Swasthvik Clinics sells a Rs 999 a month family health membership. What does each member contribute, what is a member worth over their lifetime, and at what level of usage does the model fail?

Each member contributes Rs 549 a month, worth about Rs 10,980 over a 20-month life, 4.6 times the Rs 2,400 acquisition cost. The economics look strong at 0.6 visits. But visits are unlimited, and at about 1.6 visits a month a member never repays its acquisition cost. The diligence question is whether usage drifts up as light users leave and heavy users stay.

A gym that charges a monthly fee makes money because most members come rarely; the business is priced on the average, not on the regular. An unlimited-use membership is a bet that average usage stays low, so the unit economics are only as good as the usage assumption. At 0.6 visits a month and Rs 450 a visit, a member costs Rs 270 in consultations and Rs 180 in test discounts. Rs 999 less Rs 450 leaves a contributionRevenue from one customer less the costs that rise directly with serving that customer. It is what is left to pay for acquisition, overheads and profit. of Rs 549 a month.

With 5% of members leaving each month, the average member stays 1 divided by 0.05, 20 months. Lifetime valueThe total contribution a customer is expected to bring over the whole time they stay. With a steady monthly churn rate it is monthly contribution divided by that rate. is Rs 549 times 20, Rs 10,980. That is 4.58 times the Rs 2,400 acquisition cost, and the member repays acquisition in about 4.4 months. On these numbers the model works comfortably.

Contribution falls Rs 450 for every extra visit a month. It reaches zero at 1.82 visits. But the model fails before that, because each member must also repay its Rs 2,400 acquisition cost over a 20-month life, Rs 120 a month. At 1.55 visits a month, lifetime contribution only just equals acquisition cost, and every extra member acquired destroys value. Many investors want lifetime value of at least three times acquisition cost, which Swasthvik loses at just 1.02 visits.

Because the members who use the clinic most have the most reason to stay. Suppose the average of 0.6 visits hides two groups: 80% of members at 0.4 visits who cancel at 5.5% a month, and 20% at 1.4 visits who cancel at 3%. That blend matches the 5% churn. After twelve months the heavy users are about 25% of the survivors, average usage has drifted to 0.65 visits, and contribution has fallen to about Rs 524. This is adverse selectionWhen the customers most likely to sign up or stay are the ones who cost the most to serve, because they know their own needs better than the seller does., and it is the central risk of any unlimited health plan.

So the diligence asks are specific: visits per member by cohort and by month of tenure, the share of members with chronic conditions, and whether price rises or visit caps have been tested. Close with the view: the model is attractive at today's usage, and the investment case rests on Swasthvik showing that usage in its oldest cohorts is stable, not rising towards 1.5 visits.