Practo is racing toward FY25 break-even, unleashes AI healthcare and eyes global expansion

Practo’s FY24 results may set it on the path to an initial public offering (IPO). Over the past four financial years, Practo has grown revenues, although it is still losing money. Revenue increased from Rs 105 crore in FY21 to Rs 240 crore in FY24. It has brought down operational losses, with Ebitda or earnings before interest, taxes, depreciation, and amortisation going from -Rs 87 crore to -Rs 32 crore, and adjusted Ebitda losses decreasing from Rs 82 crore to Rs 18 crore.

The adjusted Ebitda margin as a percentage of revenue has improved, moving from -78.10% to -7.50%, indicating a positive shift in operational efficiency and cost management.

Inspiration

The results have charged up Practo’s founders, Shashank N.D. (37), Abhinav Lal (36), and Siddhartha Nihalani (37), who were all fresh information-technology (IT) graduates from the National Institute of Technology Karnataka at Surathkal, when they coded Practo in 2008.

“What started in our dorm rooms has grown over the past 16 years,” Shashank, who is also the CEO of Practo, says. As a student, Shashank had to help his father undergo several surgeries and got to see some doctors up close. “I saw the surgeon’s dedication and how much work he put in for each patient before and after appointments,” Shashank says.

He decided to help create software to help doctors schedule appointments and even discuss cases with other doctors. Shashank and his partners all participated in placements. Although they were all offered jobs, none of them joined.

Internet access was not widespread when Shashank and his friends built Practo Ray, a clinic management software that brought doctors online and allowed them to interact with their patients. Practo grew as it added features and acquired a company. It got the IPO itch and planned it for 2021, but 2020 was a shock. Since then, the journey from pre-pandemic optimism in 2019 to aiming for post-pandemic profitability has not been easy.

Practo cites adjusted Ebitda, a financial metric used to evaluate a company’s operating performance by removing certain non-operational items, ESOP costs or non-recurring items from Ebitda. “We were close to achieving profitability in FY20,” Shashank says, referring to the financial year just before the Covid-19 pandemic that laid the world low. “Ending the year with nearly a minus 10% Ebitda margin, we were on the verge of a financial breakthrough.”

“The first year of Covid-19 was challenging as everything shut down, resulting in substantial losses,” Shashank says. “In the second year, we had to invest heavily due to the surge in demand for teleconsultation. We had to add infrastructure and increase marketing efforts, further impacting our finances.”

“Only from FY23 onwards could we refocus on improving our bottom line. We optimised a lot of stuff, automated processes, and focused again on our core business,” Shashank says. This strategic shift worked. “We had previously spread ourselves thin by investing in e-pharmacy and e-diagnostics. Although we continue these initiatives, our primary focus returned to our core strengths: doctor-side services, teleconsultation, and software,” he says. “We became one of the first digital health companies to achieve profitability while still growing,” Shashank claims.

Practo claims to have seen a 90% improvement in Ebitda over FY23 and a 22% growth in revenue in FY24. The company says it has achieved a positive adjusted Ebitda in Q4FY24 and aims to maintain this momentum in the full year of FY25. Shashank says, “With the advent of AI, we believe the upcoming years will be promising for us.”

The IPO That Got Delayed

Practo has been preparing for an IPO for several years but put off the plans after the pandemic disrupted life. It focussed on business growth. The IPO will power Practo’s expansion into small cities and towns and allow it to spend on AI. “The first step in the IPO journey is achieving profitability, and we have reached that milestone. Now, we are planning for this next phase. There are no specific timelines,” Shashank claims.

Practo is investing in expanding its provider network and advancing its AI capabilities,” he says. This dual focus aims to improve the range and quality of the healthcare solutions that Practo offers.

Practo is expanding in West Asia, where it already has a presence, especially in the United Arab Emirates, centred on Dubai and Abu Dhabi. Saudi Arabia is also becoming an important market. Expansion in West Asia is a strategic decision. “As one of the profitable entities in this sector, we can replicate this success in other markets,” Shashank says.

In India, It’s About Tiers

Practo has reported growth in India’s Tier II and Tier III cities, which are doing better than the Tier 1 metros, following a shift in consumer behaviour driven by increased affordability and enhanced awareness. “The premiumisation trend in Tier II and Tier III cities is noteworthy, especially following Covid-19, which prompted many people to relocate,” says Shashank. “People in these cities now aspire for branded, higher-quality products and services,” he says.

