Dive Brief:
- Cano Health cut 21% of its workforce, or approximately 842 employees, in the third quarter as the primary care chain restructured and shed assets to boost its financial performance.
- The company posted a net loss of $491.7 million during the quarter — more than four times greater than its losses during the prior-year period — driven by a $354 million impairment charge and poor operating results from higher third-party medical costs.
- Cano now operates 126 medical centers, and will continue to assess its geographic footprint, interim CFO Eladio Gil said on a Thursday earnings call. The company completed its exit from a number of states, which contributed to about half of its workforce reductions during the quarter.
Dive Insight:
The struggling primary care chain has been leaving markets and restructuring its business as cash dwindles. Cano had previously run 169 clinics at the end of June.
Cano reported it was searching for a buyer during its second quarter earnings results, noting it might not have enough funds to support the business over the next year.
The company is still searching for a buyer, according to the earnings release.
Cano has shuttered operations in a number of states to focus on the Medicare Advantage market and its ACO REACH business in Florida.
The chain sold its centers in Texas and Nevada to insurer Humana’s CenterWell Senior Primary Care segment in September, and the primary care provider has now completed its exit from California, New Mexico and Illinois, CEO Mark Kent said during the earnings call. The company is also on track to exit Puerto Rico by the beginning of 2024.
The non-Florida markets dragged on the company’s operations, accounting for about $130 million of revenue, but $43 million of adjusted earnings before interest, taxes, depreciation and amortization losses, Kent said.
Cano recorded revenue of $788.1 million in the third quarter, up 19% from the same period in 2022.
About 52% of the workforce reductions in the third quarter could be attributed to ending operations in some markets, while 48% represents organizational restructuring, the company said in a release.
The cuts are expected to yield about $65 million in annual cost reductions beginning in the third quarter of 2023 through the end of 2024.
Cano has also faced leadership turnover this year.
Kent officially took on the CEO role in August, months after founder Marlow Hernandez stepped down in the midst of pressure to resign from former board members who accused the chain of having poor corporate governance.
Early last month, Gil took the reins as interim CFO as the company searches for a permanent successor to Brian Koppy, who left the company at the end of September. Cano’s chief accounting officer also left last month.
