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Doximity (DOCS): The Linkedin for Doctors

A Scarce Asset With Deep Network Effects And A Long Runway For Growth

Updated: Mar 04, 2025

Executive Summary

The Linkedin For Doctors

Doximity is described as the 'Linkedin for Doctors'. They run a professional network with over 2 million members, including 80% of registered physicians in the US.

The company generates money by selling advertising space to pharmaceutical companies and hospitals that are trying to market their products and services to key decision-makers in healthcare.

Doximity offers a number of telehealth solutions free to their members to deepen engagement and solidify themselves in the Doctors' workflow. Example: HIPPA-compliant text and video calls through the platform to both patients and other doctors. This vastly increases the usability of the
Doximity Deep Dive

Investment Thesis

Overview of buy and sell case of the business.

Why Invest?

Key pieces of information about the business that you need to know about.

Network Effects

Doximity has established powerful network effects and now has 80% of registered physicians (90% of graduating medical students) on the platform. They have hit critical mass and established powerful network effects which they intend to strengthen through helpful workflow solutions.

What is the value of a network? That depends on what those who want access are willing to pay for it. DOCS stands as one of the key gatekeepers between the $4.3T in annual US healthcare spend the system's key decision-makers. Over 70% of healthcare spend in the US is decided by Doctors.

Leading ROI

Network effects are a key moat but they don't drive revenue. The revenue driver here is industry-leading ROI. Doxmity boasts an ROI of 11x for Pharma customers and 18x for Healthcare Systems, which is far above the ~3x Pharma receives on the average sales rep. I believe this number will continue to pull incremental marketing dollars towards Doximity and away from other traditional and digital channels.

Long runway for Growth

Doximity has just 4% share of marketing budgets for pharma 'Mega brands' (drugs with over $100m in sales) and ample whitespace to grow. The company can pull the various levers for growth;
- Growing the network (Dentists, physio's, or pharmacologists)
- New Customers (Medical Devices or Diagnostics)
- Increasing penetration with existing customers (only 10% share of budgets currently)
- Monetisation of telehealth

Catalysts

The key events that could drive investment opportunities and shift markets.

Near term
Near term I believe continued growth in their core end market (pharma) should see the stock continue to move higher. This has only recently inflected after a long reset following the COVID boom in digital advertising
Medium term
In the medium term, I believe greater engagement with investors could boost the stock's visibility. I think DOCS is underfollowed and mischaracterized by investors. This is a profitable tech company growing topline DD+ with a 30% FCF margin.
Long term
Over the long run, there is ample opportunity to expand into adjacent revenue streams such as monetization of telehealth and new customer sets. This has been evidenced by a Japanese operator (M3) who has had a 10-year head start on DOCSs and boasts revenue/doctor numbers that are multiples higher.

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Investor Materials

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Investment Content

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Doximity stock hits 52-week high at $37.28 amid robust growth

External Insights

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Outside Research

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What the Pro's Are Asking

Here are the questions that institutional investors are asking before making an investment decision.

What are the key risks?

Any deterioration in ROI as the company grows would impact the thesis

Where did you discover this stock?

I came across the company when they IPO'd in 2021 at over 100x EBITDA and quickly shunned the idea. Three years later EBITDA has compounded at 50% and the stock was down 85%.

What do you think is misunderstood?

I feel many presume this is just another unprofitable tech but the margins and FCF generation are something to be marveled. The company is also a unique asset, there are no real comparisons.

What do they do with all the cash?

Currently, it is just mounting up on the balance sheet. They buy back some shares to reduce dilution from SBC but I believe an acquisition could be likely.

Why do hospitals need to do marketing?

In the US, many hosptials are private and need to market their different departments to doctors to win referrals and bring in revenue.