Curefit’s revenue jumps 2.7X in FY20; outstanding losses pile up to Rs 1,226 Cr

Fitness startup Curefit was hit hard by the coronavirus pandemic and the lockdown which began in late March of 2020, forcing it to close some of its fitness centres and even lay off staff. 

The company, which had raised Rs 832 crore in a funding round led by Temasek at the beginning of 2020, had its growth story hit abruptly by the pandemic roadblock.

But until the pandemic hit, the company was on its way to growing exponentially, burning through heaps of cash in the process. And regulatory filings now show that its operating revenue shot up 174% to Rs 496 crore during FY20 from Rs 181 crore earned in FY19.

Fitness was the highest-earning segment for the company making up 62.4% of its revenues followed by food services which accounted for 34.5% of the earnings. Healthcare Diagnostics and other related services made up for the rest 3.06%.

Payments related to employee benefits was one of the largest cost centres for the company accounting for 25% of the expenses. Such costs grew by 84% to Rs 328.6 crore in FY20 from Rs 178.7 crore in FY19. This jump was due to the several hundred people Curefit employed as trainers in its fitness centres and for its food vertical Eat.fit.

Purchase of raw materials for Eat.fit grew by 214% to Rs 102 crore in FY20 from Rs 32.5 crore in FY19 while Curefit purchased finished goods worth Rs 15 crore for sale on its platform during FY20. Transportation expenses also grew by 365% to Rs 37.2 crore during the same period.

Expenditure on advertising and promotion, including commission, also surged by 86.2% to Rs 239.5 crore in FY20 from Rs 128.6 crore. These payments made up 18.2% of the total expenditure incurred by the company. 

High leverage and finance costs are major problems faced by the company as evidenced by the 1255% growth in its finance costs, which shot up to Rs 103 crore during FY20 from only Rs 7.6 crore in FY19. Curefit borrowed Rs 107 crore during the same period apart from payments of lease liabilities of Rs 123.1 crore.

Payments related to legal fees were unusually high, growing by 78.3% to Rs 100.2 crore in FY20 from Rs 56.2 crore paid for the same in FY19.

Unexplained miscellaneous expenditure grew by 35.2% to Rs 151 crore, pushing total expenses to Rs 1,319.3 crore in FY20, up 118% from total costs of Rs 606.5 crore spent in FY19. 

Curefit spent Rs 2.67 to earn a single rupee of operating revenue in FY20, improving by 20.3% YoY.

While annual losses shot up 98.55% to Rs 741.4 crore in FY20, EBITDA margins had improved from -136.3% in FY19 to -111.03%  in FY20. Notably, outstanding losses have been piled up to Rs 1,226 crore at the end of March 2020.

While the financial performance of Curefit has been far from being healthy, the company is poised to record a steep fall in its revenue in FY21 due to pandemic. The fitness industry has been badly hit since the past year because of the pandemic induced lockdown, curfew and other restrictions. 

The hive-off of Eat.Fit would also reflect on its annual financial statement for FY21. The company had hived off Eat.Fit in October 2020 which is now helmed by Ankit Nagori. The food vertical had garnered more than one-third of the revenues for Curefit in FY20.

The hive-off along with the second wave of COVID-19 have hampered operations in the fitness companies in the ongoing fiscal year as well and Curefit is no exception. Curefit has not been able to raise a significant equity round and it won’t be as easy as it was earlier for the Mukesh Bansal-led firm to pull off a new round during this period of crisis. The company requires a fresh infusion to ease the burden of excessive debt, which is apparent on its annual statements as finance costs shot up 1255% during FY20.