Doximity (NYSE: DOCS) is giving a masterclass on the power of a platform

Doximity (NYSE: DOCS)—an app-driven service for medical professionals—is proving once again that it’s just what the doctor ordered. The company’s stock surged 44% after it reported quarterly revenue last week that beat analyst expectations, and that’s not the first time it’s seen a bump like that. 

Indeed, Doximity shares have rallied immediately after its previous three quarterly earnings reports—shooting up 41%, 39%, and 22%, respectively—in a pattern that’s been holding for nearly a year now. While many might argue that the company is little more than a fancy LinkedIn for doctors, the gains demonstrate the power of a platform once it reaches critical mass with 80% of doctors in the US now using the service.

“Our reach is a key differentiator,” said CEO Jeff Tangney, describing the product that aims to be a one-stop communications shop for medical professionals that also has parallels with Facebook (NASDAQ: META), Zoom (NASDAQ: ZM), and even old-school fax machines. The company offers tools, some of them free, that allow doctors to improve telehealth and messaging with their patients. It also lets them build professional profiles and even makes it easy for them to send faxes—a legacy form of communication that still predominates across the healthcare industry—from their phones.

Building on a business model long-perfected by the largest social media giants, those doctors then become Doximity’s product. The company charges to help hospitals recruit for specialized positions, and it also provides marketing solutions to pharmaceutical companies looking to get their new products in front of the busy professionals who direct nearly $3 trillion in healthcare spending each year with the prescriptions they write. User monetization is nothing new, but Doximity is special because its captive audience is an elite group of people with outsized economic impact.

Despite the recent success, there are, of course, lots of risks ahead. The healthcare industry, for one, is heavily regulated, and any new legislation that seeks to reshape privacy controls, streamline medical records or lower drug prices could all impact demand for its services. Doximity’s high-margin model, meanwhile, could attract both big tech firms and startups eager to carve into the niche market. But for now, as long as Doximity can keep doctors engaged and expand its user base—particularly among nurse practitioners—it seems set to continue in a position of strength. Stay tuned for the next earnings release.