Forum Key Insights

Cano Health – potential takeout target

  • Public Equity
  • Healthcare
  • North America

Cano Health stock has dropped by 60% over the past month as reports circulate that CVS Pharmacy is abandoning its purchase of the company. Third Bridge Forum recently spoke to a former senior executive at Cano Health Inc to discuss the value-based primary care provider market and the company’s approach to patient engagement. The Interview also examined Cano’s land-and-expand strategy, as well as its possible sale. Here are the need-to-know insights from that Interview:

Who could acquire Cano Health?

  • he specialist favours an aggressive approach to growth and scaling for Cano Health over the next year – “whoever strikes first is going to be able to strike harder”. 
  • EBITDA multiples for primary care provider groups have “pretty much tripled”, according to the specialist. 
  • Cost per patient has increased from USD 4,000 to approximately USD 10,000, which has driven profitability timelines in new markets up to 3-4 years, we heard. 
  • We heard that Cano Health should avoid expanding into San Diego given reimbursement rates are low and “cost[s] to serve” are high. 

“I think that in general value-based care is completely, it’s an emerging necessity, it’s completely underutilised right now, I think that it’s just scratching the surface.”

  • However, the specialist also said there are still 30 or 40 more markets that are going to be able to deliver and sustain multiple medical centres with similar demographic make-ups to Cano Health – representing 5x growth runway.
  • The specialist believes Cano Health “is a diamond in the rough […] to me it is the future of healthcare”.
  • Cano Health has done better than most in acquiring and retaining staff which has helped reduce staff turnover. Read here for more expert insights on US healthcare staff shortages.
  • We heard that Cano Health is “very big” in the basics of value-based care such as patient engagement and prevention.

For more human insights on Cano Health and value-based primary care providers, click on the transcripts below.

Related Transcripts

The information used in compiling this document has been obtained by Third Bridge from experts participating in Forum Interviews. Third Bridge does not warrant the accuracy of the information and has not independently verified it. It should not be regarded as a trade recommendation or form the basis of any investment decision.

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