Everything You Need To Know About PharmEasy’s Surging Losses

PharmEasy's Surging Losses

API Holding Ltd, a parent company of PharmEasy loss, widened in FY22, which made the company call off its Initial Public Offering (IPO). According to the company’s filing with the Ministry of Corporate Affairs, the net loss of PharmEasy increased from Rs 641 crores in FY21 to Rs 3992 crore in FY22. 

However, after excluding one-time loss on impairment items, the final loss recorded by the company is Rs 2731 crore. PharmEasy, an online Pharmacy and tech platform, said that the primary reason behind the loss surge is the higher employee expenses which increased by five times this year. The sudden surge in the loss chart of PharmEasy creates insecurity among its retail investors about the company’s future.

PharmEasy Losses In Fiscal Year 2022

The fiscal year of 2022 was a lousy year for PharmEasy as its loss widened by five times, disrupting the company’s planning for an IPO. As a result, PharmEasy delayed its IPO plan and cited reasons for higher employee benefits costs behind it. The total costs the company spent on employee benefits surged from Rs 270 crore (FY21) to Rs 1459 crore (FY22). These costs account for nearly 6X PharmEasy overall expenses and are the major reason behind the sudden surge in the loss for FY22.

Apart from this, PharmEasy also spent Rs 494 crore on promotional activities throughout FY22. As per the regulatory data shared by the company, its business expenses increased from Rs 8492 to Rs 2981 crore from FY 21-22. The good news for the retail investors of PharmEasy unlisted shares is that the company’s total revenue also doubled during the Fiscal Year. 

PharmEasy was founded in 2014 by Dhaval Shah and Dharmil Sheth and raised a total funding of more than $1.12 billion across 16 different funding rounds till now. Its list of investors includes Steadview Capital, B Capital, Temasek, Prosus, and more. In October 2021, PharmEasy raised funds at a total valuation of over $5 Billion.

Over the years, PharmEasy has faced losses in the form of higher business expenses which increased by five times in FY22. As per the data shared by the company, it recorded a loss of Rs 81 crores during the lease of hardware and software, warehousing, and high costs in delivering the Pharmacy products. In addition, the company’s total earning from the interest on its current investments and deposits also reduces. 

According to the analysis report of Fintracker, the cost involved in the procurement process also crossed over 60% of the total expenses of PharmEasy expenses in FY22. The total cost surged around 2.5 times, from Rs 2,152 crore in FY21 to Rs 5,113 crore in FY22. Furthermore, the legal post of the company and promotional expenses also blew to Rs 494 crore in FY22.

To accelerate the business growth that stopped due to the previous losses, the company added new resources and hired a new workforce, which also resulted in high expenses. An overall rise in expenses surged the company’s annual losses, which jumped from Rs 641 crore in FY21 to Rs 2,731 in FY22. Here is the financial report of the PharmEasy for the fiscal year 2021-22:

Particulars in (cr)FY21FY22
Total Revenue23605728
Employee Benefit Expenses2701458
Other Expenses4811502
Finance Cost43258
Profit Before Tax-620-3970
Profit After Tax-641-3991

Based on the financial figures, the loss of PharmEasy widened in FY22, which caused the company to call off its IPO. The lower margins are also linked with the company’s acquisitions, during which PharmEasy faced various challenges to sustain itself in the pharmacy space.

Is It Still Beneficial To Invest In PharmEasy Unlisted Shares?

Since the company recorded a surge in losses during FY22, investors are confused about whether to buy PharmEasy unlisted shares or not. The company takes various steps to overcome these losses and plans to raise new capital during an IPO. PharmEasy also plans to extend its services in the next few years and target new cities in India. It is advised to buy unlisted shares of PharmEasy and hold them for a longer time to get higher returns. 

In addition, the pharmacy sector is growing quickly and offers immense opportunities for investors. There are higher chances that PharmEasy will bring its IPO soon and allow retail investors to buy its IPO shares in the future. So, if you already have its Pre-IPO shares at that time, the whole process of registering for an IPO stock will become easier for you.
In conclusion, the current price of PharmEasy unlisted shares is low and expected to increase as the company’s revenue and profit increase. It is the best time to invest in unlisted shares that involve less risk and are considered an excellent way to diversify an investment portfolio. For buying unlisted shares, you can connect with Stockify’s team and get access to updated share price and detailed financial data.

Devin Haney

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