Health tech company Doximity bought Pathway Medical to bulk up its healthcare artificial intelligence capabilities as it looks to offer more free AI tools to doctors.
The transaction closed July 29 for cash consideration of $26 million and up to $37 million in additional equity grants, the company said in a press release.
Pathway claims it has one of the largest structured data sets in medicine, "spanning nearly every guideline, drug and landmark trial across all major specialties."
"What makes it powerful is its cross-linked structure that lets AI quickly get accurate answers for doctors. It's much more than an LLM (large language model). It understands complex drug interactions and scores the strength of medical evidence, such as weighing a validated clinical trial more than a case study," Jeff Tangney, co-founder and CEO of Doximity, told investors during the company's fiscal first-quarter earnings call Thursday, according to a transcript of the call.
Doximity's engineering team has integrated Pathway's data sets and its AI into the company's free Doximity GPT product, which is a tool that helps streamline doctors' time-consuming administrative tasks such as drafting and faxing preauthorization and appeal letters to insurers.
The company is now testing that combined product with "thousands of physician beta testers," Tangney said on the earnings call.
Doximity, a digital platform for U.S. medical professionals, recently rolled out a new AI medical scribe that is available free of charge to all verified U.S. physicians, nurse practitioners, physician assistants and medical students with a verified Doximity account.
Doctors use Pathway's AI-powered clinical reference tool to ask questions about care guidelines, approved drugs, drug interactions and clinical trials, among other topics. Pathway's AI model, built on one of the best data sets in medicine, will take Doximity's clinical reference capabilities "to an entirely new level," Tangney told investors.
Pathway, based in Montreal, is a six-person, seven-year-old startup with physicians making up half the team. "From a post-doc program at the prestigious Mila AI Institute, they founded Pathway five years before ChatGPT even existed to help answer the ICU bedside questions they faced every day," Tangney told investors.
Pathway’s model outperforms others in clinical accuracy, recently scoring a record 96% on the U.S. Medical Licensing Examination benchmark, the companies said.
Pathway has grown to hundreds of thousands of registered users worldwide with thousands paying $300 per year for their premium version, Tangney said.
Doximity has a sizable reach into the medical community, which could give it a distinct advantage as it builds out AI-based physician workflow tools. Doximity's network members include more than 80% of U.S. physicians across all specialties and practice areas.
The acquisition of Pathway Medical marks a strategic move to bolster its AI capabilities, and the deal should help the combined entity "compete with novel providers like OpenEvidence," wrote Ryan Daniels, an analyst with William Blair, in an analyst note following Doximity's earnings call.
"We like the deal and believe that the combination of Doximity GPT, the new AI-scribe tool, and Pathway’s AI-based clinical tools (answering provider questions at the point of care) are helping Doximity become a clear leader in the AI space," Daniels wrote. "At present, we believe the company will continue to provide the full AI toolset for free to providers but expect that over the longer term (within the next one to two years) it could move to sell enterprise-grade solutions to health systems (similar to the path it took with Doximity Dialer)."
Wall Street also seemed pleased with Doximity's first-quarter results and acquisition as the company's stock was up 13% on Friday.
Clinical AI "is still in its early innings," Tangney told investors. "We recently surveyed 1,800 U.S. physicians, and more than half have yet to use any clinical AI, but many are interested. We're here to help," he said.
The company gathers feedback from beta testers and its physician advisory summit about what doctors want most from AI. "Our physician AI suite is now taking shape. Scribe takes your notes, GPT writes your letters, Pathway's Corpus helps answer your questions and they all work together in a three HIPAA compliance suite that's private to each physician," Tangney said.
"We're excited to make AI our next act here at Doximity," he said.
Solid Q1 results
The company's fiscal first quarter 2026 revenue grew 15% year over year, from $127 million to $146 million, above consensus Wall Street analyst expectations for the quarter, which was $139.5 million. The company also reported adjusted EBITDA of $79.8 million for the quarter, also above Street expectations of $71.8 million.
Doximity brought in a profit of $53.3 million, versus $41.4 million during the same quarter a year ago. Non-GAAP net income came to $71.9 million, versus $55.9 million a year ago.
The company reported earnings per share of 36 cents in the quarter versus the analyst estimate of 30 cents per share.
Doximity boasted another quarter of record engagement across its newsfeed, workflow and AI products. Last quarter, more than 630,000 providers used Doximity's workflow tools. The company's AI tools grew the fastest, up more than 5x year over year, according to the company. Its newsfeed also hit record highs, with more than 1 million quarterly active providers.
Doximity updated its full-year guidance and expects revenue between $628 million and $636 million and adjusted EBITDA between $341 million and $349 million.
For its fiscal second quarter ending Sept. 30, Doximity projects revenue between $157 million and $158 million and adjusted EBITDA between $87 million and $88 million.