$DOCS –LinkedIn for healthcare?🩺💉
Doximity is a high-growth company that created a platform for U.S. medical professionals (80% of all physicians across the US use this!). I see the platform as LinkedIn with tools specifically made for physicians built into the platform (video tools, telehealth applications).

Mission: To help physicians be more productive and provide better care for their patients

What I like:
  • Net revenue retention rate of 171%
  • Low sales and marketing costs – most physicians join because of network effects
Recurring revenue is a majority of complete revenue
  • Revenue growth (67% YoY)
  • High margins (57% GAAP net margin YoY) – understated
  • Extremely high net income and free cash flow growth.

  • 2 out of 3 co-founders are still involved, one being the CEO.
  • Very high glassdoor ratings. (4.8/5).
  • High insider ownership (27%)

What I don’t like:
  • Competition: LinkedIn, Teladoc and basically any other telehealth business
  • VERY high valuation. (EV/Sales NTM: 15.9, P/GP: 26.4x)

Overall a very strong business, but the stock is pricey! I’ll be looking for an entry at more attractive levels. What do you think?🧐

I’ll be doing more short pitches on stocks like $MELI , $PATH , $U , $NVDA , $DDOG soon, so follow me for more! 😁
Dollars and Sense's avatar
Cool business but that valuation. I took one look at 20x Sales and man. Seems like a business that will drop to $5 and get acquired by someone like $TDOC
Steve Matt's avatar
I own DOCS and don’t consider LinkedIn not TDOC competitors. The reason being:
  1. It’s anecdotal evidence but my wife is a doctor and I did some boots-on-the-ground research when DOCS was coming public. She isn’t on LinkedIn nor were any of the couple dozen doctor friends except one who was in a different line of work before going back to med school. They were all on Doximity. ALL. Basically, doctors just don’t seem to use LinkedIn.
  1. TDOC doesn’t have the social networking aspect or the platform for companies to advertise to medical professionals.
Doximity is basically the only company doing telehealth and social networking for the medical professionals. I can’t imagine LinkedIn will focus resources just to get that subset of people nor would TDOC as they have bigger fish to fry.
My one big ask of management is figure out how to capture international business.
ThomasFJE's avatar
@interrobangbros I kind of agree with you! Neither $TDOC nor LinkedIn are what DOCS is. I hope management tries to capture the international market but I’ve not seen any signs of that coming anytime soon…
Strat Becker's avatar
When they’re already at 80% penetration it’s hard to find a still arguably obscene sales multiple like that to be worth it. Especially since the high penetration means growth rate likely slows materially unless they find ways to rapidly increase revenue per user, net revenue retention rate is also likely unsustainable if i were to guess
Steve Matt's avatar
@strat 80% penetration rate for doctors. Nurses penetration is ~50% and PAs are also ~50%. But that's beside the point. Doctors and NPs and PAs aren't the customers. The app is free to them. Hospitals, pharmaceutical companies, and other healthcare system providers are the customers. They pay a subscription fee, per user per year. According to one of Doximity's recent reports, the top 20 largest hospital and pharmaceutical companies are subscribers now. And the companies they have seem to love it. They've grown their customers who spend >$100,000 per year from 172 in Q3'21 to 258 in Q4'21, growth of 50%. Before that, it was 53%, 58%, 42%. And their NRR is just stupid. In the most recent quarter, their NRR was 172%, and it doesn't seem to be an anomaly. The 3 Qs before that were 173%, 167%, and 153% so that NRR has risen pretty substantially. It was 130% in Q4'20. Most companies would kill for 130% NRR and DOCS has blown that number away.

So they as long as they keep new doctors coming onto the platform, hospitals and pharma companies know this is where they have to be to get messages/ads to their target audience. Improve the NP and PA penetration and that's an even stronger pull.
ThomasFJE's avatar
@interrobangbros very clear explanation 😁! Only makes me more bullish on this business.
Jeff Sanders's avatar
Love the business and great points above. The valuation sigh.. I got some fomo and avg at 59.
ThomasFJE's avatar
@darthtrader Yeah… but I believe the stock will go much and much higher over the long term.
Sachiv's avatar
🙃🤪 couldn’t help but comment. If you guys thought it’s high here, what did you think last year? 🫧🫧💨
ThomasFJE's avatar