Revenues in 2020-2021
Invest in IPO Doximity
San Francisco, California-based Doximity was founded to help physicians to be more productive by providing them with information and tools for their practice. Doximity developed the leading digital platform for U.S. medical professionals with over 1.8 million members.
At the beginning of 2020 the company started to provide Telehealth Solution for health systems. It includes a voice and video dialer, designed to easily connect patients with care providers. With Doximity platform over 63 million telehealth visits were delivered in fiscal 2021.
The global market for healthcare IT was an estimated $74 billion in 2020 and is forecast to reach $167 billion by 2028. This represents a forecast CAGR of 10.7% from 2021 to 2028. The main drivers for this expected growth are growing network coverage and improvement in network infrastructure along with higher demand for preventive care. Additionally, the COVID-19 pandemic has provided a boost to telehealth capabilities demand as well as other remote technologies.
The company has created an ecosystem in the medical community where all players benefit from powerful network effects. This creates a lock-in effect, which is evidenced by the net retention rate of 153%.
Clients of Doximity are large companies and medical institutions, so the profits of the company are concentrated and depend on the retention of key clients. The largest customer accounts for 12% of the company’s total revenue.
The company competes with various groups of players, such as Linkedin, Facebook, or Twittter, who partially cover Doximity’s functions in the field of professional interaction. On the other hand, it competes with companies providing digital healthcare solutions such as TeleDoc, Zocdoc, or American Well, as well as communications companies such as Zoom Video.
Doximity plans to raise $501 million by offering 23.3 million shares (18% insider) at a price range of $20 to $23. At the midpoint of the proposed range, the company would command a fully diluted market value of $4.5 billion. It plans to list on the NYSE under the symbol DOCS. Morgan Stanley, Goldman Sachs, J.P. Morgan, Piper Sandler, William Blair, Canaccord Genuity, Needham & Co., Raymond James, and SVB Leerink are the joint bookrunners on the deal.
Doximity’s recent financial results show sharply growing topline revenue. Over the last year, the company’s revenue has grown by 78%, to $207 million. Moreover, Doximity shows a growing net profit. For the fiscal year ended March 2021, it was $50,000.
Valuation of a company on IPO gives a multiplier P/S of к19.3x. Its public competitor, Teladoc Health (TDOC), trades with 18x multiplier, however, it is still unprofitable and accumulates net losses every year. Also its gross margin 20% lower than those of Doximity. Given the company’s leading position and strong financial results, Doximity is an interesting investment idea. The expected yield is 80% annualized.
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IN THE PROFIT FROM THE FIRST DAY
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