A Peek Behind Doximity’s Numbers (DOCS)
Temporary benefits appear to be supplementing growth
Doximity (DOCS) operates a data platform designed to help medical businesses manage their practices, market services, hire staff, connect with other physicians, and access medical news, treatment information, and symptom research.
While DOCS is often viewed as a growth story, the company’s latest 10-K opens with the following:
“We are the leading digital platform for U.S. medical professionals, with over two million registered members as of March 31, 2024. Our members include more than 80% of U.S. physicians, spanning all 50 states and every medical specialty, along with over 60% of U.S. nurse practitioners and physician assistants, and over 90% of graduating U.S. medical students.”
This suggests DOCS has already captured much of its core market. As a result, future growth will likely need to come from either expanding its feature set or entering international markets—both of which involve significant cost and risk. Despite this, the stock trades at 48x forward EPS and consistently beats expectations.
Our analysis of DOCS’s earnings quality identified several accounting-related factors that have recently boosted growth but appear to be temporary. We’ll review those items below.