Cano Health Exits Bankruptcy As Private Company

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Dive Brief:

• Cano Health has emerged from bankruptcy as a private company, months after the primary care chain said it would restructure and delist from the New York Stock Exchange. 
• The company said Friday it converted more than $1 billion of funded debt into common stock and warrants as part of bankruptcy proceedings. The chain’s existing investors also committed to provide more than $200 million to support Cano’s business plan going forward. 
• Cano will take a “disciplined and strategic approach” to growth over the next few years, focusing on improving services at their 80 clinics in Florida, CEO Mark Kent said in a statement. The company had 172 medical centers at the end of 2022, according to a securities filing. 

Dive Insight:

Cano, a value-based primary care provider focused on seniors, filed for Chapter 11 bankruptcy in February, citing between $1 billion and $10 billion in liabilities.

The company’s stock price had declined precipitously since its debut on the public markets in 2021, and Cano reported mounting losses — including a $491.7 million net loss during the third quarter ended Sept. 30, 2023.

Last year, executives said there was “substantial doubt” the primary care provider would be able to meet its financial obligations within the next year, and the company would search for a buyer while it cut costs. 

Cano sold medical centers in Texas and Nevada to a subsidiary of insurer Humana, while it exited markets like California, New Mexico, Illinois and Puerto Rico. The primary care provider said it would accelerate its financial turnaround plan in January, targeting $290 million in cost reductions by the end of 2024. 

Now Cano is on track to meet its cost savings goals by the end of the year, the primary care provider said in a Friday press release. The company has achieved $270 million in cost reductions and productivity improvements so far. 

The company’s board of directors has also changed significantly. Six directors resigned their positions as part of the bankruptcy restructuring, according to securities filings. There are currently three seats on the board, including new Executive Chairman Alan Wheatley, who is a former executive at Humana.

Cano’s restructuring comes as bankruptcies spike in the healthcare industry. Healthcare restructuring advisory firm Gibbins Advisors tallied 79 Chapter 11 bankruptcies in 2023 with liabilities of at least $10 million — more than three times the level seen in 2021.