Cano Health pursuing sales process, exiting operations in several markets

Cano Health is pursuing a comprehensive process to identify and evaluate interest in a sale of the company, or all or substantially all of its assets, consistent with the terms and conditions of the 2023 Side-Car Amendment. The company has engaged advisors to assist in the process. The company has not set a timetable for the conclusion of this process. In addition, the company has made progress in its assessment of its non-core assets. So far, Cano Health plans to exit operations in California, New Mexico and Illinois by the fall of 2023. As of June 30, , these geographies accounted for approximately 5,000 total members and 17 medical centers across the three states. The company also plans to exit its Puerto Rico operations by January 1, 2024, which has approximately 8,000 members cared for by affiliates. The company is continuing to assess the divestiture of other non-core assets and business lines, while focusing on improving operations for its Medicare Advantage and ACO REACH businesses in its remaining core geographies. Proceeds from any non-core divestitures would be utilized for general corporate purposes and debt repayment. Cano Health has also developed a plan to further restructure its operations to improve efficiency and reduce costs. In Q3, the company expects to reduce its workforce by approximately 700 employees, or 17%. These actions are expected to yield approximately $50M of annualized cost reductions beginning in Q3 and through the end of 2024. The company expects to record a restructuring charge in Q3 of approximately $4M, the majority of which will be paid in 2023 and a lesser amount in 2024. The company’s current liquidity as of August 9 was approximately $101M, consisting of cash and cash equivalents. The company currently believes that this amount of liquidity is not sufficient to cover its uses for the next 12 months. Management has concluded that there is substantial doubt about the company’s ability to continue as a going concern within one year.