What happened
Highly beleaguered healthcare stock Cano Health (CANO) was hit with some bad news it probably didn't need on Tuesday, and investors sold out of the company. When the smoke cleared, the shares had lost almost 3% of their value on the day, comparing unfavorably to the 0.6% decline of the S&P 500 index.
So what
Late on Monday, Cano Health disclosed in a regulatory filing that it has received formal notice from the New York Stock Exchange (NYSE) that it is in violation of the exchange's trading rules. These mandate that a listed stock's closing price must not fall below $1 per share over a period of 30 consecutive trading days.
As per the NYSE's regulations, Cano Health now has six months to regain compliance with the 30-day, $1 rule. That period of time might be extended if the company elects to solve its problem through means such as a reverse stock split. Such a move, which reduces a company's share count while simultaneously increasing the per-share price of the stock, is typical for a company risking a delisting in this way.
In the filing, the healthcare company wrote that it aims to fall back into compliance
through executing its previously announced business strategy and is considering its other options for regaining compliance with the Listing Rule, including effecting a reverse stock split, subject to stockholder approval, which it would seek to obtain no later than at the company's next annual stockholders' meeting.
Now what
On a fundamental basis these days, Cano Health is not healthy. Last month, in its latest quarterly update, it said that there is significant doubt it can continue to operate as a going concern and that management will try to sell the heavily loss-making company.
