Doximity share price soars 104% as networking platform for doctors goes public

Doximity Inc.'s share price soared 103.9% on the first day of trading as the telehealth and social networking platform for healthcare professionals raised $494.3 million in its IPO.

The amount did not include a $111.5 million offering by one of the existing stockholders, for which Doximity will not receive the proceeds.

The Emergence Equity Management Inc.-backed company, which is colloquially referred to as "LinkedIn for doctors," was valued at $8.2 billion at market close June 24, after it became the latest health tech company to go public in 2021.

Doximity provides a digital platform for U.S. healthcare professionals to connect with colleagues, conduct telehealth visits with patients, keep up to date on medical research and news, and coordinate patient care. Over 80% of U.S. physicians are members, according to the company's June 15 statement.

"Despite their critical role, physicians face challenges caused by fragmented knowledge bases and antiquated technologies. These challenges inhibit physicians' ability to effectively connect with specialists and colleagues, instantaneously access relevant and up-to-date medical information, and efficiently deliver patient care," the company wrote in its June 22 S-1A filing.

While the application is free to access, Doximity makes money through its marketing services — which allow hospitals and pharma companies to reach physicians — as well as its telehealth offering, and a hiring service for health systems and medical recruiting firms to connect with potential job candidates.

The telehealth service allows physicians to connect with patients via voice or video platforms, and the company said it delivered 63 million telehealth visits in fiscal year 2021. So far, 150 health systems have signed agreements for the company's commercial telehealth platform, it said in the filing.

With the COVID-19 pandemic having spurred increased usage of telehealth by patients and physicians, Doximity said there is a $4.3 billion market opportunity in U.S. telehealth software. The company began offering its Telehealth Solutions products to health systems for free during the pandemic, before introducing charges in January 2021.

"We have seen rapid adoption of our Telehealth Solutions among our health system customers, due to existing organic usage from Doximity members who have used our productivity tools in the past," the company wrote in the filing.

Doximity was founded in 2010 and is led by CEO and co-founder Jeffrey Tangney, who previously served as president and COO at health tech company Epocrates Inc., a provider of medical applications for physicians that he co-founded in 1998. Anna Bryson, Doximity's former vice president of strategic finance and financial planning and analysis, has been acting CFO since February.

As well as Emergence, the company has received prior financial backing from private equity partners like InterWest Partners LLC and Morgenthaler Management Corp.

The San Francisco-based company joined a growing number of health tech companies that have gone public in 2021. Beijing-based Yidu Tech Inc.'s stock jumped 148% after the big data and artificial intelligence company began trading on the Hong Kong Stock Exchange in January, while Signify Health Inc., which operates a healthcare platform that utilizes data analytics, completed a $564 million offering in February. Other health techs like direct-to-consumer telehealth company Hims & Hers Health Inc. and telehealth company UpHealth Inc. — in combination with Cloudbreak Health LLC — have gone public through mergers with special purpose acquisition companies.

By the numbers

Doximity priced 23,300,000 shares of its Class A common stock at $26 per share, including 4,289,250 shares sold by an existing stockholder for which Doximity will not receive proceeds. The underwriters have a 30‐day option to purchase an additional 3,495,000 shares of Class A common stock from Doximity at the initial purchase price.

The company intends to use the proceeds to further grow the business, as well as for working capital and general business purposes.

Morgan Stanley & Co. LLC, Goldman Sachs & Co. LLC and J.P. Morgan Securities LLC were joint lead bookrunning managers for the offering. Piper Sandler & Co. and William Blair & Co. LLC were joint bookrunning managers, and Canaccord Genuity LLC, Needham & Co. LLC, Raymond James & Associates Inc. and SVB Leerink LLC were co-managers for the offering.

J.P. Morgan and Goldman Sachs have both acted as bookrunners for a number of major healthcare IPOs this year, including healthcare services company agilon health inc., gene therapy company Sana Biotechnology Inc. and Signify.