PharmEasy Plans To Raise INR 3,500 Cr Through Right Issue

Amid serious financial troubles, healthtech unicorn PharmEasy will raise INR 3,500 Cr through a rights issue next week to repay a large portion of its debt to Goldman Sachs.

The troubled healthtech startup has received a commitment of INR 2,000 Cr from Temasek Holdings, CDPQ, LGT, Abu Dhabi sovereign wealth fund ADQ, among others, Mint reported.

Moreover, PharmEasy is likely to get INR 1,200 Cr investment from Manipal Health Enterprises founder Ranjan Pai’s family office.

Once the right issue opens next week, a few small investors, such as B Capital, Everstone Capital, and JM Financial, will confirm their participation in the round.

Founded in 2015 by Dharmil Sheth, Dhaval Shah, Harsh Parekh, Siddharth Shah, and Hardik Dedhia, PharmEasy sells medicines online and also offers diagnostic tests through its multiple subsidiaries.

The startup has so far raised more than $1.5 Bn across multiple rounds.

Last month, API Holdings, the parent entity of debt-laden PharmEasy, decided to raise INR 2,000 Cr-INR 3,000 Cr via a rights issue, during an all-investor meeting. The company also approved a proposal by the Manipal Group to invest any shortfall amount if all investors do not end up participating in the rights issue.

Earlier, PharmEasy breached its loan covenant terms with Goldman Sachs within a year after raising the high-cost debt.

As per the loan terms, the startup was expected to raise an equity round of around INR 1,000 Cr ($120 Mn) but failed to do so. The company had raised the debt to pay off a previous debt that it had taken to buy Thyrocare.

Amid its many troubles, PharmEasy also faced valuation markdowns by two of its investors — Janus Henderson and Neuberger Berman, respectively. Facing financial troubles, the company also resorted to layoffs. According to the Inc42 layoff tracker, it has laid off close to 500 employees since last year.

In FY22, PharmEasy’s consolidated revenue from operations grew to INR 5,729 Cr from INR 2,235 Cr in FY21. Its losses also shot up to INR 2,731 Cr in FY22 from INR 641 Cr in FY21.

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