Mental health platform LISSUN has raised $1.3 Mn in a seed funding round led by Inflection Point Ventures (IPV) & Rainmatter Capital. The round also saw participation from existing investors including IvyCap Ventures, WFC, GrowX Ventures and angel investors. 

Founded in 2021 by Krishna Veer Singh and Tarun Gupta, the Gurugram-based startup aims to address contemporary mental health issues by offering expert guidance, therapies, and comprehensive solutions for emotional and mental well-being.

LISSUN provides a full spectrum of mental health care, utilising technology for self-diagnosis and offering holistic treatments for patients. Commenting on the funding, cofounder Singh stated, “This investment validates LISSUN’s innovative approach to scalable solutions in the mental health sector.”

Singh further noted that the fresh capital will accelerate LISSUN’s journey toward fulfilling its vision of large-scale mental health solutions, ensuring accessibility for all in need. 

The funding will be used to enhance technological innovation, improve product offerings, introduce new services, and forge partnerships with healthcare institutions and other organisations.

The latest investment brings LISSUN’s total funding to $2.3 Mn. Currently, the startup has reach in over 40 cities in India and has recently launched a child healthcare program called ‘Sunshine by LISSUN.’

The startup aims to leverage the Business to Healthcare to Consumer (B2H2C) strategy, partnering with healthcare institutions to effectively address high-stress medical conditions including infertility, rehabilitation, nephrology, and oncology.

A study by UnivDatos Market Insights predicts that the Indian mental healthcare industry will grow at a CAGR of 15% from 2022 to 2028. Although the industry is still in its nascent stage, with societal taboos impacting its growth, more people are beginning to seek help.

Last month, actor and investor Suniel Shetty joined Manun Thakur, the founder and CEO of Veda Rehabilitation & Wellness, to launch a mental health app, Lets Get Happi, that will offer  24×7 access to real-time therapy. 

Last year, another mental healthcare startup Wysa bagged $20 Mn in its Series B funding round to venture into the markets of the US, UK, and other international markets, and further offer its services in vernacular languages.

The post LISSUN Bags Funding To Offer Full-Stack Emotional & Mental Health Solutions appeared first on Inc42 Media.

Bengaluru-based healthtech startup MediBuddy has raised an additional funding of $18 Mn from its existing investors Quadria Capital, Lightrock, and TEAMFund for expansion through strategic acquisitions.

The latest round comes more than a year after the startup raised $125 Mn in its Series C round in February last year. 

MediBuddy said the latest funding puts it in a “solid position” to navigate the current landscape and achieve its ambitious growth targets over the next three years.

A “formidable portion” of these funds will be channelled into strategic acquisitions and fortifying existing offerings, enabling exponential growth, the startup said in a statement.

“MediBuddy’s growth trajectory has consistently achieved a Compound Annual Growth Rate (CAGR) of 95.5% over the past three years. The additional funds will be critical in driving our strategic acquisition initiatives, further expanding our reach, and enhancing the depth and breadth of our services,” said Satish Kannan, cofounder and CEO of MediBuddy.

In February this year, the startup acquired vHealth by Aetna, the Indian business of US-based Aetna Inc, to expand its geographical footprint.

Prior to that, in July last year, MediBuddy acquired rural India-focused online consultation platform Clinix.

In its statement today, the startup said that both strategic acquisitions have further amplified its presence in the healthcare domain.

However, amid its aggressive growth plans, MediBuddy also took the layoff route earlier this year. Inc42 exclusively reported in January that the telemedicine startup laid off around 200 employees across departments.

The startup had attributed the restructuring exercise to re-alignment with its long-term stability and growth goals.

Founded in 2015 by Kannan and Enbasekar Dinadayalane, MediBuddy offers video consultations with doctors, surgicare consultations, and allows customers to book lab tests and order medicines. It claims to have a network of over 90,000 doctors, 7,000 hospitals, 3,000 diagnostic centres, and 2,500 pharmacies covering 96% of pin-codes in India. 

MediBuddy claims to currently have a customer base of over 3 Cr Indians. The startup said its recent growth has been fuelled by its presence in both corporate and retail domains. 

While the healthtech ecosystem has been one of the worst-hit due to the ongoing funding winter, the Indian healthtech market is expected to reach a size of $25 Bn by 2025, as per a report by LoEstro Advisors.

The post MediBuddy Raises $18 Mn From Quadria, Lightrock, TEAMFund For Acquisitions appeared first on Inc42 Media.

The Delhi High Court has granted the Centre an extension of another six weeks to finalise and inform the court about its stance on draft epharmacy regulations.

The bench of Chief Justice Satish Chandra Sharma and Justice Sanjeev Narula, while hearing petitions seeking ban on sale of online drugs and against the 2018 draft rules released by the Ministry of Health and Family Welfare (MoHFW), said that the pending cases should not come in the way of the Centre taking steps against those violating the HC’s December 2018 order, news agency PTI reported.

The HC had in 2018 ordered a stay on online pharmacies selling drugs without valid licences.

Appearing for the government, Advocate Kirtiman Singh informed the court that deliberations on the draft regulations are still ongoing. 

Consequently, the court gave the Centre an additional time of another six weeks to inform it about the outcome of the consultations and deliberations and the final stand of the government.

The MoHFW in 2018 issued draft amendments to the Drugs and Cosmetics Rules, 1945 to regulate online sales of drugs. The ministry sought comments and suggestions on the rules, but the regulations have not been finalised yet. 

At the heart of the matter are two petitions. While the South Chemists and Distributors Association’s plea has challenged the ministry’s draft notification, another petition by pharmacist Zaheer Ahmed has sought contempt action against pharmacies for selling drugs online in violation of the court’s order.

Ahmed’s petition also seeks contempt action against the government for failing to ban unregulated online epharmacies. 

It must be noted that the Drugs Controller General of India (DCGI) recently conducted fresh consultations on draft regulations for epharmacies with industry stakeholders. The meeting was attended by the All India Organization of Chemists and Druggists (AIOCD), representatives from the Pharmacy Council of India, and online pharmacy platforms, including Tata 1mg, PharmEasy, Netmed, and Practo. 

The development came after the Delhi HC asked the government to take necessary actions against epharmacies. 

Earlier in February, the DCGI sent show cause notices to 20 epharmacies, including Tata 1mg, Amazon, and Flipkart, for selling and distributing drugs in contravention of provisions of the Drugs and Cosmetics Act, 1940. 

However, defending themselves, officials of the epharmacies reportedly approached the DCGI seeking an audience with the health ministry to clarify their position. 

Last year, the Centre also came out with the draft New Drugs, Medical Devices and Cosmetics Bill, 2022, which sought to bring epharmacies under its ambit. However, the health ministry is now working on a revised draft of the bill and has also sought inputs from other departments.

The post Delhi HC Grants Centre 6 More Weeks To Finalise Stance On Draft Epharmacy Rules appeared first on Inc42 Media.

PharmEasy is set to pay $100 Mn – $150 Mn of the $300 Mn debt to Goldman Sachs from the proceeds of the expected rights issue next week. 

The investment bank is also considering converting around $38 Mn – $40 Mn of the debt into equity at the $424 Mn (INR 3,500 Cr) rights issue. The rights issue will likely value PharmEasy at $500 Mn – $600 Mn, significantly below its peak valuation of $5.6 Bn.

In light of binding commitments from existing investors for the upcoming rights issue, PharmEasy is renegotiating its debt terms with Goldman, aiming for a reduced interest rate on the outstanding loan amount, ET reported, citing sources.

“The rights issue is slated to start September 4, and based on a commitment from existing investors, the cash position of the firm is looking better than six months ago. This has led to the (discussions about) restructuring debt terms and conversion to equity,” one person aware of the talks told the publication.

It is also likely that the payout to Goldman Sachs could reach $200 Mn, given that Manipal Group chairman Ranjan Pai is also interested in investing in the startup.

Pai is expected to invest up to $160 Mn (INR 1,300 Cr) in the epharmacy unicorn, contingent on the amount invested by existing shareholders such as Temasek, Prosus Ventures and CDPQ, who are likely to lead the rights issue.

PharmEasy raised the debt to settle an existing debt it secured from Kotak Mahindra Bank for financing the Thyrocare acquisition in 2021. The loan was structured as a five-year agreement with an annual interest rate of 17-18%.

Goldman Sachs had set a covenant in the loan agreement, which mandated the epharmacy unicorn to raise INR 1,000 Cr ($120 Mn) in funding within a year of raising the debt. The failure to do so triggered a breach of covenant in June this year.

PharmEasy is likely to pay back the remaining debt by March 2025.

The post PharmEasy To Restructure $300 Mn Goldman Debt, Might Convert Some Part Into Equity appeared first on Inc42 Media.

In recent years, the healthcare industry has witnessed an explosion of startups promising innovative solutions to revolutionise patient care, improve accessibility, and reduce costs. However, amid the buzz and excitement, many of these ventures failed to achieve their goals.

The reasons behind the downfall of these healthcare startups are multifaceted, but a critical analysis reveals common mistakes that can serve as valuable lessons for entrepreneurs and investors alike.

Typical Mistakes Healthcare Startups Make

While technology has the potential to transform healthcare, some startups have fallen into the trap of developing solutions solely for the sake of innovation, rather than addressing the needs of patients, providers and payers. 

