PharmEasy Achieves INR 6,600 Cr Scale in FY23; 16% Reduction in Losses
Three points you will get to know in this article:
- API Holdings saw financial recovery in FY23, PharmEasy with 16% revenue growth.
- Diverse revenue sources and cost-cutting measures led to improved performance.
- Despite losses, PharmEasy reduced cash burn, improving EBITDA margin.
In the financial year of 2022, API Holdings, the parent company overseeing the online pharmaceutical service PharmEasy, faced significant financial setbacks. However, in the subsequent fiscal year of 2023, the Mumbai-based company successfully enhanced its financial performance. Despite this improvement, API Holdings had to make compromises on the rapid expansion it experienced, exceeding twofold in scale during the preceding fiscal year.
Notably, PharmEasy achieved a 16% growth in revenue from operations, reaching Rs 6,644 crore by the end of March 2023, in contrast to Rs 5,729 crore in FY22, as indicated by the data extracted from its annual financial statements available on the company’s website. It’s worth mentioning that PharmEasy’s gross merchandise value (GMV) for the fiscal year 2023 amounted to Rs 14,351 crore.
This transformative journey underscores the company’s commitment to financial resilience, though it did require strategic adjustments that impacted its remarkable growth trajectory.
Revenue Channels and Core Business Focus
API Holdings operates across various sectors, with a primary focus on the dynamic realms of pharmaceuticals and cosmetic products. The heartbeat of operations lies in the vibrant trading of these goods, contributing significantly, about 90%, to the company’s revenue. Beyond this core, our diverse revenue channels encompass diagnostic services, the licensing of internet portals and mobile applications related to the vibrant world of pharmaceuticals and cosmetics, teleconsulting, and the sale and subscription of cutting-edge software services, among other ventures.
Moreover, API Holdings extends its revenue tapestry through an array of services, such as leasing sought-after software and hardware, efficient warehousing solutions, and earning commissions by seamlessly facilitating pathological diagnostic tests, fostering a crucial link between discerning customers and top-notch laboratories.
Key Customers and Their Contribution to Revenue
According to the financial report, Rs 775 crore of the total revenue in FY23 is attributed to four customers who contributed more than 10% to the overall income. PharmEasy additionally generated Rs 55.8 crore through interest earnings on current investments, deposits, and other non-operational sources, elevating the total income to Rs 6699.8 crore in FY23.The expenditure related to stock procurement accounted for 63.9% of the total expenses. This cost experienced a 12% surge, reaching Rs 5,731 crore in FY23 from Rs 5,113 crore in FY22. Meanwhile, employee benefits expenses saw a 12% reduction, shrinking to Rs 1,283 crore in FY23 from Rs 1,459 crore in FY22. Notably, this expense encompasses Rs 623.75 crore designated for employee share-based payments in FY23.Implementing strategic cost-cutting measures, PharmEasy successfully reduced its losses by 16.2%, amounting to Rs 2,289.8 crore in the latest fiscal year, compared to Rs 2,731.7 crore in FY22. It’s noteworthy that the company accounted for exceptional items, including impairment of goodwill and investments, totaling Rs 2,922 crore in FY23 and Rs 1,261 crore in FY22. When factoring in these exceptional items, PharmEasy’s losses surged to Rs 5,211.7 crore during the last fiscal year.
Cash Management and Reduction in Cash Outflows
Furthermore, the company’s cumulative losses reached Rs 10,825 crore by the conclusion of FY23. PharmEasy effectively managed to curtail cash burn, leading to a notable 71.3% reduction in cash outflows from operations, which amounted to Rs 744 crore in FY23.The company demonstrated improved EBITDA margin and ROCE, standing at -20.38% and -27.12%, respectively. This positive shift can be attributed to the prudent management of cash burn during FY23. On a unit level, PharmEasy expended Rs 1.35 to generate a rupee of operating revenue in FY23.
In the fiscal year 2023, API Holdings, overseeing PharmEasy, witnessed improved financial performance despite foregoing rapid expansion. PharmEasy achieved 16% revenue growth, reaching Rs 6,644 crore, with a GMV of Rs 14,351 crore. API Holdings’ diverse revenue streams from pharmaceuticals, cosmetics, diagnostics, software services, and more, contributed significantly to its total income of Rs 6699.8 crore. With strategic cost-cutting measures, PharmEasy reduced losses by 16.2% to Rs 2,289.8 crore. Despite exceptional items totaling Rs 2,922 crore, the company efficiently curtailed cash burn, reflected in improved EBITDA margin and ROCE.
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