Dive Brief:
- Beleaguered primary care network Cano Health has sold its Texas and Nevada centers to a Humana subsidiary for almost $67 million.
- The divestiture to Humana’s CenterWell Senior Primary Care business on Tuesday comes after Cano CEO Mark Kent said in August the company was exploring a potential sale amid its worsening liquidity position.
- Cano also plans to exit markets in California, Illinois, New Mexico and Puerto Rico this year, and lay off 700 employees in the third quarter.
Dive Insight:
At the end of June, Cano operated almost 170 centers that managed the care of roughly 380,000 members across nine states and Puerto Rico. However, the primary care operator is facing a liquidity crisis, with Kent disclosing in August that Cano likely didn’t have enough cash to fund the business over the next 12 months.
Cano faced harsh criticism from three former board members this spring, who publicly resigned in protest of what they called poor corporate governance and rising debt. Former CEO Marlow Hernandez stepped down in June amid the boardroom drama.
The company plans to refocus on its core Florida market to improve cash flow. Cano’s divestiture to Humana should allow the company to refine its footprint and improve operational and medical cost performance in the state, Kent said in the release.
The Cano centers in Texas and Nevada cover 15,200 members across 30 sites.
The assets are likely attractive to Humana as the health insurer continues to build out its senior services across the U.S., hoping to profit in lucrative value-based arrangements like Medicare Advantage by improving primary care and heading off worse outcomes down the line.
Currently, CenterWell Senior Primary Care and sister brand Conviva Care Center cover more than 272,000 seniors across 12 states in more than 250 centers.
The payer said in August it plans to add 30 to 50 new centers each year through 2025.
Cano said the net cash proceeds from the transaction will allow it to stay complaint with its debt requirements at the end of the third quarter.