Ignoring user-centric design principles and failing to conduct comprehensive market research often results in products and services that fail to gain traction or align with existing workflows, hindering adoption and scalability.

Healthcare startups also fail to comprehend the complexity of the industry and neglect establishing partnerships with established healthcare providers, regulatory bodies and medical professionals. Ignoring the valuable insights these stakeholders bring to the table often leads to a disconnect between the startup’s vision and the realities of healthcare delivery, resulting in unsustainable business models.

Further, many healthcare startups rely heavily on venture funding while innovating endlessly, without a clear path to profitability. Such startups struggle to identify and implement viable revenue models and are at a high risk of capitulating. Sustainable business models should consider factors such as reimbursement mechanisms, pricing structures and strategic partnerships to ensure long-term viability.

Healthcare is also a highly regulated industry and startups must navigate the complex legal frameworks to ensure compliance with privacy, security and data protection regulations. Neglecting these crucial aspects can lead to significant setbacks, loss of trust and even legal ramifications.

Further, ethical considerations, such as maintaining patient confidentiality, respecting consent and ensuring equitable access, must be ingrained in the startup’s core values.

Bouncing Back From Failure

The rise and fall of healthtech startups can be put down to any number of mistakes, but the lessons derived from these failures are invaluable. Entrepreneurs and investors must understand the intricacies of the healthcare industry, collaborate with established stakeholders and prioritise user needs and market research.

By doing so, they can foster a culture of innovation and build startups that truly transform healthcare, benefiting patients, providers, and the industry. The future of healthcare entrepreneurship depends on our ability to acknowledge past failures and embrace a more informed, collaborative and user-centric approach to building and scaling startups in the healthcare landscape.

The post The Rise And Fall Of Healthcare Startups: Learning From Mistakes appeared first on Inc42 Media.

Amid serious financial troubles, healthtech unicorn PharmEasy will raise INR 3,500 Cr through a rights issue next week to repay a large portion of its debt to Goldman Sachs.

The troubled healthtech startup has received a commitment of INR 2,000 Cr from Temasek Holdings, CDPQ, LGT, Abu Dhabi sovereign wealth fund ADQ, among others, Mint reported.

Moreover, PharmEasy is likely to get INR 1,200 Cr investment from Manipal Health Enterprises founder Ranjan Pai’s family office.

Once the right issue opens next week, a few small investors, such as B Capital, Everstone Capital, and JM Financial, will confirm their participation in the round.

Founded in 2015 by Dharmil Sheth, Dhaval Shah, Harsh Parekh, Siddharth Shah, and Hardik Dedhia, PharmEasy sells medicines online and also offers diagnostic tests through its multiple subsidiaries.

The startup has so far raised more than $1.5 Bn across multiple rounds.

Last month, API Holdings, the parent entity of debt-laden PharmEasy, decided to raise INR 2,000 Cr-INR 3,000 Cr via a rights issue, during an all-investor meeting. The company also approved a proposal by the Manipal Group to invest any shortfall amount if all investors do not end up participating in the rights issue.

Earlier, PharmEasy breached its loan covenant terms with Goldman Sachs within a year after raising the high-cost debt.

As per the loan terms, the startup was expected to raise an equity round of around INR 1,000 Cr ($120 Mn) but failed to do so. The company had raised the debt to pay off a previous debt that it had taken to buy Thyrocare.

Amid its many troubles, PharmEasy also faced valuation markdowns by two of its investors — Janus Henderson and Neuberger Berman, respectively. Facing financial troubles, the company also resorted to layoffs. According to the Inc42 layoff tracker, it has laid off close to 500 employees since last year.

In FY22, PharmEasy’s consolidated revenue from operations grew to INR 5,729 Cr from INR 2,235 Cr in FY21. Its losses also shot up to INR 2,731 Cr in FY22 from INR 641 Cr in FY21.

The post PharmEasy Plans To Raise INR 3,500 Cr Through Right Issue appeared first on Inc42 Media.

If there is one thing besides the investor dry powder that has fuelled the growth of the world’s third-largest startup economy, it is, without a doubt, consolidations, which have happened in the ecosystem over the last decade or so.

Embarking on their respective merger and acquisition (M&A) journeys, Indian startups have not only entered new markets but also fostered new technologies and widened their access to newer and bigger TAMs (total addressable markets). In this race to grow at a break-neck speed, bolstered by hand-holding, joint ventures, or even acquiring and merging with peers and rivals, Indian unicorns, too, seem to have aced the M&A game.

Consider this: Between 2014 and 2023, the Indian startup ecosystem witnessed 1.2K acquisitions by Indian startups. Of these, 110 unicorns led over 400-plus acquisitions, according to Inc42’s latest report on ‘Decoding India’s Unicorn Club’.

Further, of the total 110 unicorns in India, as of August 10, 2023, ecommerce unicorns have spearheaded the maximum acquisitions. In ecommerce, rollup unicorns together acquired more than 40 firms. In edtech too, BYJU’S and Unacademy acquired 30 companies – accounting for more than half of total M&As in the sector.

Cure.Fit, BYJU’S Lead The M&A Graph

Interestingly, 33% of the total acquisitions in the country’s startup space have been led by a handful of unicorns, with Cure.Fit, a fitness and health platform, at the helm.

Cure.Fit was launched in 2016, following the acquisition of two Bengaluru-based fitness studios, Cult and Tribe. Today, the unicorn has acquired a total of 28 startups.

Other prominent names leading the M&A charts are Mensa Brands with 21 acquisitions, Flipkart with 19 acquisitions, BYJU’S at 18, and Zomato and GlobalBees at 16 acquisitions each.

In terms of individual (disclosed) deal value, BYJU’S is an undisputed winner. Four of its biggest acquisitions include Aakash Educational Services Limited (at $1 Bn), Great Learning (at $600 Mn), Epic (at $500 Mn), and WhiteHat Jr (at $400 Mn).

The Saga Of Shaky Acquisitions

While acquisitions are certainly a great strategy for growth and scale, it can also create issues for a company. Overvaluation, incompatible cultures, failure to realise synergies, regulatory challenges as well as unrealistic expectations in terms of growth can put the acquirer company at risk.

For instance, BYJU’S acquisition spree has backfired by multiple degrees, and the company has been at a crossroads for the last two years. The edtech is already contemplating shutting down Whitehat Jr, while Aakash Educational Services Limited (AESL) has been cornered in a legal battle.

Similarly, Snapdeal acquired fintech startup Freecharge in 2015 for an estimated $400 Mn. However, as the talks regarding its merger with Flipkart failed to take off, the company sold the digital payment app to Axis Bank for mere $60 Mn in July 2017.

Another unicorn Unacademy, too, has experienced a series of downturns since it embarked on its acquisition journey in 2020. The Bengaluru-based company acquired more than ten startups, including Rheo TV, PrepLadder, Mastree, Spayee, CodeChef, SwifLearn, Kreatryx, and TapChief, and launched an array of products to serve the edtech space.

However, its journey is now fraught with challenges, be it exiting the K-12 segment, layoffs, or even unwinding its US operations, subjecting the company to some of the most turbulent times since its inception in 2015.

What’s Next?

With the ongoing funding winter and markets undergoing corrections, the overall M&A trend is expected to accelerate further in the Indian startup ecosystem.

With examples like Zomato turning profitable, it is anticipated that more unicorns will emerge in the black, triggered by a wave of M&A deals. Looking at the profitable ones, many other unicorns may find themselves on the acquisition route to strengthen their tech, teams, and product line or even expand their footprints into untapped geographies.

However, according to the managing partner at Orios Venture Partners, Anup Jain, most M&As will take place between Series A and C stages, where funding has slowed down, and many will choose to retain as much value as possible via the consolidation route.

He further predicts that startups operating in high-cash burn sectors such as ecommerce, edtech, content and media, healthtech, B2C lending, and fintech payments will see more M&A deals than others.

With the number of unicorns expected to cross the 280 mark in the next five years, there will be no dearth of startups taking the consolidation route. Amid this, various funds that have already started to explore secondary asset purchase opportunities at lower valuations will continue to strengthen their play. This will likely trigger investors to look for more merger and acquisition deals for their portfolio companies, thereby paving the way for more unicorns in the county.

Update – August 23, 2023: The table on biggest acquisitions has been updated with the logo for Leisure Group – a European vacation rental operator (that has been acquired by Oyo), which was earlier misrepresented with that of Leisure Hotels Group.

The post What’s Inside The M&A Treasure Trove Of Indian Unicorns appeared first on Inc42 Media.

Healthtech unicorn Pristyn Care has commenced operations in Bangladesh, setting aside INR 100 Cr for the next two years of expansion in the neighbouring country.

The startup, which specialises in surgical treatments, plans to have five patient care centres in Dhaka and Chattogram (Chittagong) by the end of FY24. Pristyn Care also aims to hire 200 employees across various departments in Bangladesh as part of the plans.

“With the country’s (Bangladesh) healthcare market expected to reach $14 Bn by the end of 2023, we are committed to the growth of healthcare in Bangladesh. Over the next two years, we’ll invest INR 100 Cr to establish a robust healthcare infrastructure,” said Pristyn Care cofounder Harsimarbir Singh.

