Are we nearing the final episodes of “Cano Health”, the telenovela? New CEO Mark Kent has gotten busy in the past five weeks since his permanent CEO appointment. The first and most important action he has taken is to generate cash in the nick of time to comply with their debt covenants coming due in September. The sale of their Texas and Nevada operations to CenterWell Senior Primary Care, a unit of Humana, for $66.7 million, includes $35.4 million in cash to be paid at closing. According to their release, this brings their unrestricted cash reserves up to $109 million, which will enable it to remain in compliance with the covenants under its debt instruments due at the end of Q3, including the financial maintenance covenant under the Credit Suisse credit agreement. $80 million will be drawn down to repay a portion of its $120 million revolving credit facility by the end of Q3 2023–September.
Cano’s Texas and Nevada clinics serve approximately 15,000 patients. CenterWell’s acquisition fits their corporate growth strategy in adding 25 to 50 clinics per year. FierceHealthcare
In August, Cano admitted that their liquidity was insufficient to cover the next 12 months, initiating a 17% staff downsizing and exits of their California, New Mexico, and Illinois operations by the fall, reducing their coverage by 5,000 members and 17 medical centers. They also announced a restructuring of their core Florida operations [TTA 15 August].
But…there’s more. Axios reports that Kent and Cano are continuing to work with financial advisers JPMorgan and Oppenheimer on a full-bore breakup of the company. JPM is advising on a whole-company sale, while Oppenheimer is advising on a breakup. Remaining are the Puerto Rico operation and their Medicaid business in Florida. Axios
Earlier this month, Cano declared that it would work with the NYSE to regain compliance with the Listing Rule that requires stocks to trade above $1.00. Cano was notified on 11 September since it traded below $1.00 for 30 days. The Cano stock closed today (28 Sept) at $0.28. Actions mentioned in their release include their announced business strategy of reorganizing their business and a reverse stock split that has to be approved by shareholders at a meeting to be determined. However, their largest shareholder, InTandem Capital Partners, LLC, which controls ITC Rumba, LLC, is in favor of the reverse stock split. NYSE has a six-month deadline for this.
Once again, not a peep from the Cano 3 (resigned directors Barry Sternlicht, Elliot Cooperstone, and Lewis Gold). Perhaps they have resigned themselves to writing off their 35% of near-worthless shares in their collective portfolios.
Given the above timelines, Q3 reporting due next month, and end of year looming, CEO Kent will need to be Clark Kent (the Daily Planet disguise of Superman) to pull Cano Health either to survival as a smaller entity, as stated in their press releases, a sale in toto of what remains–or a complete parting-out.