What happened

Shares of Opko Health, Inc. (OPK -1.03%) soared 19.1% higher as of 11:26 a.m. EST on Monday. The healthcare company topped analysts' expectations with its third-quarter results, announced after the market closed on Friday. Opko also again defended itself and CEO Phillip Frost against fraud allegations made by the Securities and Exchange Commission (SEC) in September. 

So what

Wall Street analysts' consensus estimate was that Opko would lose $0.08 per share in the third quarter. Instead, the company posted a net loss of $27.7 million, or $0.05 per share. This was a marked improvement from the prior-year period loss of $35.9 million, or $0.06 per share.

Man in suit pulling red line that was going down back up.

Image source: Getty Images.

However, Opko's bottom-line improvement didn't come from tremendous gains on the top line. The company's revenue increased only 1.5% year over year to $249.8 million. Opko's better-than-expected Q3 net loss stemmed primarily from spending cuts, particularly in selling, general, and administrative expenses. 

While beating Wall Street estimates is a good thing, the reality is that Opko can't use spending cuts to generate improvement indefinitely. Although the company continues to see incremental prescription growth for Rayaldee, sales for the secondary hyperparathyroidism (SHPT) drug still aren't anywhere close to where the company needs them to be.

Opko's statements during the company's Q3 conference call didn't provide any new details on the SEC fraud allegations. Steve Rubin, Opko Health's executive vice president-administration, said that the company is working with advisors to respond to the allegations.

Now what

The charges of fraud against Opko Health and Phillip Frost came at a point where it seemed the company was beginning to turn things around. Opko's Q3 results reflected some improvement, but it wasn't enough to convincingly show that the company is coming back in a strong way. And it's still too soon to know what will happen with the SEC allegations.

It's possible that Opko will successfully defend itself against the SEC. It's also possible that Rayaldee and other products will generate solid revenue growth for the company over time. For now, though, there are still too many questions to make Opko Health stock a good pick for most investors.