Doximity Up 69% On Debut After IPO Values ​​Company At $ 4.6 Billion

Doximity, the company that describes itself as LinkedIn for Doctors, jumped 69% on Thursday in its debut on the stock exchange after raising about $ 500 million in its IPO.

Doximity sold 19 million shares at $ 26 a share Wednesday night, above its projected range of $ 20 to $ 23, and an existing investor sold another 4.3 million. The offering valued the company at $ 4.6 billion. The stock, which trades under the ticker symbol “DOCS,” rose to $ 44.13 shortly after opening.

Founded in 2010, Doximity has grown rapidly in recent years by becoming the premier application clinicians use to stay connected with each other, sharing the latest research and updates on new drugs. With 1.8 million medical professionals in the US on site, including more than 80% of physicians, Doximity has bolstered revenue by allowing pharmaceutical companies to promote drugs and treatments and by giving medical recruiters a central place. to find prospects.

Revenue increased 77% in the last fiscal year to $ 206.9 million, according to the company’s prospectus. Because Doximity spends virtually no money on advertising, operating costs are lower than most enterprise-backed software companies. That allowed Doximity to increase net income by 69% to $ 50.2 million in the fiscal year that ended in March.

The intersection between healthcare and technology took center stage last year when the coronavirus pandemic forced patients to feel comfortable with remote visits and depleted the resources of medical systems across the country. Investors seized the opportunity to benefit from the economic changes.

In August, telehealth provider Teladoc acquired Livongo, which specializes in remote training for chronic conditions, creating what was at the time a $ 37 billion company. Telehealth rival Amwell went public in September. Teladoc and Amwell have traded lower in recent months as Covid-19 cases have plummeted and future growth rates for companies have been called into question.

Meanwhile, telehealth company MDLive was acquired by Cigna in February for an undisclosed amount, and two company-backed healthcare technology companies, Grand Rounds and Doctor on Demand, merged in March, creating a multi-million dollar business.

For Doximity, telehealth is a new business. The company has been offering a free service since 2016 that allows doctors to call patients using their work number on a mobile phone. Doximity moved the dialing service to its main application in 2019.

In May 2020, the company added a video, which it described as its “first telemedicine offering.” Doximity launched a paid enterprise version, although it said the video service would be free until January 2021. In its prospectus, Doximity said it had signed subscription agreements with more than 150 hospitals as of the end of March.

Jeff Tangney, co-founder and CEO of Doximity, said in an interview that even though more than 80% of physicians are online, the company has at least a decade of “what we consider high growth” ahead of it because of to the value it can bring to the healthcare system. For example, the referral system can be much more robust so that doctors know exactly where in the country to send patients with rare cancer.

He also said that Doximity has many opportunities to expand in telehealth given the size of its user base for its core product.

“Telehealth is 2% of revolutions today, and it’s such a green field,” Tangney said, after ringing the opening bell at the New York Stock Exchange. “We have not been aggressive with prices yet.”

Doximity’s overall growth is less dependent on telehealth than other providers in the market because its main sources of revenue are not tied to doctor-patient communications. However, the company recognizes that when the pandemic ends, its business could suffer. Doximity benefited as more medical practices put their marketing budgets online, and some of that spending could go back to physical advertising.

“The circumstances that have accelerated the growth of our business arising from the effects of the COVID-19 pandemic may not continue in the future,” said Doximity. “If these clients reallocate a significant portion of their budgets to in-person marketing, this could slow our growth in future periods.”

Tangney, who previously co-founded the digital health site Epocrates, is the company’s largest shareholder, with shares valued at around $ 1.3 billion, based on the IPO price. Emergence Capital is the largest outside investor, with a stake of $ 627 million, followed by InterWest Partners and Morgenthaler.

The IPO marks Doximity’s first financing since 2014, when the company raised $ 54 million at a valuation of $ 355 million, according to PitchBook.

As part of the offering, Doximity reserved 15% of the shares for network doctors. Assuming the doctors maximized their stake, they bought $ 91 million worth of Doximity shares.

Tangney said more than 10,000 doctors participated in the offering, buying up to $ 24,000 in stock. As a group, they own more shares than any new investor, he said.

LOOK: The CEO of Doximity in the social network of doctors that goes public

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