Investor Essentials Daily

This healthcare tech platform set to thrive as virtual care adoption accelerates

January 30, 2024

Doximity (DOCS) was founded in 2010 to provide a dedicated digital platform for healthcare professionals to connect, as industries like LinkedIn had done for other fields. 

It has since grown to over 80% of U.S. doctors on its network. 

Doximity allows job postings and profile updates while expanding offerings like Telehealth.

Strong financial results with 52% ROA and 40% asset growth reflect its success in connecting the industry, though the market views it pessimistically despite the potential for growth.

Thus, DOCS showed up on our screen. The company makes a great FA Alpha 50 name due to its potential for high returns and low expectations from the market.

Investor Essentials Daily:
Tuesday FA Alpha 50
Powered by Valens Research

Healthcare has historically lacked a dedicated platform to connect professionals in the same way that LinkedIn enabled connections in other industries. 

This changed in 2010 with the founding of Doximity (DOCS). Doximity was launched to fill the gap and provide a digital network specifically for healthcare professionals. 

Its founders recognized that healthcare professionals needed an efficient way to communicate with colleagues, find jobs, and stay up-to-date on the latest research and treatments. 

Currently, Doximity is the largest community of healthcare professionals in the United States with over 80% of U.S. doctors, 50% of all NPs, and physician assistants as verified members.

Similar to LinkedIn, Doximity allowed employers to post job listings to recruit healthcare talent more effectively. Medical practices, hospitals, and staffing agencies were able to reach a large pool of clinicians all in one centralized place. 

Professionals could also update their profiles, indicate specializations, and connect with others in their field.

Since 2010, the firm has been broadening its range of products and strengthening ties with its premier clients.

One of these new products is Telehealth. Powered by Twilio’s APIs, Doximity Dialer allows seamless video connections between doctors and their patients.

These improvements led to strong financial results, with a return on assets of 52% and 40% asset growth in 2020.

Take a look…

These figures indicate a robust and growing business, with efficient use of assets to generate profits.

However, the market fails to recognize the company’s potential.

We can see this through our Embedded Expectations Analysis (“EEA”) framework.

The EEA starts by looking at a company’s current stock price. From there, we can calculate what the market expects from the company’s future cash flows. We then compare that with our own cash-flow projections.

In short, it tells us how well a company has to perform in the future to be worth what the market is paying for it today.

At the current stock price, the market predicts that the company’s Uniform ROA will fall to 33%, a far cry from the 52% peak in 2020.

The market’s pessimistic view is caused by concerns about the overall macroeconomic headwinds. 

By enhancing its platform with new workflow tools, Doximity aims to become physicians’ primary resource and the leading destination for all things medicine-related. 

If it continues expanding its network reach and monetizing through additional service offerings, Doximity may see further upside despite broader macroeconomic challenges. 

Its current modest Uniform Price to Earnings (P/E) ratio of 20.7x also leaves room for multiple expansion. 

As digital transformation in healthcare accelerates, Doximity is well-positioned to solidify its role in connecting professionals across the industry.

Throughout financial market history, many of the world’s most successful investors have been candid in their belief that Generally Accepted Accounting Principles (“GAAP”) distort economic reality.

Warren Buffett, for example, once said investors should “concentrate on the world of companies, not arcane accounting mathematics.”

Investors who neglect the very real issues with as-reported accounting can find themselves caught up in investing with the crowd, blindly following hot “themes” without a thorough grasp of how to understand the businesses in question.

The only true way to focus on the “world of companies,” as Buffett suggests investors do, is to present a clear picture of how a business operates, something that can only be done by adjusting financial statements to reflect the arbitrary nature of certain accounting rules that leave much to discretion.

The world’s best investors understand the need to make these adjustments, which allows them to focus not on picking out the most popular companies but rather on looking for great names in sleepy areas that the market isn’t paying much attention to. From there, the goal is to then identify quality companies with significant growth potential at reasonable prices.

That’s exactly what we’ve set out to do with the FA Alpha, our monthly list of 50 companies that rank at the top for quality, high growth, and low valuations.

This list has outperformed the market by 300 basis points per year for over 20 years now, effectively doubling the performance of the market by focusing on the real fundamentals and valuations of companies with our proprietary Uniform Accounting framework.

See for yourself below.

To see the other 49 names on the list, click

Best regards,

Joel Litman & Rob Spivey

Chief Investment Strategist &
Director of Research
at Valens Research

View All

You don’t have access to the Valens Research Premium Application.

To get access to our best content including the highly regarded Conviction Long List and Market Phase Cycle macro newsletter, please contact our Client Relations Team at 630-841-0683 or email

Please fill out the fields below so that our client relations team can contact you

Or contact our Client Relationship Team at 630-841-0683