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Cano Health attracts another activist

Aug 23, 2022
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Illustration: Aïda Amer/Axios

Jeffrey Altman's Owl Creek Asset Management disclosed a 3.7% stake in Cano Health, calling for the Miami-based primary care company to hire banks to explore a sale to a strategic buyer.

Why it matters: In the wake of Amazon's $3.9 billion buyout of One Medical, CVS reiterating its primary care ambitions, and a host of buyers circling Signify Health, value-based care players like Cano are increasingly finding themselves in the crosshairs.

Context: Oak Creek joins Third Point, Dan Loeb's hedge fund, which in March disclosed a 6.4% stake and pushed for sale of Cano.

  • Cano last June completed its merger with Barry Sternlicht’s Jaws Acquisition Corp. at a $4.4 billion value.
  • Both Third Point and Oak Creek formerly participated in the SPAC merger's $800 million PIPE.

Details: Oak Creek applauded Cano for its strong growth and outperformance, but — having consistently traded at a discount to its peers — says its long-term potential will be maximized with a strategic transaction.

  • Of note: Cano has exceeded guidance with respect to various metrics (membership, revenue, and adjusted EBITDA), the letter acknowledges.

Catch up fast: Cano CEO Marlow Hernandez on an August earnings call reiterated that business growth is the focus, but amid the space's accelerated consolidation, noted it remains "open to considering all strategic alternatives to accelerate value creation."

  • Shares traded around $5.72 in Tuesday morning trading, putting its market capitalization at about $2.7 billion.

💭 Sarah's thought bubble: The primary care and value-based care shakeout going on in the public markets is starting to look like the musical chairs that played out with all the managed care organizations years ago.

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