Kalaari Capital-backed Red.Health struggles to clear salaries

Backed by investors like HealthQuad, Kalaari Capital and HealthXCapital among others, the company has raised a total funding of $22.6 million so far. (Photo: Company website)
Backed by investors like HealthQuad, Kalaari Capital and HealthXCapital among others, the company has raised a total funding of $22.6 million so far. (Photo: Company website)

Summary

  • There has been no intimation from Red.Health on when the salaries will be credited. December salary was also delayed by two days and was disbursed on 3 January.

Red.Health, an ambulance aggregator backed by Kalaari Capital, has partially delayed January salaries for its staff, with only 50% disbursed so far, according to people aware of the matter.

The company had paid half of the wages to paramedics and employees on 9 February, according to a current employee. There has been no intimation of when the remaining salary will be credited.

According to multiple sources, the company has struggled to raise funding for an extended period and is likely facing issues in scaling up its business. Last year, it laid off about 800 employees after hiring aggressively on the back of funding, the sources said.

Founder and chief executive Prabhdeep Singh, however, said the company’s business has doubled since September. “Given the nature of our business, we had to launch ambulance services for three big hospitals this month and had forward investments to be made. This meant prioritising those launches over paying everyone’s salaries," Singh said in response to Mint’s queries.

“Our funding round is closed and we are awaiting money to be wired this week. Basis that, and to manage working capital we had given a choice to old employees to hold salaries back. Please note that most of the salaries are already paid," Singh said.

Red.Health will announce its fundraise in about 15 days, he said, adding that it would be one of the largest Series B funding rounds in the country. He didn’t disclose more details. Series B funding rounds typically range from $10-$25 million.

Backed by investors like HealthQuad, Kalaari Capital and HealthXCapital among others, the company has raised a total funding of $22.6 million so far, of which about $20 million came as Series A funding in January 2022. This was then termed as the largest Series A funding raised in the healthcare sector. 

Early-stage deals saw a dramatic shift in pace and ticket size in 2022, with Series A rounds hitting the $10 million mark in average deal size, according to a Bain & Company report.

The situation in Red.Health mirrors a broader trend of startups, including Byju's, Dunzo and test prep company Exampur, delaying employee salary payments due to financial difficulties.

Red.Health is an emergency response platform that aggregates ambulances and claims a response time of eight minutes. It has a fleet of about 100-150 ambulances and has tied up with local vendors for around 5,000 ambulances. It claims to have a network of over 300 hospitals.

Data from Crediwatch shows that the number of employees fell from 1,718 in May to 1,011 in July last year. According to Linkedin, the current employee strength of the company is around 300.

The company posted a revenue of 46 crore in FY22 against 26 crore in the previous year. Its loss widened to 1.4 crore in 2021-22 from 19 lakh in the year-ago period.

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