Fifteen years ago, Practo embarked on a mission to make healthcare affordable and accessible to over a billion+ Indians. Over the years, we’ve touched the lives of more than 35 crore+ individuals. As we reflect on our journey, one thing that stands out is FY ’23, which marks a turning point at Practo as we exited Mar ‘23 with positive cash flows. What is even more exciting is the fact that we’re well on our way to a full year FY ’24 with positive cash flows.
FY 23 Financial Performance:
- Improvement of gross margin to 70% (FY 23) from 54% (FY 21)
- 50% reduction in losses from FY22, with focus on improved efficiencies (from 211.86cr to 93.68cr)
- Contribution margins went up to 42% (Q4 FY 23) from 5% (Q4 FY 22)
- 39% YoY improvement in EBITDA (from -162.26 cr FY22 to -99.42 cr in FY23)
- Revenues remained steady YoY (from 188.90 cr in FY 22 to 194.53 cr in FY23)
In FY ‘23, we were able to significantly reduce our losses, cutting them by more than half from 211.86 cr in FY ‘22 to 93.68 cr in FY ‘23. While our revenues remained steady, we focused on enhancing organic growth, implementing new monetisation models and optimising operational efficiencies; resulting in a 40% improvement in negative EBITDA i.e. from 162.26 cr FY ‘22 to 99.42 cr in FY ‘23.
Our commitment to enhancing efficiencies and bringing in optimisations from different business models in FY ‘22 has yielded strong results in FY ‘23.
As we look forward, we’re excited to continue our journey as one of the leading healthcare companies in the country, with plans to be EBITDA neutral in the coming year.
Navigating the COVID-19 Challenge: Stabilising Revenues with Innovative, EBITDA-Neutral Business Models
Let’s put some of these numbers in perspective, as in our journey triumph and trials have been our constant companions. Over the last four years, we’ve encountered a multitude of challenges, the biggest ones being i) the global pandemic and ii) the complex geopolitical situations which also resulted in them being a turning point for Practo.
Back in 2020, the emergence of COVID-19 opened the door to digital healthcare, with countless startups exploring innovative ways to deliver healthcare services in India. In 2021 itself, there were 2000 health tech start-ups in the country addressing different challenges and working towards improving the quality of life for patients.
During this time, Practo stepped up to the challenge, delivering thousands of consultations daily with an impressive TAT of less than 120 seconds. This surge in demand prompted investments in technology to ensure we could meet these needs, resulting in revenue growth from 104.92 cr in FY ‘21 to 188.90 cr in FY ‘22(refer chart 1). This marked the first turning point in our journey, as we harnessed the power of digital healthcare and strengthened our position as a vital player in the industry.
Post covid, the demand stabilised as the world gradually reopened, but it ignited a lasting interest in digital healthcare. Patients and healthcare providers recognized the value of digital health and the trust that Practo built before and during covid enabled us to maintain revenue, improve margins while reducing operational costs.
Practo is a widely trusted brand for both doctor discovery and consultations. Nearly 90% of Practo’s traffic is organic, underscoring the effectiveness of our brand. The ‘Brand Practo’s’ CSAT score of 88% (as shown in chart 2) signifies the trust and loyalty we have cultivated. This was our second major turning point, as we not only adapted to the changing landscape but excelled within it, further strengthening our position as an industry leader.
However, the post-COVID world also presented us with another challenge: a tightening of funding opportunities for startups. We recognised this right at the beginning of 2022 and dedicated our energy to building a sustainable and profitable business model. This involved revisiting and enhancing our existing models along with optimising efficiencies across the board. With a mindset of profitability across the organisation, we were able to grow revenues sustainably, achieve significant improvement in unit economics while reducing losses by 50% leading to improvement in EBITDA. This financial transformation marked the third turning point in our journey, as we cemented our position as a financially sound and robust company, ready to meet future challenges with resilience and determination.
These turning points have not only been remarkable milestones in our journey but also reflections of our commitment to excellence, innovation, and patient-centred care.
Future Outlook: Growing Revenues and Strategic Investments Ahead
Looking ahead to FY ‘24, we are poised to achieve positive cash flow for FY ‘24 . We are focused on building resilience, fostering sustainable growth, and expanding into new territories that seamlessly blend the physical and virtual realms. We also continue to remain committed to investing in sales, technology, and engineering as we prepare for the next leg in our journey.
Our B2C business continues to be the biggest driver of growth contributing close to 80% to the overall revenues. We are determined to create sustainable financial growth while delivering exceptional service through our full-stack model while we explore more opportunities in the phygital space.
‘Phygital’ as the future : Building a Brand in Primary and Secondary Healthcare, with Franchise (FOFO, FOCO) and Company owned (COCO) Models
India’s tertiary healthcare segment boasts numerous renowned brands delivering exceptional care services, and one of the testament to this is the country’s status as a leading medical tourism destination globally. As of 2019, foreign tourist arrivals (FTA) for medical purposes had surged to an impressive 697,000, signifying the world-class healthcare services available in the country. While tertiary care has made substantial strides, the same cannot be said for primary and secondary care, which accounts for a significant portion of healthcare expenditure for patients.
Through our phygital journey, we are resolutely committed to delivering exceptional healthcare experience to Practo’s users and building a strong brand in the primary and secondary space. We’re doing this through a dynamic mix of franchise (FOFO, FOCO) and company-owned (COCO) models. Recognizing the challenge that patients face in distinguishing between healthcare providers, Practo is focused on creating innovative collaborations with existing establishments. Our approach takes into account quality, patient needs, growth potential, demand, geographical location, to name a few, ensuring a tailored approach. By working closely with various partners and stakeholders in the industry, we aim to deliver top-notch care, emphasizing modern infrastructure dedicated to patient hygiene, safety, and convenience.
Our journey, since inception, has always been anchored in patient-centricity, with a commitment to quality. And our services and offerings have evolved to meet the needs of our patients and customers. It’s the collective effort of all Practeons that has enabled us not just to survive but to thrive in this ever-evolving industry. And it is the passion to help mankind live longer healthier lives that continues to push us to #dogreat. We are confident that this passion will fuel us through the next phase as we enter the new era of phygital healthcare, built on the foundation of profitability.