According to World Bank data, India has just 0.7 physicians per 1,000 people compared to 2.8 and 3.5 in the UK and US, respectively. Access to healthcare is one of the pain points that Bangalore-based healthcare startup Practo tries to address.
Practo was founded in 2008 by Shashank ND and Abhinav Lal while they were still studying engineering at National Institute of Technology, Surathkal, Karnataka. Practo initially started as a healthcare practice management software provider. While most healthcare service providers had been using information systems, they incurred high maintenance costs. Practo was offering a cost efficient cloud-based healthcare Software-as-a-Service (SaaS) platform (HSP) to deliver healthcare information services with high clinical value and usability. By May 2009, it had closed its first sale to a doctor in Bangalore.
In March 2013, Practo launched the consumer-facing doctor discovery and appointment booking platform, which gave a shot in the arm for its valuation. It provides free listing for doctors and consumers also don’t pay for searches and appointment bookings. Currently, Practo allows consumers to search for doctors and diagnostic labs, book appointments, consult doctors online and order medicines. It manages over 35 million healthcare records, 45 million appointments, over 100 million healthcare searches annually, and connects tens of millions of patients to over 200,000 healthcare practitioners, 8,000 diagnostic centres, and 4,000 wellness and fitness centres in India, Brazil, the Philippines, Malaysia, Indonesia, and Singapore.
Practo has two main products. Practo Ray is a cloud-based, subscription-based practice management software for doctors and clinics. Practo claims to have 90% market share in India.
Practo Reach is a hyper local targeted ad platform that allows hospitals, clinics, and diagnostic centers to advertise to relevant consumers. The company is expanding this service to 100 Indian cities as about 25% of its search traffic comes from smaller cities and towns, where there is huge demand to find and access high quality doctors.
Over the past two years, Practo has acquired five companies to expand into the enterprise market.
In December 2016, it acquired healthcare analytics solutions firm Enlightiks for an undisclosed sum. Bangalore-based Enlightiks owns a predictive clinical and computational platform called Querent and uses Big Data analytics to provide business intelligence to healthcare providers. Enlightiks was founded in 2012 and was bootstrapped. About 50 of its engineers were absorbed into Practo.
With its $12 million acquisition of Instahealth in September 2015, Practo entered the hospital management space. Over 500 hospitals across 15 countries in South East Asia, Middle East and Africa used Instahealth. Bangalore-based Instahealth was founded in 2008 and has raised $1.1 million in 2009 from Inventus Capital Partners.
In September 2015, Practo also acquired hospital appointment scheduling firm Qikwell for an undisclosed amount. Bangalore-based Qikwell was founded in 2011. It had raised $3 million (over Rs 18 crore) in funding from SAIF Partners in 2014. Over 250 hospitals in 19 cities in India used Qikwell.
It also acquired fitness management platform FitHo in April 2015 and product outsourcing firm Genii Technologies in July 2015 for undisclosed amounts. Mumbai-based Genii had raised $100k in angel and seed funding while Delhi-based FitHo was bootstrapped.
Practo now offers Insta, Qikwell, and Enlightik’s advanced analytics platform Querent for hospitals.
Practo earns revenue from subscriptions to its suite of software and from advertising on its platform. The cost of its most popular Ray Clinic Management plan ranges from Rs 1000 to Rs 1500 ($25) per month. In the year ended 31 March 2016, Practo recorded revenue of Rs 165.14 crore ($27 million) versus Rs 29.73 crore ($5 million) a year ago. Net sales were Rs 156 crore ($26 million). Losses widened to Rs 64.61 crore ($10 million) from Rs 12.85 crore ($2 million) in 2015. The company claims to have witnessed a 129% growth in appointment bookings in international markets in 2016 as against 2015.
Latest financials are not available but Practo claims that certain parts of its business are already profitable and it is on track to achieve full profitability by fiscal 2017. In April 2017, the company announced that it cut its workforce of 1,500 employees by 10%.
Practo took almost two years to raise any venture capital. After acquiring a few hundred customers and a couple of lakhs (1 lakh rupees~$2,000 in 2011) in annual revenue, it raised $4 million from Sequoia Capital in May 2011. Since then, it has raised $179 million overall from investors including Sequoia Capital, Matrix Partners, Tencent Holdings, Sofina, Altimeter Capital, Google Capital, RSI Fund, Thrive Capital, and ru-Net. Its latest funding round was in January 2017 when it raised $55 million in a Series D round that valued it at $600-$650 million. The company will use the funds for international expansion and further improve its platform. It had previously raised $90 million in 2015 at a valuation of $500 million.
Practo is not looking at any exit options right now and has no timeline for an IPO. It appears that they DO have a path to profitability, and the business models are relatively clear and robust. The Series D valuation, if they did an estimated $50 million in revenue in the year ended 31 March 2017, is not hugely overvalued either. We don’t have confirmation on that revenue estimate though, so it is hard to tell exactly what number the Series D valuation is pegged to.
Maybe, a 2018 IPO with a profitable, sustainable business is a reasonable bet for Practo. It would be wonderful to see another healthy success story emerge out of India.