Abhinav Lal cited the penetration of smartphones and the affordability and access to high-speed internet. “In healthcare, it is not about being the fastest possible care, but it is about being the highest quality of care. And at Practo, we use data and technology to help our customers find the best care for their healthcare needs,” says Lal.

Shashank says that, as affordability increases, more private hospitals are opening branches in Tier II and Tier III cities.

For Practo, premiumisation is a big opportunity. “While we previously focused on the Top 10 cities, we now have the chance to expand into 60-70 cities and deepen our presence. We’re already established in these areas but are expanding further to meet this growing demand.”

Practo’s rivals are also getting into the underserved regions, offering everything from online pharmacies to teleconsultations.

Satish Kannan, Co-founder and CEO of Medibuddy, which provides teleconsultations, online pharmacy, lab tests, and cashless hospitalisation services, sees digitalisation reshaping India’s healthcare landscape as innovations improve access, convenience and quality care.

The biggest beneficiaries will be those in underserved regions, says Kannan. “Video consultation has become our fastest-growing category,” Kannan says. “Health checks, diagnostics, and online pharmacies are expanding swiftly.”

Leveraging Tech

Practo Ray was launched when internet access was limited, but doctors liked it because it got them online, enabling virtual patient interactions, says Shashank.

Practo is looking at how AI can help bridge language barriers in healthcare. “AI can seamlessly translate and facilitate this interaction, ensuring that language is no longer a barrier to receiving quality care,” says Shashank.

Shashank says AI can help doctors record appointments, take detailed notes, work out treatment plans, and write prescriptions. Practo can use AI to help collect, use and analyse data, validate doctor credentials, audit healthcare facilities, provide customer feedback, and develop scoring systems. Practo offers doctors a digital prescription so the patient gets the prescribed medication without any guesswork over handwriting or dosage.

Shashank says Practo was the first to validate every doctor on its platform and pioneered providing patient feedback. “We introduced the excellence score for hospitals and clinics, reflecting their investment in infrastructure and clinical processes. We conduct physical audits and take photographs of their equipment, simplifying this information for patients,” he explains.

Practo works in three main areas: doctor discovery, telemedicine, and software. “We now have more than five million verified patient feedback reviews, making us the only platform with such a large number of genuine, verified reviews for doctors,” he says.

Growth and More Growth

India’s digital health sector is growing significantly and is driven by technology and consumer demand. According to Frost & Sullivan, the market, which includes telemedicine, health management apps, and electronic health records, was valued at approximately Rs 2.35 lakh crore in 2023. The market is projected to expand to around Rs 15.12 lakh crore by 2026, supported by a compound annual growth rate (CAGR) of about 26% from 2023.

Ankur Dhandharia, Partner, Healthcare Strategy, EY India, says digital health platforms are powering better diagnostics and opening up personalised care.

“The digital health space continues to see a shift in teleconsult and B2B business models towards B2C and ecosystem play to address wellness to surgery needs of patients. While geographical expansion and partnerships drive growth for players like Medibuddy and Practo, business models are still evolving to address high customer acquisition costs,” says Dhandharia.

Industry experts say that consumer demand is also a significant driver, with increasing interest in convenient and personalised healthcare solutions. Digital platforms offering health tracking, teleconsultations, and customised wellness plans have gained popularity, particularly after the pandemic.

“Practo has experienced significant growth by expanding its platform and services in recent years. Practo has diversified into various aspects of healthcare, including telemedicine, diagnostics, and health records management,” says Sanjay Sachdeva, Director of Healthcare & Lifesciences at 1Lattice, a market research and consulting firm.

Three developments are driving healthcare’s growth, says Prashant Tandon, Co-founder and CEO of Tata 1mg, a digital healthcare platform offering online pharmacy services, lab tests, and teleconsultations for accessible healthcare.

“First, the sheer speed and scale of digitalisation have created a wealth of data, coming at the right time for AI to make a real difference in healthcare,” Tandon says.

“Second, all stakeholders—doctors, hospitals, patients—love digital healthcare. Third, government initiatives such as ABDM and the UHI are creating a strong backbone or network,” Tandon says.

The ABDM, or the Ayushman Bharat Digital Mission, will enable all Indians to securely store and access their medical records, share them with healthcare providers, consult specialists online, and order medicines without visiting a pharmacy. Doctors will get to see their patient’s records online. The Unified Health Interface is a key part of the ABDM and allows for a seamless user experience, giving each a unique identification number.

So, even as the Practo app could be helping thousands get into online calls with their chosen doctor or book appointments, Shashank’s techies are working quietly on deeper integration with ABDM. Practo has booked an appointment with Dr Profit.

@neetu_csharma