What Happened?
Shares of healthcare professional network Doximity (NYSE: DOCS) fell 11.7% in the afternoon session after the company reported weak first quarter 2025 results: its revenue guidance for next year fell short of Wall Street's estimates and suggested a significant slowdown in demand. Notably, top-line growth decelerated significantly, up 17% (versus 25% growth in the previous quarter).
On the other hand, Doximity blew past analysts' revenue and EBITDA expectations this quarter. Overall, this was a weaker quarter.
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What The Market Is Telling Us
Doximity’s shares are very volatile and have had 24 moves greater than 5% over the last year. But moves this big are rare even for Doximity and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was 6 months ago when the stock gained 48.2% on the news that the company reported impressive third-quarter earnings, which blew past analysts' revenue, EPS, and EBITDA expectations.
Sales improved significantly, driven by robust platform engagement, particularly in new products like AI-powered workflow tools and the expanded client portal. The improved engagement facilitated upselling among top pharma clients. The company recorded an impressive 56% adjusted EBITDA margin, highlighting disciplined cost management, which was supported by higher incremental margins from digital products. The business observed stabilization in key markets, including strong growth in pharma budgets and increased adoption of digital solutions.
Guidance was also strong as the company lifted its full-year sales outlook, while the EBITDA forecast came in ahead of consensus.
Zooming out, we think this was a strong quarter for the company. Following the result, Keybanc analyst Scott Schoenhaus upgraded the stock's rating from Neutral to Buy on hopes for momentum to improve heading into the last quarter of the year.
Doximity is down 2.4% since the beginning of the year, and at $52.25 per share, it is trading 37.2% below its 52-week high of $83.14 from February 2025. Investors who bought $1,000 worth of Doximity’s shares at the IPO in June 2021 would now be looking at an investment worth $985.99.
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