Cano Health, a technology-enabled primary care company, saw its shares soar this past week after three recently resigned board members called for changes at the company
Barry Sternlicht, a billionaire real estate investor, Dr. Lewis Gold, co-founder of Sheridan Healthcare, and Elliot Cooperstone, managing partner of InTandem Capital Partners, are seeking to replace CEO Dr. Marlow Hernandez. The three resigned from the board last Friday over differences with Hernandez and executive leadership.
The three ex-directors entered into a group agreement on Sunday to pursue the changes, according to a Securities and Exchange Commission filing this week. Together, the three hold approximately 35.7% of Cano's shares
Cano's stock has spiked more than 30% since their concerns were made public in a letter. It went from $0.86 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.
