Doximity's Dip: A Buying Opportunity in Healthcare Tech's Future?

Amid a rocky start to 2026, Doximity (NYSE: DOCS) saw its shares plummet 16% after issuing softer-than-expected guidance for Q1 2026. The sell-off reflects investor anxiety over macroeconomic pressures and short-term revenue headwinds. Yet, beneath the noise lies a company positioned at the heart of healthcare’s digital transformation—a sector poised for decades of growth. Is this a fleeting misstep or a buying opportunity for investors with vision? The data suggests the latter.

The Catalyst for the Selloff: Near-Term Concerns Overshadow Long-Term Strength

The selloff followed Doximity’s Q4 2025 results, which showed 17% revenue growth to $138.3 million—a beat—but Q1 2026 guidance of $139–$140 million fell short of consensus estimates of $143.4 million. Analysts cited concerns over slowing healthcare IT spending amid broader economic uncertainty. Yet, this overlooks two critical points:

1. The Subscription Model’s Resilience: Doximity’s revenue, which comes overwhelmingly from subscriptions (99% of total), has grown at a 20% CAGR since 2020, even through recessions. Its net revenue retention rate (a measure of customer retention and expansion) remains robust, though undisclosed.
2. Margin Expansion: Despite the guidance cut, Doximity’s Adjusted EBITDA margins hit 55% in FY 2025, up from 48.5% in 2024. This efficiency bodes well for profitability even in a slowdown.

Under the Radar: Long-Term Growth Catalysts

The market’s focus on near-term guidance ignores three secular tailwinds:

1. AI Adoption is a Game-Changer

Doximity’s AI tools, such as clinical summarization and document analysis, now see 5x YoY adoption, with 590,000 unique providers using them. These tools reduce administrative burdens and improve care quality—a critical edge in a sector where physician burnout is at crisis levels. As AI becomes table stakes for healthcare providers, Doximity’s platform gains stickiness.

2. Telehealth and Workflow Integration

With over 80% of U.S. physicians on its network, Doximity’s ecosystem—messaging, telehealth, and scheduling—is a must-have for practices. The platform’s $543.8 million in 2025 subscription revenue reflects this stickiness. Unlike consumer tech, healthcare IT has low churn rates due to regulatory and operational dependencies.

3. The Shift to Value-Based Care

Healthcare’s transition to value-based reimbursements rewards providers who reduce costs and improve outcomes. Doximity’s tools help physicians achieve these goals, making its platform a strategic asset—not a discretionary spend.

Valuation: Is the Market Underestimating Doximity?

At current levels, Doximity trades at 10.2x FY 2026 consensus revenue, a discount to peers like Cerner (CERN), which trades at 19.2x EV/EBITDA. Even accounting for Doximity’s lower margins, its 55% EBITDA margins vs. Cerner’s ~10% net margins suggest it’s undervalued.

Critics cite Doximity’s declining free cash flow (down 29% YoY in Q1 2025), but this reflects one-time investments in AI infrastructure. With $111.4 million in cash and a $266.7 million annual free cash flow (FY 2025), liquidity remains strong.

Risks and the Bottom Line

Risks include:
- Market Saturation: With 80% of physicians already on the platform, growth must come from enterprise contracts and AI upsells.
- Regulatory Hurdles: Healthcare’s regulatory complexity could slow AI adoption.
- Economic Sensitivity: A prolonged recession might delay IT spending.

However, these risks are mitigated by Doximity’s entrenched position and the inevitability of healthcare’s digital shift. The stock’s 16% drop creates a rare entry point for investors willing to look past quarterly noise.

Conclusion: A High-Conviction Buy for the Next 3–5 Years

Doximity’s fundamentals—sticky subscriptions, margin strength, and AI-driven innovation—are too compelling to dismiss over a single quarter’s guidance. At a 20% discount to its peers and with a $570M revenue base growing at 20% annually, the stock offers asymmetric upside. For investors with a 3–5 year horizon, this is a chance to buy a healthcare tech leader at a bargain.

The market’s myopic focus on short-term headwinds has created a buying opportunity in one of healthcare’s most critical platforms. The future of healthcare IT belongs to those who digitize workflows, reduce costs, and empower providers—traits Doximity embodies. This dip is a call to act.