Cano Health Files for Bankruptcy to Reduce Debt

Feb. 7, 2024
Cano Health has filed for Chapter 11 bankruptcy, raising speculations in the industry that Medicare Advantage Market may be a factor

Staff editors for Reuters reported on Feb. 5 that the Miami-based Cano Health, specializing in seniors' primary care, has filed for Chapter 11 bankruptcy. Cano Health “entered into a restructuring support agreement to reduce debt and solicit potential offers, including the sale of the firm,” the editors wrote. On Feb 4, Cano Health announced In a news release that it received a commitment for $150 million in new debtor-in-possession financing from existing secured lenders, subject to Court approval.

Cindy Krischer Goodman wrote for the South Florida Sun Sentinel on Feb. 5, “[C]ano listed $1.2 billion in assets, including a little over $2 million in cash on hand and $1.4 billion in debt. The largest unsecured creditor is U.S. Bank, owed $306 million, according to the filing.”

Healthcare Finance’s Susan Morse explained for a piece on Feb. 6 that challenges of the Medicare Advantage (MA) Market may be a contributing factor to Cano Health’s problems. “Major MA health insurers have reported earnings hit by larger than expected utilization of services, while a peak in the number of baby boomers retiring signals a slowdown for growth,” Morse wrote. Medriva’s staff underlined on Feb. 5 that changes in the healthcare industry could pose challenges for providers, as well as patients and health insurance companies. “At the heart of Cano Health’s troubles is the profitability of Medicare Advantage….In particular, evidence has accumulated that private insurers running Medicare Advantage plans have been gaming the system by exaggerating their members’ illnesses, leading to reduced profitability,” Medriva’s editors reported.

Cano Health has over 1,000 employees with primary care offices across Florida, treating over 310,000 patients. Medriva’s staff reported that the company was once worth $4.4 billion and that “rapid growth ahead of its 2021 initial public offering led to a mountain of debt.”

In a statement, 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. By entering this court-supervised restructuring process, we are positioning the Company to achieve those goals on an accelerated basis and focus on what we do best – improving health outcomes for patients at a lower cost.”

“The bankruptcy of Cano Health is not an isolated incident,” according to Medriva, “Healthcare firm bankruptcies have been on the rise, with large filings with liabilities over $100 million surging in 2023.”

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