Doximity, a health tech company with 1.8 million medical professionals on its network, hasn't touched investor cash in seven years.
But the San Francisco-based company had a blockbuster debut on the stock market Thursday, as shares opened more than 58% above their offer price. The stock, trading under the ticker symbol “DOCS,” closed at $53, up 104%, on Thursday, valuing the company at $7 billion, Reuters reported.
The company sold 23.3 million shares for $26, above its initial share price between $20 and $23 per share, and raised nearly $606 million in its initial public offering (IPO). Doximity opened at $50 per share Friday morning.
The offering consists of 19 million shares of Class A common stock being sold by Doximity and 4.3 million shares of Class A common stock being sold by an existing stockholder.
The gross proceeds from the offering are expected to be approximately $494 million, before deducting underwriting discounts and commissions and other offering expenses payable by Doximity, the company said in a press release.
Morgan Stanley, Goldman Sachs and J.P. Morgan Securities were the lead underwriters for the IPO.
The company, which was founded in 2010, has been steadily growing and, unlike many health tech unicorns, generating enviable profits by offering productivity tools that resonate with physicians, according to Nate Gross, co-founder and chief strategy officer at Doximity.
"We're going against the Silicon Valley norm," Gross told Fierce Healthcare. "We've been relatively quiet from a fundraising and press perspective. But our brand recognition is ubiquitous. We have the top 20 hospitals as clients along with the top 20 pharma and life sciences companies. We are a building HIPAA compliant suite of tools, which are pretty unique in the digital health world."
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Doximity brought in revenue of $116 million in 2019 and revenue grew 78% to reach $207 million in 2020. The company brought in $30 million in profits in 2019 and net income grew to $50 million in 2020.
For the years ended March 31, 2020 and 2021, Doximity generated adjusted EBITDA of $27 million and $65 million. The company booked $207 million in sales for the 12 months ended March 31, 2021, according to its S-1 filing with the U.S. Securities and Exchange Commission.
Doximity operates like a LinkedIn for doctors and provides a digital platform for U.S. medical professionals, including telehealth and scheduling tools. That company counts more than 80% of U.S. physicians as members of its platform.
The company has a consistent focus on being "physician-first" in developing its software and tools, Gross said, noting that historically most medical software was developed for billing and coding or administrative functions.
"For the most part, physicians can’t use the tools that you and I might use in other industries. The software they use has to be specifically designed to be HIPAA compliant with medical-grade security and tailored to clinical needs," he said.
Last year, during the pandemic, the company added telehealth capabilities, called Doximity Dialer Video, to its platform as a telehealth app that enables doctors to video call their patients on any smartphone. The telehealth solution doesn't require patients or doctors to download any extra apps or sign up for the software, the company said.
Doximity designed the telehealth feature to make it easy for doctors to add a medical interpreter to the virtual visit or to include patient education materials.
"We joke that we are a mix of 'docs and dorks.' We spend a lot of time finetuning all of our tools," Gross said.
The aim is to provide software that connects and empowers physicians to bring medical communication into the internet age, he said.
"Our platform helps medical professionals to collaborate with colleagues, stay up to date with the latest news and research, manage their careers, which is the 'LinkedIn for doctors' part, and conduct telehealth visits with their patients. We make the technology specifically designed to work for doctors to be productive and provide better care for the patients," Gross said.
Through a reserved share program, Doximity also set aside up to 15% of its shares for member physicians at the institutional investor rate. Gross said 10,000 physician members participated in the IPO offering.
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"We wanted to be able to share our success. As a 'physician-first' company, we felt that should be in our investment decision. It took work to do that carve-out. You don't see that with most IPOs," he said.
Gross said Doximity plans to use the proceeds from the IPO to fund its growth and explore opportunities in new markets. He didn't rule out M&A as a potential growth strategy to boost its capabilities.
"This IPO gives us financial flexibility and allows us to be opportunistic when it matters," he said.
The company has a history of building rather than buying—it developed its own telehealth software.
"But we also want to be able to think about our future growth and expansion and execute the best you can. Sometimes, that might mean M&A as a strategy but that's not something that we see as essential to our growth strategy in any way," Gross said.