MIAMI - Cano Health, Inc. (NYSE: CANO), a primary care provider focusing on value-based care, announced Monday that it has commenced voluntary Chapter 11 proceedings to restructure its debt and has obtained $150M in new financing. The restructuring agreement, supported by a significant majority of its lenders, is intended to reduce the company's debt and aid in executing its Transformation Plan aimed at cutting costs and enhancing productivity.
CEO Mark Kent emphasized the company's commitment to advancing its Transformation Plan and maintaining high-quality patient care. Cano Health has taken steps to focus on its core Florida Medicare Advantage and ACO REACH lines of business, which include divesting operations in Texas and Nevada and exiting markets in California and Puerto Rico. These moves are expected to yield approximately $290M in annualized cost reductions by the end of 2024.
The company has filed customary "first day" motions to ensure that operations continue smoothly during the restructuring, including paying wages and fulfilling obligations to affiliate physician groups. Cano Health also seeks court authority to pay critical vendors to maintain uninterrupted service at its medical centers.
Cano Health anticipates court approval for a Plan of Reorganization and expects to emerge from the restructuring process in the second quarter of 2024. The restructuring support agreement (RSA) outlines the conversion of nearly $1B in secured debt into new debt and equity in the reorganized company and allows for the exploration of strategic partnerships and potential offers.
The company's legal, financial, and investment banking advisors include Weil, Gotshal & Manges LLP, AlixPartners LLP, and Houlihan Lokey (NYSE:HLI) Capital Inc., respectively. The Ad Hoc Lender Group is advised by Gibson, Dunn & Crutcher, Evercore, and Berkeley Research Group.
Cano Health operates high-touch, technology-powered healthcare services for approximately 310,000 members. The company's restructuring proceedings are available for review at a designated website, and creditors can contact Kurtzman Carson Consultants LLC for more information.
This announcement is based on a press release statement from Cano Health, Inc.
InvestingPro Insights
In light of Cano Health's recent Chapter 11 announcement, a glance at the latest InvestingPro data and tips can provide investors with a clearer picture of the company's financial health. Cano Health, which currently holds a market capitalization of $12.43M, has been grappling with significant financial challenges. The company's revenue for the last twelve months as of Q3 2023 stands at $3.1B, marking a growth of 21.61%. Despite this increase in revenue, the company's gross profit margin remains low at 4.94%, reflecting underlying inefficiencies that the Transformation Plan aims to address.
InvestingPro Tips highlight that Cano Health operates with a significant debt burden and has been aggressively buying back shares, which could be a double-edged sword in the context of its financial restructuring. Moreover, the stock's performance has been concerning, with a 42.36% drop over the last month and a staggering 98.46% fall over the past year. These metrics underscore the importance of the company's efforts to streamline operations and reduce costs.
For those considering an investment in Cano Health, it's worth noting that the company's stock is currently trading at a low revenue valuation multiple and analysts do not anticipate profitability this year. Investors can find additional insights and over 15 more InvestingPro Tips at https://www.investing.com/pro/CANO. With a special New Year sale, now is an opportune time to subscribe to InvestingPro at a discount of up to 50%. Use coupon code SFY24 for an additional 10% off a 2-year InvestingPro+ subscription, or SFY241 for an additional 10% off a 1-year subscription.
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