Cano Health files for Chapter 11 bankruptcy
Cano Health has received a commitment for $150 million in financing.
Photo: Kiyoshi Hijiki
Cano Health and its affiliated entities have voluntarily filed for Chapter 11 bankruptcy.
The Miami-based company, which specializes in primary care for seniors, filed for Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the District of Delaware on Sunday. It has entered into a restructuring support agreement to reduce debt and solicit potential offers, including the sale of the firm, according to Reuters.
Cano Health has received a commitment for $150 million in new debtor-in-possession financing from certain of its existing secured lenders, which is subject to court approval, according to Seeking Alpha. Lenders reportedly hold approximately 86% of its secured revolving and term loan debt and 92% of its senior unsecured notes.
This new capital is expected to provide sufficient liquidity to support the company's ongoing operations throughout the restructuring process, the report said.
WHY THIS MATTERS
The recent challenges of the Medicare Advantage market may be adding to Cano Health's troubles.
The company had rapid growth ahead of its 2021 initial public offering that led to debt, currently sitting at $1.3 billion, according to Medriva.
Major MA health insurers have reported earnings hit by larger than expected utilization of services, while a peak in the number of baby boomers retiring signals a slowdown for growth.
THE LARGER TREND
Cano Health, once valued at $4.4 billion, was recently notified by the New York Stock Exchange that delisting procedures have started to suspend trading of its stock. Cano does not intend to appeal the NYSE's determination and therefore expects that its stock will be delisted from the NYSE.
Cano Health's Board of Directors been conducting a review of strategic alternatives to recapitalize, refinance or otherwise optimize its capital structure, according to court documents.
The Board authorized the filing of a voluntary petition seeking relief under the provisions of Chapter 11 and a Restructuring Support Agreement.
Email the writer: SMorse@himss.org
