Doximity (DOCS): Powering the Digital Transformation of Healthcare

Published on September 24, 2024 | Ticker: DOCS

Doximity, Inc. (NASDAQ: DOCS) is the leading digital platform for U.S. medical professionals, boasting a network of over 80% of physicians across all 50 states and every medical specialty. The company's mission is to help every physician be more productive and provide better care for their patients by leveraging technology.

Business Overview

Doximity's cloud-based platform provides its members with a suite of tools specifically designed for medical professionals, enabling them to collaborate with colleagues, securely coordinate patient care, conduct virtual patient visits, stay up-to-date with the latest medical news and research, monitor their work schedules, and manage their careers. The company's revenue-generating customers, primarily pharmaceutical manufacturers and healthcare systems, have access to a range of commercial solutions that benefit from the broad physician usage of the Doximity platform.

Financials

In the fiscal year ended March 31, 2023, Doximity delivered impressive financial results, reporting annual revenue of $475.4 million, up 13% year-over-year. The company's net income for the year reached $147.6 million, while its annual operating cash flow and free cash flow stood at $185.8 million and $180.0 million, respectively.

During the fourth quarter of fiscal 2023, Doximity's revenue grew to $118.1 million, up 6% year-over-year and exceeding the high-end of the company's guidance range. The strong quarterly performance was driven by continued growth in the company's existing customer base, with the top 20 customers growing at 22% in fiscal 2023. These top customers include most of the leading pharmaceutical companies, who have a deep understanding and appreciation for Doximity's value proposition.

Doximity's profitability remains impressive, with a non-GAAP gross margin of 91% in the fourth quarter and for the full fiscal year. The company's adjusted EBITDA margin was 48% in the fourth quarter and for the full year, up from 44% in the prior fiscal year, showcasing the scalability of Doximity's business model.

The company's strong cash flow generation has enabled it to continue investing in growth initiatives while also returning capital to shareholders. During the fourth quarter, Doximity repurchased $21.7 million worth of shares, and for the full fiscal year, the company repurchased $284 million worth of shares at an average price of $23.19 per share. These share repurchase efforts have decreased Doximity's fully diluted shares outstanding by 5.5% since the fourth quarter of the prior fiscal year.

Outlook

Looking ahead, Doximity provided guidance for the first quarter of fiscal 2024, expecting revenue in the range of $119.5 million to $120.5 million, representing 11% growth at the midpoint, and adjusted EBITDA in the range of $55 million to $56 million, or a 46% adjusted EBITDA margin. For the full fiscal year 2024, the company expects revenue in the range of $506 million to $518 million, representing 8% growth at the midpoint, and adjusted EBITDA in the range of $238 million to $250 million, or a 48% adjusted EBITDA margin.

Recent Developments

Doximity's strong performance is underpinned by its growing network of healthcare professionals and the increasing engagement of its members. In fiscal 2023, the company added over 400,000 registered healthcare professionals to its platform, the second-highest growth year in its history, trailing only the COVID-related surge in 2021. Doximity now boasts over 60% of the roughly 550,000 nurse practitioners and physician assistants in the U.S. as members, in addition to the 80%-plus of U.S. physicians on its platform.

The company's engagement metrics also reached new highs in the fourth quarter, with double-digit year-over-year growth in unique active users on a quarterly, monthly, weekly, and daily basis. Notably, daily active users grew the most, underscoring the increasing adoption of Doximity's personalized newsfeed and EHR-integrated workflow tools among healthcare providers.

Doximity's newsfeed continues to be its most widely used feature, with over 900,000 unique prescribers scrolling the feed in the fourth quarter to stay up-to-date on the latest developments in their fields. The company's workflow tools also saw record engagement, with over 580,000 unique active prescribers utilizing these tools.

The company's strong performance is further evidenced by its high ratings and reviews. Doximity's app has over 165,000 reviews on the Apple App Store and is one of the highest-rated medical apps, with a 4.8-star rating.

Doximity's growth is not limited to its core physician network. The company has also made significant strides in expanding its reach among other healthcare professionals, such as nurse practitioners and physician assistants. This expansion aligns with Doximity's vision of becoming the essential platform for all healthcare providers, not just physicians.

The company's focus on innovation is another key driver of its success. Doximity has been investing heavily in developing AI-powered tools to enhance the productivity and efficiency of healthcare providers. The company's Doximity GPT, a HIPAA-compliant medical writing assistant, has been well-received by physicians, with one hospital even requiring all of its staff to use the tool.

Doximity's recent integration with Perplexity, an AI answer engine that provides the latest publicly-available information and citations, further demonstrates the company's commitment to leveraging technology to support healthcare professionals. This integration allows physicians on the Doximity platform to quickly access the latest guidelines and research, addressing a key requirement for making informed clinical decisions.

The company's efforts to empower its pharmaceutical and healthcare system customers are also noteworthy. Doximity's annual Pharma Client Summit, which brought together over 30 marketing leaders from the largest pharmaceutical companies, highlighted the growing importance of the company's Client Portal. This platform provides customers with enhanced reporting, purchasing, and content creation capabilities, streamlining their digital marketing efforts and delivering industry-leading ROI.

Conclusion

Doximity's strong financial performance, growing network of healthcare professionals, and innovative product offerings position the company well for continued success. As the digital transformation of healthcare accelerates, Doximity's unique position as the leading platform for medical professionals is likely to drive sustained growth and value creation for its shareholders.

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Doximity (NASDAQ:DOCS) - Pioneering Digital Healthcare Transformation

Doximity, Inc. has emerged as the leading digital platform for medical professionals in the United States, connecting over 80% of physicians across the country. Founded in 2010, the company has rapidly expanded its reach and capabilities, positioning itself as a vital conduit between healthcare providers, pharmaceutical companies, and patients.