The Centers for Medicare & Medicaid Services (CMS) website will tell you that healthcare spending in the U.S. grew 9.7% in 2020 to hit $4.1 trillion, or $12,350 per person.
Health spending accounted for 19.7% of the nation’s GDP. Over 73% of this health spending is decided by doctors. It makes sense then that a platform for doctors would attract pharma companies, medical device companies and other companies in the healthcare space.
Welcome to Doximity (DOCS). The company is known as the “LinkedIn for doctors” and we’re bullish on the stock.
Doximity claims to be the “the largest community of healthcare professionals in the country – with over 80% of U.S. doctors and 50% of all NPs and physician assistants as verified members.”
Doximity shares have had a roller-coaster ride in the stock markets since their IPO in June 2021. The stock hit a high of $107.79 in September 2021 but have steadily fallen since then. It closed at $39.87 on May 2.
An All-Encompassing Network
Doximity is the largest social network for doctors, but it’s not just for doctors. Around 50% of nurses and 50% of doctor’s assistants are also on the platform.
It also has the entire medical student fraternity under its spell. Over 90% of medical students are Doximity members. In August 2021, the company announced the release of its 2021-22 Residency Navigator tool.
The Residency Navigator tool is “the most comprehensive online directory of American residency programs, and includes nominations, ratings, and individual reviews from over 100,000 Doximity physician members.”
The latest version of the tool has a feature called “Couples Match.” This lets medical students stay connected to their significant others. One in four female physicians are married to doctors, and 16% of male doctors are married to physicians, according to this 2020 survey.
The Residency Navigator is designed to help couples find residency programs that are geographically close. Did Doximity just become the number one matchmaking site for doctors?
Doctors and health professionals can use Doximity’s free app to connect with each other and share information, but hospitals and pharma companies have to pay for access.
They happily do so because Doximity gives them access to doctors. Hospitals can use this to scout for talent, while pharma companies can market their wares to doctors. The top 20 hospitals in the country are already on Doximity.
Beating Market Expectations
Doximity has beaten analyst expectations for three straight quarters. Its numbers for Q3 2022 show an increase of 67% in revenue year-over-year.
Revenue for the quarter came in at $97.9 million compared to $58.7 million. Net income came in at $55.6 million to $17.2 million year-over-year. Adjusted EBITDA came in at $47 million.
For Q4 ending March 31, 2022, Doximity provided revenue guidance of $89 million to $90 million, and adjusted EBITDA between $34 million to $35 million.
For the fiscal year ending March 31, 2022, Doximity has estimated revenues between $338.9 million and $339.9 million. This would mean a CAGR of 58% since it clocked $86 million in revenues in Fiscal Year 2019.
Adjusted EBITDA is expected to hit $145 million for the same fiscal year, a growth of 144% since Fiscal Year 2019. These are numbers that would gladden the heart of any investor.
Since announcing its Q3 numbers, Doximity has acquired Amion, a leader in physician scheduling. Its press release said, “Amion manages nearly 200,000 physician schedules at thousands of hospitals, including 18 of the top 20.”
Doximity also released a report which said, “Over 73% of patients plan to have telemedicine visits after the pandemic; nearly 60% of patients prefer mobile devices for telemedicine; telemedicine adoption among physicians is strong across age, gender and location.”
Wall Street’s Take
Doximity has a Moderate Buy consensus rating on TipRanks, which comes from five Buys and two Holds assigned over the past three months.
The average Doximity price target is $67.43, which suggests 105.5% upside potential.
Conclusion
An April 14 investor letter by investment management firm ClearBridge Investments has Doximity as a Buy.
The letter says, “We believe Doximity is poised to gain share within its core addressable market for medical professional marketing, hiring and telehealth solutions. We also see significant opportunity for growth beyond this initial target market, driven by the potential for the company to add new member types, broaden its customer base, expand internationally and offer direct-to-consumer applications. Doximity has a profitable financial model, though we see room for further margin expansion ahead, particularly as growth matures.”
All data points to the conclusion that Doximity is a great stock to invest in, and investors will likely reap rich benefits in the long run.
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