What happened
Shares of Cano Health (CANO) were crashing 67.9% lower as of 11:25 a.m. ET on Friday. The steep sell-off came after the primary care provider and population health company provided its second-quarter update following the market close on Thursday. In that update, Cano Health stated that its management team "has concluded that there is substantial doubt about the company's ability to continue as a going concern within one year."
Cano Health announced that it will try to sell the company. In the meantime, it intends to exit operations in California, Illinois, and New Mexico this fall as well as in Puerto Rico by the beginning of 2024.
So what
The healthcare stock was enjoying a nice run so far in 2023 before Cano Health's Q2 update. But investors were right to head for the hills after hearing the company's gloomy outlook.
Cano Health's biggest problem is that it simply hasn't found a way to achieve anything close to profitability. The company posted a net loss of $270.7 million in Q2, much worse than the loss of $14.6 million in the prior-year period. However, its revenue grew 11% year over year to $766.7 million.
Now what
As of Aug. 9, Cano Health had $101 million in cash and cash equivalents. It has already fully tapped out the revolving line of credit with Credit Suisse. In addition to exiting some markets, Cano Health plans to reduce its workforce by around 17% to cut costs.
Cano Health is obviously a stock to avoid altogether in light of the serious issues it faces. It remains to be seen if the company will be able to find a buyer before it completely runs out of money.