The startup also told Inc42 that it has been running a pilot in Dhaka for the past three months, having partnered with five hospitals in the Bangladeshi capital. The startup has a team of 35 care coordinators already working out of Dhaka, coordinating surgeries and primary care.

Founded by Singh, Dr Vaibhav Kapoor, and Dr Garima Sawhney in 2018, Pristyn Care offers advanced secondary care surgeries through its network of more than 800 hospitals, over 200 clinics, and 400+ in-house super-speciality surgeons. The startup claims that it provides treatment for over 50 diseases across 42 cities, having treated 150K+ patients so far.

Pristyn Care entered the unicorn club in late 2021 after raising $96 Mn in its Series E round from Peak XV Partners (then Sequoia Capital India), Tiger Global, Winter Capital, Eriq Capital and Hummingbird Ventures at a valuation of $1.4 Bn. The Gurugram-based startup has raised a total funding of over $177 Mn to date.

Last year, Pristyn Care acquired New Delhi-based healthcare startup Lybrate for an undisclosed amount. The healthtech unicorn competes against the likes of MediBuddy, Practo and PharmEasy. 

Trouble Simmering Underneath

The startup was shrouded in controversy in March this year as it fired 300-350 employees across departments, Inc42 had exclusively reported at the time. The layoffs impacted sales, tech and product teams, according to Inc42 sources.

Inc42 further learnt that GST officials visited Pristyn Care’s office a few months ago seeking clarifications about the startup’s operations. The healthtech startup said the department had some simple questions about its business model.

While the startup has not filed its financial statement for financial year 2021-22 (FY22) with the Ministry of Corporate Affairs (MCA), it reported a loss of INR 63.5 Cr in FY21 on operating revenue of INR 96 Cr. 

The healthtech unicorn was also shaken last month as it reportedly suspended the founders of Lybrate for filing a default notice against the startup. The cofounders – Rahul Narang and Saurabh Arora – were shown the door for filing a default notice against Pristyn Care for outstanding payments emanating out of the acquisition deal.

The post Healthtech Unicorn Pristyn Care Looks East, Launches Bangladesh Ops appeared first on Inc42 Media.

In another trouble brewing for Pristyn Care, the healthtech startup has reportedly suspended the founders of Lybrate, a primary-care company it acquired last year.

Sources told Livemint that the Lybrate’s cofounders Rahul Narang and Saurabh Arora were shown the door for filing a default notice against Pristyn Care for outstanding payments emanating out of the acquisition deal. 

Reacting to the reports, a Pristyn Care spokesperson told Livemint, “Pristyn Care has and shall continue to act in accordance with the contractual terms and conditions. Pristyn Care has not defaulted on any of its contractual obligations. At this point, it would be inappropriate to comment on the matter.”

The Tiger Global-backed healthtech startup acquired Lybrate last year for an undisclosed amount in a deal that saw the two cofounders – Narang and Arora – join Pristyn Care. As per reports, the deal was pegged in the range of $20 Mn to $30 Mn, including payments to existing investors such as Nexus Venture Partners and Tiger Global Management.

The drama erupted after the acquisition was executed. As per the report, the investors were paid their respective amounts while the cofounders received only a part of the proceeds. The duo were reportedly promised the remaining payments in two separate tranches – the first one on June 1, 2023 and the second one in 2024. 

However, a majority of the payments to Lybrate’s cofounders are yet to go through. “Nearly 60-80% of the payment owed to the founders has not yet been paid,” said a person privy to the development. 

After multiple delays, the duo served a notice to Pristyn Care’s operating entity GHV Advanced Care on Tuesday (July 18). In their notice, the Lybrate cofounders reportedly alleged that Pristyn Care ‘failed to acquire the second tranche of shares in Lybrate, as agreed in the original share-purchase agreement.’

The Saga Of Troubles

The new trouble has erupted at a time when Pristyn Care has bogged down by multiple challenges. Amid a full blown funding winter, the startup, in March this year, laid off 300-350 employees, while it claimed, on record, that it only fired 45 employees for performance-related issues.

Not just this, GST officials also visited the premises of Pristyn Care last year seeking clarifications about the startup’s operations. The healthtech platform has also been bogged down by heavy losses which stood at INR 64 Cr in the fiscal year 2020-21 (FY21) against a revenue of INR 64 Cr during the same period. 

The company is also yet to file its FY22 financials. With payments due and funding scarce across the ecosystem, it now seems that the acquisition deal has also waded into choppy waters. 

Founded in 2018 by Harsimarbir Singh, Vaibhav Kapoor, and Garima Sawhney,  Pristyn Care offers advanced secondary care surgeries through its chain of more than 800 hospitals, clinics, and in-house super-specialty surgeons. It claims to offer treatment for more than 50 diseases across 42 cities. 

Backed by marquee names such as Peak XV Partners (formerly Sequoia Capital India), Tiger Global, Winter Capital and Eriq Capital, Pristyn Care entered the unicorn club in 2021 after raising a mammoth $96 Mn as part of its Series E round at a valuation of $1.4 Bn.The Gurugram-based startup has raised a funding of more than $177 Mn since its inception.

Pristyn Care competes against the likes of MediBuddy, Practo, and PharmEasy across multiple offerings.

The development comes close on the heels of Inc42 reporting a similar story which elaborated how participants of the show Shark Tank India were facing deliberate delays in investments from sharks under various pretexts. 

The post Pristyn Care Suspends Lybrate Cofounders For Filing Default Notice Against The Healthtech Unicorn appeared first on Inc42 Media.

API Holdings, the parent entity of debt-laden PharmEasy, reportedly decided to raise INR 2,000 Cr-INR 3,000 Cr via a rights issue, during an all-investor meeting held on Monday (July 17), to repay the loan it took from Goldman Sachs.

The company has also approved a proposal by the Manipal Group to invest any shortfall amount if all investors do not end up participating in the rights issue, CNBC TV18 reported citing sources.

Earlier this month, a report said that PharmEasy informed its board and investors about its plans to raise around INR 2,400 Cr through a rights issue, at a 90% discount, as the startup is in immediate need of money to pay off INR 2,280 Cr ($285 Mn) Term B loan, for which it had pledged shares of its subsidiary Thyrocare as collateral.

As per the latest report, Manipal Group’s family office has offered to invest up to INR 1,300 Cr in the epharmacy startup. 

A section of investors at PharmEasy had reservations on the sale of shares to the Manipal Group at low valuations. As a solution, the board came to a consensus decision to give the first chance to its existing shareholders to invest on a pro-rata basis, the report said. 

API Holdings’ board has reportedly approved Manipal Group’s binding offer but only to the tune of non-participation by the company’s existing shareholders. 

PharmEasy is also backed by the likes of Prosus Ventures, TPG, and Temasek.

The post-money valuation of PharmEasy, after this investment, is expected to be to the tune of INR 6,000 Cr-INR 7,000 Cr (about $730 Mn-$850 Mn), a major drop from a valuation of $2.8 Bn during its previous fund raise. 

Earlier, PharmEasy breached its loan covenant terms with Goldman Sachs, within a year after raising the high-cost debt.

As per the loan terms, the startup was expected to raise an equity round of around INR 1,000 Cr ($120 Mn) but failed to do so. The company had raised the debt to pay off a previous debt that it had taken to buy Thyrocare.

Amid a severe market downturn, PharmEasy also failed to launch its INR 6,250 Cr IPO, for which it had filed its DRHP in November 2021.

The post Debt-Laden PharmEasy To Raise INR 2,000 Cr-INR 3,000 Cr Via Right Issue appeared first on Inc42 Media.

Healthtech startup Fold Health has raised $6 Mn funding in a round led by Iron Pillar. The round also saw participation from Iora Health’s Dr. Rushika Fernandopulle, National Quality Forum’s Dr. Christine Cassel, Aetna’s Dr. Molly Coye, Cigna’s Sridhar Krishnan, and Perot Jain’s Anurag Jain.

Founded in 2021 by Abhijeet Gupta and Ram Sahasranam, Fold Health allows medical workers to integrate electronic health records and use software tools to automate tasks.

Fold Health aims to use the freshly raised funds for scaling business and hiring talent.

An Economic Times report quoted founder Gupta saying, “We have got nine customers with about 15,000 lives among them. This year, we should be at 10X or more of that in the next 12 months.”

Further commenting on the expertise of the founders, Mohanjit Jolly, partner at Iron Pillar, said, “Their domain expertise, combined with a massive US healthcare market ready for disruption, a unique built-from-scratch VBC technology stack, and strong endorsement by their early customers and prospects got the Iron Pillar team excited about backing Fold.”

The San Francisco-based startup has recently opened its research and development office in Pune which employs 40 people and is aiming to rapidly expand its employee count in the US office which employs nine employees currently. 

The new fund takes the overall capital raised by the startup to $12 Mn, as it raised $6 Mn earlier. 

Healthtech and its services have been redefined since the pandemic and the impact seemingly continues to prevail. 

Recently, healthtech startup HealthifyMe raised $30 Mn in its pre-Series D funding round to strengthen its AI capabilities, hiring, and global expansion. 

Earlier in March this year, SaaS healthtech startup HealthPlix raised $22 Mn in its Series C funding round to grow its doctor base and invest more in sales, product and engineering teams.

