Practo Technologies Pvt. Ltd, the most funded homegrown healthcare start-up, posted a more than 10-fold increase in revenue for the year ended 31 March, 2015 while losses increased 30%, signalling the company’s intent to extend its lead over smaller rivals.
Practo’s revenue increased to Rs.29.73 crore in fiscal 2015 from Rs.2.30 crore a year earlier, while the company incurred a loss of Rs.12.85 crore until March, as against Rs.9.88 crore in the year-ago period, according to documents filed with the Registrar of Companies (RoC).
The company’s expenses grew more than three times, from Rs.12.19 crore in fiscal 2014 to Rs.42.59 crore, while revenue grew more than 10 times, which, according to industry experts imply that the company has a stable business model in place.
“Businesses thrive only if revenue grows faster than expenses. Yes, there are losses. But, if revenue grows faster than expenses, at some point in time the company has the potential to become a profitable business,” said Rutvik Doshi, director at Inventus Capital Partners, a venture capital firm.
Employee benefits, which surged three times to Rs.25.8 crore in fiscal 2015, comprised more than half of the firm’s expenses, the documents showed.
Practo did not respond to an email seeking comment.
India is home to at least 140 start-ups in the doctor-booking and practice management software segment, according to Tracxn, a company which provides data on start-ups. Practo is by far the largest in the category, with the company claiming to have about 200,000 doctors, 5,000 diagnostic centres and 8,000 hospitals on its platform.
For instance, smaller rival Qikwell Technologies Pvt. Ltd, which was bought by Practo in September, posted a loss of Rs.3.61 crore on revenue of Rs.51.29 lakh in fiscal 2015, according to RoC filings. Tiger Global Management-backed Lybrate Inc. is another well-capitalized start-up in the segment.
Practo had raised $34 million from institutional investors until March, while Qikwell had about $3 million and Lybrate raised $1.2 million by then.
Practo went on to raise another $90 million in August from leading investors such as China’s Tencent, Belgian venture capital firm Sofina, Google Capital, Altimeter Capital, Sequoia Capital and Yuri Milner, founder of Russian venture capital firm DST Global. Lybrate raised another $10 million in July.
Experts believe that losses may surge in the near future, given that Practo has invested in multiple acquisitions, besides spending on international expansion, launching more categories and brand promotion since April. It entered the beauty and wellness segment in early December by aggregating spas, salons and fitness centres.
“In the short term, I would expect the expenses to balloon. It makes sense to pump in a lot of money at this juncture and capture the adjacent markets. In a year or two, they can again accelerate and the cost will be recovered,” said Doshi.
Practo, which was founded in 2008 by Shashank N.D. and Abhinav Lal, started out as a product firm, providing practice management software for doctors on a software-as-a-service model. Called Practo Ray, the product remains the key revenue generator for Practo. The firm also earns revenue from Practo Reach, a sponsored listing service for hospitals and clinics. It does not charge doctors for listing on Practo, while searching is free for consumers.
To be sure, Practo had acquired hospital information management solution provider Insta Health Solutions for $12 million in September in an attempt to boost revenue. At the time of the acquisition, Insta Health Solutions had over 500 hospitals as clients in 15 nations across South-east Asia, West Asia and Africa using its information management software.
Its acquisition of Qikwell, which has expertise in appointment scheduling at hospitals, helped Practo penetrate deeper into the enterprise segment, especially hospitals, clinics and diagnostic centres. Additionally, Practo had acquired product outsourcing firm Genii in July and Delhi-based health and fitness solutions firm Fitho Wellness Services Pvt. Ltd in April.