JAKARTA -- Halodoc, an Indonesian health-tech platform, was forced to shut down one of its business units that had been hit by the COVID-19 pandemic, a top company executive told DealStreetAsia.
The unit, Halodoc Goes to Hospital (HG2H), was in the business of drug delivery. It partnered with private and public hospitals and delivered medicines to patients' doorsteps.
Established in September 2018, HG2H claimed to have partnered with 500 hospitals by end-2019. But Halodoc CEO and co-founder Jonathan Sudharta said the management decided to wind up the business because drug orders from hospitals fell during the pandemic.
"Only a few patients went to doctors in hospitals during that time. Since it affected our service for drug delivery, we closed the business ahead of the third quarter of last year," said Sudharta.
Sudharta said the company has changed its business model over the past few months. Halodoc now offers teleconsultation, an online delivery service for drugs, and also a platform that helps patients book COVID-19 tests and hospital appointments.
Halodoc also has ties with insurance firms that give it access to the corporate sector under companies' health insurance schemes.
"In total, our revenue is bigger than what we earned from COVID," Sudharta said. Without delving deep into the numbers, he said the company's transaction volume grew 600 times in 2020, compared with a year ago, driven by teleconsultation and drug delivery, and COVID tests.
"Teleconsultation has grown tenfold, drug sales through the platform grew fivefold. We are the largest drive-through for PCR (polymerase chain reaction) and swab tests. Most recently, we also helped the government with vaccines. I don't think we have any issue in growth," Sudharta said.
However, three sources who know of the company's financials told DealStreetAsia that its revenue in the third quarter of 2020 fell. A source who declined to be identified said the revenue dropped by more than 50% from the quarter before. This was despite analysts' expectations that health tech businesses surged during the pandemic.
In the fourth quarter of 2019, the company's gross merchandise volume stood at $44.6 million, of which HG2H's revenues contributed 30%.
Against this backdrop, Halodoc is looking to raise funds. Jakarta-headquartered Astra International (part of Jardine Cycle & Carriage) that assembles and distributes automobiles, motorcycles, and parts, is understood to be in talks with Halodoc to invest in the company.
Before that, DealStreetAsia reported that U.S. tech giant Google was exploring an investment option in Halodoc. However, sources said those discussions had ended.
"The company has been grappling to raise funds, as its earnings dropped," said a source who also did not want to be named. Some potential investors have asked the company to lower its valuation to reflect its lower revenue in the third quarter of 2020, the person added.
According to a report by DealStreetAsia on Southeast Asia's telemedicine landscape in 2020, despite the overarching trend of private investments in the sector picking up during the pandemic, valuations of telemedicine startups appear to have fallen. According to proprietary data collated by DealStreetAsia, the median investment value for 2020 stood at $800,000 in the region, the lowest since 2016.
This is primarily because the market in Indonesia is still in its infancy.
"The fact that seed-stage transactions dominated most investment deals also contributed to the low median value. The average value of investments in telemedicine startups also declined to $3.7 million in the year  from $16.7 million in 2019," the report said.
In January 2020, Halodoc made headlines by raising $5 million in its Series B-plus round, which was co-led by Indonesia's Intudo Ventures and Taiwan-based conglomerate Uni-President. The round also saw the participation of Go-Ventures, Openspace Ventures, Allianz Strategic Investment, Prudential Life Assurance, Singtel Innov8, and the Bill & Melinda Gates Foundation. The company has so far raised about $100 million.
Health tech has been increasingly popular with investors. Between January and June 2020, Southeast Asia-based telemedicine startups inked as many as 10 fundraising deals, DealStreetAsia data showed. These include companies such as Doctor Anywhere, HealthMetrics, and Alodokter.
The sector witnessed a similar number of transactions during the entire 2019. In terms of value, however, there has been a significant drop during the period last year due to the absence of large-ticket deals.
The largest fundraisers last year were Alodokter with $45 million, Doctor Anywhere with at least $31 million, followed by DocDoc with $21.6 million.
Halodoc has led the acceleration of telemedicine adoption in the region. In 2019, the telemedicine industry drew fundraising of $117.2 million, led by Halodoc with $65 million.
For the original story from DealStreetAsia, click here.
DealStreetAsia is a financial news site based in Singapore that focuses on private equity, venture capital and corporate investment activity in Asia, especially Southeast Asia, India and greater China. Nikkei owns a majority stake in the company.