Teladoc Health TDOC.N shares surged 10% in premarket trading on Thursday after the largest listed U.S. telehealth firm onboarded more members than it expected, allaying fears of inflation hitting its consumer-focused mental health unit.
The company, which counts Cathie Wood's Ark Investment as its largest shareholder, has been increasingly reliant on its BetterHelp mental health unit, even as analysts have raised concerns over the impact on the segment as inflation-hit consumers cut spending.
Teladoc shares have fallen more than 70% so far this year after losing over half their value last year. This is in sharp contrast to 2020 when the stock more than doubled in value on a pandemic-driven boost.
"Teladoc isn’t out of the woods yet," said Citigroup analyst Daniel Grosslight. But the solid results and the better-than-feared forecast cut show that "a clear path forward is beginning to emerge," Grosslight said in a client note.
The company cut the upper end of its full-year adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) forecast to $250 million from $265 million. The midpoint of the $240 million to $250 million forecast range was still above consensus estimates of $234 million.
At least five analysts cut their price targets on Teladoc after it tightened forecast but shares were up 9.01% at $29.15 before the bell after rising more than 10%.
U.S. paid memberships in the quarter rose nearly 10% to 57.8 million, above Teladoc's own expectations of between 55.5 to 56.5 million members.
While Teladoc remains one of the largest telehealth firms, competition is heating up, with Amazon.com Inc AMZN.O in July agreeing to buy primary care provider One Medical ONEM.O for $3.49 billion, expanding the e-commerce giant's virtual healthcare presence.
