80% Of Physicians Use This Platform, Is It a Buy?

2021 was an epic year for IPOs, primarily driven by very low interest rates, and COVID-19 stimulus funding. In fact, in 2021, there were 976 IPOs, compared to 480 the prior year. One of the most noteworthy IPOs of the year was Doximity, Inc. (DOCS), which opened at $26 per share.

Today, it’s worth nearly twice that. It’s important to note that, unlike many others in the IPO space, DOCS never sold under its initial offering price. Compare that to ballyhooed IPOs like Uber, Facebook, Casper, and Zynga, amongst many others. That’s not to say that those companies haven’t gone on to reward shareholders–just that they had disappointing IPOs.

Analysts are bullish on DOCS, despite the rather lukewarm nature of SaaS for medical professionals. According to 11 analysts, the consensus fair market value is $65.91 per share, representing around 33% upside.

So, What Is Doximity, Anyway?

Some people call Doximity “LinkedIn for Doctors.” Others call it “Facebook for Doctors.” Neither description is entirely accurate.

Yes, Doximity is a social network for physicians and other medical professionals, such as physician assistants, and nurse practitioners. But it’s not a place to post memes.

Doximity is widely used as a recruiting tool by hospitals and health centers, as well as a place to confidentially consult with trusted colleagues about patient care, outcomes, medications, clinical trials, and other important issues.

Doximity’s DocNews® is a place where clinicians can keep abreast of the latest medical news. Recently, Doximity added Dialer, a feature allowing clinicians to provide telehealth services direct from their mobile devices, all thanks to Doximity’s app.

Clinicians can also earn continued medical education (CME) units by reading articles on the Doximity’s Op-Med section, written by participating clinicians. In early 2022, Dialer was named Best in KLAS’ in the Telehealth – Video Conferencing Platforms segment by KLAS Research.

In mid-2020, Doximity acquired THMED, a healthcare staffing company, and rebranded if as Curative Talent, which recruits for permanent, as well as temporary jobs, known in the healthcare field as “locum tenens.” The inherent power of Doximity’s ability to reach its audience of more than 1 million physicians, plus other clinical providers, coupled with an experienced recruitment firm, is powering much of Doximity’s growth.

In early 2022, Doximity also acquired Amion, a small Massachusetts-based company with software that manages call, shift, and resident scheduling. Amion’s enterprise version allows entire hospitals to manage scheduling with this easy and intuitive tool. As a result, Amion (and now Doximity) manages more than 200,000 physician schedules at thousands of hospitals, including 18 of the top 20 among U.S. News & World Report‘s Best Hospitals.

All Doximity’s features are HIPAA-compliant.

Where Does Doximity’s Revenue Come From?

Doximity generates its revenue from several sources:

• Big pharma
• Hospitals and health systems
• Enterprise accounts
• Telehealth

Big pharma companies use Doximity to market treatments to specialists, as well as general practitioners who might prescribe their medication. This is especially important to pharmaceutical companies looking to remain profitable after so many commonly prescribed medications have become generic.

Health systems and large teaching hospitals aim to promote content to doctors across the U.S. Getting their brand in front of referring physicians is part and parcel of new patient acquisitions.

Doximity partners with U.S. News & World Report to syndicate physician profiles. This allows patients to search for a recognized specialist to meet their healthcare needs. Doximity claims 77 percent of searches coming from the U.S. News partnership are from potential patients seeking a specialist. Health systems also use the tool to recruit top practitioners to fill key jobs.

Enterprise accounts create regular subscription-based revenue for Doximity. Each subscriber pays a minimum of $100,000 annually for access. Currently, Doximity claims more than 220 such customers, creating a significant income stream.

Telehealth is another important revenue stream for Doximity, with its add-on Dialer. Dialer charges a per-user fee rather than a per-use fee. Dialer allows clinicians to connect with patients in real-time using devices ranging from smartphones to tablets to laptops.

As part of its FY 2022 growth strategy, Doximity is now nurturing customers in the medical device and diagnostics field.

Who’s Behind Doximity?

Imagine if a serial entrepreneur, a medical doctor, and a marketing whiz in the tech field joined forces. That’s exactly what happened with Doximity.

Entrepreneur Jeff Tangney is Doximity’s CEO, but he’s not the only brainiac behind the company. Joining him is co-founder Dr. Nate Gross, founder of Rock Health, the first venture fund for digital health.

Rounding out the trio is co-founder Sheri Buck, who has deep experience in Silicon Valley. The three work closely with an advisory team, consisting of physicians and venture investors. Some of those investors include well-known names such as T. Rowe Price and Morgan Stanley.

Bullish? Bearish?

Despite some analysts giving DOCS a solid thumbs-up, there are some worrying signs.

If you’re seeking a long-term investment and aren’t afraid of a bumpy ride, DOCS could be for you, but if you’re investing for a short-term gain, you may want to pass on Doximity for now, primarily for technical stock chart reasons.

Candlestick analysis of DOCS shows some volatility, with two incidences of the troubling Three Black Crows occurring in Q2 2022, as well as an incidence of Dark Cloud Cover. These indicators give some credence to the “sell” ratings several analysts have recently given Doximity.

No matter what you choose, this company is one to keep an eye on, especially as it continues to move in the mergers and acquisitions space.