Doximity's Post-Earnings Dip: A Buying Opportunity in Healthcare Tech?

Healthcare technology stocks have faced turbulence in 2025, but few have seen such a stark disconnect between fundamentals and market sentiment as Doximity (DOCS). After delivering record revenue growth and free cash flow in Q4 2024, the company’s shares plummeted 20.5% following cautious 2026 guidance—a reaction that may have overcooked near-term risks while ignoring its structural advantages. For contrarian investors, this could mark a rare entry point into a healthcare IT leader with a fortress balance sheet, dominant physician network, and AI-driven moat.

The Earnings Beat That Began a Rout

Doximity’s Q4 results were unequivocally strong:
- Revenue rose 17% YoY to $138.3 million, crushing consensus estimates of $134.03 million.
- Free cash flow hit $97 million, a 56% YoY jump, with margins expanding to 50.4%.
- Adjusted EBITDA surged 24% to $69.7 million, reflecting disciplined cost management.

Yet shares cratered after management guided FY 2026 revenue to $619–631 million, implying 8–9% growth—well below the 20% expansion of FY 2025 and analysts’ $639.4 million consensus. The culprit? A short-term slowdown in subscription pricing and concerns over physician adoption of new tools. But this misses the bigger picture: Doximity’s $209.6 million cash pile, $266.7 million annual free cash flow, and near-100% retention rates signal a company that’s already delivering recurring revenue at scale.

Why the Guidance Concerns Are Overblown

The market’s focus on 2026 guidance ignores three critical factors:
1. Dominant Market Share: With 87% of U.S. physicians on its platform, Doximity’s network effects are unmatched. Its newsfeed, workflow tools, and AI-powered patient referrals create a sticky ecosystem that competitors can’t replicate.
2. AI-Driven Growth: CEO Jeff Tangney emphasized “record engagement” in Q4, fueled by AI capabilities that streamline clinical workflows. This isn’t just a buzzword—physicians using Doximity’s tools see 30% faster patient referrals, a metric that could drive premium pricing over time.
3. Valuation Discount: At just 15x 2025 consensus EBITDA, Doximity trades at a 40% discount to peers like Cerner (CERN) and Epic, despite its superior cash flow and scalability.

The Contrarian Case for DOCS

The bear case hinges on two risks:
- Slowing subscription growth: Management cited “price sensitivity” as a headwind, but its pricing power is underappreciated. With 75% of revenue from multi-year contracts, Doximity can gradually raise prices without alienating clients.
- Regulatory hurdles: Healthcare IT faces compliance risks, but Doximity’s focus on physician-facing tools (not patient data) reduces its exposure to HIPAA or EHR regulations.

Meanwhile, the long-term tailwinds are undeniable:
- AI adoption in healthcare is accelerating, and Doximity’s platform is already embedded in workflows.
- Physician burnout remains a crisis, making productivity tools a necessity, not a luxury.
- Market consolidation: With healthcare providers seeking single-source solutions, Doximity’s network could become a de facto standard.

A Buy at These Levels

The selloff has created an asymmetric opportunity:
- Price-to-cash flow: At $23/share (post-dip), DOCS trades at just 9x FY 2025 free cash flow, a historical low for high-growth SaaS companies.
- Upside catalysts: FY 2026 guidance assumes minimal AI monetization—yet the company’s Q4 results already showed a 24% jump in EBITDA margins, suggesting operating leverage is intact.

For investors willing to look past quarterly noise, Doximity represents a once-in-a-cycle entry point into a healthcare tech titan. With a fortress balance sheet, a moat that’s widening, and AI adoption trends that remain underpriced, this could be a generational buying opportunity.

Action to Take: Buy DOCS at $23/share or below. Set a stop-loss at $18, but don’t blink at short-term volatility—this is a 3–5-year play.

Final Note: Healthcare tech’s next phase belongs to platforms that solve clinician pain points. Doximity’s Q4 results—and its undervalued fundamentals—suggest it’s already winning.