Positions the Company to Advance Its Ongoing
Transformation Plan Designed to Significantly Reduce Costs, Enhance
Productivity, and Improve Cash Flow
Receives Commitment for $150 Million in New Capital
Ensures Patients Continue to Receive
High-Quality Care Across Medical Centers
MIAMI, Feb. 4, 2024
/PRNewswire/ -- Cano Health, Inc. (NYSE: CANO) ("Cano Health" or
the "Company"), a leading value-based primary care provider and
population health company, today announced that it has entered into
a Restructuring Support Agreement (the "RSA") with lenders
(the "Ad Hoc Lender Group") holding approximately 86% of its
secured revolving and term loan debt and 92% of its senior
unsecured notes. This agreement enables Cano Health to
substantially reduce its debt and position the Company to achieve
long-term success.
To facilitate this restructuring, Cano Health has initiated
prearranged voluntary Chapter 11 proceedings in the U.S. Bankruptcy
Court for the District of Delaware
(the "Court"). It has also received a commitment for $150 million in new debtor-in-possession
financing from certain of its existing secured lenders, which is
subject to Court approval. This new capital is expected to provide
sufficient liquidity to support the Company's ongoing operations
throughout the restructuring process.
Mark Kent, CEO of Cano Health,
said, "We have taken decisive actions over the past few months to
advance our previously disclosed Transformation Plan and strengthen
our financial position. 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. I am
confident we will emerge from this process a stronger organization
with the necessary resources in place to continue delivering the
quality of care our patients expect and deserve. We appreciate the
support of the majority of our creditors as we pursue this
goal."
Since Mark Kent assumed the
permanent CEO role in August 2023,
Cano Health has significantly advanced and accelerated its strategy
to focus on its core Florida Medicare Advantage and ACO REACH lines of business, including
successfully divesting operations in Texas and Nevada and exiting the California and Puerto Rico markets. As a result of its
ongoing operational Transformation Plan, the Company expects to
achieve approximately $290 million of
annualized cost reductions by the end of 2024.
Cano Health is filing with the Court a series of customary
"first day" motions to maintain business-as-usual operations on all
fronts:
- Paying associate wages, including for its doctors and nurses,
without interruption;
- Continuing operations and honoring obligations to its affiliate
physician groups;
- Ensuring patients at its clinics continue to receive quality
value-based healthcare; and
- Seeking authority to pay the existing pre-petition claims of
certain vendors that are critical to the health and safety
of Cano Health's patients and critical to the operation
of the Company's medical centers. The Company has authority to
continue making ordinary course payments for all authorized goods
and services provided on or after the filing date.
Court approval of these routine motions, which the Company
expects to receive in short order, will help facilitate a smooth
transition into the process and ensure the Company's medical
centers and its physician affiliates can continue providing
uninterrupted service to all patients.
Given the broad extent of creditor support, Cano Health expects
to file and receive Court approval of a Plan of Reorganization and
Disclosure Statement expeditiously, while also exploring paths to
maximize value, and it expects to emerge from the restructuring
process in the second quarter of 2024.
The RSA provides for the conversion of nearly $1 billion in secured debt to a combination of
new debt and full equity ownership in the reorganized company. It
also allows for solicitation of strategic partnerships and
potential offers – including the sale of the company or
substantially all its assets – that may result in a
value-maximizing outcome to the Company's stakeholders.
Additional information about Cano Health's restructuring
proceedings is available at https://www.kccllc.net/CanoHealth.
Creditors with questions may contact the Company's Claims Agent,
Kurtzman Carson Consultants LLC ("KCC"), at
CanoHealthinfo@kccllc.com and (888) 251-2679 (U.S./Canada) or (310) 751-2609 (International).
Weil, Gotshal & Manges LLP is serving as legal counsel;
Houlihan Lokey Capital Inc. is serving as investment banker; and
AlixPartners LLP is serving as financial advisor to Cano
Health.
The Ad Hoc Lender Group is represented by Gibson, Dunn &
Crutcher as legal counsel, Evercore as investment banker, and
Berkeley Research Group as financial advisor.
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.
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
words such as "will," "shall," "may," "expects," "anticipates,"
"believes," "foresees," "forecasts," "plans," "seeks," "intends,"
"estimates" or other words or phrases of similar import. Such
statements include, without limitation, statements regarding:
(i) the RSA, the transactions contemplated thereby, and the
expected benefits thereof, including that it will enable the
Company to substantially reduce its debt and position the Company
to achieve long-term success; (ii) the Company's Chapter 11
proceedings, including, without limitation, the outcome thereof and
the Company's expectations as to receipt of and timing for Court
approvals and the timing of its emergence from the proceedings, as
well as the expected benefits of the proceedings, such as that they
will strengthen the Company's financial condition, position the
Company to advance its ongoing Transformation Plan that is designed
to significantly reduce costs, enhance productivity, and improve
cash flow, ensure patients continue to receive high-quality care
across medical centers and improve health outcomes for
patients at a lower cost; (iii) the availability of liquidity from
the Company's debtor-in-possession financing and the various
conditions to which such debtor-in-possession financing is subject
and the risk that these conditions may not be satisfied for various
reasons, including for reasons outside of the Company's control, as
well as the Company's planned uses of such funds, including,
without limitation that the new capital will provide
sufficient liquidity to support the Company's ongoing operations
throughout the restructuring process; (iv) the Company's execution
of one or more aspects of its Transformation Plan, including the
benefits from such activities, including our expectations regarding
achieving approximately $290 million of cost reductions by the
end of 2024; and (v) the Company's 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. It is uncertain whether any of the events
anticipated by the forward-looking statements will 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) successfully pursue the Chapter 11
proceedings; (ii) less than expected benefits from the RSA;
(iii) less than expected access to liquidity and greater than
anticipated costs and expenses; (iv) less than expected 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 or delays in
achieving such benefits; and/or (v) difficulties and/or delays in
consummating one or more transactions arising from its pursuit of
strategic alternatives. 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 and our other SEC
filings noted above. 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.
The Company cautions that trading in the Company's securities
during the pendency of the Chapter 11 proceedings is highly
speculative and poses substantial risks. Trading prices for the
Company's securities may bear little or no relationship to the
actual recovery, if any, by holders of the Company's securities in
the Chapter 11 proceedings. Holders of shares of the Company's
Class A common stock could experience a complete loss on their
investment, depending on the outcome of the Chapter 11
proceedings.
Media Contacts
David Zarco
mediarelations@canohealth.com
Kekst CNC
Ruth Pachman / Nicholas Capuano
ruth.pachman@kekstcnc.com / nicholas.capuano@kekstcnc.com
Investor Contact
Cano Health IR
investors@canohealth.com
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SOURCE Cano Health, Inc.