The post Fold Health Bags $6 Mn Investment To Help Professionals Integrate Electronic Health Records appeared first on Inc42 Media.

Caught in the middle of multiple financial troubles, epharmacy giant PharmEasy has set in motion the process to raise additional capital from investors. 

The board of API Holdings, the startup’s parent company, has reportedly approved a resolution to increase the company’s authorised share capital. A share capital increase is undertaken when a company wants to raise funds from new investors. 

The proposal is now pending before PharmEasy’s equity investors who will now vote on the proposal. The voting, which starts on July 8, will conclude on August 5.

As per The Economic Times, the company plans to increase its authorised share capital to INR 3,500 Cr (nearly $423 Mn). This will be divided into 3,000 Cr equity shares of INR 1 each and 500 Cr preference shares of INR 1 each. 

This comes close on the heels of the reports that the healthtech startup PharmEasy was looking to raise nearly INR 2,400 Cr through a rights issue at a 90% discount. The issue was reportedly initiated to repay the debt it took from Goldman Sachs after PharmEasy breached its loan covenants. 

Led by existing investors TPG and Temasek, the rights issue of API Holding is expected to be undertaken at a price of INR 5 per share. In contrast, the startup last raised capital at INR 50 apiece back in 2021. The new rights issue will peg the startup at $500-600 Mn, down from a record high of $5.6 Bn two years ago.

If the deal goes through, PharmEasy could very well become one of the first new-age tech companies to undergo a down round, emblematic of the valuation correction that has been the norm lately.

Founded in 2015 by Dharmil Sheth, Dhaval Shah, Harsh Parekh, Siddharth Shah, and Hardik Dedhia, PharmEasy sells medicines online and also offers diagnostic tests through its multiple subsidiaries. 

The startup has so far raised more than $1.5 Bn across multiple rounds. 

However, the startup has been mired in multiple troubles in the recent past, including ballooning losses, a debt crisis, shelved IPO plans and a funding drought. The company reported losses to the tune of INR 2,731 Cr in FY22, up from INR 641 Cr in FY21.

However, the trouble started when it breached the loan covenant terms of its Term Loan B (TLB) agreement with Goldman Sachs after it failed to raise an equity round of around INR 1,000 Cr despite trying for a year. The startup is especially concerned about wrapping up the debt as it has pledged the shares of its cash cow Thyrocare as collateral for the loan.

It has also faced valuation cuts in the books of many of its investors such as Janus Henderson and Neuberger Berman. Making matters worse have been reports that PharmEasy could be forced to compensate the founder of Thyrocare, Arokiaswamy Velumani, who had secured anti-dilution rights way back in 2021. 

With much at stake, it remains to be seen what next course of action the startup undertakes. As of now, the company is at crossroads as the future seems uncertain and full of challenges. 

The post PharmEasy Board Okays Plan To Raise Additional Capital, Ball In Investors’ Court appeared first on Inc42 Media.

Amid serious financial troubles, healthtech startup PharmEasy has reportedly informed its board and investors that it is planning to raise around INR 2,400 Cr through a rights issue at a 90% discount to repay the loan it took from Goldman Sachs.

As per a report by the Economic Times, PharmEasy’s existing shareholders TPG and Temasek are leading the rights issue. Besides, Ranjan Pai, chairman of the Manipal Group, is also expected to join the company board. 

The publication said PharmEasy parent’s API Holdings would issue new stock at INR 5 per share in its rights issue. This is in sharp contrast to the time when API Holdings raised funds at INR 50 per share value.

PharmEasy was not immediately available to respond to Inc42’s query on the matter.

Founded in 2015 by Dharmil Sheth, Dhaval Shah, Harsh Parekh, Siddharth Shah, and Hardik Dedhia, PharmEasy operates in the overarching healthtech domain, offering services from medicine deliveries to sample collections for diagnostic tests. PharmEasy’s parent company API Holdings has rapidly expanded on the back of venture capital and debt over the years and raised over $1.5 Bn, as per Inc42 data.

The Mumbai-based startup was last valued at $5.6 Bn in 2021.

As per the publication’s report, the rights issue will likely take place at a valuation of around $500 Mn-$600 Mn. A person in the know of the matter also said that PharmEasy’s previous valuation would be around $4.6 Bn, adjusted for the dollar-rupee rate.

Meanwhile, as per a report by Moneycontrol, API Holdings is under a lot of pressure to repay the Goldman Sachs loan as it had pledged shares of its subsidiary Thyrocare as collateral for the loan.

It must be noted that as per a recent report, PharmEasy breached its loan covenant terms in its INR 2,280 Cr ($285 Mn) Term B loan agreement with Goldman Sachs, within a year after raising the high-cost debt.

As per the loan terms, the epharmacy startup was supposed to raise an equity round of around INR 1,000 Cr ($120 Mn) but failed to do so despite trying for a year. The company had raised the debt to pay off a previous debt that it had taken from Kotak Mahindra Bank to buy Thyrocare.

“After the covenant breach, the board and shareholders wanted the loan to be repaid to Goldman Sachs. Also, the price of the share had to be readjusted as it was freely available for INR 20 in the grey market,” a person was quoted as saying by the Economic Times. Reportedly, he also said that PharmEasy had to choose between an outright distress sale or opt for a rights issue, which would also help current investors increase their stake in the company and bring down their cost of purchase.

Meanwhile, PharmEasy’s investors and the board have in-principle agreed to issue new employee stock options to the founders and the other employees in order to compensate for the massive value erosion.

PharmEasy cofounder and CEO Siddharth Shah will reportedly address the company’s staff on Wednesday (July 5) to explain the matter.

PharmEasy In Troubled Waters

From increasing debt to widening losses and delayed IPO, PharmEasy has been on a roller coaster ride over the last few years.

In FY22, PharmEasy’s consolidated loss widened to INR 2,731 Cr from INR 641 Cr in FY21, while its operating revenue grew to INR 5,729 Cr from INR 2,235 Cr in the previous fiscal. Meanwhile, the startup kept acquiring more companies that year and continued spending heavily towards employee benefits.

As troubles grew amid a severe funding crunch, PharmEasy laid off several employees in December 2022.

Meanwhile, the startup’s INR 6,250 Cr IPO plan also went haywire. PharmEasy filed its DRHP in November 2021 and received approval from SEBi in February 2022. However, it kept on delaying its IPO amid the downturn in the global market. 

Recently, a few of its investors also slashed the startup’s valuation. While Janus Henderson cut its valuation to about $2.8 Bn, Neuberger Berman trimmed the valuation of API Holdings to $4.4 Bn in March this year from $5.6 Bn earlier.

The post Debt-Laden PharmEasy To Raise INR 2,400 Cr Through Right Issue At A 90% Discount appeared first on Inc42 Media.

Update: After Inc42’s in-depth look at the problems at PharmEasy, reports emerged about the company raising INR 2,500 Cr from existing investors in a rights issue. The healthtech unicorn is said to be raising these funds at a 90% valuation cut.

Click here to see how PharmEasy is trying to free itself from its pile of debt.

Our original story follows

From high hopes of an INR 6,250 Cr IPO to its current beleaguered state — the fortunes of healthtech unicorn PharmEasy have swung wildly in less than a year.

Before we delve deeper, here’s a quick snapshot of what is ailing the company:

• A serious lapse in franchise operations that has left franchisees exasperated
• Mismanagement of the profitable Thyrocare business after acquisition
• A fast-brewing financial crisis around its own $300 Mn Term B Loan (BYJU’S is not alone)
• Layoffs and departures of key personnel, with the tech team reduced to 100 employees from around 500 last year
• Employees allege lapses in the leadership despite five cofounders leading the various verticals for PharmEasy

The franchise model challenges have also spilled over to social media, where several individuals have blamed PharmEasy for charging them high fees and not providing adequate support.

Sources close to the company, pharma sector experts and former employees claim these issues have been bubbling for a few months and now things have come to a boil for the Mumbai-based healthtech unicorn.

Inc42 has learnt that the company has reduced its workforce by over 500 employees through resignations or layoffs since last year. Inc42 has reported on some of these layoffs over the past year, including an exclusive on the situation at PharmEasy subsidiary Docon Technologies.

Former employees, some of whom have recently quit the company, allege that despite having five cofounders, PharmEasy has serious leadership gaps, adding to the chaos.

PharmEasy did not respond to requests for comments and responses to the allegations of mismanagement or the lack of a financial safety net.

PharmEasy’s Pandemic Swing

Any story about PharmEasy inevitably speaks about how the company was founded by five friends who grew up in pretty much the same neighbourhood in Mumbai.

Dharmil Sheth, Dhaval Shah, Harsh Parekh, Siddharth Shah, and Hardik Dedhia teamed up to take the pharma ecommerce plunge with PharmEasy in 2015. Since then, the parent company, API Holdings, has rapidly expanded on the back of venture capital and debt, raising more than $1.5 Bn, as per Inc42 data.

Today, the company has as many as 36 subsidiaries that operate the B2C epharmacy ops, B2B pharma supply, franchise stores, SaaS for pharmacy management, pathological testing and ancillary telemedicine services.

While other healthtech companies have stuck to one or two of these models as a core business, PharmEasy bullishly went after the entire stack. To get there, it went on an acquisition spree, spending more than $865 Mn in the process.

