, which includes an IPO, Gordon says.

• And if Babylist Health proves to be a success, it will likely look more closely at those options.

The bottom line: The acquisition of SourceMD and the launch of Babylist Health provide a lucrative growth channel.