What happened
Shares of health professional social media network Doximity (DOCS -0.85%) gained 35% in February, according to data provided by S&P Global Market Intelligence. Investors were impressed with its third-quarter earnings report, sending the stock higher.
So what
Doximity operates a platform for doctors and other health professionals to connect and for hospitals to effectively coordinate patient care. Its digital platform services the medical community with a curated news feed and it provides technical features to easily organize workers' schedules and coordinate patient healthcare across a multidisciplinary team. It also offers telemedicine options. Eighty percent of doctors are on the platform, and other health professionals, such as nurses and physicians assistants, have a large and growing presence as well.
Image source: Getty Images.
Doximity has several revenue streams. Its largest are pharmaceutical advertising and hospital solutions, and it also makes money from premium subscriptions. One of its key features is a recruitment strategy to help hospitals locate and hire talent and help healthcare professionals find suitable employment.
In the third fiscal quarter (ended Dec. 31, 2021), revenue increased 67% year over year to $97.9 million. Net income increased more than 200% to $55.6 million, representing a very wide margin of 57%. Not only is this growth company profitable, it's become very profitable in the short amount of time it's been in operation. Its net revenue retention rate was 171%, which implies that not only are customers sticking around, but they are increasing engagement and sales with Doximity.
Management expects revenue to grow about 34% in the fourth fiscal quarter, and full-year revenue to increase 64%.
The company also announced that it was acquiring amion.com, a doctor scheduling site that complements its services, for $55 million. This adds value to Doximity's platform and is a strong move to bolster its network.
Now what
Doximity has an attractive, unique, and growing business that's leading in its industry. It went public in June of last year and its stock quickly skyrocketed, but the price came down as the valuation soared along with it. It's now down 3% in 2022.
Shares trade at 73 times trailing-12-month earnings, which is expensive, but reasonable for a growth company. Doximity is a growing, profitable company with a path toward unlocking greater value, and investors may want to consider adding shares to their portfolios.
