Shares of Teladoc Health (TDOC -2.75%) charged sharply higher this week, surging as much as 27.8% according to data provided by S&P Global Market Intelligence. As of 2:43 p.m. ET Thursday, the stock was still up 18.7%.
The catalyst that sent the digital healthcare stock higher was financial results that far exceeded expectations.
For the third quarter, Teladoc Health generated revenue of $611 million, up 17% year over year. This resulted in a loss per share of $0.45. While a lack of profits in generally not a cause for celebration, Teladoc's results were far better than analysts' consensus estimates, which called for revenue of $609 million and a loss per share of $0.55.
The results were also in stark contrast to the second quarter, when Teladoc reported a noncash impairment charge of $3 billion, which followed a $6.6 billion impairment charge in Q1 -- related to the company's ill-timed acquisition of Livongo Health in late 2020. These write-downs led to blistering losses, as Teladoc reported a loss per share of $41.11 and $19.22, respectively, in the first and second quarters of 2022.
There were other reasons investors were optimistic. The improving top-line results were boosted by increasing patient visits, which improved 25% year over year, underpinned by a 28% increase in U.S. patient visits and a 17% increase internationally.
Teladoc further fueled investor enthusiasm with a solid outlook that suggests further improvements. Management is forecasting revenue in a range of $625 million to $640 million, or roughly 14% growth, resulting in a loss per share of $0.25 at the midpoint of its guidance.
The positive results led to several bullish analyst opinions. Oppenheimer analyst Michael Wiederhorn said the company was righting the ship using an approach that balances efficiency and growth, while the stock remains attractively valued. Citi analyst Daniel Grosslight said that while the company "isn't out of the woods yet," he cited Teladoc's "encouraging pipeline commentary, [which] demonstrate that a clear path forward is beginning to emerge."
Given the company's strong results and solid outlook, investors have concluded that Teladoc is no longer in need of life support and is well on the road to recovery.