Accelerates Transformation Plan, Now Targeting
$290 million of Cost
Reductions
MIAMI, Dec. 29,
2023 /PRNewswire/ -- Cano Health, Inc. (NYSE: CANO)
("Cano Health" or the "Company")
announced today that it was notified by NYSE Regulation Inc. (the
"NYSE") that it is not in compliance with Section
802.01B of the NYSE Listed Company
Manual (the "Listing Rule") because the Company's
total market capitalization has been less than $50 million over a 30 trading-day period and its
stockholders' equity is less than $50
million.
Pursuant to the Listing Rule, the Company has 10 business days
from receipt of the Notice to send a letter to the NYSE confirming
receipt of the Notice and to indicate whether it intends to cure
the deficiencies. If the Company determines to cure such
deficiencies, the Company would then submit a business plan (the
"Plan") within 45 days of receipt of the Notice that
demonstrates that the Company will regain compliance with the
Listing Rule within 18 months of receipt of the Notice. Upon
receipt of the Plan, the NYSE would have up to 45 days to review
and determine whether the Company has made a reasonable
demonstration of its ability to come into conformity with the
relevant standards within the cure period. The NYSE may either
accept the Plan, at which time the Company would be subject to
ongoing quarterly monitoring for compliance with the Plan, or the
NYSE may not accept the Plan and the Company would be subject to
suspension and delisting proceedings. Under the NYSE rules, during
the 18-month cure period, the Company's Class A common stock will
remain eligible for continued listing and trading on the NYSE,
subject to the Company's compliance with other continued listing
requirements.
The current noncompliance with the NYSE Listing Rule does not
affect the Company's ongoing business operations or its U.S.
Securities and Exchange Commission ("SEC") reporting
requirements, nor does it trigger any violation of its material
debt or other obligations.
As previously disclosed by the Company, including in its
Quarterly Report on Form 10-Q for the quarter ended September 30, 2023, filed with the SEC on
November 13, 2023, the Company has
shifted its strategic direction to focus on executing its
Transformation Plan that is designed to: (i) improve the Company's
Medical Cost Ratio ("MCR"); (ii) reduce its direct
patient expense ("DPE") and selling, general &
administrative ("SG&A") expenses; (iii)
improve the Company's gross profit and Adjusted
EBITDA; and (iv) maximize the Company's productivity, cash flow and
liquidity. The Transformation Plan primarily includes the following
measures:
- Driving medical cost management initiatives to improve the
Company's MCR;
- Lowering third party medical costs through negotiations with
payors, including restructuring contractual arrangements with
payors and specialty network;
- Expanding initiatives to optimize its DPE and SG&A
expenses--
- reducing operating expenses, including reduction of permanent
staff; and
- significantly reducing all other non-essential spending;
- Prioritizing the Company's Medicare Advantage and ACO Reach
lines of business through improving patient engagement and
access;
- Divesting and consolidating certain assets and operations,
inclusive of exiting certain markets--
- exiting its Puerto Rico
operations by the beginning of 2024;
- conducting a strategic review of the Company's Medicaid
business in Florida, pharmacy
assets and other specialty practices; and
- consolidating underperforming owned medical centers and
delaying renovations and other capital projects;
- Evaluating the performance its affiliate provider relationship—
- terminating underperforming affiliate partnerships; and
- Pursuing a comprehensive process to identify and evaluate
interest in a sale of the Company, or all or substantially all of
its assets, including having engaged advisors to assist in the
process.
As a result of accelerating these initiatives, the
Transformation Plan is now targeted to achieve approximately
$290 million of cost reductions by
the end of 2024, inclusive of the $65
million of planned cost reductions previously disclosed. The
Company expects to recognize approximately $30 million in pre-tax charges to implement these
plans during 2024, consisting principally of lease exit costs and
employee termination benefits. The Company expects that
substantially all of these charges will be paid in cash over 2024
and 2025.
