Doximity IPO on nYSE is approaching can it be one of the best IPOs of 2021?

Most investors haven’t heard of this company, Doximity, however medical professionals and doctors are pretty familiar with its cloud-based digital platform. Doximity is planning to go IPO this year and I believe it is worth having a look at the company. In this article, I am going to talk about the company as a whole, its services, growth and profitability as well as the IPO details.

Summary

  • Doximity was launched in July 2010, with the purpose to better monitor the health care section both for the doctors to be more efficient and for the patients to receive better care. The San Francisco-based company is an online networking service for medical professionals that offers its members medical news, case collaboration, and messaging capabilities to keep them up to date.
  • The future growth of the company is much dependent on the convincing of existing customers to use additional services. However, this has proved to be very successful for the company’s revenue that saw an increase of 153% on the net revenue retention rate for the quarter ended on March 31.
  • What is impressive about the company is that it is already profitable which is unusual for an early-stage company.
  • The company will go public on New York Stock Exchange under the ticker DOCS. It plans to offer 23,300,000 shares with 19,010,750 for sale by the company and 4,289,250 offered by an early investor. The exact share price is yet to be released, but the company has initially proposed a range of $20 to $23.

 

 

About Doximity

The company was launched 11 years ago in July 2010, with the purpose to better monitor the health care section both for the doctors to be more efficient and for the patients to receive better care. The San Francisco based company, is an online networking service for medical professionals that offers its members medical news, case collaboration and messaging capabilities to keep them up to date.

Doximity or the professional medical network for physicians has over 80% of U.S. doctors and 50% of all NPs and physician assistants as verified members on its platform. It is impressive to see that its network has actually a larger membership than the American Medical Association, and more doctors use Doximity than Epic, the top EMR in the United States.

The company has an application that can be used by both doctors and patients. Dialer Video on the app connects doctors to the patients through a no reply text message, meaning with a simple tap doctors can practice telemedicine. Users can also send and receive electronic faxes while doctors can call patients from their personal cell phone while displaying the office number. Therefore, personal information does not get exposed and medical care works can be more convenient than ever.

Source: https://doximity.hospitalsolutions.com/dialer-enterprise-solutions

 

“We support physicians in an era of information overload, by solving signal-to-noise challenges with our news tools. Our newsfeed addresses the ever-increasing sub-specialization of medical expertise and volume of medical research by delivering news and information that is relevant to each individual physician’s patient population, clinical practice, and professional relationships.”

The Doximity team is formed by health tech leaders from institutions as big as Cleveland Clinic, Stanford University, UCSF and Medscape. The CEO of the company, Jeff Tangney previously founded Epocrates (EPOC) and the co-founder Dr. Nate Gross previously founded Rock Health, the first venture fund for digital health. 

Growth and profitability

 

Moreover, the company has 600 subscription customers, with 200 of them already contributing $100,000 in annual revenue and 29 contributing $1 million. The company has introduced the telehealth solution in 2020 and started charging for its services earlier this year. The future growth of the company is much dependent on the convincing of existing customers to use additional services. However, this has proved to be very successful for the company’s revenue that saw an increase of 153% on the net revenue retention rate for the quarter ended in March 31.

During the last year of operation, more than 63 million telehealth visits have been completed.  Thus far, Doximity has signed 150 health systems to its telehealth services, including six of the top 10 hospitals and health systems in the U.S. This could represent a significant growth driver going forward.  

Looking at the numbers, Doximity generated a revenue of $206 million for the quarter ended on March 31 compared to a $116 million last year. This is a 78% increase. What is impressive about the company is that it is already profitable which is unusual for an early-stage company. In the stock market, there are many companies that have a high price per share but are not yet profitable such as Airbnb (ABNB). Having a look in the health sector, Clover Health (CLOV) for example, is improving its revenues but until March this year, it was still losing money and reported a net loss of $91.6 million.

What to be aware of

 

Investors should know that Doximity gets a large amount of its revenue from a few key customers, with one of them accounting for 12% of its sales last year. Therefore, you can imagine that if the company was to lose these few key customers its revenues would take a big hit.

About the IPO

 

The company will go public on New York Stock Exchange under the ticker DOCS. It plans to offer 23,300,000 shares with 19,010,750 for sale by the company and 4,289,250 offered by an early investor. The exact share price is yet to be released, but the company has initially proposed a range of $20 to $23.

In order for the management to ensure that customers are fully invested the company will allocate up to 15% of its shares or a “reserved share program.” This will allow certain doctors who use its platform to invest in the company, buying shares at the IPO price. To participate, the physicians must meet minimum eligibility requirements, based on platform activity or attendance at member advisory meetings. 

 

Bottom Line

 

IPOs are inherently risky and in many scenarios, we have seen previous IPOs rallying hard on the first few days of their release and then plumping down to earth prices. This is something all investors should know and be cautious for. On a general note, Doximity shows impressive financial and customer metrics which helps “ignore” or want to undertake the risk in order to benefit from the company’s future success.

Disclaimer – I/we have no position in any stock mentioned. I wrote this article myself, and it expresses my personal opinions. I am not receiving any compensation for it, other than FDGT Academy. I do not have or had in the past any business relationship with any company that is mentioned in the above article.

Natalia C. - Junior Analyst at FDGT Academy

Natalia C. - Junior Analyst at FDGT Academy

I am a stock analyst/investor with prior experience and knowledge to BSc Accounting and Finance. After completing my degree and exposure to the accounting firms I decided that the direction I should choose is towards the Investment world. I completed my masters in Investment Management where it gave me solid fundamentals to build my career on. I have examined a lot of different aspects of investment, from REITS, derivatives, currencies, bonds, equity and hedge funds. I never stopped learning about the market which is why I can analyze and write articles for FDGT community always personally opinionated. My passion are green energy and electric vehicles stocks as a whole. I also had my share of analyzing the work form home stocks that are coming to take over in the upcoming years.

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