1mg’s revenue crosses Rs 350 Cr; net worth erodes to negative Rs 883 Cr

Online medicine delivery startup 1mg has recorded a 77% jump to Rs 358 crore in its operating revenue in FY20 from Rs 202.3 crore in FY19. This comes at a time when the company has been in talks with Tata, International Finance Corp and Gaja Capital to raise over $100 million in fresh financing.  

1mg generated 75% of the topline through sales of medicines on its online pharmacy platform. These sales grew by 72% to Rs 268.1 crore in FY20 from Rs 156.2 crore in FY19. The diagnostics services churned 16% of its total revenue, regulatory filings show.

 1mg earned Rs 57.6 crore through these services in FY20, growing by 57% from Rs 36.7 crore in FY19. Its collections via facilitation and shipping services also grew 3.76X to Rs 21.8 crore in FY20 while advertisement and ancillary services accounted for another Rs 10.5 crore during the same period.

While the company has pushed its scale of operations, its balance sheet reflects the 1mg is in dire need of fresh equity capital to continue the growth. Its liabilities at the end of FY20 far outweigh its assets by a whopping 348.7%.

1mg is heavily leveraged and had a string of high loss-making years, which have caused a complete erosion of its net worth. 1mg’s balance sheet at the end of FY20 was deep in red with shareholder’s equity stands at Rs 883.3 crore. 

However, the company has tried to rein in its losses in the last fiscal improving its EBITDA margins from -137.4% in FY19 to -82.6% in FY20. The loss for the year rose by 6.6% to Rs 318 crore during the fiscal ended in March 2020.

Moving over to the expense sheet, purchase of stock in trade ( i.e medicines and cosmetic products) stood as the single biggest cost factor, making up 37% of the total costs. These expenses rose by 58.4% to Rs 252.87 crore in FY20 from Rs 159.6 crore in FY19.

Expenditure on advertisements shot up 2.5X from Rs 44.1 in FY19 to Rs 110 crore in FY20 and the company handed out discount coupons worth Rs 35 crore during the same period. Employee benefit expenses decreased marginally, amounting to Rs 120.3 crore in FY20 while logistics and packaging costs rose by 86.2% to Rs 43.2 crore.

1mg outsources its diagnostics services and spent Rs 25.7 crore on laboratory and testing costs during FY20. Importantly, the company passed a special resolution last week to alter its object clause in order to establish and run its own chain of pathology labs and collection centres to compete with the likes of Dr Lal Path Labs, Netmeds, Pharmeasy etc.

Overall, the company’s total expenditure for FY20 stood at Rs 687.2 crore, increasing by 35.4% from Rs 507.5 crore it spent in FY19. It spent Rs 1.92 to earn a single rupee of operating revenue in FY20, improving from Rs 2.43 in FY19.

1mg’s sales figures have been impressive in FY20 as reelected by the 77% jump in its topline and the company has managed to control losses which is a good sign. However, erosion of net worth is a matter of concern for 1mg and the Gurugram-based firm will need to raise fresh equity capital to balance that out. 

1mg’s sales figures have been impressive in FY20 as reelected by the 77% jump in its topline and the company has managed to control losses and it’s a good sign. However, erosion of net worth is a matter of huge concern for 1mg and the Gurugram-based firm is required to raise fresh proceeds soon.