Healthcare and diagnostics app Practo, backed by Tencent, has revealed plans to go public with an initial public offering (IPO) within the next two years, according to co-founder and chief technical officer Abhinav Lal. The company anticipates turning a profit in FY24. Lal stated, “We should end FY24 with profits. Not a quarter, not a month, but a full-year profit. We should be in the green again after 14 or maybe 12 years. With the focus on profitability, we are 12-18 months away from an IPO.”
Practo intends to utilize the proceeds from the IPO for further growth, with no investors seeking an exit. Lal emphasized their selective approach to investors, stating, “None of them… (investors looking for an exit), thankfully for us. That’s where we have been very selective. To be very honest, a lot of it is going to be about future growth.”
In early 2023, Practo is targeting a doubling of its revenue to ₹400 crore during the current fiscal year. The company aims to achieve this target while prioritizing positive cash flow. Lal expressed confidence, saying, “We are on track. I think we should be able to get very close to that number and even achieve it. We are 90%-plus confident that we should hit that number, while the tele-consultation business, standalone is profitable.”
During FY22, Practo doubled its operating revenue to ₹188.9 crore, and it further increased to ₹194.53 crore in FY23. Backed by Tencent and venture capital funds Peak XV Partners and Matrix Partners, Practo is diversifying into healthcare delivery and other related services.
The telemedicine and online healthcare delivery sector is experiencing substantial growth in India. EY predicts that the Indian telemedicine market will reach $5.5 billion by 2025. Numerous telemedicine startups are securing capital to expand their customer base, with funding expected to reach $21.3 billion by 2025, showcasing a 27% compound annual growth rate from $2.2 billion in FY23 across 131 deals, as reported by Inc42.
Practo, based in Bengaluru, was founded in 2008 by Shashank N.D. and Abhinav Lal. The startup emerged as an early player in India’s tele-consulting landscape, connecting doctors and health professionals with patients in rural areas. During the COVID-19 pandemic, Practo experienced a 25-fold growth, with a focus on growth rather than profitability. Lal remarked, “We were in a growth phase then, now the focus is on profitability.”
Practo’s path to profitability involved cost-cutting measures and innovations, including reducing staff by 25% compared to the pandemic period. Currently, the company maintains a team of 700-800 members, with 75% of tele-consultations handled by an in-house team of doctors. Increasing the percentage of in-house tele-consultations has contributed to revenue growth, allowing Practo to offer affordable online consultations nationwide.
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Practo charges a fixed percentage of online consultation fees as its commission, although the exact share was not disclosed. Offline consultation fees vary by location and the doctor’s specialty, with an average charge of ₹250-280 per session.
