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PharmEasy valuation slashes, raises Rs. 3500 crores via rights issue

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PharmEasy is an Indian e-pharmacy startup that has expanded to multinational extents. It is a company that sells medicines, diagnostics and telehealth online.

PharmEasy’s parent company API Holdings raised an additional $300 million to file for IPO in November of 2021. In July, the Board of Directors okayed the plan to raise additional share capital worth 3,500 crores which will be divided into Rs 3000 crore equity shares of INR 1 each and 500 crore preference shares of INR 1 each. The proposal was left at the equity investor’s table for a final go-ahead.

The challenging market conditions have made PharmEasy raise 3500 crores through rights issues from existing backers namely  Temasek, TPG Growth, Prosus Ventures, CDPQ, Eight Roads Ventures, LGT Lightstone, ADQ (Abu Dhabi’s sovereign wealth fund), Amansa, OrbiMed, and Sunil Kant Munjal’s family office, have expressed their interest to invest up to Rs 2,000 crore.

According to other sources, Ranjan Pai may also invest 1200 crore during the round. The new round of financing will be used to repay the term loan owed to Goldman Sachs. June, PharmEasy breached its loan covenant terms with Goldman Sachs. The new round or the pre-money round will value the company at a $500 million range. This essentially means that the company’s value eroded to the tune of 90% as its peak valuation stood at $5.6 billion in October 2021.

The barrage of problems doesn’t end here, the valuation of PharmEasy has been slashed by close to 50% by its backers in 2023. Berman reduced the company’s valuation by 21.4% to $4.4 billion in February whereas Henderson further dwindled it to a valuation of $2.8 billion. The new rights issue will peg the startup at $500-600 Mn, down from a record high of $5.6 Bn two years ago.

As of 2022,  he company sells a range of pharmaceutical and cosmetic products which accounted for 91.3% of overall operating revenues. Collections from this segment grew 2.3X to Rs 5,230 crore during the last fiscal from Rs 2,282 crore in FY21. Revenue from diagnostic services, licensing of internet portals, teleconsulting, software, subscriptions et al shot up over 16X to Rs 418 crore during FY22 from Rs 26 crore in FY21.

PharmEasy was founded in 2015 by Dharmil Sheth and Dhaval Shah in Mumbai with an initial seed funding from their respective families itself. It went on to acquire MedLife in 2021 and now competes with NetMeds, Apollo24x7 and Amazon Pharmacy.

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