What happened
Shares of Cano Health (CANO +0.00%) fell 27.9% in December, according to data provided by S&P Global Market Intelligence. The stock closed November at $1.90 a share but fell as low as $1.01 on Dec. 28. The stock has a 52-week low of $0.9801 and a 52-week high of $9.75. The downward move followed a 46.9% drop in November.
So what
Investors took a closer look at the healthcare company's financials after the Third Point hedge fund pulled out its investment from Cano, citing the company's illiquidity. Cano focuses on senior primary healthcare and has 151 facilities across California, Florida, Texas, New Mexico, Nevada, and Puerto Rico. The company provides health and dental care management, with pharmacy services, home visits, telehealth, wellness activities, and transition care, mainly to Medicare Advantage members.
NYSE: CANO
Key Data Points
Cano, in its third quarter report, did have some positive numbers. Revenue was reported as $665 million, up 33%, year over year. The company also increased total membership to 295,000, up 40% over the same period last year. However, the company lost $112 million in the quarter and now only has $24 million in cash, compared to $163.2 million in the third quarter of 2021. The company also downgraded its yearly guidance in several areas. It said it expected total revenue to fall between $2.7 billion to $2.75 billion instead of between $2.85 billion to $2.9 billion, and it added that it expected the medical cost ratio to be between 79.5% to 80.5%, compared to earlier forecasts of between 78% and 79%. It also lowered yearly earnings before interest, taxes, depreciation, and amortization (EBITDA) to land between $150 and $160 million, down from earlier guidance of $200 million.
Now what
More concerning to investors is how little the company mentioned in its report about its cash situation and what exactly it intended to do. With borrowing costs higher, it will likely need a cash infusion or perhaps will look to be bought out by another company. Investors don't like uncertainty, and the lack of comment regarding its cash situation in the third-quarter earnings call didn't help matters.
Back in September, CVS Health and Humana were mentioned in a Wall Street Journal article as suitors to buy out Cano, but there has been no news on that front. Humana, which already has a CenterWell Senior Primary Care business, could be waiting for Cano's shares to fall a little further to the price would be right.
