Medical professional network Doximity (NYSE: DOCS) reported Q4 CY2025 results topping the market’s revenue expectations, with sales up 9.8% year on year to $185.1 million. On the other hand, next quarter’s revenue guidance of $143.5 million was less impressive, coming in 5.2% below analysts’ estimates. Its non-GAAP profit of $0.46 per share was 2.9% above analysts’ consensus estimates.

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StockStory’s Take

Doximity’s fourth quarter results for 2025 were met with a sharp negative market reaction, as management cited a combination of delayed pharmaceutical industry budgets and a notable increase in AI-related infrastructure spending as primary factors behind underwhelming outcomes. CEO Jeffrey Tangney pointed to record engagement across the platform, particularly in workflow and AI tools, but acknowledged that “client uncertainty” stemming from late-signed government pricing agreements caused several top pharma customers to delay or reduce upfront spending. Management also highlighted that the majority of revenue growth came from existing customers, with a 10% increase in high-value accounts, but also noted that elevated investments in AI pressured margins.

Looking forward, Doximity’s guidance reflects a cautious stance, with expectations for a slow start to 2026 as pharma clients finalize budgets and release previously held funds. Management is optimistic that the lag in upfront spending will shift to the midyear upsell season, with CFO Tim Cabral stating, “We believe the higher portion of our clients’ budgets that wasn’t deployed upfront will likely be available to be invested later this year.” The company also expects its soon-to-be-commercialized AI products to tap into pharma innovation and search budgets, but executives were clear that no AI-related revenue is currently included in guidance. Ongoing policy uncertainty and continued investment in AI infrastructure are expected to weigh on margins in the near term.

Key Insights from Management’s Remarks

Doximity’s latest quarter was shaped by robust growth in AI engagement, delayed pharma industry spending, and increased investment in its doctor-focused platform.

• AI adoption accelerated: Over 300,000 unique prescribers used Doximity’s AI tools, including Docs GPT, marking rapid adoption within the physician community. Management attributed this uptake to the platform’s integration into existing workflows and its ability to provide high-quality, evidence-based clinical answers. The AI tools’ popularity was further supported by a study of 1,300 high-prescribing physicians, who preferred Doximity’s solution at more than twice the rate of the nearest competitor, largely due to built-in drug references and full PDF medical journal access.

• Hospital partnerships expanded: Doximity’s AI suite was adopted by over 100 leading U.S. health systems, granting access to more than 180,000 prescribers. Management emphasized that winning approval from hospital privacy and AI committees greatly strengthened the platform’s credibility and reach. These rollouts are expected to drive further AI usage as hospitals integrate the tools into their standard clinical practices.

• PeerCheck program scaled: The company’s PeerCheck initiative, which leverages 10,000 U.S. physician experts to review AI-generated clinical answers, was highlighted as a core differentiator. This peer-review process is designed to address physician trust concerns and regulatory requirements around AI in healthcare, setting Doximity’s offerings apart from competitors who lack similar oversight.

• Pharma budget timing disrupted: Management reported that many top pharmaceutical customers delayed releasing annual budgets due to government policy changes, including most favored nation (MFN) pricing agreements with the White House. This led to fewer upfront commitments and pushed some deals into the next quarter, as brand managers waited for internal approval of funds. Despite these delays, Doximity saw record bookings growth in January, suggesting that spending could rebound later in the year once budget uncertainties clear.

• Margin compressed by AI investments: Adjusted gross margins declined as Doximity ramped up spending on AI infrastructure and PeerCheck-related costs. Management views these investments as essential for long-term differentiation but acknowledged short-term profitability pressures. They expect margin improvement as AI usage scales and unit economics improve, drawing a parallel to the early trajectory of the company’s telehealth business.

Drivers of Future Performance

Management expects a slow start for 2026 as pharma clients finalize budgets, while commercial AI products and upsell opportunities may support growth later in the year.

• Pharma spending recovery expected: Management anticipates that the delayed release of pharmaceutical budgets, resulting from late government pricing negotiations, should lead to increased upsell activity and revenue in the second half of the year. They noted that intent to spend remains strong among brand managers, but actual funds are expected to be unlocked gradually as policy uncertainty diminishes.

• AI product commercialization: Doximity plans to bring AI-powered tools to market for pharmaceutical clients later in the year, targeting the large healthcare search advertising market. Management sees this as a meaningful new revenue stream, but emphasized that initial guidance does not assume any contribution from AI product sales, reflecting a cautious outlook until adoption and monetization become more visible.

• Margin stabilization targeted: Ongoing investment in AI infrastructure and physician peer review is expected to weigh on margins in the near term. However, management believes that as AI usage increases and the unit economics of cloud-based tools improve, adjusted EBITDA margins can stabilize above a 50% floor. The company also expects to benefit from operational efficiencies and improved pricing power as new products mature.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will be watching (1) the timing and magnitude of pharma budget releases and upsell activity, (2) the commercial launch and adoption rates of Doximity’s AI products among both hospitals and pharma clients, and (3) the impact of ongoing policy changes on healthcare marketing budgets. The pace of margin recovery and progress in integrating AI tools across health systems will also be key markers of execution.

Doximity currently trades at $22.46, down from $33.32 just before the earnings. In the wake of this quarter, is it a buy or sell? See for yourself in our full research report (it’s free).

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