Practo’s FY17 numbers are out, and the company might not be in the pink of health.
The healthcare services aggregator rose its revenues 28% to Rs. 212 crore during the last financial year, but its losses rose much more rapidly. Practo recorded losses of Rs. 190 crore in FY17, up three times from its losses of Rs. 65 crore last year. Worse, even as Practo’s losses are ballooning, its revenue growth might be slowing down — last year, it had grown its revenues five times; this year, it managed to only grow them by 28%.
Practo’s increased losses were on the back of some increased expenses. Practo’s expenses nearly doubled year-on-year to Rs. 407 crore, up from Rs. 230 crore last year. The biggest component of its revenues were staff costs, which stood at Rs. 287 crore. Other expenses were Rs. 106 crore.
Practo appeared to have been cognizant of its rising staff costs — in April last year, it had fired 150 of its employees, which represented 10% of its workforce. The company had then said that the layoffs were a result of its performance review through which it trims its workforce every year. But even as it had cut back on its workforce, Practo had picked Chermayeff & Geismar & Haviv, a prestigious (and expensive) New York based agency that’s designed the logos of brands like Exxon Mobil, National Geographic and NBC, in a bid to overhaul its brand image. The agency had created a new logo for the company with two dots on either side, and given it a new tagline — Your home for health.
It’s unclear how much the rebranding has helped Practo’s cause, particularly its top line. Practo earns its revenue chiefly through doctors, who pay it for subscriptions for using its service. But the largest chunk of its revenue comes from its holding Singporean entity, Practo Pte. This year, the Singaporean arm contributed Rs. 199 crore of its revenue of Rs. 212 crore. This revenue is for providing ““software development and support services,” and isn’t earned through subscriptions.
Practo is among the most well-funded startups in the healthcare space in India. It’s raised a total of Rs. 1150 crore so far from prominent investors, and had last raised its Series D of Rs. 350 crore in January last year. But Practo’s found it hard to adequately monetize its operations, and for its investors, consistent losses, even after 10 years of operations, might be a bitter pill to swallow.