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JPMorgan, Oppenheimer advising Cano Health

Claire Rychlewski
Aug 16, 2023
Illustration of price tag stickers in the shape of a health plus.

Illustration: Aïda Amer/Axios

After dismal Q2 earnings, Cano Health (NYSE: CANO) is working with JPMorgan and Oppenheimer as it pursues strategic alternatives, sources familiar with the situation tell Axios.

Why it's the BFD: A vestige of 2021's SPAC bonanza, Cano is a cautionary tale.

Catch up quick: Last week, Cano announced plans to "identify and evaluate interest in a sale of the company, or all or substantially all of its assets."

What's happening: JPMorgan is advising Cano on a potential sale of the whole company, while Oppenheimer is advising on possible divestitures or breakups of the business, the sources say.

  • Cano announced plans to exit operations in California, New Mexico and Illinois by the fall of 2023, and intends to exit its Puerto Rico operations by January 2024.
  • Potential assets to sell off include Cano's Medicaid business in Florida (the company made a $300 million acquisition to buoy it last year), as well as its Puerto Rico asset, one source notes.

By the numbers: Cano reported a net loss of about $270 million this quarter, compared with a net loss of $14.6 million the prior year — partly attributable to higher third-party medical costs, the company said.

  • As of Aug. 9, Cano had about $101 million in cash and cash equivalents, which it said is not enough to cover operating, investing and financing uses for the next 12 months.
  • The company took out a $150 million term loan in March from Diameter Capital Partners, Rubicon Founders and their respective affiliates and funds.

Flashback: Private equity spent a lot of time with Cano before it went public via a $4.4 billion SPAC deal with Jaws Acquisition Corp in 2021.

  • At that time, Cano saw its stock price hover around $13 per share. The company has since seen its stock erode considerably, trading at 51 cents a share as of this morning.

The big picture: A spate of primary care businesses made public market debuts in the last few years — but increasing strategic interest in owning doctors' offices and rocky public markets have prompted consolidation.

  • Amazon acquired One Medical for about $4 billion, while CVS Health took Oak Street Health for more than $10 billion.
  • "I anticipate that'll be a sector that's still going to see more acquisitions," says Kevin Eisele, co-head of equity capital markets for health care at William Blair.
  • "From the private equity channel there's a lot of interest, given where a lot of these assets are currently trading," he adds.

JPMorgan declined to comment. Oppenheimer and Cano did not respond to a request for comment.

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