Doximity (DOCS 1.32%) is on a roll. It's just not a good one.
Shares of the digital healthcare platform for medical professionals have lost two-thirds of their value since hitting a high in the fourth quarter of 2021. Things were looking up earlier this year. However, Doximity gave up most of its gains after investors were disappointed in its guidance.
There's reason to be optimistic about Doximity's future, though. And some of it is related to the company's integration with OpenAI's ChatGPT, the generative AI system that's been at the center of attention recently. Could ChatGPT light a fire beneath Doximity stock?
Getting the fax right
Doximity CEO and co-founder Jeff Tangney described the new initiative with ChatGPT in his company's fiscal 2023 third-quarter conference call on Feb. 9. Tangney said that Doximity engineers started off by creating a beta site called DocsGPT that allowed physicians and their staff to play with the AI system via an API (application programming interface) with ChatGPT. The engineers also tied this beta site into Doximity's online faxing functionality.
That playing around turned serious relatively quickly. Tangney noted that an oncologist in Ohio was able to use DocsGPT to create an appeal letter for a cancer patient that was faxed to the patient's health insurer. Within an hour, the insurer approved the appeal, clearing the way for the patient to receive a medication that had been previously turned down.
He mentioned another example where the department chief of a major hospital used DocsGPT to handle a backlog of peer credentialing letters. The department chief raved about his experience.
Physicians and their staff still must deal with a lot of paperwork. And while fax machines aren't used nearly as much as they used to be in many industries because of the rise of email, it's a different story in the healthcare world.
It seems as if nearly everything connected with generative AI has exploded (in a good way) after ChatGPT's successful launch. So far, though, Doximity's integration with OpenAI's system hasn't provided a boost to its share price. However, the company is still only in the early innings of its use of the AI system.
Tangney acknowledged that DocsGPT "is just a small test project" right now. But he's excited about the opportunities for using AI with Doximity's cloud platform.
One idea he mentioned was using DocsGPT to automatically fill in responses to a pharmacy fax form. Tangney also brought up the possibility of using the AI system to create short summaries of medical journal articles. Those uses could be just the tip of the iceberg.
Doximity fully intends to be at the forefront of using AI in streamlining physician workflows. Tangney said that the company will work closely with physicians to develop AI-powered products, just as it has developed its previous products.
More likely near-term catalysts
It's possible that Doximity's use of ChatGPT could open up significant growth opportunities in the future. However, there are other more likely near-term catalysts for the healthcare stock.
For one thing, Doximity's revenue growth could accelerate in fiscal 2024. The company's lower-than-expected fiscal 2023 guidance was due to snags related to its new peer-to-peer and point-of-care modules. But the revenue from these new modules will only be delayed rather than lost.
Doximity's collaboration with scheduling automation company Calendly could also help. The company is integrating Calendly's scheduling functionality into its platform, enabling doctors to schedule appointments without using email.
Perhaps the best near-term catalyst for Doximity, though, could simply be for a new roaring bull market to begin. Stocks with high valuations tend to perform much better when the stock market booms. If the overall market gets on a big roll, Doximity probably will too.