What happened
Cano Health (CANO), a value-based primary care provider, saw its shares drop 29.5% this week, according to data from S&P Global Market Intelligence. The stock closed last week at $2.34 and then opened on Monday at $2.40. It dropped to its 52-week low of $1.64 on Friday before closing the week at $1.65. It is down nearly $8 a share from where it was in early October and down more than 84% so far this year.
So what
The downward trend is a combination of a poor week for the markets and a hangover from a less-than-promising third-quarter report. Cano said it increased membership by 40%, year over year, in the quarter and had revenue of $666 million, up 33% year over year. However, the company reported a higher-than-expected net loss of $112 million, or an earnings-per-share (EPS) loss of $0.23, compared to a loss of $64.3 million and an EPS loss of $0.09 in the third quarter last year.
The company said lower quarterly revenue from patients was the reason it was downgrading annual guidance to revenue landing from $2.7 billion to $2.75 billion, compared to earlier estimates of as much as $2.9 billion.
In October, Bloomberg reported that CVS Health had been listed as being in exclusive talks to buy Cano. Yet when other reports came out on Oct. 17 that CVS was walking away from the potential deal, investors started hitting the exits for Cano.
Now what
Cano just went public with a special purpose acquisition company deal a little more than two years ago. It operates clinics, mostly for Medicare Advantage members, in nine states and Puerto Rico. Its stock is likely to bounce back a little next week, as bargain hunters may flock to the stock now that it has hit a 52-week low. Though its growing losses are concerning, the company is continuing to build revenue, so it could still be a buyout target for another company. Primary-care providers could easily fit in with several big healthcare companies. In September, The Wall Street Journal reported that Humana could also be interested in buying Cano.