But acquisition does not equal success, and as we can see, Thyrocare’s profits have fallen to FY2019 levels after PharmEasy acquired the company in mid-2021.

In FY23, Thyrocare saw a major drop in revenue to INR 491 Cr from INR 568 Cr in FY22. Its profits plummeted in June 2021 (FY22). The deal coincided with the end of the second wave of Covid in India when testing numbers had peaked.

The diagnostics company reported profits of INR 34 Cr in the first six months of FY23, as opposed to INR 109 Cr in H1 FY22, just after the PharmEasy deal. A portion of these profits is also being used to pay the interest on the debt that PharmEasy had taken to buy the company.

Plus, PharmEasy’s parent API Holdings is deep in the red. In FY22, PharmEasy’s consolidated revenue from operations grew to INR 5,729 Cr from INR 2,235 Cr in FY21. Its losses also shot up to INR 2,731 Cr in FY22 from INR 641 Cr in FY21.

The higher losses were a result of PharmEasy’s acquisitions in the year and its rampant marketing and salary spend. Employee benefit costs surged to INR 1,459 Cr from INR 270 Cr in FY21, while advertising and promotional activities accounted for INR 494 Cr, up from INR 134 Cr. Total expenses shot up to INR 8,492 Cr in FY22, nearly 3X higher than INR 2,981 Cr in FY21.

Without its FY23 numbers, we can’t say with any certainty that PharmEasy has managed to cut back the heavy spending. One way the company has looked to push revenue is through the franchise model for both PharmEasy-branded pharmacies as well as Thyrocare’s diagnostics biz, but these are fraught with major issues.

But the fact is that the company is faced with stiff competition in the epharmacy and diagnostics space, and employees allege that it continues to spend considerably on marketing and customer acquisition.

The shaky financial situation has created a host of problems for Thyrocare, which otherwise has a stellar reputation in the market. With Thyrocare’s profits also down, PharmEasy will have a tough time showing why investors should invest at a higher valuation.

Now that PharmEasy’s IPO ambitions have been put on hold, the company is still chasing a new funding round as it looks to get out of the debt hole.

Franchise Models Plagued By Issues

The franchise operations, like any other franchise model, hinge on PharmEasy attracting store owners and existing unorganised players in the diagnostics and pharmacy space. While theoretically it is a cost-effective way to expand and scale up, there are plenty of problems that have dogged this vertical.

Franchise owners are unhappy with the commission terms being changed mid-way through FY23 and then again earlier this year (in the ongoing FY24). This has left franchises with very thin margins. Further, on the pharmacy franchise side, store owners bemoan the lack of support from the company in handling operations.

Let’s dive into these issues separately:

Thyrocare Feels The Heat From Rivals 

“The franchise model is not unusual in the diagnostics business. Every major player wants a deeper presence in the major cities, but the likes of SRL and Lal Pathlabs offered better commissions for each walk-in or lead,” a former PharmEasy employee, who was working on the B2B and franchisee tech products, told Inc42.

Like any other franchise model, PharmEasy charged fees from pharmacists, store owners and merchants to open up new locations under the Thyrocare umbrella. In the initial days, the company took 10% as commission from a franchise store for each transaction until a certain fee ceiling was hit. For example, if the ceiling is INR 2 Lakh, PharmEasy would not charge any commission beyond this point.

This proposition appealed to several store owners. But the growing competition meant that PharmEasy could not afford to leave any revenue on the table when it came to the franchise model. In the diagnostics business, Thyrocare competes with the likes of Redcliffe, SRL, Abbott, Metropolis and many others. Almost all of these have heavy discounts for basic tests, which PharmEasy has to match to keep up pace, said one Thyrocare franchise owner based in Kalyan, near Mumbai.

Lately, PharmEasy has changed this structure, the franchise owner added. The company now charges a direct commission from each franchise for every test instead of the earlier model of charging commissions until a specific ceiling was hit. Moreover, franchises have to pay a small fee for each consumable (such as vials or collection kits) used in the collection process.

“If a test costs INR 150 for the patient, we are now being paid INR 60 instead of INR 80 earlier,” the franchise owner mentioned above told Inc42.

He also said that even though his Thyrocare outlet gets a lot of walk-ins, he is not empowered to offer the same discounts as the PharmEasy app where users can get offers such as buy-one-get-one offer for some tests. Customers who want to avail this offer cannot get it at a franchise location and have to use PharmEasy’s app with Thyrocare’s direct sample collection service, which bypasses franchises.

It’s no wonder that franchise owners claim the company is shortchanging them on commissions as well as potential new business.

Franchise owners also have to face the customer’s ire when it comes to delays from the PharmEasy/Thyrocare testing labs. Many franchise owners have taken to Twitter and other social media platforms to talk about the lack of support on the operations front from PharmEasy.

Besides diagnostics, the company also has a franchise arrangement for pharmacies under the PharmEasy brand. In this case, many store owners have complained that employees assigned as support personnel for franchisees have been withdrawn by the company in recent weeks.

Staff Crunch Hurts PharmEasy Franchise Ops 

One such franchise store owner claims there is a group of 400-500 PharmEasy franchises that is dissatisfied with the company for charging up to INR 4 Lakh up front but not providing the support that is expected in the early days.

“Within 15 days, PharmEasy withdrew many of the people it had assigned to help us manage operations. They said they would handle marketing and digital enablement, but most of the time we cannot get hold of anyone in the company,” the PharmEasy franchise store owner mentioned above said.

As per the terms of the agreement, PharmEasy says it would provide fulfilment, marketing and digital enablement for franchise pharmacies, but franchise owners say that the company has reneged on these services.

The retail franchise model has become the go-to-market strategy for all leading pharma chains. Apollo, MedPlus, Wellness Forever and others have expanded rapidly on the back of franchise models even during the peak Covid times. And now, franchises are trapped in PharmEasy’s terms and conditions since they have already paid a cost up front.

Medical stores and diagnostics centres are typically clustered around major hospitals. This means moving to a rival franchise is also not always possible since there is very little possibility of multiple outlets of the same brand in one area.

The lack of hands-on support for franchises, employees allege, is directly related to layoffs and resignations at PharmEasy.

In many ways, PharmEasy’s debt situation has forced it into a corner. The company has to chase revenue through every avenue and cut costs significantly to raise its next round and free itself from the chain of debt, which began with the Thyrocare acquisition in 2021.

PharmEasy’s Tech Platform On Life Support

The tech platform, which was seen as a competitive moat for PharmEasy when it came to the Thyrocare acquisition, is also fast eroding due to layoffs and exits of key tech leaders, sources said.

Sources and former employees told Inc42 that there are hardly any employees left in the tech team to build new products, and most products are in maintenance mode.

For one, the technology or product that helps read prescriptions does not always work. This means PharmEasy is processing orders for prescriptions it has no idea about. “You can add any prescription and it will usually be accepted. In case of rejection, a doctor will call and prescribe medicines.”

Speaking to Inc42, one retailer in South Delhi alleged that medicines are often prescribed on the phone by PharmEasy agents without any diagnosis, and at times, these tele-doctors also upsell products.

This Twitter thread by the well-regarded TheLiverDoc highlights how telecallers look to tack on herbal medicines to other orders; these herbal medicines are not always safe for general consumption.

Indeed, retailer associations have complained about the lack of due diligence and compliance by epharmacies, including improper storage of medicines and selling medicines without prescriptions.

Employees allege that the company is no longer able to compete with other epharmacies through discounting due to a funding crunch.

“Even though whatever we sell has high margins, the volumes are down. We are currently doing 50K orders per day from an average of 80K in FY22; orders mostly coming from metros,” one former employee claimed.

Employees also allege that despite the exits of key personnel and the restructuring of the managerial layer, PharmEasy’s founders are typically missing from day-to-day operations and only address town halls once every quarter.

PharmEasy On The Funding Trail

It doesn’t help PharmEasy that a significant portion of its monthly expenses go towards debt repayments. As per reports, PharmEasy has a monthly repayment outlay of INR 15 Cr, and its monthly cashburn is also around INR 15 Cr.

The company also claimed that it reached a positive EBITDA for the first time in April this year, with a net revenue of INR 600 Cr. These numbers could not be corroborated in any regulatory filings.

PharmEasy reached a valuation of $5.6 Bn with its last funding round of nearly $350 Mn in October 2021, which saw investments from Amansa Capital, ApaH Capital, Janus Henderson and others. Cut to June 2023 and Janus Henderson’s regulatory filings showed a markdown of its PharmEasy investment with a valuation of $2.7 Bn.

Plus, the online pharmacy has reportedly breached a loan covenant in its INR 2,280 Cr ($285 Mn) Term B loan agreement with Goldman Sachs in August 2022.

As per the loan covenant, PharmEasy had to raise an equity round of around INR 1,000 Cr ($120 Mn) to fund its monthly burn. However, it has failed to do so, and today, the company continues to repay the loan at an interest rate of up to 18% per annum.

PharmEasy raised INR 750 Cr through convertible notes in October last year from existing investors and also raised a debt round from Temasek’s EvolutionX, but a majority of this has gone in debt repayments.

The company was reported to be in the process of raising further equity funding to push for scale and growth on both epharmacy and diagnostics front. However, so far, there’s no official indication that PharmEasy has improved its financial position enough to attract investors.