As part of this strategic shift, the Company also has been
engaged in reviewing and continues to review strategic alternatives
to recapitalize, refinance or otherwise optimize its capital
structure (the "Ongoing Review"), which may
ultimately result in the Company pursuing one or more significant
corporate transactions or other remedial measures. The Ongoing
Review includes an evaluation of available options to regain
compliance with the Listing Rule. The Company can provide no
assurances that it will be able to satisfy any of the steps
outlined above and maintain the listing of its shares on the NYSE
or the results of the Ongoing Review.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. Forward-looking statements relate to future events and
involve known and unknown risks, uncertainties and other factors
which are, in some cases, beyond our control and could materially
affect actual results, performance or achievements. These
forward-looking statements generally can be identified by phrases
such as "will," "expects," "anticipates," "believes," "foresees,"
"forecasts," "plans," "intends," "estimates" or other words or
phrases of similar import, including, without limitation,
statements regarding our anticipated performance, operations,
financial strength, potential, and prospects for long-term
shareholder value creation, our anticipated results of operations,
including our business strategies, our projected costs, prospects
and plans, and other aspects of our operations or operating
results, as well as statements made in this press release regarding
the Company's plans to (i) regain compliance with the Listing Rule;
(ii) execute one or more aspects of its Transformation Plan; (iii)
pursue strategic alternatives to recapitalize, refinance or
otherwise optimize its capital structure, which may ultimately
result in the Company pursuing one or more significant corporate
transactions or other remedial measures; and (iv) achieve
approximately $290 million of cost
reductions by the end of 2024 and recognize approximately
$30 million in charges to implement
the Transformation Plan during 2024, and the timing of the payment
of such charges, and the related expected benefits from pursuing
such plan. It is uncertain whether any of the events anticipated by
the forward-looking statements will transpire or occur, or if any
of them do, what impact they will have on our results of operations
and financial condition. Important risks and uncertainties that
could cause our actual results and financial condition to differ
materially from those indicated in forward-looking statements
include, among others, changes in market or industry conditions,
the regulatory environment, competitive conditions, and/or consumer
receptivity to our services; changes in our strategy, future
operations, prospects and plans; our ability to realize expected
financial results, including with respect to patient membership,
total revenue and earnings; our ability to predict and control our
medical cost ratio; our ability to maintain our relationships with
health plans and other key payors; our future capital requirements
and sources and uses of cash, including funds to satisfy our
liquidity needs; our ability to attract and retain members of
management and our Board of Directors; and/or our ability to
recruit and retain qualified team members and independent
physicians. Actual results may also differ materially from such
forward-looking statements for a number of other reasons, including
those set forth in our filings with the SEC, including, without
limitation, in our Annual Report on Form 10-K for the fiscal year
ended December 31, 2022, filed with
the SEC on March 15, 2023, as amended
by our Annual Report on Form 10-K/A, filed with the SEC on
April 7, 2023 (the "2022 Form 10-K"),
as well as our Quarterly Reports on Form 10-Q and Current Reports
on Form 8-K that we have filed or will file with the SEC during
2023 and 2024 (which may be viewed on the SEC's website at
http://www.sec.gov or on our website at
http://www.investors.canohealth.com/ir-home), as well as reasons
including, without limitation, our experiencing delays or
difficulties in, and/or unexpected or less than anticipated results
from its efforts to (i) regain compliance with the NYSE Listing
Rule; (ii) implement the Company's Transformation Plan; (iii)
consummate one or more transactions to recapitalize, refinance or
otherwise optimize its capital structure, such as due to less than
expected liquidity and/or difficulties and/or delays in
consummating one or more transactions to sell all or part of the
Company; and/or (iv) achieve the targeted cost reductions and/or
any of the other expected benefits from its Transformation Plan,
such as due to higher than expected costs and charges to achieve
one or more aspects of such plan. For a detailed discussion of
other risks and uncertainties that could cause our actual results
to differ materially from those expressed or implied by the
forward-looking statements, please refer to our filings with the
SEC, including, without limitation, our 2022 Form 10-K. Factors
other than those listed above could also cause our results to
differ materially from expected results. Forward-looking statements
speak only as of the date they are made and, except as required by
law, we undertake no obligation or duty to publicly update or
revise any forward-looking statement, whether to reflect actual
results of operations; changes in financial condition; changes in
general U.S. or international economic, industry conditions;
changes in estimates, expectations or assumptions; or other
circumstances, conditions, developments or events arising after the
issuance of this press release. Additionally, the business and
financial materials and any other statement or disclosure on or
made available through the Company's websites or other websites
referenced herein shall not be incorporated by reference into this
press release.
About Cano Health
Cano Health (NYSE: CANO) is a high-touch, technology-powered
healthcare company delivering personalized, value-based primary
care to approximately 310,000 members. Founded in 2009, with its
headquarters in Miami, Florida,
Cano Health is transforming healthcare by delivering primary care
that measurably improves the health, wellness, and quality of life
of its patients and the communities it serves through its primary
care medical centers and supporting affiliated providers. For more
information, visit canohealth.com or investors.canohealth.com.
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SOURCE Cano Health, Inc.
