What Happened?

Shares of healthcare professional network Doximity (NYSE:DOCS) jumped 37.6% in the afternoon session after the company reported strong fourth-quarter results, and handily beat on the revenue, EBITDA, and EPS lines. Top line growth accelerated by 24% year on year, as the quarter benefited from strong platform engagement with over 610,000 providers using its clinical workflow tools and a 60% sequential growth in AI tool usage​. Doximity also provided optimistic EBITDA guidance for the next quarter, which blew past analysts' expectations. Zooming out, we think this was a very good quarter with some key areas of upside.

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What The Market Is Telling Us

Doximity’s shares are somewhat volatile and have had 14 moves greater than 5% over the last year. But moves this big are rare even for Doximity and indicate this news significantly impacted the market’s perception of the business. 

The biggest move we wrote about over the last year was 3 months ago when the stock gained 48.2% on the news that the company reported impressive third-quarter earnings, which blew past analysts' revenue, EPS, and EBITDA expectations. Sales improved significantly, driven by robust platform engagement, particularly in new products like AI-powered workflow tools and the expanded client portal. The improved engagement facilitated upselling among top pharma clients. The company recorded an impressive 56% adjusted EBITDA margin, highlighting disciplined cost management, which was supported by higher incremental margins from digital products. The business is observing stabilization in key markets, including strong growth in pharma budgets and increased adoption of digital solutions. 

Guidance was also strong as the company lifted its full-year sales outlook, while the EBITDA forecast came in ahead of consensus. Zooming out, we think this was a strong quarter for the company. 

Following the result, KeyBanc analyst Scott Schoenhaus upgraded the stock's rating from Neutral to Buy on hopes for momentum to improve heading into the last quarter of the year.

Doximity is up 47.4% since the beginning of the year, and at $78.95 per share, has set a new 52-week high. Investors who bought $1,000 worth of Doximity’s shares at the IPO in June 2021 would now be looking at an investment worth $1,490.

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