Earlier this year, PharmEasy is said to have appointed Avendus Capital as advisors for fundraising, but there’s no certainty of the company actually raising any funds given its current situation. Avendus did not respond to a comment on the funding talks.

Given the global macroeconomic slowdown, investors are primarily looking to back companies that have made some meaningful progress in terms of sustainability.

PharmEasy hoped to pay off INR 2,000 Cr of its debt from the proposed IPO proceeds of INR 6,250 Cr. Having postponed its IPO plans to 2025, the epharmacy unicorn is looking to raise equity capital, but the healthtech and epharmacy landscape has changed drastically.

Two More Complications: Regulations & Competition

For PharmEasy, operational and executional challenges are compounded by the regulatory pressure on the epharmacy segment as well as growing competition. In April this year, it was reported that the government sought a report from epharmacies to understand what consumer benefits they were providing beyond discounts.

The lack of direct regulations pertaining to epharmacies in India has exposed startups such as PharmEasy to legal challenges from retailer associations and other bodies.

Delhi-based South Chemists and Distributors Association (SCDA) is one of the bodies that had moved the courts against epharmacies. SCDA’s legal and media head Yash Aggarwal believes authorities need to temporarily shut down epharmacy platforms until a full-fledged legislation is drafted.

“When things are against the law, especially with regard to the health of the public, follow court’s directions and shut these platforms till norms are promulgated in the matter,” SCDA’s Aggarwal told Inc42.

Indeed, many epharmacy platforms were pulled up by the Drugs Controller General of India (DCGI) in February for allegedly violating rules under the Drugs and Cosmetics Act, 1940.

The situation is particularly precarious given the high competition in epharmacies with players such as PharmEasy, Tata 1Mg, Flipkart Health+, Amazon, NetMeds and others. The entry of horizontal ecommerce marketplaces such as Jio, Tata, Flipkart and Amazon has certainly catalysed the regulatory crackdown on epharmacies.

Former employees managing PharmEasy’s online business told Inc42 that no player can afford to ignore the threat from Amazon, Flipkart, Tata (1Mg) and Reliance (NetMeds). The vertical integration and specialisation that epharmacies have built over the years can easily be nullified by the scale of these large players.

The likes of Reliance, Tata and Flipkart have taken the ‘super app’ route to compete with pure-play epharmacies such as PharmEasy. Reliance Retail-owned NetMeds has also entered the retail pharmacy space with physical stores in Chennai. Reliance Retail claims it will open 2,000 such stores in a year.

PharmEasy might have grabbed the healthcare industry’s eyeballs with its Thyrocare acquisition and rapidly building its telemedicine stack, but it’s looking more and more like the unicorn needs a bigger dose of funding to continue on this trajectory. Will the cost-cutting and changes in its franchise model be enough to bring in long-term sustainability and convince gun-shy investors amid this funding winter?

The post Is PharmEasy’s Debt-Laden Bubble About To Burst? appeared first on Inc42 Media.

Online pharmacy unicorn PharmEasy has reportedly appointed Avendus Capital to raise equity funding. The move comes as its existing investors plan to infuse fresh capital to shore up the company.

Prosus Ventures, Temasek Holdings, CDPQ and TPG are looking to invest up to INR 250 Cr into PharmEasy, Mint reported citing sources. Avendus might also look for external investors for fundraising.

PharmEasy is looking to raise up to $100 Mn (INR 824.64 Cr) in the current round. The company raised capital internally as well. In October 2022, PharmEasy initiated a rights issue to potentially raise INR 750 Cr from its existing investors, calling off its IPO plans in FY23 citing adverse market conditions.

Avendus was also the advisor for the epharmacy major’s September 2018 Series C funding round worth $50 Mn.

The funding comes when PharmEasy needs to raise funding to meet a key covenant in the loan extended to the unicorn by the US-based lender Goldman Sachs. Earlier this month, media reports suggested that PharmEasy had to raise up to INR 1,000 Cr ($120 Mn) in equity as part of its March 2022 loan agreement with Goldman Sachs.

PharmEasy has reported operational EBITDA profitability, excluding ESOP costs. This allowed the online pharmacy major to negotiate a smaller equity raise than the INR 1,000 Cr with the lender. The unicorn is said to raise INR 250 Cr to meet the loan covenant, with the rest to meet working capital requirements.

PharmEasy reportedly borrowed INR 2,280 Cr ($285 Mn), from Goldman Sachs in August 2022 to pay off an earlier debt it had incurred from Kotak Mahindra Bank to buy Thyrocare. The loan was said to be a five-year arrangement, attracting an annual interest rate of 17-18%.

There is interest to acquire PharmEasy’s subsidiary Thyrocare. However, the founders are resisting that the business has become a strategic asset for the unicorn.

In June 2021, PharmEasy’s parent API Holdings acquired a 66% stake in Thyrocare for INR 4,546 Cr, the key reason the epharmacy raised debt from Kotak Mahindra Bank and then Goldman Sachs.

During the year ended March 31, 2022, PharmEasy’s revenue from operations grew to INR 5,729 Cr from INR 2,235 Cr in FY21. Its losses were at INR 2,731 Cr in FY22 against INR 641 Cr in FY21.

The online pharmacy unicorn’s investors Neuberger Berman and Janus Hendersen marked down its valuation to $2.8 Bn earlier this month, amid an ongoing valuation markdown season for Indian unicorns.

The post PharmEasy Appoints Avendus Capital For Next Funding Round appeared first on Inc42 Media.

Bengaluru-based fitness startup HealthifyMe has raised $30 Mn in its pre-Series D funding round led by LeapFrog Investments and Khosla Ventures. The round also saw participation from new investors FinnFund, a Finnish development financier, and Van Lanschot Kempen, a Dutch investment firm.

In a statement, the startup said that existing investors Unilever Ventures, Chiratae Ventures, Blume Ventures and HealthQuad were also part of the funding round.

HealthifyMe said it will use the fresh capital for strengthening its AI capabilities, hiring, and for global expansion. 

The new capital will also help the startup upgrade its AI-powered virtual nutritionist, Ria. 

HealthifyMe said it currently has a user base of over 35 Mn and claimed that it would achieve an annual recurring revenue (ARR) of $50 Mn in the coming months.

It must be noted that HealthifyMe’s net loss widened over 8X to INR 157 Cr in the financial year 2021-22 (FY22) from INR 19 Cr in FY21. Meanwhile, its operating revenue stood at INR 185.2 Cr in FY22 as against INR 86 Cr in the previous fiscal year. 

The funding round comes almost six months after Inc42 exclusively reported about the startup laying off around 150 employees, or 15-20% of its workforce. 

Before this, HealthifyMe last raised $75 Mn in 2021 in its Series C round led by LeapFrog and Khosla Ventures. 

With this capital infusion, HealthifyMe has raised over $130 Mn across multiple rounds. The startup competes with the likes of UltraHuman, Cult.fit, one8 Fitness, among others. 

Founded in 2012 by Tushar Vashisht, HealthifyMe’s health and fitness app leverages AI to deliver measurable results on eating habits, fitness and weight by tracking lifestyle and providing access to coaches, among other benefits.

The post Fitness & Healthtech Startup HealthifyMe Bags $30 Mn From LeapFrog, Others appeared first on Inc42 Media.

Global asset management company (AMC) Janus Henderson has further marked down its stake valuation in Mumbai-based online pharmacy PharmEasy’s parent company API Holdings.

According to Janus Henderson’s regulatory filings with the US Securities and Exchange Commission (SEC), funds managed by the AMC marked the fair value of PharmEasy at $2.7 Bn, less than half of its $5.6 Bn valuation during the fundraise in October 2021.

Janus Henderson has cut the online pharmacy’s valuation twice in two weeks, having first marked its valuation to about $2.8 Bn as of December 31, 2022. The investor’s move also came days after the New York-based investment firm Neuberger Berman also trimmed the valuation of the epharmacy startup to $4.4 Bn. 

PharmEasy secured a valuation of $5.6 Bn when it closed its last funding round of nearly $350 Mn in October 2021, which saw investments from Singapore’s Amansa Capital, Blackstone-backed hedge fund ApaH Capital, Janus Henderson and others.

The fair value markdown comes at a difficult time for PharmEasy, as the online pharmacy has reportedly breached a loan covenant in its loan agreement with the US-based lender Goldman Sachs.

Turbulent Times For PharmEasy

Per the covenant, PharmEasy was supposed to raise an equity round of around INR 1,000 Cr ($120 Mn), associated with its burn rate. However, it has failed to raise the round after trying for a year and postponing its initial public offering (IPO).

The unicorn reportedly raised INR 2,280 Cr ($285 Mn) in debt from Goldman Sachs last August to pay off an earlier debt it had incurred to buy Thyrocare. The loan is said to be a five-year arrangement, attracting an annual interest rate of 17-18%.

PharmEasy hoped to pay off INR 2,000 Cr of its debt from the proposed IPO proceeds of INR 6,250 Cr. Having postponed its IPO plans to 2025, the epharmacy unicorn is looking to raise equity capital.

To be sure, it raised around INR 650 Cr in rights issue last year, and multiple sources close to the company cited by ET said PharmEasy does not have to raise a huge round, having reduced its burn rate significantly over the past few months.

