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How Cano Health Emerged From Bankruptcy

Analysis  |  By Jay Asser  
   July 10, 2024

The company announced that its reorganization plan received court approval. What's next for the company?

Cano Health has successfully climbed out of bankruptcy months after entering restructuring, the primary care chain announced.

By converting more than $1 billion of funded debt into common stock and warrants, and receiving a commitment of more than $200 million from existing investors for its business plan going forward, Cano said it emerged from Chapter 11 as a reorganizing private company.

In February, the provider filed for bankruptcy and was delisted from the New York Stock Exchange following a significant stretch of financial trouble that saw it accrue liabilities in the range of $1 billion to $10 billion.

With a “significantly improved capital structure and optimized operations,” Cano will now turn its attention to its Florida market.

"We are taking a disciplined and strategic approach to our growth over the next few years, with the primary goal of improving services for patients within our existing Florida footprint, which now consists of 80 locations,” Cano Health CEO Mark Kent said in the news release.

“We are already seeing encouraging results across our improved platform, and I am immensely proud of our associates for their continued dedication to our patients throughout this process. Despite the challenges we have faced as an organization, we have emerged as a stronger and more focused company with a bright future."

Necessary shake-up

Cano said it is on track to hit its goal of $290 million in annualized cost reductions by the end of this year, with $270 million in cost reductions and productivity improvements already achieved.

The company was forced to make changes after reporting net losses of $270.7 million and $491.7 million in the second and third quarters of last year, respectively.\

Liquidity was partly achieved through strategic divestitures of underperforming expansion markets, including the sale of its Texas and Nevada primary care centers for nearly $67 million to Humana’s CenterWell Senior Primary Care business.

Cano also exited operations in California, New Mexico, Illinois, and Puerto Rico, while reducing its workforce in the third quarter of last year by 21%.

Additionally, Cano announced leadership changes to its board of directors to better align with its planned path. Alan Wheatley, a former Humana executive who ran Medicare and Medicaid programs, will join the board as Executive Chariman, serving alongside two other members, Kent and Eric Hsiao of Nut Tree Capital Management.

Jay Asser is the contributing editor for strategy at HealthLeaders. 


KEY TAKEAWAYS

Primary care provider Cano Health has exited bankruptcy as a private company with a focus on its Florida market as it charts a new path forward.

The company said it converted more than $1 billion of funded debt into common stock and warrants, while its existing investors have committed more than $200 million for support.

Through the streamlining of its assets, Cano has achieved over $270 million in cost reductions and productivity improvements.


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