Membership-based primary care provider Cano Health is laying off 700 employees, exiting four markets and exploring a sale, the company said Thursday.
The plans were disclosed as the company reported a second-quarter net loss of $270.7 million, or 51 cents per share, compared with a loss of $14.6 million, or 3 cents per share, in the same period last year. The company attributed the loss to lower-than-expected Medicare Risk Adjustment revenue.
The 700 people represent 17% of Cano's workforce, the company said. Around 40% of the layoffs are tied to the company's pending exit from markets in California, New Mexico, Illinois. and Puerto Rico. The remaining layoffs are part of efforts to consolidate operations.
Cano also said it is exploring a potential sale of all or substantially all of its assets. It said its liquidity of $125 million is not enough to cover operating, investing and financing uses for the next 12 months.
Cano said it plans to exit the three states, where it has a total of 5,000 members and 17 medical centers, by the fall. It plans to exit Puerto Rico, where it serves 8,000 members, by 2024.
On a call with analysts, interim CEO Mark Kent said Cano is also planning to sell its Florida Medicaid business and has received initial interest from potential buyers. It also will reduce its footprint in Texas and Nevada by half, Kent said.
“Our exits from California, New Mexico, Illinois and Puerto Rico, coupled with the consolidations in Texas and Nevada, and the potential divestiture of Medicaid, will allow the organization to be laser-focused on delivering high quality, high member engagement for our Medicare Advantage and ACO Reach members,” Kent said.
The company said it will focus on its Medicare Advantage and Accountable Care Organization Reimagined to Achieve Equity and Community Health businesses. The company said in May that it planned to focus on its Medicare Advantage business and sell non-core assets.
In June, former Cano Health CEO Dr. Marlow Hernandez was removed and Kent, who had served as chief strategy officer, stepped in as interim CEO. The board of directors is searching for a permanent replacement.
Hernandez left after a public battle with three former directors who sought his removal. The three, Barry Sternlicht, a billionaire real estate investor; Dr. Lewis Gold, co-founder of Sheridan Healthcare; and Elliot Cooperstone, managing partner of InTandem Capital Partners, resigned in March and expressed dismay that Hernandez’s leadership team was unwilling to sell non-core assets.