What happened

Shares of Cano Health (CANO) were crashing 31.6% lower as of 11:25 a.m. ET on Thursday. The steep decline came after the primary care provider announced its third-quarter results following the market close on Wednesday.

Cano reported Q3 revenue of $665 million, up 33% year over year. The company posted a net loss of $112 million, or $0.23 per share. The consensus among analysts surveyed by Refinitiv was for Cano to record a net loss of $0.05 per share.

The company also provided updated full-year 2022 guidance. Cano now expects revenue will be between $2.7 billion and $2.75 billion, down from its previous outlook of $2.85 billion to $2.9 billion. It projects adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of between $150 million and $160 million. This range is well below the previous forecast of adjusted EBITDA of around $200 million.

So what

Poor performance has consequences. Cano's disappointing Q3 results and lower full-year guidance led Raymond James analyst John Ransom to downgrade the stock to market perform from outperform.

Ransom wrote to investors that this was the company's second consecutive quarter to reduce its full-year guidance. He pointed to Cano's "deteriorating fundamentals, constricted financial flexibility, and the apparent lack of suitors" as the key reasons behind the downgrade.

Now what

The main problem for Cano in Q3 was that it generated less revenue from new members. Over time, the revenue per member per month could rise to historic levels. However, the company faces some headwinds in the second half of this year with seasonal increases in medical costs. Raymond James' rating on the stock seems to be appropriate: It isn't likely that Cano will beat the market for now.