Health-tech company Doximity files for IPO and says doctors will get up to 15% allocation

Uber offered it to drivers. Airbnb did it for hosts. Now Doximity is providing it to doctors, but in a much bigger way.

In its IPO prospectus on Friday, health-tech company Doximity, which is often described as the LinkedIn for doctors, said it’s allocating up to 15% of shares in the offering for physicians through a “reserved share program.”

That means eligible doctors can get stock at the same price as the select group of institutional investors, who so often benefit from the IPO pop because they get early allocation and don’t have to wait for trading to begin. Doximity hasn’t yet said how many shares it plans to issue or at what price. To qualify for the program, members must meet certain thresholds of activity.

“We aspire to be the world’s largest physician-owned technology company, and our IPO reserved share program is intended to both thank our members and kickstart the process,” co-founders Jeff Tangney, Nate Gross and Shari Buck wrote in the founders’ letter portion of the prospectus.

Airbnb, which went public in December, set aside up to 7% of shares in its IPO for hosts on the platform. After the stock popped 112% in its debut, hosts who bought the maximum number of shares made a paper profit of over $15,000 on day one.

There’s no guarantee the stock will see such a rally. In Uber’s 2019 IPO, the ride-hailing company allocated up to 3% of the offering for drivers. Buyers at the IPO price are up just 14%, while the Nasdaq Composite has jumped 74% over that stretch. Meanwhile, trading app Robinhood announced last week that it’s launching a product called IPO Access to give retail investors more opportunities to buy into deals at the offer price.

Founded in 2011, Doximity has been largely under the radar even though it’s based in San Francisco. It hasn’t raised outside capital since 2014, only brought in a total of about $80 million in venture funding during its decade as a private company and spends very little on marketing. The company is also profitable, with net income jumping 69% in the latest fiscal year to $50.2 million.

Doximity has grown rapidly by becoming the default site for doctors across the country to connect with one another and stay informed about new research. It’s also been a highly valuable tool for medical recruiters. The service is now used by 1.8 million medical professionals in all of the top 20 hospitals and health systems, according to the prospectus.

Revenue surged 78% last year to $206.9 million. Sales and marketing accounted for 30% of total revenue, Most of that is “personnel-related expenses, sales commissions, travel, and other event expenses,” with a little spent on Google and Facebook ads, the filing says. Only $2.6 million went to advertising last year.

While Doximity doesn’t do much by way of promotion, it generates a healthy amount of revenue from medical and pharmaceutical companies who use the app as a way to reach doctors. All of the top 20 drugmakers use the service to educate medical professionals about their products. The company says its marketing solutions product, which is paid for through subscriptions, accounted for over 80% of revenue in the latest fiscal year.

Most of its remaining revenue comes from hiring solutions, used by health systems and medical recruiting firms to connect with Doximity’s physicians.

Doximity said it has over 600 subscription customers, including 200 that spent $100,000 in fiscal 2021. Of those, 29 spent at least $1 million. Subscriptions accounted for 93% of total revenue.

Doximity also introduced a telehealth product last year as Covid-19 forced patients to stay home and communicate with their doctors remotely. The company just started charging for the telehealth service at the beginning of January.

“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 said.

Doximity said it competes with LinkedIn for members. For hiring and recruiting, it goes up against staffing companies, while in the telehealth market it faces competition from Teladoc and American Well along with general purpose video chat app Zoom.

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