During the year ended March 31, 2022, PharmEasy’s revenue from operations grew to INR 5,729 Cr from INR 2,235 Cr in FY21. Its losses were at INR 2,731 Cr in FY22 against INR 641 Cr in FY21.

A lot of Indian startups have seen their investors reduce the fair value of their stakes in them. The likes of BYJU’S, Ola, Gupshup, Meesho, Eruditus, Swiggy and Pine Labs have all witnessed valuation markdowns recently. 

However, these corrections do not permanently reduce a startup’s valuation. Investor markdowns have more to do with internal policies than the value of a startup. Valuations changes are linked with funding activity and unless a startup raises a down round, its valuation remains the same.

The post Janus Henderson Further Cuts PharmEasy’s Valuation To $2.7 Bn appeared first on Inc42 Media.

Epharmacy unicorn PharmEasy has reportedly breached its loan covenant terms with Goldman Sachs, within a year after raising high-cost debt from the US-based lender.

Per the loan terms, PharmEasy was supposed to raise an equity round of around INR 1,000 Cr ($120 Mn), linked to its burn rate. However, it has failed to raise the round after trying for a year and postponing its initial public offering (IPO).

The unicorn reportedly borrowed INR 2,280 Cr ($285 Mn), from Goldman Sachs in August 2022 to pay off an earlier debt it had incurred from Kotak Mahindra Bank to buy Thyrocare. The loan was said to be a five-year arrangement, attracting an annual interest rate of 17-18%.

PharmEasy hoped to pay off INR 2,000 Cr of its debt from the proposed IPO proceeds of INR 6,250 Cr. Since then, the online pharmacy has pushed its IPO plans to 2025.

Per an ET report, PharmEasy has yet to default on any of its payment obligations so far. The unicorn continues to service its high-cost debt, having paid back only $50 Mn so far.

The development comes just months after it was reported that PharmEasy had begun its rights issue to raise up to INR 750 Cr through convertible notes in October 2022. It did raise INR 650 Cr through the rights issue from existing investors Prosus Ventures, Temasek, TPG Growth and others.

During the year ended March 31, 2022, PharmEasy’s revenue from operations grew to INR 5,729 Cr from INR 2,235 Cr in FY21. Its losses were at INR 2,731 Cr in FY22 against INR 641 Cr in FY21.

For the uninitiated, loan covenants are independent agreements between a borrower and a lender, which outline things a borrower must or must not do. When a debtor violates one of these agreements, it is considered a technical default.

The terms of the covenant allow the US-based lender to potentially take over the whole company or its most profitable arm, Thyrocare. Per an ET report, all of the assets of PharmEasy’s parent company API Holdings have been used as security for the loan.

For now, the online pharmacy unicorn is said to be negotiating the terms of the loan, to either restructure the debt or raise equity funding.

However, the people close to PharmEasy were cited as saying that the unicorn should raise less than what was initially planned, as the burn rate has reduced significantly and the business is poised to turn around.

The online pharmacy unicorn has faced turbulent times recently, with investors Neuberger Berman and Janus Hendersen marking down its valuation to $2.8 Bn earlier this month, amid an ongoing valuation markdown season for Indian unicorns.

The post PharmEasy Breaches Goldman Sachs Loan Covenant Of Raising $120 Mn appeared first on Inc42 Media.

After their recent brush with government agencies, the homegrown digital pharmacy ecosystem is now facing the ire of the judiciary. 

Earlier this week, the Delhi High Court (HC) came down hard on the union government for failing to formulate rules to govern the country’s burgeoning epharmacy industry. A bench comprising Chief Justice Satish Chandra Sharma and Justice Subramonium Prasad directed the Centre to take action against illegal epharmacies.

In an order issued on May 22, the court also noted that the pendency of ongoing cases ought not to prevent the union government from taking action against non-licenced digital pharmacies. 

“It is made clear that the pendency of the present matters will not come in (the) way of the Union of India in taking action against the persons who are violating the interim order dated 12.12.2018,” the HC said in its order. 

In its December 2018 order, a Delhi HC bench had issued an injunction on the sale of medicines by online platforms without licence. It had also directed all relevant authorities to ensure the prohibition is enacted with full force till further orders. 

The HC, on Monday, also gave a six-week deadline to the union government to file final submission before it on its ongoing consultation with digital pharmacies and other stakeholders.

The order came close on the heels of the union government submitting the status report sought by the HC on the issue. In its order, the court hinted that the report, submitted on May 19, was still inconclusive and no firm decision was yet taken on the operation on the epharmacies in the country. 

Welcoming the order, the South Chemists and Distributors Association (SCDA) termed the HC’s directive a commendable step which would ensure welfare and protection of the general public.

“The proliferation of illegal epharmacies poses significant risks to public health and safety… During the hearing, the division bench observed that unregulated sale of medicines poses a greater risk than sale of liquor. The Delhi High Court’s decision that action be taken against such illegal entities is a commendable step in ensuring the welfare and protection of the public,” SCDA’s legal and media head Yash Aggarwal said.

Speaking to Inc42, Aggarwal urged the government to frame laws and regulations concerning the space. He also emphasised the need for temporarily shutting down epharmacy platforms in the country till full-fledged legislations are drafted for governing the industry. 

“Uphold the laws and draft laws carefully. When things are against the law, especially with regards to the health of the public, follow court’s directions and shut these platforms, during the interim, till norms are promulgated in the matter,” Aggarwal told Inc42. 

It is pertinent to note that the case is nearly five years in the making. It all began after a petition was filed before the Delhi HC seeking regulation of digital pharmacies in the country. In the intervening period, the union government tried to bring in a draft legislation (New Drugs, Medical Devices and Cosmetics Bill, 2022) to regulate the healthtech segment but it soon hit a stonewall and is currently in limbo. 

The proposed norms are being mulled over as there are no specific laws governing the digital pharmacies, barring a few aspects under the IT Act, 2000. In the absence of rules, a slew of companies and startups have propped up to cater to the growing segment of online users even as regulation seems sparse. 

The crackdown from Delhi HC has also seen government agencies crack the whip on epharmacies. 

In February, the Drugs Controller General of India (DCGI) issued notices to as many as 20 such players, including Tata 1mg, Amazon, Flipkart, NetMeds and MediBuddy, for violating rules under the Drugs and Cosmetics Act, 1940. Quick on the heels of that, reports also emerged that the Centre was mulling a ban on digital pharmacies for flouting data privacy norms and predatory pricing.

Despite the hurdles, the Indian epharmacy market still continues to be a lucrative segment and is estimated to soar to a market size of INR 8,947 Cr by 2027.

The post Take Action Against Illegal Epharmacies, Formulate Rules: Delhi HC To Centre appeared first on Inc42 Media.

Sequoia Capital-backed genomics-driven diagnostics and research startup MedGenome has acquired Prognosis Laboratories to expand its geographical presence. 

The acquisition would help MedGenome strengthen its diagnostic foothold in north India and cater to the needs of a larger population base. 

The financial details of the deal were not disclosed.

Established in 2013, Prognosis Labs is led by Dr. Smita Sadwani, Dr. Deepak  Sadwani and Mr. Mayank Madan. It is  a NABL accredited, ICMR approved and AERB Certified pathology lab. It claims to have a test catalgoue of 700+ tests spread across pathology, radiology with a  specialisation in molecular diagnostics, histopathology, immunohistochemistry,  immunology, biochemistry, microbiology and serology using the latest technology. 

Commenting on the acquisition, Deepak Sadwani said that the deal will accelerate the next phase of growth and expansion of Prognosis’ overall business.

Founded by Mahesh Pratapneni and Sam Santhosh in 2013, MedGenome is a CAP accredited genetic testing laboratory that offers over 1,300 genetics tests across various disease categories. 

Besides Sequoia, MedGenome is backed by the likes of LeapFrog Investments,  Novo Holdings, Sofina, HDFC, Emerge Ventures, Zodius Capital and International Finance  Corporation. 

Last year, the Bengaluru based startup raised $50 Mn in a strategic funding round led by life sciences investor Novo Holdings.

The startup then said it would use the proceeds to broaden its product portfolio, improve the reach of its diagnostic services across reproductive and oncology domains, and invest in enhancing bioinformatics and software-as-a-service (SaaS) offerings. 

Earlier, it raised $55 Mn in 2020 in a funding round led by LeapFrog Investments. Overall, MedGenome has raised total funding of over $180 Mn to date.

The startup competes with the likes of MapMyGenome and Positive Bioscience in India.

The Indian diagnostics market is estimated to be worth $11 Bn currently. With an increasing population, rising economy and new breakthroughs in medical technology, this market size is expected to keep rising. 

According to an Inc42 report, the country’s ehealth market is expected to reach a size of $21 Bn by 2025.

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Amid the global economic slowdown and valuation markdown season, PharmEasy has received another valuation cut. The epharmacy unicorn’s investor Janus Henderson has reportedly slashed its valuation to about $2.8 Bn.

The global asset management company’s filings with the US Securities and Exchange Commission (SEC) showed that it has cut the valuation of its holding in PharmEasy by 50%, ET reported. 

Janus Henderson picked a stake in PharmEasy in September 2021.

