Primary care company Cano Health lays off 700, looking to sell
Company exiting three states and Puerto Rico this year, warns of cash shortfall
Cano Health, a value-based primary care provider, announced that it will lay off 700 employees – 17% of its workforce -- and accelerate its exit from California, New Mexico, Illinois, and Puerto Rico by the end of the year. In addition, the company is looking for a buyer, according to a news release from Cano.
According to its second quarter earnings report, the company increased both total membership and capitated Medicare members by 35% and 25% respectively and revenue increased 11% year-over-year, but its net loss increased from $14.6 million to $270.7 million last year. The company said this larger loss was driven primarily by higher operating costs due to lower than expected Medicare Risk Adjustment revenue, higher third-party medical costs, higher interest expense, and accounting-related financial moves. Its EBITDA fell from $9.9 million last year to -$149.7 million this year.
“Cano Health is evaluating strategic interest in the Company to ensure we continue caring for our patients, while maximizing value for our stakeholders,” said Mark Kent, Cano Health’s interim chief executive officer, in a statement. “Our mission and vision remain the same, however, the strategy and tactics needed to realize the profitability inherent therein requires a refreshed approach with a solid operating foundation. Cano Health took critical strategic steps during the second quarter of 2023 that are intended to accelerate our strategy to enhance operational efficiency and execute on the plan to improve the management of our medical costs.”
The company plans to focus on its Medicare Advantage and ACO REACH assets in its remaining territory. The number of medical centers in Texas and Nevada will be consolidated, and in Florida, Cano will work on increasing speed and quality of care for members by improving patient engagement, restructuring contractual arrangements with payer and specialty networks, and terminating underperforming affiliate partnerships.
The company will also look for a buyer and has hired consultants to help with this process.
Cano’s current liquidity as of August 9, 2023, was approximately $101 million. The company said that this amount of liquidity is not sufficient to cover its operating, investing, and financing uses for the next 12 months. “Management has concluded that there is substantial doubt about the company’s ability to continue as a going concern within one year,” the company announced in the press release.