Founded in 2007, health start-up Zocdoc helps consumers find and schedule appointments with doctors, dentists, therapists, and other medical specialists using its website or mobile phone application. In the midst of the telehealth revolution spurred by the pandemic, Zocdoc is an up-and-coming private company that investors are eyeing for a potential IPO in the near future.
What does Zocdoc do?
In a nutshell, patients use Zocdoc to locate and book appointments with clinicians who are in their area and covered by their insurance. These appointments can be for one-off medical procedures like fitting patients for contact lenses, or as a first step toward establishing an ongoing relationship with a specific practitioner. After the appointment, patients can leave a review on their practitioner's Zocdoc profile to encourage or dissuade other potential patients. Of the more than 1.8 million clinician reviews on Zocdoc's site, the overwhelming majority are highly positive.
Doctors who list themselves or their practices on Zocdoc pay a fee for each new patient that the service sends their way, but the service is completely free for patients. This means that Zocdoc's customers pay more the more they get out of the service's boost to their marketing efforts. Zocdoc's fees haven't stopped thousands of clinicians from flocking to the platform.
In particular, Zocdoc's appointment scheduling service is invaluable for clinicians in small practices as well as consumers seeking health services covered by their insurance. By using Zocdoc, consumers can avoid the pain of using the often-clunky doctor-finding tools offered by their insurance provider and also shortcut the appointment scheduling process by booking with clinicians directly. Patients love Zocdoc because it means they don't have to call the doctor's office to get an appointment or fill out basic pre-appointment paperwork in the waiting room, and healthcare professionals appreciate that appointments booked with Zocdoc require less administrative work up front.
Zocdoc expands into telehealth
Recently, Zocdoc has branched out into telemedicine by leveraging its network of healthcare professionals who have been forced to reduce their in-person visits as a result of the COVID-19 pandemic. As part of its telemedicine program, Zocdoc developed a HIPAA-compliant video call platform that doctors on its network can use to have virtual appointments. In the first week after launching its telehealth service, Zocdoc reported that more than 20% of its total bookings were for telehealth visits, suggesting that consumers immediately took to the new platform.
While Zocdoc's telemedicine service gives consumers their choice of clinician unlike some of its competitors, it isn't as graceful at connecting people to telemedicine service on-demand compared to Teladoc (NYSE:TDOC). Nonetheless, it wouldn't be too surprising if Zocdoc spent the next few years reducing friction within its platform so that it could steal some of Teladoc's market share.
What's in store for Zocdoc's future?
Zocdoc's last major round of publicly disclosed fundraising was in 2015 when the company raised $130 million in a Series D offering, so it may need to raise cash again if it isn't profitable enough to continue expanding on its own. The company's major investors include venture capital firms like Khosla Ventures and Bezos Expeditions as well as investment banks including Goldman Sachs. It would be surprising if these firms were not pushing the company's leadership toward a large initial public offering.
Between its growing telehealth enterprise and its substantial clinician-targeted appointment scheduling service, Zocdoc is worth watching closely over the next few years. At present, Zocdoc appears to be poised for continued growth as a result of its new telehealth initiative, but it's hard to gauge when investors should expect the company to go public. Be on the lookout for major announcements, and be sure to see how its public competition responds to new Zocdoc services.