Doximity’s AI Third Act Takes Hold: NOHARM Win and AI Search Monetization Fuel Guidance Raise

Clinical AI leadership plus early monetization signal a reacceleration, with the stock up 20% in 90 days.

DOCS · Earnings Call · 2026-08-06

A Proving Quarter for Clinical AI

Doximity entered its fiscal 2027 with a decisive validation of its Clinical AI strategy. The NOHARM study — the first large-scale independent head-to-head trial of 24 clinical AI models across 1,100 real-world cases — placed Doximity Ask on top among U.S. models. Jeff Tangney highlighted the result as a key differentiator: “Our Doximity Ask product led among U.S. models with the lowest clinical error rates and the highest safety ratings.” — Jeffrey Tangney, Co-Founder and CEO · 2026-08-06 The company attributes this to two unique assets: a built-in drug reference and over 12,000 physician PeerCheck editors. These safeguards directly address the liability concerns of hospital AI steering committees, helping Doximity reach 165 signed health system clients, including 8 of the nation’s top Honor Roll hospitals. As Jeff framed it, the shift mirrors the enterprise adoption that happened in coding assistants:

I believe that 5 years from now, every physician will have, in effect, a doctor's digital assistant. And the core of that doctor's digital assistant will be us, and it will be the combination of Scribe and Ask, our note-taking tool that then leads to a lit search or a clinical decision support tool.
Jeffrey Tangney, Co-Founder and CEO · 2026-08-06

AI Search Moves from Pilot to Pipeline

The commercial AI engine is already turning. Doximity launched AI search in late April, and by the first quarter it had signed a first cohort of customers across more than 2 dozen programs. CFO Matt Sonefeldt noted: “We have onboarded our first cohort of AI search customers across more than 2 dozen programs.” — Matthew Sonefeldt, Chief Financial Officer · 2026-08-06 While no AI revenue was recognized in the quarter, the company expects most of the contracted revenue to hit in Q3. The demand is broad and the guidance reflects it: full-year revenue is raised by $6 million to $671–$681 million. Perry Gold described the energy: “There's just a lot of engagement and activity and buzz, and quite frankly, kind of the velocity of the business that we haven't felt in a few quarters.” — Perry Gold, Investor Relations or IR Representative · 2026-08-06 The company is also expanding beyond pharma, with hospital customers adopting the suite for cost savings and workflow integration.

Financial Discipline Amid AI Investment

Doximity is deliberately leaning into its “AI investment year,” but it is doing so from a position of strength. Revenue reaccelerated to 7% YoY, and adjusted EBITDA margin hit 48%, beating guidance. Gross margin declined to 86.7% (down 2.9pp YoY) due to increased AI compute and content costs, but the company expects the unit economics of AI search to be accretive. Total Revenue reached $157M in Q1 FY27. Stock-based compensation rose to 23% of revenue, though roughly 19% excl. the AI R&D grant. Share repurchases continued, with $92M bought in the quarter. The balance sheet remains debt-free with $688M in cash. This financial flexibility allows Doximity to invest heavily while still posting best-in-class margins — a point Jeff made emphatically: “We're proving you can still post best-in-class software margins while investing heavily in clinical AI.” — Jeffrey Tangney, Co-Founder and CEO · 2026-08-06

A Strategic Shift with Long-Term Implications

What changed is not just another quarter of growth — it is the emergence of a credible third act built on AI search, AI usage at record levels, and an independent validation (NOHARM study) that gives enterprises a reason to consolidate on Doximity. The prior call in May had already set the stage, with Jeff noting, “I was surprised, honestly, by the degree to which they are really all leaned in on AI.” — Jeffrey Tangney, Co-Founder and CEO · 2026-05-14 Now the company is converting that interest into contracts. The stock has responded, rising 20% over the last 90 days, though it remains well below its 2021 peak. The investor takeaway: Doximity is no longer just a physician network; it is positioning itself as the trustworthy, private, and accurate AI layer for U.S. medicine — with the financial discipline to invest for the long term.