Why Cano Health shares fell 29.5% this week

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What happened

Cano Health (CANO -10.33%), a value-based primary care provider, saw its shares fall 29.5% this week, according to data from S&P Global Market Intelligence. The stock closed last week at $2.34, then opened Monday at $2.40. It fell to a 52-week low of $1.64 on Friday before closing the week at $1.65. It’s down nearly $8 a share from early October and down more than 84% so far this year.

So what

The downtrend is a combination of a bad week for markets and the hangover from a less than promising third quarter report. Cano said it grew membership 40% year over year in the quarter and posted revenue of $666 million, up 33% year over year. the other. However, the company posted a higher-than-expected net loss of $112 million, or earnings per share (EPS) loss of $0.23, compared to a loss of $64.3 million and an EPS loss. of $0.09 in the third quarter of last year. .

The company said lower quarterly patient revenue was the reason it lowered the full-year revenue forecast by $2.7 billion to $2.75 billion, down from earlier estimates of up to 2. $9 billion.

In October, Bloomberg reported that SVC Health had been listed as being in exclusive talks to buy Cano. Yet when further reports emerged on Oct. 17 that CVS was backing away from the potential deal, investors began hitting the exits for Cano.

Now what

Cano just went public with a special purpose acquisition company deal just over two years ago. It operates clinics, primarily for Medicare Advantage members, in nine states and Puerto Rico. Its stock is likely to rebound a bit next week as bargain hunters may flock to the stock now that it has hit a 52-week low. Although its mounting losses are concerning, the company continues to generate revenue, so it could still be a takeover target for another company. Primary care providers could easily integrate with several large healthcare companies. In September, The Wall Street Journal reported that humane might also be interested in buying Cano.

Jim Halley holds positions in CVS Health. The Motley Fool recommends CVS Health and CVS Health Corporation. The Motley Fool has a disclosure policy.

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