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Cano posted a second-quarter net loss of $270.7 million.
Stephen Zenner/Getty Images
Cano Health
stock was falling sharply after the primary-care provider issued a warning about its ability to continue as a “going concern” and said it was pursuing a process to sell the company.
Citi analysts downgraded shares of Cano (ticker: CANO) to Neutral from Buy, following its second-quarter earnings report, and lowered their target price to 80 cents from $4. They still believe there is “inherent value” in the company’s “approach to managing underserved populations,” but wrote that recent financial trends and solvency concerns, among other challenges, make it “difficult to maintain a more positive stance at this juncture.”
In its second-quarter earnings report Thursday, Cano withdrew the fiscal 2023 guidance it provided earlier this year and said it was pursuing a process to sell itself. As of Aug. 9, the company’s liquidity was about $101 million, consisting of cash and cash equivalents—which it doesn’t believe is sufficient to cover operating, investing, and financing for the next 12 months.
“Management has concluded that there is substantial doubt about the company’s ability to continue as a going concern within one year,” according to the release.
Cano also said it was planning to exit operations in several states—in the third quarter, it expects to reduce its workforce by about 700 employees. The company also posted a second-quarter net loss of $270.7 million, much wider than the $14.6 million loss recorded the year prior, mainly due to a higher operating loss.
All of that news was weighing on the stock as it plummeted 65% to 53 cents on Friday.
“Cano Health is evaluating strategic interest in the company to ensure we continue caring for our patients, while maximizing value for our stakeholders,” said Mark Kent, interim chief executive, in the release. “Our mission and vision remain the same, however, the strategy and tactics needed to realize the profitability inherent therein requires a refreshed approach with a solid operating foundation.”
Last September, reports said
Humana
(HUM) or
CVS Health
(CVS) were interested in acquiring Cano, but a month later, another report said CVS had walked away from the potential acquisition.
Write to Emily Dattilo at emily.dattilo@dowjones.com
