Api Holdings Limited, the parent company of PharmEasy, recently raised $216 million in funding. This round was led by Manipal Education and Medical Group (MEMG) and other existing investors. Despite the new funding, PharmEasy’s valuation has dropped by 90% since its peak. MEMG contributed Rs 800 crore, while Prosus invested Rs 221 crore, 360 One (formerly IIFL Ventures) put in Rs 200 crore, and Temasek invested Rs 183 crore.
The company offers a range of services, including wellness tools, consultations, diagnostic and radiology tests, and treatment deliveries. It filed for an $843 million IPO in November 2021 but later deferred the plan.
PharmEasy’s Valuation Takes a Hit
The recent funding round for PharmEasy, led by MEMG, a family office, raised concerns as the company’s valuation dropped by 90% since its peak. MEMG contributed Rs 800 crore, with Prosus investing Rs 221 crore, 360 One (formerly IIFL Ventures) putting in Rs 200 crore, and Temasek investing Rs 183 crore.
Additionally, CDPQ Private Equity, WSSS Investments, Goldman Sachs, and Evolution Debt Capital collectively invested Rs 400 crore. PharmEasy’s board also approved a special resolution to issue convertible preference shares, aiming to raise Rs 1,804 crore, with plans to convert these shares into equity shares later.
Since August last year, PharmEasy has been trying to raise around Rs 3,500 crore to pay back the money it owes to Goldman Sachs. The company missed loan payments to Goldman Sachs last June.
Financial Performance of PharmEasy
Despite challenges, PharmEasy’s revenue grew by 16% in the financial year ending in March 2023, reaching Rs 6,644 crore compared to Rs 5,729 crore in the previous year. The company also reduced its losses to Rs 2,289.8 crore in FY23 from Rs 2,731.7 crore in FY22.
PharmEasy’s Plans to Repay Debt
PharmEasy aims to convert its convertible preference shares (CCPS) into equity shares at a 1:20 ratio as part of its fundraising strategy. Since August last year, the company has been seeking to gather Rs 3,500 crore to settle its debt owed to Goldman Sachs. A default on loan terms in June resulted in a 50% valuation reduction by Janus Henderson and a 21.4% reduction by Neuberger Berman Group, bringing the valuation down to $4.4 billion as of February 2023.
The recent investment follows the Competition Commission of India (CCI) approval for the MEMG family office and 360 One’s proposal to invest in API Holdings, PharmEasy’s parent company. Founded in 2015, PharmEasy sells medicines online and offers diagnostic tests through its other brands. Despite reporting a 16% increase in revenue for FY23, reaching Rs 6,643.9 crore, compared to Rs 5,728.8 crore the previous year, the company also saw its losses rise by 30% to Rs 5,211.7 crore in the financial year ending March 2023.
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