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On Monday, value-based primary care provider Cano Health Inc (NASDAQ:CANO) entered into a Restructuring Support Agreement with lenders holding approximately 86% of its secured revolving and term loan debt and 92% of its senior unsecured notes.
This agreement enables Cano Health to reduce its debt. To facilitate this restructuring, Cano Health has initiated prearranged voluntary Chapter 11 proceedings in the U.S. Bankruptcy Court for the District of Delaware.
It has also received a commitment for $150 million in new debtor-in-possession financing from certain of its existing secured lenders, subject to Court approval.
This new capital is expected to provide sufficient liquidity to support the company’s ongoing operations throughout the restructuring process.
Mark Kent, CEO of Cano Health, said, “We have taken decisive actions over the past few months to advance our previously disclosed Transformation Plan and strengthen our financial position.”
Since Mark Kent assumed the permanent CEO role in August 2023, Cano Health has significantly advanced and accelerated its strategy to focus on its core Florida Medicare Advantage and ACO REACH lines of business, including divesting operations in Texas and Nevada and exiting the California and Puerto Rico markets.
As a result of its ongoing operational Transformation Plan, the company expects to achieve approximately $290 million of annualized cost reductions by the end of 2024.
Cano Health expects to emerge from the restructuring process in the second quarter of 2024.
The RSA provides for the conversion of nearly $1 billion in secured debt to a combination of new debt and full equity ownership in the reorganized company. It also allows for solicitation of strategic partnerships and potential offers – including the sale of the company or substantially all its assets.
Price Action: CANO stock is down 51.30% at $1.12 during the premarket session on the last check Monday.
Posted In: CANO
