After years of persistent losses and leadership churn, API Holdings, the parent company of Pharmeasy, Thyrocare and medicine distributor Ascent, expects to achieve break-even at the profit-before-tax (PBT) level by the fourth quarter of FY27, managing director and chief executive Rahul Guha told Ayanti Bera. In an interview, he talks about the company’s focus on tighter cost controls, steady debt reduction, and scaling high-margin services and tests. Excerpts:
How was the financial performance of the group company, API Holdings, in FY26?
The philosophy at the group level is profitable growth and ensuring we can get the maximum operating leverage out of each of our businesses. By Q3 FY26, at the API group level, we had turned EBITDA positive at about Rs 30 crore for the nine months, compared to an EBITDA loss of around Rs 150 crore in the previous year. We were also on a growth track of about 15%.
In Thyrocare, revenues grew about 20% and we normally don’t increase prices. Costs never grow at 20%, so you get a significant benefit at the EBITDA level and that flows straight down to the PAT level as well. In PharmEasy, we have grown while reducing discounts and have done a lot of hard work on operating costs. In Ascent too, we’ve continuously worked on bringing costs down. We are targeting break-even at the PBT level for the group company by Q4 FY27.
Thyrocare’s Q4 PAT growth of 50% (excluding exceptional items) has been much higher than revenue growth. What are the key drivers?
Tests per patient for the full year went from 10.2 to 10.9, which is a significant jump of about 8%. Once the patient is there and we have collected the blood, pretty much all our costs are fixed. Every extra test that we sell comes straight down to the bottom line.
The bigger growth, though, is volume growth. Patient growth was around 15%, while overall test volumes grew roughly 23%. Patient walk-ins and home collections have been very good.
Despite input cost pressures, you haven’t raised prices. Do you plan to?
No. It is the last resort for us. We will first try to squeeze more efficiency and negotiate harder with vendors. We processed 210 million tests last year, which is not a small number. When we sit across the table from a vendor with that kind of scale and 20-25% growth, we should get some benefit. A lot of inputs are imported and currency movements do create challenges, but for now we have been able to absorb that through negotiations with vendors.
What is the path to profitability for your B2C business Pharmeasy?
Interestingly, in March, PharmEasy actually broke even after all its costs. Even if you take the full quarter, the loss is only around Rs 2-3 crore. The path to profitability has been a focus on high-margin services like diagnostics, doctor consultations, physiotherapy, dietitian consultations, weight management and vaccination at home. Alongside that, we have also focused on high-margin products like generics and private label.
Our services mix has now reached around 14%, while generics and private labels are close to 9%. Put together, 23% of PharmEasy’s revenue now comes from high-margin categories.
How is the debt reduction going?
We are working on that actively. Since January we have already repaid another Rs 150 crore, so our outstanding debt is now around Rs 1,050 crore. We are also looking at non-strategic assets and using that money to repay debt.
What will be the focus areas for Thyrocare in FY27?
FY27 is going to be the year of specialty for Thyrocare. We have invested in allergy, genomics and histopathology. Today, our average revenue per test is about Rs 36. A histopathology test is around Rs 300, an allergy test around Rs 2,500 and a genomic test around Rs 5,000.
Are there plans to list the group company once profitability improves?
I think it’s too early to say. With the group entity still loss-making excluding Thyrocare, and with debt on the balance sheet, it’s a difficult proposition to take to the market right now. The immediate focus is to ensure that excluding Thyrocare, all the other group companies together are profitable and that we have been able to repay debt. Only after that can we really think about bringing the company to the market.