Bragar Eagel & Squire, PC is

NEW YORK, June 19, 2024 (GLOBE NEWSWIRE) — Bragar Eagel & Squire, PC, a nationally recognized shareholder rights law firm, is investigating potential claims against Doximity, Inc. (NYSE: DOCS) on behalf of long-term shareholders following a class action lawsuit filed against Doximity on April 17, 2024, which is effective from February 9, 2022, through April 1, 2024. Our investigation concerns whether Doximity’s board of directors breached its fiduciary duty to the company.

Doximity operates a digital platform that connects healthcare professionals with medical information and provides them with patient scheduling tools. The class action lawsuit begins on February 9, 2022, when Doximity released its quarterly results for the third quarter of fiscal 2022 after the market closed the previous evening. During the accompanying quarterly earnings call for investors on February 8, 2022 after the market closed, Defendant Anna Bryson, the Company’s Chief Financial Officer, emphasized that “marketers have been able to see the value of running these digital programs” and that this “value is the primary reason we are seeing this continued demand from our customers, not new (COVID) variants.” To that end, Defendant Bryson also assured investors that the Company was “focused on … really building a business that can provide years of sustainable, high-margin growth.”

The lawsuit alleges that throughout the Class Period, Defendants continued to tout the sustainability of the Company’s business prospects while downplaying the importance of upsell rates to the Company’s financial performance. During the Company’s second quarter fiscal 2023 earnings conference call on November 10, 2022, Defendant Jeffrey Tangney, the Company’s Chief Executive Officer, reassured investors that “the pharmaceutical industry is doing quite well,” while investors were concerned that macroeconomic headwinds would significantly impact Doximity’s financial performance. Defendant Bryson similarly emphasized that the Company’s sales pipeline “has larger dollar deals than we’ve ever seen before,” and, to allay investor concerns, stated that while Doximity’s upsell rates were “somewhat below historical norms,” ​​upsell rates were “not a significant portion of our revenue.”

Similarly, in February 2023, Defendant Bryson specifically stated that Doximity is “less dependent on large upselling efforts than in prior years,” and in May 2023, Defendant Bryson stated that the Company was being conservative in its financial forecast for the market by assuming upselling rates of “half of our historical (upselling) rate.”

The lawsuit further alleges that despite defendants’ claims regarding the sustainability of Doximity’s growth and profitability, investors did not learn the truth until August 8, 2023, when Doximity announced its financial results for the first quarter of fiscal year 2024, which ended June 30, 2023, after the market closed. While the company beat its quarterly guidance for revenue and adjusted EBITDA for the first quarter, the company provided disappointing guidance for the second quarter of fiscal 2024 and cut its guidance for the full fiscal 2024. Specifically, Doximity announced that it expects fiscal 2024 revenue to be between $452 million and $468 million (up from previous guidance of $500 million to $506 million, representing year-over-year revenue growth of just 7.9% to 11.7%) and adjusted EBITDA to be between $193 million and $209 million (up from previous guidance of $216 million to $222 million, representing year-over-year adjusted EBITDA growth of just 4.9% to 13.6%). In conjunction with the disappointing guidance, Doximity announced that it would reduce its workforce by approximately 10%. The company also noted that the layoffs are expected to cost approximately $8 million to $10 million.

In explaining this turnaround, Defendant Bryson admitted that the Company’s “major upsells have fallen significantly short of expectations and we expect this to continue in the near future.” Defendant Tangney further stated that Doximity was unable to close sales due in part to “fewer face-to-face meetings with our customers.” Following this news, the price of Doximity’s common stock declined $7.49 per share, or nearly 23%, from a closing price of $32.79 per share on August 8, 2023, to $25.30 per share on August 9, 2023.

On April 1, 2024, investors learned more about the lack of sustainability of the company’s revenue growth when Jehoshaphat Research released a report claiming, among other things, that “Doximity’s underlying revenues… are declining at a negative rate of -3-6%, but this decline was masked by accelerated revenue recognition.” Following this news, the price of Doximity’s common stock declined $1.11 per share, or more than 4%, in two trading days, from a closing price of $26.91 per share on March 28, 2024 to $25.80 per share on April 2, 2024.

The complaint further alleges that throughout the Class Period, Defendants made materially false and/or misleading statements and failed to disclose material adverse facts about the Company’s business and operations. Specifically, Defendants repeatedly touted the Company’s business prospects and the sustainability of the Company’s revenue growth and profitability while downplaying the impact of competition and tightening macroeconomic conditions on the Company, as well as Doximity’s reliance on “upselling” products and services (such as additional advertising) to existing customers to maintain the Company’s performance and future growth.

If you are a long-term Doximity shareholder, have information, would like to learn more about these claims, or have any questions about this announcement or your rights or interests with respect to these matters, please contact Brandon Walker or Marion Passmore by email at [email protected], by phone at (212) 355-4648, or by completing this contact form. There is no cost or obligation to you.

About Bragar Eagel & Squire, PC:

Bragar Eagel & Squire, PC is a nationally recognized law firm with offices in New York, California and South Carolina. The firm represents individual and institutional investors in commercial, securities, derivatives and other complex litigation in state and federal courts across the country. For more information about the firm, visit www.bespc.com. Attorney advertising. Past results do not guarantee similar results.

Contact information:

Bragar Eagle & Squire, PC
Brandon Walker, Esq.
Marion Passmore, Esq.
(212) 355-4648
[email protected]
www.bespc.com