Doximity (NASDAQ: DOCS) is a disruptor company in the world of medical care. It is a leading platform that allows medical professionals to connect and discuss cases as well as coordinate different aspects of patient care. The company went public in July 2021, but it did not see too much hype surrounding its IPO. It has only been since the beginning of august that many investors have begun to take interest.
But, despite its lackluster start, Doximity has a lot to offer. So here are the reasons why this is the one healthcare stock I am buying right now.
Doximity's share price is currently at $79, which is up 49% since its IPO in July. Doximity generates revenue through specifically chosen advertisements on its networking platform as well as hiring tools for medical recruiters. Its service is primarily free to use, but due to the medical professional niche, it offers out advertisements on a subscription basis to pharmaceutical companies. This is like a three-way symbiotic relationship that benefits all parties involved.
For the fiscal ending March 2021, Doximity posted revenue of 208.9 million, up 78% year-over-year (YoY). Net income came in at $50.2 million. In its most recent quarter, the company posted revenue of $72.7 million which is an increase of 100% YoY whilst net income for the quarter was $26.3 million and earnings per share came in at $0.11.
Doximity is a high-growth company that is fast becoming a favorite among many investors.
Doximity is a very promising company with over 1.8 million doctors using its service for consultations, networking, and coordinating patient care. Its current addressable market is worth around $18.5 billion in this area alone. But, with plans to potentially expand into other medical professional sectors, the addressable market could grow exponentially. Dentists, psychiatrists, nurses, and many more would be able to exchange knowledge freely using Doximity's service.
Additionally, the company has branched out into the telehealth world and is fast becoming a serious competitor to Teladoc. It first launched in 2020 and throughout its fiscal 2021 the service has seen 63 million visits on its platform, in comparison, Teladoc saw approximately 10.6 million visits in its fiscal 2020. This is a space where Doximity could dominate, combining both networking and telehealth services means it could become the go-to service for medical professionals.
Doximity also has another advantage over other telehealth services, it can connect patients with their primary physician. The likes of Teladoc and Amwell connect patients to a doctor that is available at that moment, Doximity is basically a digital version of normal visits to your family doctor. This is a service that medical professionals would probably pay for in the future as it integrates everything into one compact package.
Doximity's revenue mainly comes from pharmaceutical companies and recruiters. These are subscription-based revenue streams and they make up 94% of Doximities revenue. This is good as regularly recurring revenue is something that shareholders are particularly fond of.
However, 94% is a very large chunk of its total revenue, particularly for such a niche area. This could create volatility down the line if Doximity grows bigger than its pool of paying pharmaceutical companies can serve. The company will need to find new ways of creating revenue further down the line, such as a premium versus free service for its users.
The niche nature of Doximity means that it is going to have a hard time competing with multiple players, not only in the social networking space but also in the video conferencing space. It will be competing with big names such as Google, Microsoft, Zoom, and even Slack. In the telehealth space it is competing with Amwell and Teladoc.
If it cannot break out as a powerhouse in its own right, then Doximity's share price will likely suffer.
I like this stock because it has plenty of potential as both a social networking platform and a telehealth platform. Its services are perfect to combine in the healthcare world and thus it could become the no.1 workplace platform for all medical staff. It is the simple fact that patients would be able to make appointments to see their family doctor which is what sets it apart from the likes of Amwell and Teladoc.
With a little more diversification in its revenue, this company will give itself the resources its needs to sustain its fast-paced growth for many years to come.
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