Janus Henderson Further Cuts PharmEasy’s Valuation To $2.7 Bn

Global asset management company (AMC) Janus Henderson has further marked down its stake valuation in Mumbai-based online pharmacy PharmEasy’s parent company API Holdings.

According to Janus Henderson’s regulatory filings with the US Securities and Exchange Commission (SEC), funds managed by the AMC marked the fair value of PharmEasy at $2.7 Bn, less than half of its $5.6 Bn valuation during the fundraise in October 2021.

Janus Henderson has cut the online pharmacy’s valuation twice in two weeks, having first marked its valuation to about $2.8 Bn as of December 31, 2022. The investor’s move also came days after the New York-based investment firm Neuberger Berman also trimmed the valuation of the epharmacy startup to $4.4 Bn. 

PharmEasy secured a valuation of $5.6 Bn when it closed its last funding round of nearly $350 Mn in October 2021, which saw investments from Singapore’s Amansa Capital, Blackstone-backed hedge fund ApaH Capital, Janus Henderson and others.

The fair value markdown comes at a difficult time for PharmEasy, as the online pharmacy has reportedly breached a loan covenant in its loan agreement with the US-based lender Goldman Sachs.

Turbulent Times For PharmEasy

Per the covenant, PharmEasy was supposed to raise an equity round of around INR 1,000 Cr ($120 Mn), associated with its burn rate. However, it has failed to raise the round after trying for a year and postponing its initial public offering (IPO).

The unicorn reportedly raised INR 2,280 Cr ($285 Mn) in debt from Goldman Sachs last August to pay off an earlier debt it had incurred to buy Thyrocare. The loan is said to be a five-year arrangement, attracting an annual interest rate of 17-18%.

PharmEasy hoped to pay off INR 2,000 Cr of its debt from the proposed IPO proceeds of INR 6,250 Cr. Having postponed its IPO plans to 2025, the epharmacy unicorn is looking to raise equity capital.

To be sure, it raised around INR 650 Cr in rights issue last year, and multiple sources close to the company cited by ET said PharmEasy does not have to raise a huge round, having reduced its burn rate significantly over the past few months.

During the year ended March 31, 2022, PharmEasy’s revenue from operations grew to INR 5,729 Cr from INR 2,235 Cr in FY21. Its losses were at INR 2,731 Cr in FY22 against INR 641 Cr in FY21.

A lot of Indian startups have seen their investors reduce the fair value of their stakes in them. The likes of BYJU’S, Ola, Gupshup, Meesho, Eruditus, Swiggy and Pine Labs have all witnessed valuation markdowns recently. 

However, these corrections do not permanently reduce a startup’s valuation. Investor markdowns have more to do with internal policies than the value of a startup. Valuations changes are linked with funding activity and unless a startup raises a down round, its valuation remains the same.