IPO-hopeful API Holdings, which operates PharmEasy, hopes to turn profitable on an Ebitda-level in the next 4-5 quarters, Siddharth Shah, CEO told shareholders at the company’s annual general meeting (AGM) on Wednesday. That comes at a time when the company’s comprehensive losses jumped 161% to Rs 4,043 crore in FY22 from Rs 1,552 crore in FY21, impacted by non-cash expenses.
The company’s total revenue, however, increased 48% to Rs 6,461.1 crore in FY22 from Rs 4,363.2 crore in FY21, its consolidated pro-forma financials showed. The company said its earnings before interest, taxes, depreciation and amortisation (Ebitda) margins have been improving consistently from -13% at the end of FY22 to -7% currently. Over the next 2-3 quarters, it expects that to improve to -4% and eventually to turn positive at 0.5% in the next 4-5 quarters.
“Our Ebitda losses have already come down by more than 50% on the back of strong strong traction over the past six months. We are confident that our company will become Ebitda profitable, across the business, in the next 4-5 quarters,” Shah said.
API Holdings had also filed documents for a Rs 6,250 crore initial public offering (IPO) in February but withdrew its draft red herring prospectus (DRHP) in August, citing its cash balance and the unfavourable geopolitical setting.
“We thought its better to come to the public when we have delivered on our performance and not just on our promise. We should tap the markets at a time when the performance is better in terms of our scale as well as profitability and significantly better metrics,” Shah said revealing a timeline for the company’s IPO.
Shah also ruled out the possibility of merging API Holdings with Thyrocare – an NSE listed company it acquired for Rs 4,546 crore – and listing the combined entity now but “we believe that in the near foreseeable future, once the company goes public, then options of merging API (Holdings) and Thyrocare maybe explored,” he said.
Meanwhile, the company has been actively raising funds from the private market. It is currently in the process of raising
750 crore through a rights issue and, on Wednesday, the company said that over 65% of the fundraise was already achieved. About a month ago, API Holdings also raised took a loan of over2,000 crore from Goldman Sachs, to be repaid over 4-5 years.
“With our tie up with Goldman (Sachs) and others, the cash position of the company is significantly strong to be able to look (through) the next 12-24 months,” Shah said.
The company has also generating more revenue from the services it offers, like Thyrocare. Currently, 88% of the company’s revenue comes from products that it sells through PharmEasy and Retailio, its B2B pharmacy division. Services on the other hand, account for 12% of the company’s total revenue, up from 0% in FY20. Shah also said the company’s products unit is already profitable.
The company has a net margin of 2-3% from selling products and earns about 40% on a net basis from offering services. To further its goal towards profitability, Shah said the company was creating and focusing on private labels like Ever Herb, Zustle, TrueCure and Liveasy, among others as these typically had higher margins.