Doximity's Guidance Miss Masks a Buying Opportunity in Healthcare Tech

The healthcare tech sector has faced its share of volatility in 2025, with investors skittish over macroeconomic pressures and regulatory uncertainty. But one company—Doximity (DOCS)—is being overlooked by the market. Despite a recent stock plunge, its underlying financial and operational strength makes it a rare diamond in the rough. Here’s why the guidance miss is a buying opportunity.

Financial Fortitude: Cash Flow and Customer Efficiency

Doximity’s Q1 2025 results underscore its financial resilience. While free cash flow margin dipped to 31% (from 42% in Q1 2024) due to tax timing, its adjusted EBITDA margin hit 52%, a staggering 9% improvement year-over-year. This profit machine generates $0.66 in EBITDA for every dollar of revenue, a level of profitability that few SaaS companies can match.

Even more compelling: Doximity’s customer acquisition cost (CAC) payback period now sits at 5.3 months, a record low. That means the company recoups the cost of acquiring a new customer in less than half a year—a metric that rivals the efficiency of fintech giants like Plaid or Stripe. With sales and marketing expenses holding steady at $35.2 million in Q1, Doximity is scaling without overinvesting in customer acquisition.

The stock has dropped 18% since its February peak, despite beating Q1 revenue and earnings estimates.

Structural Tailwinds: Healthcare’s Digital Shift

Doximity is at the epicenter of two seismic trends: healthcare data centralization and provider network consolidation.

1. The “News Feed of Medicine”: With 590,000 unique prescribers using its AI tools, telehealth platforms, and messaging features, Doximity is the go-to hub for U.S. physicians. Its news feed isn’t just a content channel—it’s a clinical workflow tool.

2. Pharma’s Data Obsession: The client portal, now live for 30% of Doximity’s top clients, provides real-time ROI tracking for pharma marketing spend. One feature alone—prescription sales data tied to individual ad campaigns—has accelerated upsell decisions by 20%. This isn’t just a product—it’s a revenue multiplier.

3. AI’s Administrative Revolution: Over 1.5 million automated prior authorization requests via Doximity GPT have slashed administrative costs for providers. This isn’t just a feature; it’s a moat. Competitors can’t replicate the network effects of 1.5 million+ physicians relying on Doximity’s tools daily.

Undervalued on Every Metric

The market is pricing in pessimism, not reality. Doximity’s stock has dropped 18.2% since its February high, even as it delivered 5% upside to revenue guidance in Q1. At current levels, the stock trades at 11x forward revenue, a discount to peers like Veeva Systems (VEEV, 12x) or Salesforce (CRM, 10x).

But the most compelling metric? Client retention. The top 20 clients—accounting for 82% of revenue—grew 121% year-over-year, and the net revenue retention rate hit 114%. That’s sticky enterprise SaaS at its finest.

Long-Term Catalysts: AI Expansion and Global Ambitions

The bull case for Doximity isn’t just about today’s metrics—it’s about the future.

• AI-Driven Content Creation: The client portal’s Phase 3 rollout, enabling self-service AI-generated content, will lower client entry barriers and unlock smaller pharma budgets.

• Health System Partnerships: Doximity now serves 250 health systems, and its telehealth tools are integrating into clinical workflows. This creates a virtuous cycle: more providers on the platform → richer data → better AI outcomes → more pharma spend.

• Global Play: While not yet a focus, Doximity’s HIPAA-compliant AI stack could be adapted for European or Asian markets, where healthcare digitization is lagging behind the U.S.

The Guidance “Miss” Is a Mirage

Management’s cautious 2026 outlook—a 9% revenue growth midpoint—has spooked investors. But dig deeper:

• Macroeconomic Precaution: Pharma budgets are projected to grow 5-7% annually, so Doximity’s guidance assumes no upside.

• Investment in New Products: The Phase 3 portal rollout and weekly prescription claims data integrations require upfront spending.

• Execution Over Hype: The company has a history of beating conservative guidance. In Q1, it delivered 17% revenue growth—double its own 2026 midpoint.

Final Take: Buy the Dip

Doximity isn’t just a healthcare SaaS company—it’s the operating system for U.S. physicians, with data assets that few can replicate. The guidance miss reflects prudence, not weakness. With $750 million in cash, a fortress balance sheet, and a product pipeline that’s accelerating, this is a rare chance to buy a $1 billion+ business at a sub-$2 billion valuation.

The market is mispricing the power of sticky enterprise contracts, AI-driven efficiency, and the secular shift to digital healthcare. Investors who act now could be buying a future $10 billion+ company at a steep discount.

Act fast—this opportunity won’t last.