What happened
Shares of Teladoc Health (TDOC 0.30%) were climbing last month after the beaten-down telehealth stock delivered third-quarter results that were enough to please investors. The growth stock also seemed to respond to gains in the broad market as investors bet that a Fed pivot, meaning the Federal Reserve stops raising interest rates, could come sooner rather than later.
According to data from S&P Global Market Intelligence, the stock finished the month up 17%.
As the chart shows, the stock surged at the end of the month after its earnings report came out.
So what
Teladoc stock has fallen more than 90% since its peak early last year as the growth story around the telehealth platform has collapsed and the company has taken nearly $10 billion in write-downs this year, including $6.6 billion for Livongo Health, the diabetes monitoring company it acquired in 2020.
As the stock price has come down, so have expectations for a company that is still seen as a leader in telehealth, a disruptive technology, which is good for investors.
Teladoc stock actually jumped two days ahead of its earnings report on Oct. 25 on positive analyst chatter as Citigroup analyst Daniel Grosslight said the stock could rally on just an in-line quarter, and that's what seemed to happen as it gained another 6.5% when the earnings report came out.
Revenue in the quarter rose 17% to $611.4 million, slightly ahead of estimates at $610.1 million. Adjusted EBITDA in the quarter fell 24% to $51.2 million, showing the company is still struggling to control costs, and on a GAAP basis, it reported a loss of $0.45 per share, which was better than $0.53 in the quarter a year ago and ahead of the analyst consensus at $0.55. On an adjusted basis, the company posted a per-share profit of $0.11.
CEO Jason Gorevic said: "Teladoc Health delivered strong third-quarter results, including robust revenue growth, and adjusted EBITDA above the high end of expectations. During the quarter, we continued to make progress against our whole-person care strategy as the market evolves toward integrated virtual and digital health solutions."
Now what
Guidance for the fourth quarter was within expectations, as management called for revenue of $625 million to $640 million, up 14% from the quarter a year ago. It also expects adjusted EBITDA of $88 million to $98 million, showing a sequential improvement and a margin of 15%.
While that growth isn't particularly impressive, Teladoc shares have fallen enough to give investors an easy win, making the bull case for the healthcare stock more appealing from here.
