In the past two years Cure.fit has emerged as the biggest brand riding on the wave of the growing Indian fitness industry providing an end-to-end solution to the age-old fitness problems from nutrition and exercise to healthcare and grocery.
In the last fiscal the company’s growth blew up fueled by huge investment rounds that the promoters managed to raise. During this time, the company founded by Mukesh Bansal and Ankit Nagori not only saw its revenue and expenses rise, but also witnessed an improvement in unit economics.
According to regulatory filings, Cure.fit’s operating revenues grew 7.3X to Rs 181 crore in FY19 from Rs 24.7 crore in FY18 and it spent Rs 350.7 crore on purchasing property and infrastructure to add more facilities each month in various cities.
While the company spent heavily on growing its scale, the growth came at a steep price. Cure.fit lost Rs 373.5 crore in FY19, four times as much as the FY18’s figure of Rs 95.4 crore.
Almost 70% of operating revenues — Rs 124.5 crore — were generated by offering fitness and healthcare services while the sale of food through its cloud kitchens added another Rs 55.2 in FY19. These cloud kitchen sales grew 10.2X as compared to sales of Rs 5.4 crore in FY18.
The Bengaluru-based company earned another Rs 1.1 crore through platform fees and sale of merchandise. It also added Rs 52 crore to its coffers through non-operating incomes (interest & investment gains) during the year ended in March 2019.
Cure.fit offers a bouquet of health-related services including Cult.fit for workouts, Eat.fit for healthy food, Mind.fit for mental health, Care.fit for primary health care and fitness gear. The company has been growing aggressively — both organically and through acquisitions — since its inception in 2016.
And like any other growth-stage company in the ecosystem, Cure.fit burned through a huge pile of cash to achieve this growth across its verticals. During FY19, its total expenditure grew 4.6X to Rs 606.5 crore as compared to Rs 131 crore in FY18.
Employee benefits remained the single biggest cost element for the company during FY19, growing 3.7X to Rs 178.7 crore from Rs 48 crore in FY18.
Running a chain of gyms and cloud kitchens had its real estate costs as well and the company spent Rs 104.2 crore on rent and facility management in FY19. This expenditure grew 5X from Rs 20.8 crores in FY18.
During FY19 the company paid for a blitzkrieg of advertising and promotions to penetrate the market and increase its user base. And expenses for the same registered 5X growth to reach Rs 108.6 crore in FY19 as compared to only Rs 22 crore in FY18.
Purchase of raw material and stock-in-trade for kitchens accounted for Rs 35 crore in FY19, growing almost 6x as compared to Rs 6 crore in FY18. Legal charges were also a big addition to the expense sheet for the company, ballooning 5.6X from Rs 10 crore in FY18 to Rs 56.2 crore in FY19.
Importantly, Cure.fit also paid out Rs 20 crore as commissions to selling agents in FY19 and this expense grew 100X from Rs 20 lakh it paid for the same in FY18.
The company spent Rs 4.6 crore on training and recruitment to manage its growing scale and Rs 8.2 crore on IT & research along with the miscellaneous expenditure of Rs 19 crore during the fiscal ended in March 2019.
The snowballing of expenditure was clearly reflected in the cash flows of the company. Its negative cash flows grew 4x to Rs 231 crore in Fy19 from Rs 59.2 crore in FY18 and the end of last fiscal the company’s balance sheet sported outstanding losses of Rs 483.3 crore.
But there’s also a silver lining as Cure.fit managed to improve its unit expenditure by 37%. It spent Rs 3.35 to generate a single rupee of operating revenue as compared to Rs 5.3 crore it spent for the same in FY18There was no dearth of capital for the company to fuel its expense, it raised Rs 995.3 crore through issue of shares and borrowed another Rs 56.5 crore during the fiscal year ended in FY19.
Cure.fit’s total assets stood at Rs 1,208.7 crore at the end of FY19, ballooning 4X as compared to FY18. The company held around 61% — Rs 735.4 crore of these in financial assets, Rs 100.6 crore in leasehold property and Rs 119 crore in goodwill acquired through acquisitions.
Apart from Fitness centres, all other verticals collectively generated Rs 58.8 crore in revenues and lost more than twice the money — around Rs 126 crore in FY19.
With the introduction of new verticals such as grocery and addition of other health-related services, Cure.fit is expected to register high revenue growth in the ongoing fiscal. The gap between expense and revenue is also likely to shrink further as it would leverage network effect around its super-app ecosystem.