Cano Health, a primary-care provider, has issued a warning regarding its ability to sustain itself, prompting a sharp decline in its stock price. The company has also initiated a process to sell itself.
Following the release of Cano's second-quarter earnings report, Citi analysts downgraded the stock from Buy to Neutral. They have also revised their target price downward from $4 to 80 cents. Despite recognizing the value of the company's approach to serving underserved populations, the analysts cited recent financial trends, solvency concerns, and other challenges as reasons for their less optimistic stance.
In the second-quarter earnings report, Cano withdrew its previously provided fiscal year 2023 guidance. Additionally, the company announced its intention to pursue a sale. As of August 9, Cano's liquidity stood at approximately $101 million, including cash and cash equivalents. However, the company does not believe this amount is sufficient to cover its operating, investing, and financing needs for the next year.
In light of these circumstances, Cano's management has expressed doubt about the company's ability to continue as a going concern within the next year.
Cano Health Plans Workforce Reduction and Reports Net Loss
Cano Health, a leading healthcare company, has announced its plans to exit operations in certain states. In the third quarter, the company is expected to reduce its workforce by approximately 700 employees. Additionally, Cano Health has reported a significant net loss of $270.7 million for the second quarter, a considerable increase from the $14.6 million loss recorded during the same period last year. This considerable loss can be primarily attributed to a higher operating loss.
These recent developments have had a significant impact on the company's stock performance. Shares have plummeted by 49% to just 78 cents in premarket trading on Friday.
Amidst these challenges, Cano Health remains focused on providing quality care for its patients while ensuring maximum value for its stakeholders. Mark Kent, the interim chief executive of Cano Health, emphasizes the company's commitment to its mission and vision. However, in order to improve profitability and establish a strong operational foundation, a refreshed approach with solid strategies and tactics is required.
It is important to mention that in September of last year, reports indicated a potential interest from Humana (HUM) or CVS Health (CVS) in acquiring Cano Health. However, in subsequent reports, it was revealed that CVS had ultimately decided against pursuing the acquisition.