Social network Doximity valued at over $7 billion as shares jump in debut

(Reuters) -Doximity Inc was valued at over $7 billion in its market debut on Thursday as its shares opened more than 58% above their offer price, indicating investor confidence in healthcare-focused technology companies.

Shares of the social network for doctors opened at $41.17 apiece, up from the initial public offering (IPO) price of $26 per share, climbing further to $43 in afternoon trading.

Co-founded and led by Chief Executive Officer Jeffrey Tangney, Doximity’s platform allows doctors to communicate securely with each other. The platform had more than 1.8 million members as of March 31, according to the IPO prospectus.

The company reserved 15% of its Class A shares for certain eligible physicians to be sold at the IPO price.

“We’re especially pleased to share our success with over 10,000 of our physician members ... (they) are now the largest new shareholders in this offering,” Tangney said.

Those shares would be sold through Fidelity Capital Markets and would not be subject to lock-up restrictions, the company had stated earlier.

Demand for and investment in telehealth services is expected to keep rising post-pandemic, a March survey from McKinsey showed.

Doximity, which benefited from pandemic-led tailwinds last year, priced 23.3 million of its Class A shares, raising nearly $606 million in its IPO. Excluding the amount raised from shares offered by one selling stockholder, the company earned about $494 million.

In response to the COVID-19 pandemic, Doximity accelerated the rollout of Dialer Enterprise on its platform, a feature that helps medical professionals conduct virtual patient visits, it said in its filing.

Morgan Stanley, Goldman Sachs and J.P. Morgan Securities were the lead underwriters for the IPO.

Reporting by Echo Wang in Asheville N.C. and Niket Nishant in Bengaluru; Editing by Vinay Dwivedi