PharmEasy DRHP: Here are a few key takeaways

The parent company of epharmacy company Pharmeasy, API Holdings, has filed its Draft Red Herring Prospectus (DRHP) with markets regulator SEBI on Monday for a Rs 6,250 crore initial public offering (IPO) through a primary share sale. 

The company is also in talks with investment bankers to raise Rs 1,250 crore as part of a pre-IPO round, which will bring down the fresh issue size.

In October, Pharmeasy raised Rs 2,602 crore approximately ($350 million) in a pre-IPO round from Singapore-based Amansa Capital, US-based hedge fund Janus Henderson, global healthcare asset manager OrbiMed, and other investors including Steadview Capital, ADQ, Neuberger Berman, among others. 

The round valued API Holdings at $5.4 billion. According to media reports, the round was a mix of both primary and secondary financing. The reports suggested that early investors also sold partial stakes to senior employees and founders. 

The company will utilise an estimated Rs 1,929 crore from the public offering towards prepayment or repayment of outstanding debts.

It has allocated Rs 1,259 crore towards funding its business expansion including investment in its subsidiaries and has earmarked Rs 1,500 crore towards inorganic growth including acquisition and strategic investments.

Kotak Mahindra Capital Company Limited, Morgan Stanley India Company Private Limited, BofA Securities India Limited, Citigroup Global Markets India Private Limited and JM Financial Limited are the book-runners to the issue.

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Here are a few salient points from the DRHP filed by API Holdings:

• The startup revenue from operations stood at Rs 23,352.69 million for FY 2020-21, as compared to Rs 6,675.42 for FY 2019-20. For the three month period of FY 2021-22 ending June 30, 2021, the revenue from operations stood at Rs 11,968.08. 

• The loss after tax for the three month period of FY 2021-22 or the first quarter was at Rs 3,138.91 million, as compared to Rs 6,413.36 million loss incurred by the company during the entire year for FY 2020-21.

• Naspers Ventures BV and Temasek are the largest shareholders in the company with 12.04 percent and 10.84 percent stakes. 

• Its platform had 87,194 pharmacies, 3,261 wholesalers, 4,617 doctors and 926 hospitals as on June 30, 2021.

• With the recent acquisitions made by API Holdings — including Thyrocare Technologies and its subsidiaries, as well as Akna Medical Private Limited and its subsidiaries — the company now offers a wide range of products and services including pharma, OTC and private label medical products, surgical and consumables, diagnostic services, and teleconsultations. The company had also acquired rival Medlife last year.

• The startup also invested Rs 265.9 million for FY 2020-21 and Rs 181.28 million for the first quarter of FY 2021-22 development of its proprietary technology infrastructure. 

Co-founders of the company, Siddharth Shah, Dhaval Shah, Dhramil Sheth, Harsh Parekh, and Hardik Dedhia, started their journey with on-call teleconsultation and diagnostic service platform DialHealth in 2012, which evolved into PharmEasy.