Dive Brief:
- Cano Health is looking for a buyer after posting growing losses in the second quarter, as the value-based primary care chain noted it might not have enough cash to fund the business over the next year.
- Cano on Thursday reported a $270.7 million net loss in the second quarter, nearly 19 times larger than its $14.6 million loss in the prior-year period.
- In addition to the sale, the Miami-based chain will cease operations in California, New Mexico and Illinois by the fall, and exit Puerto Rico by January 2024. It also plans lay off about 700 employees, or 17% of its workforce, in the third quarter this year, Cano disclosed in its financial release.
Dive Insight:
After concluding there was “substantial doubt” about the company’s ability to meet its financial obligations within the next year, Cano said on Thursday it had engaged advisors to evaluate interest in the sale of the whole company or its assets.
But the primary care chain hasn’t determined when a sale could proceed — or if it could find a buyer.
Cano faced harsh criticism from three former board members this spring, who publicly resigned in protest of what they called poor corporate governance and called for the resignation of the company’s CEO.
The former board members argued the chain’s stock price had been “decimated” since its debut on the public markets in 2021, and that Cano was now saddled with “crippling” debt.
In June, former CEO Marlow Hernandez stepped down about a month after Cano said it would divest certain non-core operations in an effort to improve cash flow.
The primary care chain lost more than $428 million in 2022. Cano’s net losses through the first half of this year now total more than $331 million.
In addition to a potential sale, the company also announced it will reduce its medical center footprint to about 136 by the end of year, CFO Brian Koppy said on a call with investors Thursday. The company operated 169 clinics at the end of June. The company expects its financial position to improve in the back half of the year, partially due to its restructuring, Koppy said.
Going forward, Cano said it will refocus its strategy on its Medicare Advantage and ACO REACH businesses, particularly in its home market in Florida.
The primary care chain will consolidate operations in Texas and Nevada, closing about half of its centers in those markets, according to interim CEO Mark Kent.
“Focusing on Medicare Advantage and ACO REACH provides Cano Health with the opportunity to rebuild its foundation in a market we understand very well,” Kent said on the call. “It also allows us to implement and scale critical operational changes across our footprint, giving us greater leverage over time.”
Cano’s stock price fell 50% in after-hours trading Thursday, opening below $1 per share on Friday.
