Cano Health sinks on raising going concern doubts; announces job cuts (updated)

Cano Health

10/08/2023 22:46

(Adds details, background throughout and results in paragraph
5,9)
       Aug 10 (Reuters) - Cano Health  CANO.N  said on Thursday
there is substantial doubt about the company's ability to
continue as a going concern within one year, sending shares down
about 48% after the bell.
    The health insurer, which went public in 2021 after merging
with Sternlicht-backed SPAC, also said it is pursuing a process
to sell itself and is continuing efforts to divest its non-core
assets and business lines. 
    Under its restructuring plan, the company expects to lower
costs by reducing 17% of its current workforce, about 700
employees, in the third quarter of 2023.
    The company's current liquidity as of Aug. 9, 2023 was about
$101 million, consisting of cash and cash equivalents, which it
said is not sufficient to cover operating, investing and
financing uses for the next 12 months.
    Its second-quarter net loss widened to $270.75 million from
$14.6 million a year earlier, due to reasons such as increased
medical costs from a spurt in demand for non-urgent surgeries
that were delayed during the pandemic.
    The company's medical cost ratio — or spending on claims as
a percentage of premiums — rose to 103.5% in the quarter,
compared with 82.6% a year earlier.
    Cano has been looking for a new CEO after its former chief
Marlow Hernandez stepped down in June.
    Cano shareholders, including Cooperstone, Gold & Sternlicht,
had issued an open letter in April highlighting an urgent need
for leadership changes.
    The company's revenue for the quarter ended June 30 was
$766.75 million, below analysts' average estimate of $828.44
million, according to Refinitiv data.

 (Reporting by Pratik Jain in Bengaluru; Editing by Shilpi
Majumdar)
 ((Pratik.Jain@thomsonreuters.com;))