The development comes days after it was reported that New York-based investment firm Neuberger Berman trimmed the valuation of the epharmacy startup to $4.4 Bn from $5.6 Bn in October 2021. 

Amid the ongoing funding winter and falling valuations of tech companies globally, multiple Indian startups like Ola, Swiggy, Pine Labs, BYJU’S, and OYO have seen their investors trimming their valuations.

Along with PharmEasy, Neuberger Berman also cut the valuation of Pine Labs to $3.1 Bn from $5 Bn in July 2021. Meanwhile, Vanguard Group recently reduced the valuation of ride-hailing startup Ola by 35% to $4.8 Bn.

Earlier this month, it was reported that Invesco cut the valuation of Swiggy to $5.5 Bn as of October 2022 from $10.7 Bn in January 2021.

Last month, BlackRock also trimmed the valuation of edtech unicorn BYJU’S by almost 50% to $11.5 Bn.

Last year, PharmEasy deferred its plans to list on the Indian stock exchanges citing valuation mismatch and market volatility. However, it was not the only startup to do so as multiple Indian new-age tech companies like ixigo, Pine Labs, and Capillary Technologies postponed or cancelled their planned initial public offerings (IPOs) amidst a bloodbath on the exchanges.

PharmEasy filed its draft red herring prospectus (DRHP) with SEBI in November 2021 to raise INR 6,250 Cr. After deferring its IPO, the startup raised INR 750 Cr in October 2022. While Prosus picked up convertibles worth INR 100 Cr, Temasek subscribed to convertibles of nearly INR 90 Cr.

PharmEasy also laid off several employees last year. While Inc42 reported about 40 layoffs at the startup in June last year, more employees were laid off in the latter half of the year.

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Healthtech startup Bonatra on Tuesday (May 2) said it has acquired women’s health and wellness startup MyAva. However, it didn’t disclose the details of the deal.

Bonatra said with the acquisition, it aims to expand its holistic healthcare programmes and become a one-stop solution for management of chronic health conditions. 

Founded in 2019 by Evelyn Immanuel, MyAva helps women manage chronic health conditions such as polycystic ovary syndrome (PCOS), thyroid disorders, insulin resistance, among others. The startup offers curated programs and personalised plans that help women improve their health and wellbeing.

Meanwhile, Bonatra, founded in 2022 by Rahul Kishore Singh, Manjari Chandra, Ramanpreet Singh, and Amit Acharya, is a doctor-led IoMT (Internet of Medical Things) startup that focuses on treatment and management of chronic diseases such as diabetes, hypertension, fatty liver, PCOD, obesity, among others. The startup claims to use IoMT devices to analyse various health parameters to come up with personalised treatment plans for patients suffering from these chronic diseases.

Commenting on the acquisition, Bonatra CEO Rahul Kishore Singh said, “We have been closely working with and interacting with the MyAva team and we believe that this will be a good strategic fit for Bonatra.”

Last year, Bonatra raised INR 5.5 Cr in a pre-seed funding round led by ITI Growth Opportunities Fund. The funding round also saw participation from angel investors like Jitendra Jagadev, founder of Nestaway and Helloworld, and Rajesh Yabaji, founder of Blackbuck. 

Bonatra said it plans to come out with new IoMT devices to further strengthen its solutions which are a convergence of medical science, data science and technology. 

The Covid-19 pandemic gave a big boost to the healthtech industry in the country. The Indian healthtech market is expected to reach a size of $21 Bn by 2025. The country is currently home to about 300 funded healthtech startups. 

Recently, healthcare startup Portea Medical’s parent company Healthvista India received approval from the Securities and Exchange Board of India (SEBI) for its initial public offering (IPO). 

However, the ongoing funding winter has also hit Indian healthtech startups. Earlier this month,  Practo fired 41 employees as part of its performance management and planning process, while healthtech unicorn Innovaccer fired 245 employees earlier. Besides, Bengaluru-based Phablecare also saw several layoffs.

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The Indian insurance industry is constantly seeking ways to improve its operations and enhance its customers’ experiences. With an eye on emerging technologies, the industry has turned its attention to blockchain, a distributed ledger technology that can improve data sharing, reduce fraud, and increase transparency. According to reports, the global blockchain market is projected to grow at a CAGR of approximately 85.9% between 2022 and 2030. However, while such numbers indicate the benefits of blockchain, there are also challenges that must be addressed to ensure its widespread adoption. 

How Widespread Blockchain Adoption Is Changing the Game

Shedding light on the benefits of blockchain adoption in the insurance industry, improved data sharing is one of the most significant benefits. In the current system, data sharing among stakeholders is often slow, inefficient, and prone to errors. Blockchain technology can create a secure and transparent network of data sharing among insurers, customers, brokers, and third-party administrators. This can lead to faster and more accurate claims processing, improving the customer experience and saving time and money for all stakeholders.

Another notable benefit of blockchain adoption is the reduction of fraud. Insurance fraud is a significant problem in India, leading to huge financial losses. Blockchain can help reduce fraud by creating a tamper-proof record of all transactions. Smart contracts can automate the claims process, reducing the possibility of fraud and identifying fraudulent claims. By creating a more secure and transparent system, blockchain can increase trust between insurers and customers and improve the industry’s reputation.

Cost savings are also a key benefit of blockchain adoption. The current insurance system involves a lot of paperwork, manual processes, and intermediaries, leading to high operational costs. Blockchain can help reduce these costs by eliminating intermediaries and automating processes. This can lead to faster and more efficient claims processing, resulting in cost savings for both insurers and customers.

In addition to these benefits, blockchain adoption can also increase transparency in the industry. The Indian insurance industry has been criticised in the past for its lack of transparency, and blockchain can help address this issue by creating a transparent and secure record of all transactions. This can improve trust between insurers and customers and help build a better reputation for the industry.

Blockchain Adoption: Challenges Galore

Despite these benefits, there are also challenges acting as hindrances to the adoption of blockchain technology in the insurance industry. One of the biggest challenges is a lack of regulatory clarity. The regulatory framework around blockchain is still evolving, and there are no clear guidelines on how blockchain can be used in the insurance sector. This can lead to confusion and uncertainty among insurers, hindering the widespread adoption of blockchain.

Another challenge is the limited technical expertise available. Blockchain is a complex technology that requires specialised skills to implement and maintain. However, there is a shortage of skilled blockchain professionals in India, leading to a skills gap in the industry. This can hinder the adoption of blockchain and slow down its implementation.

Standardisation is also a significant challenge to blockchain adoption in the Indian insurance industry. Blockchain is a decentralised technology, which means that there are multiple blockchain platforms available, each with its own set of features and capabilities. This can lead to interoperability issues and a lack of standardisation in the industry. To ensure the widespread adoption of blockchain, there needs to be a standardised approach to blockchain implementation and interoperability.

To overcome these challenges, the industry needs to work towards creating a standardised approach to blockchain implementation, upskilling its workforce, and collaborating with regulators to create a clear regulatory framework. Overall, the potential benefits of blockchain adoption in the insurance industry make it worth overcoming these challenges and pursuing its adoption.

The post How Blockchain Can Transform The Insurance Industry appeared first on Inc42 Media.

Amid reports that the Centre is mulling a ban on epharmacies, Union Health Minister Mansukh Mandaviya will reportedly soon meet the representatives of online drug stores to discuss concerns around the space.

News agency PTI, citing sources, reported that high on the agenda of the meeting would be concerns around data privacy and irrational sales of prescription drugs by these platforms. Privacy of patient data appears to be another major area of concern for the government. 

The report said that digital pharmacies collect area-wise data on consumption of drugs, which can increase risks associated with patient safety.

However, the exact date of the meeting is not clear yet. 

Last month, it was reported that a Group of Ministers (GoM) has advocated a ban on epharmacies citing allegations of malpractices, predatory pricing and data privacy concerns. 

The epharmacy space, which is dominated by startups and conglomerates such as PharmEasy, NetMeds, Tata 1mg, Flipkart and Amazon in the country, has been marred by regulatory hurdles. 

Earlier this year, the Drugs Controller General of India (DCGI) sent notices to 20 epharmacies, including Tata 1mg, Amazon, Flipkart, NetMeds and MediBuddy, for flouting local drug norms.

Prior to that in February, the Ministry of Health warned the healthtech platforms of an impending ban for dispatching medicines without prescriptions. 

Apart from that, the Centre has also been looking to build a regulatory framework to bring such platforms under the ambit of law. To address the current lacunae in laws governing pharmacies, the Centre last year released the draft New Drugs, Medical Devices and Cosmetics Bill, 2022 that had provisions to build a licensing regime for digital pharmacies. 

Building on that, the government is currently working on a revised version of the Bill which grants it the powers to regulate, restrict, or prohibit the sale of any drug via online mode. The proposed Bill is currently pending before an inter-ministerial panel for consultation. 

Besides the regulatory quagmire, macroeconomic headwinds and fears of a recession have also pushed the epharmacies in a corner. With investors now focusing on profitable ventures or those with a clear path to profitability, the high cash burn model of the healthtech space has not gone down well with VC and PE investors. 

The funding winter and shelved public listing of players such as PharmEasy have made matters worse for the homegrown space which is projected to reach a market size of INR 8,947 Cr by 2027. 

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