Digital health tool Doximity announced plans to raise up to $100 million in an initial public offering, with the San Francisco-based startup joining an increasing number of companies that provide products for physicians filing for an IPO.
Over the past two years, the company has already generated a profit.
The 11-year-old startup serves as a professional networking platform for clinicians, a marketing tool for pharmaceutical businesses and a telehealth service for health systems. Doximity counted more than 1.8 million medical professional members as of March 31, with users including 80% of physicians nationwide, 50% of advanced practice providers and 90% of graduating U.S. medical students.
The networking platform is free for physicians to use, and Doximity generates revenue through its marketing, hiring and telehealth tools. Its revenue-generating customers are primarily pharmaceutical manufacturers, which use Doximity to digitally market drugs to prescribers—Doximity said these customers include all 20 of the top medication manufacturers by revenue—and generally achieve a tenfold return-on-investment over an undisclosed time period. Its health systems, meanwhile, are also included in its fold of revenue-generating clients. Hospitals and health systems use Doximity's telehealth tools and marketing platform to alert clinicians of new studies, reports and medical journal articles. They generally realize an ROI of 13 to 1, Doximity said.
Doximity filed its prospectus with the Securities and Exchange Commission on Friday, and confidentially reported to the federal agency its IPO plans in early March. The company plans to list under the DCOS symbol, and did not name which exchange it will list under. The startup has yet to disclose pricing terms in its initial filing. It estimates the market for its marketing, hiring and telehealth products to be $18.5 million.
Here are five things to know about Doximity's IPO:
1. The company generated $206.8 million in revenue in fiscal 2021, up 78% from $116.3 million the prior year. Doximity's net income also grew nearly 70% year-over-year, from $29.7 million in fiscal 2020 to $50.2 million in 2021. The company credited the growth to new customers and expanded business with its old subscription users. Pharmaceutical customers generally start out marketing one line of products through Doximity and then expand to marketing other drugs through the startup.
2. The majority of Doximity's revenue comes from its subscription customers, with 93% of its revenue in fiscal 2021 coming from these clients. The company counts 600 subscription customers, with 200 paying more than $100,000 per year for the product and 29 paying more than $1 million annually. Over the past three years, the startup's revenue retention rates have reached more than 130%, with the greatest customer retention coming in 2021, meaning they likely have very sticky relationships with their health system and pharmaceutical clients.
3. Last year, the company launched its telehealth platform, which allows clinicians to connect with patients through voice and video calls. For the year ended March 31, Doximity powered 63 million telehealth visits through its platform. In the fourth quarter of fiscal 2021, the startup said it had more than 300,000 active providers using its telehealth tools. Doximity noted that changes to telehealth payment parity could impact its business going forward.
4. Last June, Doximity paid an undisclosed sum to acquire healthcare staffing firm THMED, which it has renamed to Curative. Curative health system and medical recruiting customers generally pay Doximity a placement fee for candidates found through the platform. The company also offers a subscription service for these customers to market their job openings and directly message prospective candidates through the startup's software. As of March 31, the company said it had fostered more than 56 million connections between clinicians, health systems, recruiting firms and more.
5. The company plans to grow by driving adoption across new and old customers. Across its pharmaceutical client base of U.S. customers that generate $100 million in sales revenue, Doximity estimated that it had penetrated less than 5% of their marketing budget. Its reach also allows it to grow organically by word-of-mouth, and through targeted outreach by its market and sales teams. Going forward, the company will add more products, with the aim of attracting new and different healthcare customers.