Sequoia-backed Pristyn Care lays off 300 employees to alleviate cash burn
Pristyn Care, backed by Sequoia Capital and Tiger Global, has raised $181 million so far. Now, the healthcare startup is eliminating roles to contain expenses, particularly related to employee costs.
Surgery care startuplaid off nearly 300 employees out of its 2,000-odd workforce last month as part of a broader cost-cutting initiative amid uncertain economic conditions, according to four people aware of the developments, including two who were recently asked to leave.
Nearly 15% of the workforce comprising junior and mid-level employees working in sales, administration, category, and city teams were affected in the exercise, these people said.
The Sequoia Capital and Tiger Global-backed healthtech firm cited under-performance for the move, according to the two former employees.
“I walked into the office one morning and was summoned by the HR manager to surrender my laptop. I was told that targets were not being met and employees showing poor performance were being dismissed,” one of them said.
Pristyn Care joins several healthcare companies eliminating roles to cut costs. Kalaari-backed Phable laid off 70% of its workforce last month, while Stride Ventures-backed Medibuddy let go of 8% of its employees in January.
Pristyn Care denied the layoffs, saying it had asked far fewer people to leave on grounds of poor performance.
"In the last 4 months, we have hired over 300 employees across the board and hence there have been no layoffs," a Pristyn Care spokesperson said in response to YourStory's questions.
"We have a comprehensive performance evaluation process that helps us understand the efficiency levels across the board. This is a regular process (to be efficient and effective) and we found around 45 employees across the organization who were performing consistently below expectations and we had to part ways," the spokesperson said.
While the healthtech firm logged a healthy revenue in the previous financial year and is ambitious about its future, its cash burn rate remains high. Employee benefit expenses made for the biggest cost centre.
Founder and CEO of Pristyn Care, Harsimarbir Singh, has said that the company had been “mindful” while hiring and did not need to lay off employees, according to a Financial Express report from last month.
Moreover, Singh wrote a LinkedIn post last week calling out the industry-wide move of layoffs.
“Many companies have gone from work-from-anywhere to come back to office or lose the job. It’s the same as hiring 10x and then cutting jobs 100X. As new age companies we need to innovate but not discard the past. Hire responsibly,” he said in the post, causing agitation among employees who are questioning the hypocrisy on online platforms.
The Gurugram-based company is also scaling down its international expansion segment that's focused on medical tourism, according to two people in the know.
Launched in June last year, the vertical aimed to popularise the influx of international patients to India for healthcare. The company initially focused on Uzbekistan, Turkmenistan and some eastern European countries with the aim of eventually expanding the service to Middle Eastern and Asian countries.
According to the two people quoted above, the vertical failed to generate sufficient revenue and contributed negligibly to the overall business. Out of the 10 employees in the vertical, a few were absorbed into other verticals while the others were laid off.
Pristyn Care's spokesperson said that the company recently built a new team specialising in international business, and that the medical tourism vertical remained on pilot mode.
"We are just experimenting in international markets for both medical value tourism and international expansion. The newly formed team is studying Middle East, Africa, Central Asia and parts of South Asia for MVT (where we can bring patients to India and treat them)," the spokesperson said in a separate email. "We are also running pilots currently in countries with similar healthcare infrastructure like India for international expansion (where we set up our operations)."
"Both these models are at an experimental phase and we are focused on scaling this business further. This will be our next phase of growth and we are very excited about it."
An industry executive, asking not to be identified, said medical tourism as a category was still nascent in India and "the infrastructure must develop further to support a business.”
A culture problem
Pristyn Care, a market leader in the surgery care space, is well-funded after raising about $181 million from eminent investors such as Sequoia Capital, Tiger Global Management, Hummingbird Ventures, and Trifecta Capital. Founded in 2018 by Harsimarbir Singh and Vaibhav Kapoor, the company’s quick turnaround was helped by the pandemic when healthcare assumed importance.
The company lauds itself over its asset-light business model. It has tie-ups with over 800 hospitals in the country that provide vacant operation theatres for conducting surgeries. Pristyn Care provides surgery equipment and medical expertise to patients for elective surgeries like proctology and gynaecomastia.
It registered a 270% growth in its operating revenue to Rs 96 crore in FY21, while expenses more than doubled to Rs 164 crore in FY21 from Rs 61.60 crore in FY20, according to filings with the Ministry of Corporate Affairs. Employee benefit expense was the biggest cost centre at Rs 52.9 crore in FY21.
The company aims to clock a revenue of Rs 1,000 crore by FY24 as it looks to keep its foot on the accelerator while aiming to minimise its cash burn rate, Financial Express reported last month just days before the layoffs took place.
However, it seems like the company grew too much too quickly.
The recent layoffs highlight a larger turmoil within the company, especially with employee attrition rising dramatically over the past year, according to two former employees and two industry executives. According to them, unrealistic targets and lack of communication are among the biggest problems within the firm.
“Within a month of joining, I was asked to bring on board 20 patients within a month. That’s impossible,” said one of the two former employees who resigned in December after a year-long stint.
”Getting in touch with my manager was always difficult. My colleagues knew I was struggling. How can the management state performance issues when it had been only a few months since I joined?” said another employee who was let go in February.
"Our attrition has been consistent over the past couple of years, talent retention has been one of our key metrics to drive people's productivity. We have in fact increased our headcount in the last year," Pristyn Care's spokesperson added.
A few months ago, CEO Harsimarbir Singh was widely criticised on social media after his LinkedIn post encouraging offbeat interview hacks went viral. He said that the company rings the candidate at 8.00 am to request an interview to find out if they are early risers, schedules telephonic interviews at 11.00 pm to check if they are late workers, and gets them to spend 6-8 hours in the office to test their culture and patience.
“This is a classic example of a toxic work environment,” said one Twitter user reacting to the post. “First thing to do is avoid the job if someone schedules a call outside working hours,” said another tweet.
“For a company backed by esteemed investors with so much money in the bank, it is irresponsible to make tall claims of great culture and assume a high moral ground,” said the other former employee.
[The story has been updated to correct a typo and add responses from Pristyn Care, including on the medical tourism vertical.]
Edited by Feroze Jamal and Akanksha Sarma