Doximity sits on a rare kind of leverage. It reaches 80% of verified U.S. physicians and runs at 90% gross margins, the kind of software economics most platforms never touch. Yet the stock still fell 46%, as if the business broke. It did not. What broke was the market's model. DOCS is being priced like cyclical ad-tech, while three structural forces are quietly turning it into clinical infrastructure. The signal the market is trading is the headline. The signal that matters is underneath.
Why did DOCS stock drop 46% after beating estimates?
The quarter was strong. Revenue grew 23% year over year and beat estimates by double digits. Adjusted EBITDA margin hit 60%. Very few companies on earth grow at 20% with 60% cash-flow margins. The balance sheet is a fortress: $878 million in cash against just $11 million in debt. Yet shares fell to a 52-week low on December 24. The reason: management guided for slower growth next quarter. The market wanted hypergrowth. It got discipline instead. But underneath the headline, top clients grew 23% and net revenue retention stayed above 118%. Conservative guidance masked acceleration already in motion.
What moat does DOCS have that competitors cannot replicate?
DOCS isn't building a single AI tool. It's building the clinical operating system. Doximity Scribe captures the visit and reduces burnout. DoxGPT answers clinical questions at the point of care. PeerCheck lets doctors peer-review the AI's output. Together, they form the interface between the doctor, the patient, and the prescription pad. Competitors like OpenEvidence may win engagement minutes, but DOCS has something they cannot replicate: HIPAA compliance with verified physician identity. Doctors cannot enter patient data into ChatGPT. They can enter it into DoxGPT.
Why is pharma shifting spend to DOCS?
The sales rep model is dying. Physicians are closing doors to reps, a trend called closed door syndrome. The solution is digital. Most physicians now prefer online interactions with pharma over in-person visits. When Eli Lilly needs to reach endocrinologists about the GLP-1 franchise, or Novo Nordisk promotes its new oral weight-loss pill, the verified physician network is the channel. DOCS sits at the center of a structural shift from rep-led to digital-first engagement.
How do demographics guarantee demand growth?
By 2030, one in five Americans will be over 65. All 73 million baby boomers will have crossed into retirement age. Per-capita healthcare spending for those over 65 runs five times higher than spending per child. Meanwhile, physician shortages are projected to reach 139,000 by 2033. More patients, fewer doctors, and one platform connecting 80% of the physicians who remain. Tools that save time become must-haves, not nice-to-haves.
The market is treating DOCS like a legacy ad-tech company vulnerable to budget cycles. It's missing the transition. DOCS is becoming a clinical infrastructure play. When 80% of doctors use your AI to write their notes, check their dosages, and peer-review the output, you don't just sell ads. You own the point of clinical decision.