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Cano’s stock has spiked more than 30% upon news of this potential takeover. It went from 86 cents per share on Friday to $1.24 per share on Thursday afternoon.
A representative for Sternlicht, Gold and Cooperstone would not comment further. Cano did not respond to an interview request but in a statement said it was “disappointed” the directors chose to resign and that it strongly disagreed with the group’s view.
Sternlicht helped the Miami-based primary care provider go public through a special purpose acquisition company in 2021. He and other investors provided the company with an excess $1.4 billion in capital in June 2021, driving up its valuation to $4.4 billion. But in a letter he sent to shareholders last Friday, he said the CEO and management team “expended nearly all this cash and the company has not enjoyed any demonstrable improvement in its core profitability.”
In the letter, Sternlicht said he had never witnessed such poor corporate governance at any company, let alone a public company. In Cooperstone’s letter, he said he advised the company to sell its non-core assets and focus on growing its “high performing business in Florida.” This request was ignored, he said. Outside of Florida, the company has clinics in California, Illinois, Nevada, New Mexico, Puerto Rico and Texas.
Gold said that the three directors were purposefully excluded from conversations with other board directors on assessing management’s performance.
Cano faces major liquidity issues amid rapid growth. The company recorded a net loss of $428 million on $2.7 billion in revenue in 2022, partially due to a non-cash goodwill impairment, according to regulatory filings. Cano treats 310,000 patients, more than half of whom are Medicare enrollees covered under value-based arrangements.
Humana and CVS Health were reportedly in a bidding war for Cano last year, but a transaction has yet to materialize. Humana holds right of first refusal. Neither company responded to initial requests for comment.
On Wednesday, the company announced Mark Kent would serve as its new chief strategy officer.
This story first appeared in Digital Health Business & Technology.
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