Telehealth is revolutionizing the healthcare industry since the pandemic boomed its demand. In an increasingly digitalized world, healthcare was deficient in this much-needed renovation of computing and digitalization, but thankfully, Covid-19 sparked the era of a digitalized healthcare system that has continued to evolve. One of the game-changers in the field is Doximity Inc. (DOCS) which is even called the “LinkedIn for Medical Professionals” but it is much more than just a social media platform.
Despite its above 60% decline from all-time highs post IPO, the stock did manage to stay above its IPO price. But its latest earnings, with a missed guidance on May 17, caused the stock to tumble below its IPO price for the first time ever. Following the results, DOCS initially plunged below the $26 price level in the after-hours with a decline of over 25% but at the close of the session, the downfall was restricted to 16.32%. Thus, the stock was then valued at a price of $28.26 a share at the end of the day. This decline came after a slight uptick of 2.36% in the prior session, which had the stock trading at $33.77 apiece.
However, despite the not-impressive guidance for the ongoing quarter, the company raised its full-year guidance and is set for many gains as the industry continues to evolve and telehealth disrupts further. There are most certainly some factors to call for concerns regarding DOCS growth, but the market opportunity is huge, and the company has strong sway and good potential.
DOCS’ Earnings Overview
For the fiscal Q4 2022, the company came out with revenue of $93.7 million against the year-earlier $66.7 million. While beating the consensus estimate, sales grew by 40% YOY.
On the surpassing front was also its quarterly earnings, with an improvement of 48% YOY resulting in a non-GAAP net income of $44.9 million. Hence, the adjusted earnings of 21 cents a share beat the consensus estimate of 15 cents per share for the quarter. Comparatively, the year-ago adjusted earnings were $0.09 per share.
The adjusted EBITDA rose by 47% YOY to $39.4 million, and operating cash flow was $47 million, while free cash flow stood at $44.9 million.
For the full fiscal year of 2022, DOCS’ revenue remained above its top-end guidance at $343.5 million with YOY growth of 66%. And the adjusted earnings for the year were 82 cents per share while the non-GAAP net income totaled $180.6 million at a 53% margin.
The company also authorized a share buyback plan for up to $70 million of its Class A common stock over the next 12 months.
DOCS’ Guidance
For the fiscal quarter ending on June 30, 2022, DOCS expects revenue of $88.6-$89.6 million with adjusted EBITDA of $28.6-$29.6 million. Analysts, on average, were expecting $96.8 million in revenue for the June Quarter.
On the other hand, the company did raise its full-year guidance to revenue of $454-$458 million against the earlier $450 million. This also surpasses analysts’ estimate of $452.2 million. Furthermore, the adjusted EBITDA according to company executives’ prediction would be $192-$196 million, against analysts’ forecast of $180.8 million.
Growth Factors of the Company
Major factors setting it apart and on a bullish path include its unique approach combined with its strong performance so far in a market that is full of opportunities.
Unique Approach & Edge
The company’s app is free for doctors and health professionals who can connect and share information on the platform while also being able to review medical studies, collaborate across multiple hospitals, and even coordinate patient care. Its doctor-to-doctor and doctor-to-patient video and voice call solutions are further upping its game while services like its digital eSignature, faxing, virtual health, and recruitment are also huge competitive advantages as it remains HIPPA compliant. The company is about to add a new feature of physician schedule management through its acquisition of the software provider Amion. The free app comes with subscription fees for hospitals and pharma companies to get to a large and established audience of doctors.
Promising Performance
DOCS’ unique platform has so far shown much promise with over 80% of U.S. physicians and more than 50% of Physician Assistants and Nurse Practitioners verified with its app. Even more so, the top 20 hospitals and pharma companies in the country are also its subscribers. In addition, the company has continued showing virtuoso performance with revenue growing 78% in the first three quarters of fiscal 2022 combined and over 40% in the last quarter while the average growth rate over the past three years remains nearly 60%. DOCS has also reported continuous profitability in all quarters since it went public in June 2021.
Huge Market Opportunity
The cherry on top. The market is huge, growing, and full of opportunities. According to the company, its market opportunity is estimated to be $18.5 billion while the telehealth market is also expected to continue growing, with a CAGR of 22.2% between 2022-2027. By 2027, the market is expected to reach $41.5 billion. In a recent report by the company, a survey of 2000 patients’ experience with telemedicine showed that over 73% of patients plan to continue telemedicine visits after the pandemic, and patients’ adoption of telemedicine has surged by 67% YOY. The study further revealed that physicians across all ages, gender, and location are strongly adopting telemedicine.
There are Risks but the Outlook Remains Bullish
As the telehealth market is just in its early stages and digitalized healthcare continues to evolve, there still exist big names in the market while competition toughens more. A major competitor to DOCS is Teladoc even though their direct customers do not alight straight away. Both the companies are working in the telehealth sector. As Teladoc serves employers, insurers, and patients, competition comes at indirect overlap at customer retention based on getting faster appointments and the like.
Another red flag to the company comes from its falling share price as investors haven’t been responding warmly to the stock amid the wider economic instability. However, there is still some time before DOCS’ story unravels and it appoints itself an emerging leader in the market. Thus, with its continued growth, good performance, and several competitive advantages despite the tough competition and challenging market, DOCS is poised for growth in the years to come as it continues its bullish course.
