• Health-tech giant PharmEasy's valuation has dropped drastically to $456 million from its peak of $5.6 billion.
• The company reported losses of Rs 2,533 crore in FY24 and a 15% decline in revenue.
• Amid valuation cuts, PharmEasy defaulted on a Rs 3,500 crore loan from Goldman Sachs last year.
• The company's financial struggles highlight the challenges faced by startups in maintaining their valuations and financial stability.

PharmEasy, a health-tech giant, has experienced a drastic drop in its valuation, now standing at a mere $456 million. This is a significant decrease from its all-time high of $5.6 billion. The information comes from a recent filing by one of its investors, Janus Henderson. The investor valued its stake of 12.9 million shares in the startup at $766,043, as reported by TechCrunch.

The Global Research Fund of the asset manager, which had initially invested $9.4 million, now sees its investment value plummet by a staggering 92 per cent from PharmEasy's peak valuation. This dramatic decrease in valuation is a clear indication of the financial turmoil the company is currently facing.

The financial year 2024 (FY24) was particularly challenging for the online pharmacy, which reported losses amounting to Rs 2,533 crore. This was accompanied by a nearly 15 per cent decline in revenue, which stood at Rs 5,664 crore.

PharmEasy's Financial Struggles

The revenue from operations also saw a decrease of 14.8 per cent, falling to Rs 5,664 crore from Rs 6,644 crore in FY23. These figures are based on the financials of API Holdings, the parent company of PharmEasy. Amid deep valuation cuts, the company made substantial workforce reductions last year. However, it managed to reduce losses by over 50 per cent in FY24, primarily due to a 79 per cent reduction in goodwill impairment charges.

PharmEasy, once a shining star in the health-tech sector with a valuation of $5.6 billion, saw its valuation plummet to about $500-$600 million last year. Despite having raised around $1.1 billion to date, the online pharmacy startup found itself in a deep crisis amid sharp valuation cuts as it sought new funding.

Adding to its woes, reports suggest that the health-tech company defaulted on a Rs 3,500 crore loan from Goldman Sachs in June last year. This financial setback led to the postponement of its listing plan in August 2022, despite having filed IPO papers in November 2021.

A Series of Financial Setbacks

In April this year, PharmEasy's valuation took another hit, suffering a 90 per cent haircut after securing around $216 million funding led by Manipal Education and Medical Group (MEMG) and existing investors. This situation is reminiscent of the dot-com bubble burst in the early 2000s, where several tech companies saw their valuations plummet drastically. The current scenario with PharmEasy serves as a stark reminder of the volatility and unpredictability of the tech industry.

The cost of materials for PharmEasy went down 14.8 per cent to Rs 4,880.3 crore in FY24, and the finance cost went up 9.4 per cent to Rs 727.9 crore. This financial instability has led to a significant reduction in the company's goodwill, an accounting charge that companies record when goodwill's carrying value on financial statements exceeds its fair value.