Cano Health, which entered Chapter 11 bankruptcy protection six months ago burdened by heavy debts and a money-losing multi-state network of care providers, has re-emerged as a reorganized private company that intends to focus on the Florida market with 80 locations.
The Miami-based company, which was founded in 2009, announced last Friday that the U.S. Bankruptcy Court in Delaware confirmed its new business plan after obtaining the support of unsecured creditors and “key business partners.”
“This has been a transformative year, and the successful conclusion of our court-supervised restructuring has put Cano Health in an excellent position for the future,” CEO Market Kent said in a statement. “We are moving forward with incredibly strong physician partnerships and an improved medical center portfolio. Cano Health has the proper resources to focus on what matters most — treating our patients with the same level of care and attention as we would our own families.”
Cano care centers now serve principally senior citizens in Palm Beach, Broward and Miami-Dade counties, as well as in the Orlando area and from Greater Tampa to Bradenton. The company employs 2,500 people.
From heavily indebted to a value company
“This process has been a daunting one,” Kent told the Sun Sentinel on Tuesday, “having to tell your creditors you’re going to lose more than $1 billion, but I need $200 million for the company to move forward because it’s a great value.”
For patients, that value is on an upward curve, said Kent, a 25-year health care veteran who became interim CEO a year ago on June 16, his son’s birthday. .
“Our patients can expect a new and enhanced Cano. We’ve got some things we are going to announce in the fourth quarter of this year,” he added. “We have always been a one-stop shop. We are enhancing our look and presence. At the same time we have enhanced our new services.”
Among other things, he said Cano assigns each of its patients a care manager, and maintains a 24/7 hotline for patients to call for assistance. Up until midnight, the company will dispatch a nurse practitioner to patient homes. It has also improved its physical medicine and rehabilitation services and offers classes in balance and memory.
“We still have specialists in our centers and primary physicians and nurse practitioners,” he said. Drug prescriptions can be acquired at home or at care centers on the day of appointments.
Hurt by fast growth, competition
Cano entered Chapter 11 in early February after a major expansion and competitive pressures drained cash and fostered a public battle over operations between founding executives and outside investors who helped take the company public in 2021. At filing, the company had more than 1,000 employees and primary care offices across Florida, specializing in care for senior citizens.
Its Florida offices were concentrated in Miami-Dade, Broward and Palm Beach counties with some locations on the Gulf coast in Tampa and Central Florida in Kissimmee/St. Cloud. The doctors treated more than 310,000 patients, many of whom are Medicare enrollees covered under value-based plans.
Four years ago, the company went public with its stock traded on the New York Stock Exchange. It boasted more than 103,000 members in a network of 564 primary care physicians across 14 markets in Florida, Texas, Nevada and Puerto Rico.
Strong cash position
In last week’s statement about exiting bankruptcy, Cano said existing investors have committed more than $200 million in new funding to back its operations while management has achieved $270 million in cost reductions and productivity improvement. The company owners are now banks and private equity groups who were creditors.
The company “significantly reduced its debt obligations, converting more than $1 billion of prepetition funded debt into a combination of common stock and warrants,” Cano said in its statement.
The company added that it intends to take “a disciplined and strategic approach to our growth over the next few years, with the primary goal of improving services for patients within our existing Florida footprint.”
In Tuesday’s interview, Kent acknowledged the senior citizen space in the healthcare industry faces tight times ahead as Medicare reduces its payments to providers through 2026.
“During this time we got out ahead of that,” Kent said. “We budgeted for it and prepared for it. We have continued to focus on our patients and bet on their care and how we can enhance their care.”
“We are already seeing encouraging results across our improved platform,” he said. “It’s a much different Cano today and I am really proud of that.”
Timeline: Rise, fall, reorganization
- 2009: Cano Health is founded by South Florida physician Dr. Marlow Hernandez.
- November 2020: Company announces it is going public on the New York Stock Exchange in merger with Special Purpose Acquisition Company. Cano says it has more than 103,000 members in a network of 564 primary care physicians in 14 markets in Florida, Texas, Nevada and Puerto Rico.
- October 2022: CVS Health backs out of reported talks to acquire Cano as company seeks takeover partner.
- March 2023: Major shareholder Barry Sternlicht resigns from the board, after citing company’s poor financial performance and differences with management.
- June 2023: Under continued pressure by major shareholders led by Sternlicht, Hernandez resigns as CEO and is replaced by 20-year healthcare veteran Mark Kent.
- August 2023: Company lays off 17% of workforce.
- Feb. 4, 2024: Cano files to reorganize under Chapter 11 of the U.S. Bankruptcy Code.
- June 28, 2024: Exits Chapter 11 with 80 Florida locations, $200 million in funding.