UPDATE: Feb. 6, 2024: The New York Stock Exchange announced late Monday that it would begin proceedings to delist Cano Health a day after the primary care chain said it filed for bankruptcy. Cano’s stock was suspended from trading immediately. In a press release, the company said it wouldn’t appeal the exchange’s decision.
- Cano Health filed for Chapter 11 bankruptcy late Sunday, as the beleaguered primary care chain works to bolster its financials.
- The filing is part of a restructuring support agreement with the majority of its lenders. Cano said it expects to emerge from restructuring during the second quarter this year, adding that the process will help it reduce debt and allow it to search for a strategic partner or buyer.
- Cano also announced it reached an agreement to receive $150 million in debtor-in-possession financing to fund its operations during restructuring.
Cano, a value-based primary care provider with about 310,000 members, reported in the summer there was “substantial doubt” it could bring in enough cash to fund its business in the near term.
The company began to exit markets and search for a potential buyer last year to improve its financial position, including by selling centers in Texas and Nevada to a Humana subsidiary for almost $67 million.
The chain said it cut 21% of its workforce during restructuring in the third quarter of 2023, in addition to exiting operations in California, New Mexico and Illinois. The company also recently stopped operating in Puerto Rico.
Cano pushed to accelerate its turnaround plan late last year after it received notice from the New York Stock Exchange warning the chain could be delisted because its total market capitalization, or the market value of its outstanding shares, had been less than $50 million over a 30 trading-day period.
The company said it was targeting $290 million in cost reductions by the end of this year, including $65 million in cuts it had previously disclosed.
Under the new restructuring agreement, Cano said it plans to convert nearly $1 billion in secured debt to a combination of new debt and full equity ownership in the reorganized company. The chain could also look for strategic partners or buyers for parts or the entirety of the company.
“By entering this court-supervised restructuring process, we are positioning the Company to achieve those goals on an accelerated basis and focus on what we do best – improving health outcomes for patients at a lower cost,” Cano CEO Mark Kent said in a statement.
Cano estimated between $1 billion and $10 billion in liabilities in a filing with the Bankruptcy Court for the District of Delaware.
Bankruptcies at healthcare firms have been on the rise, spiking to a five-year high last year, according to a report released late last month by restructuring advisory firm Gibbins Advisors.
Large filings with liabilities over $100 million surged in 2023, with 28 filings recorded last year compared with seven in 2022.