PharmEasy Gears Up for Second Shot at IPO: Will They Succeed This Time?
PharmEasy: The online pharmacy PharmEasy is planning to make a comeback on Dalal Street this year, two years after withdrawing its initial public offering (IPO) application, according to sources familiar with the matter.
The company intends to present its IPO strategy to the board next month, exploring the option of a reverse merger with its listed subsidiary Thyrocare. By capitalizing on its improved cash flow position and restructured business model, PharmEasy aims to gain the trust of public market investors.
An individual familiar with the plan stated, “PharmEasy will address the IPO plan in the upcoming board meeting in February. More details regarding the public offering, size, and valuation are expected to be revealed thereafter. The company has made significant progress in reducing cash burn, which is now reflected in its financial records.”
PharmEasy declined to comment on its IPO plans. Meanwhile, three of its co-founders – Dhaval Shah, Dharmil Sheth, and Hardik Dedhia – have transitioned away from operational roles but remain on the boards of parent company API Holdings and Thyrocare. This change has been in effect since last year and has now been formalized.
Siddharth Shah, the CEO of API Holdings, continues to lead the company, collaborating closely with Rahul Guha, the president of PharmEasy and CEO of Thyrocare. Additionally, Shah, Sheth, and Dedhia are embarking on a new startup venture with Siddharth’s support as an investor.
A company spokesperson expressed, “This transition has been in progress for several quarters, and we are pleased that the new team has achieved operational cash flow breakeven while effectively managing all responsibilities. The group remains committed to establishing India’s premier healthcare platform.”
Shah, Sheth, and Dedhia, in a united statement, emphasized their unwavering commitment to the business and its vision. They expressed their dedication to holding shares for the long term to create value.
PharmEasy’s decision to enter the public markets reflects a growing trend among Indian startups. Companies like Boat, Ola Consumer, and Oyo, which previously delayed or canceled their public listings due to various reasons, have recently reignited discussions about IPOs. Boat, for example, has enlisted new bankers for an IPO, as reported by ET in November. Oyo, after securing private funding and undergoing shareholder restructuring, aims to file draft papers by the first quarter of the new fiscal year, according to ET’s report on January 20.
In 2024, PharmEasy’s revenue decreased by 14.7% to Rs 5,664 crore from Rs 6,644 crore in 2023. Despite this decline, the company successfully reduced its net loss to Rs 2,533 crore from Rs 5,212 crore in 2023, largely due to a significant decrease in goodwill impairment charges. Sales from medicines accounted for Rs 5,008 crore of the revenue, while lab tests and other services contributed Rs 652 crore. Total expenses for the year decreased to Rs 7,255 crore from Rs 8,974 crore in 2023, with employee expenses also declining from Rs 1,283 crore to Rs 699 crore, showcasing the company’s efforts in cost optimization.
The number of new-age firms going public is expected to more than double by 2025, indicating a growing interest in the public markets among startups.
“They are currently on track to achieve a revenue of Rs 6,500 crore for this year,” stated a source familiar with the situation.
In 2023, PharmEasy underwent a significant recapitalization, resulting in a 90% decrease in its valuation from its peak of $5.6 billion in 2021. The rights issue, spearheaded by Manipal Group Chief Ranjan Pai and backed by investors such as Prosus Ventures, TPG, Temasek, Abu Dhabi’s ADQ, and Amansa Capital, successfully raised Rs 3,500 crore. These funds were allocated towards debt repayment and restructuring initiatives.
Following the recapitalization, the company has shifted its focus towards reducing cash burn and achieving sustainable growth. This strategic shift has allowed PharmEasy to minimize its losses, but has also created opportunities for competitors like Tata-owned 1mg and Apollo 24×7 to gain additional market share. Additionally, Flipkart Minutes has introduced a rapid medicine delivery service on Minutes in specific areas of Bengaluru.
In the midst of these developments, PharmEasy continues to facilitate medicine delivery for Swiggy Instamart, solidifying its position in the market.”
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