We are all aware of the remarkable growth experienced by the healthcare platform in the last fiscal year. But how was it determined? You may ask. Through revenue! Do you know, in FY22, the e-healthcare startup i.e., Practo revenue hit over Rs.200 crore? Yes, its growth rate was 86.5% and its revenue touched Rs.202 crore.
Wow! That is a great success.
But wait! You cannot declare the achievement without analyzing its financial point of view. Reason? Although it earned enormous revenue, its losses doubled as well. How did it happen? Rs.202 crore is a large amount, isn’t it? Then how come it was not profitable despite its whopping revenue?
You will come to know it all in this article.
Practo Revenue Breakdown
Established in 2008, Practo efficiently digitalized medical services. With the help of Practo, you can connect to doctors, pathology labs, and pharmacists. It also initiated a telemedicine service where you can consult physicians online (through video calls).
We have explained it all in Practo Business Model. You can look into it for more details.
Coming back to the point of Practo revenue. So, its main source of income was diagnostic and consultation services. You will get a brief comparison of Practo revenue for the last two fiscal years.
|Revenue Sources||Amount Earned in FY22||Amount Earned in FY21|
|Diagnostic and Consultation Services||Rs.94.6 crore||Rs.35.9 crore|
|Sale of Software and Maintenance||Rs.21.2 crore||Rs.16.6 crore|
|Sale of Pharmaceutical Products||Rs.11.5 crore||Rs.13.8 crore|
|Subscription Services||Rs.74.7 crore||Rs.42 crore|
Thus, you can see that diagnostic consultation services and subscription services were the most significant contributors to Practo revenue. Also, its revenue from most of the sources increased from last year. Thus, in total it earned a revenue of Rs.202 crore.
Now, here comes the question of its deepening losses. Despite earning humongous revenue, how did it drown in huge losses?
Let’s find out!
Do you know why a company drowns in losses in spite of earning a decent amount of revenue? Due to its expenses. When the cost of expenditure crosses the amount of income earned, then it results in disappointing losses. Similar is the case with Practo.
Before proceeding further, have a brief look at the expense breakdown of Practo in the last two fiscal years-
|Expenses||Amount Spent in FY22||Amount Spent in FY21|
|Employee Benefit Costs||Rs.139 crore||Rs.75 crore|
|Consultation & Surgery Costs||Rs.95 crore||Rs.39 crore|
|Advertisement & Promotional Expenses||Rs.68 crore||Rs.34.2 crore|
|Legal Professional Fees||Rs.30.5 crore||Rs.12.7 crore|
|Server Hosting and Subscription||Rs.18 crore||Rs.14 crore|
|Others||Rs.61.8 crore||Rs.38.1 crore|
Thus, you can see that its expenses on different verticals had increased over 2X. The amount of money spent on different expenditures increased to 93.6%. Thus, its total expenses soared to Rs.412.3 crore.
Controversy on Financials
The digital healthcare platform was surrounded by some controversies because it failed to report its financial numbers during its growth stage. It filed the financial report of FY20 two years later i.e., in July 2022. And the remaining financials (FY21 and FY220 were reported in March-June 2023.
People were worried about its financials. But the company has achieved notable growth as compared to its contemporaries in the last three fiscal years.
Financials of Practo
The financials of the company Practo is summarized in the following table-
|Practo’s Financials (FY22)||Amount (in crores)|
|Market Valuation||Rs.3,427 crore|
|Revenue Earned||Rs.202 crore|
|Profit/Loss||Loss of Rs.203.3 crore|
Although it earned an appreciable amount of revenue from its numerous revenue sources. But the cash outflow in various expenses crossed the threshold. This means the amount spent on expenditures exceeded the amount of income earned. Eventually, it continues to face a significant amount of loss.
Future Plans for Practo
You must note that the financial figures mentioned above are specific to FY22. If you want to consider the overall financial performance of Practo, you need to perform a comprehensive assessment.
Its online platform connects patients with doctors and healthcare providers, offering appointment booking, online consultations, and medical record management. Thus, it is planning to transform the healthcare industry of India!