Why Doximity Stock Is Plummeting Today

Josh Kohn-Lindquist, The Motley Fool

Fri, May 16, 2025, 12:43 PM 3 min read

Key Points

Leading digital healthcare platform Doximity rocketed past analysts' expectations, but offered up disappointing guidance.
Trading at a premium valuation, the company sold off as the market fretted over this potentially slowing growth.
However, sales from Doximity's AI tools grew fivefold from last year, providing immense long-term potential.
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Shares of the leading digital platform for U.S. medical professionals, Doximity (NYSE: DOCS), were down 14% as of noon ET Friday, according to data provided by S&P Global Market Intelligence.

Doximity wrapped up its fiscal 2025 on Friday, delivering revenue and free cash flow (FCF) growth of 20% and 50%, respectively, during the year. These results rocketed past analysts' expectations.

However, management's guidance for 10% sales growth in 2026 was shy of the market's hopes, prompting today's sell-off.

Lofty expectations for Doximity

Considered the "Bloomberg platform for medical professionals," Doximity is dominant in its niche, with 80% of U.S. physicians using its platform. Providing a curated newsfeed, telehealth options, scheduling capabilities, professional networking, and an array of AI-powered workflow solutions, Doximity's platform has become indispensable among healthcare workers.

Thanks to this broad reach within the medical community, the company's platform is an attractive asset for pharmaceutical companies and hospital systems looking to market their products and services. Reinforcing this fact, Doximity counts each of the largest 20 pharmaceutical companies and hospital systems as customers.

A person holds up a bottle of medicine while on a telehealth call with their doctor on a smart phone. — Image source: Getty Images.

By virtue of this dominant positioning, the company's 43% annualized growth rate over the last five years, and its FCF margin of 47%, Doximity commanded a lofty price-to-FCF ratio of 50 before today's decline.

However, since the market had Doximity priced for (or at least, near) perfection, its 10% sales growth guidance was not enough.

Despite this, sales from the company's AI tools like Doximity GPT -- which can summarize a patient's healthcare history and search for diagnostic clues -- grew fivefold from last year, indicating immense potential.

With the number of customers spending $500,000 or more annually with the company increasing 17%, and existing customers growing sales 19% in 2025, Doximity's land-and-expand model continues firing on all cylinders.