Doximity (DOCS -4.24% ) and Teladoc ( DOC -3.97% ) are two leading companies with similar market capitalizations in healthcare, but there are also important differences. In this Motley Fool live excerpt from “The Pharma & Biotech Show”, recorded on March 23Fool.com contributor Taylor Carmichael rates both stocks and tells potential investors what to look for.
Taylor Carmichael: What Doximity is is the website for all the other doctors in real life hospitals, it’s Facebook for doctors. It’s where all the physical doctors, so to speak, go to network to find jobs, to find the next hospital where they want to work. Where nurses go where EMT has 80% of doctors are on Doximity. It is the networking site for the medical industry. Ninety percent of medical students are on Doximity in America. It’s already won.
I feel like Teladoc Health is the best dog and the first at what they do. It’s really interesting to compare these two companies because I think they’re both going to be successful. But Doximity is fascinating because it is extremely profitable. They have huge profit margins. While Teladoc is more like Amazon, where it does this super-fast growth. I think their margins will probably be much lower than what Teladoc currently has. Teladoc [Editor’s note: Taylor meant to say “Doximity” here.] has this amazing business model and it’s so profitable, even though they’re growing rapidly, which is very unusual in these fast-growing tech companies that don’t usually see this huge profitability so quickly. This is why the market always gives a very high multiple Doximity compared to Teladoc. Like we talk about how others have a POS of two or a POS of a Doximity has a POS of 26. It’s still expensive but they were way more expensive three months ago, four months ago, where they had a POS of 300 or something.
They are two wonderful companies. They now have similar market caps, with Teladoc being I think at 10 billion and Doximity at nine billion. They are both growing rapidly. Doximity pays off. Teladoc is not. Teladoc has a tiny multiple, so it’s cheap. Doxity has a high multiple, so it’s expensive. But probably, probably anyway, a better business model, or at least a faster profitable business.
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