Cano Health Announces Closing of $150 Million Term Loan Facility with Diameter Capital Partners and Rubicon Founders
Cano Health, Inc. (NYSE: CANO) announced the closing of a $150 million senior secured term loan on February 24, 2023, maturing November 23, 2027. The loan has an interest rate of 14% for the first two years, thereafter dropping to 13%. The lenders include Diameter Capital Partners and Rubicon Founders, who received warrants for 29.5 million shares of Class A common stock. For Q4 2022, Cano Health estimated total revenue at $680 million and a net loss of $(302) million, including a $323 million non-cash goodwill impairment. Membership rose to approximately 310,000.
- Secured a $150 million term loan for financing.
- Membership increased to approximately 310,000, exceeding prior guidance.
- Loan interest rate decreases to 13% after two years.
- Reported a net loss of $(302) million in Q4 2022.
- Included a non-cash goodwill impairment of $323 million in the reported losses.
Announces Preliminary Fourth Quarter 2022 Summary Financial Results
Lenders in the 2023 Term Loan were
The 2023 Term Loan bears interest at
In connection with the 2023 Term Loan, the Company issued to the lenders warrants to purchase up to approximately 29.5 million shares of the Company's Class A common stock, or up to
"We are pleased to partner with experienced investors like Diameter and Rubicon who recognize the value of our platform," said Dr.
"Our partnership with
Preliminary Unaudited Fourth Quarter 2022 Summary Results
Total membership at the end of the fourth quarter 2022 is estimated to be approximately 310,000, higher than the previous guidance of 300,000 to 305,000 members. Preliminary unaudited total revenue, net loss, and Adjusted EBITDA for the fourth quarter of 2022 are estimated to be approximately
The Company is scheduled to release its final financial results for the fourth quarter and full year ended
The Company has not yet completed its quarter and year-end financial close processes for the quarter and year ended
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(1) Adjusted EBITDA is a non-GAAP financial measure. A reconciliation of this non-GAAP financial measure to its most directly comparable GAAP financial measure is provided in the Reconciliation of Non-GAAP Adjusted EBITDA table included in this press release. An explanation of this measure and how it is calculated is also included under the heading "Non-GAAP Financial Measures."
(2) Includes
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements relate to future events and involve known and unknown risks, uncertainties and other factors which are, in some cases, beyond our control and could materially affect actual results, performance or achievements. Such forward-looking statement include, without limitation, our anticipated results of operations, including our financial guidance for the 2022 fiscal year, our business strategies, our projected costs, prospects and plans, and other aspects of our operations or
operating results. These forward-looking statements generally can be identified by phrases such as "will," "expects," "anticipates," "foresees," "forecasts," "estimates" or other words or phrases of similar import, including, without limitation, the Company's (i) expectation to use proceeds from the transaction for general corporate purposes, including the repayment of amounts outstanding under its existing revolving credit facility, and to pay transaction fees and expenses related to the 2023 Term Loan, and that this capital infusion will help the Company realize its unique potential; (ii) plans to optimize its existing capacity to continue to unlock embedded profitability within its medical centers; (iii) plans and expectations with respect to continuing to review its operations with the objective of further enhancing liquidity, improving margins, and maximizing long-term shareholder value; and (iv) plans to continue fulfilling its goals of improving patient health and outcomes in the communities it serves. It is uncertain whether any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do, what impact they will have on our results of operations and financial condition. Important risks and uncertainties that could cause our actual results and financial condition to differ materially from those indicated in forward-looking statements include, among others, changes in market or industry conditions, regulatory environment, competitive conditions, and receptivity to our services; changes in our strategy, future operations, prospects and plans; developments and uncertainties related to the Direct Contracting Entity program; our ability to realize expected financial results, including with respect to patient membership, total revenue and earnings; our ability to predict and control our medical cost ratio; our ability to grow market share in existing markets or enter into new markets and continue our growth; our ability to integrate our acquisitions and achieve desired synergies; our ability to maintain our relationships with health plans and other key payors; the impact of COVID-19 on our business and results of operations; our future capital requirements and sources and uses of cash, including funds to satisfy our liquidity needs; and our ability to recruit and retain qualified team members and independent physicians. The Company may also experience delays or difficulties in, and/or unexpected or less than anticipated results from (i) using the proceeds from the 2023 Term Loan transaction for general corporate purposes, repaying amounts outstanding under its existing revolving credit agreement, and/or to pay related transaction fees, such as due to unanticipated demands on its available sources of cash; (ii) its focus on optimizing its existing capacity to continue to unlock embedded profitability within its medical centers, such as due to increased competition in the provision of health care services, increasing costs, tightness in the labor market or less than expected sources of, or access to, liquidity; (iii) its efforts to review its operations with the objective of further enhancing liquidity, improving margins, and maximizing long-term shareholder value, such as due to tightness in the credit or M&A markets, higher interest rates, and/or a higher inflationary environment, which could adversely affect the Company's ability to improve its liquidity, cash flow and/or long-term shareholder value; and/or (iv) its plans to continue fulfilling its goals of improving patient health and outcomes in the communities it serves, such as due to , such as due to higher than expected medical costs or the spread of other pandemics. For a detailed discussion of the risks and uncertainties that could cause our actual results to differ materially from those expressed or implied by the forward-looking statements, please refer to our filings with the
Non-GAAP Financial Measures
This press release contains certain non-GAAP financial measures as defined by the
The non-GAAP financial measures should not be considered in isolation or as a substitute for their respective most directly comparable As Reported financial measures prepared in accordance with GAAP, such as net income/loss. These non-GAAP financial measures are subject to inherent limitations as they reflect the exercise of judgments by management about which expense, income and other items are excluded or included in determining these non-GAAP financial measures. In addition, other companies may define such non-GAAP measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measures as tools for comparison. Also, while EBITDA and Adjusted EBITDA, as used in this release, are defined differently than Adjusted EBITDA for the Company's credit agreements and indentures, certain financial covenants in its borrowing arrangements are tied to similar financial measures. These non-GAAP financial measures should be read in conjunction with the Company's financial statements and related footnotes filed with the
A reconciliation of those measures to their most directly comparable GAAP measures is available under the heading "Reconciliation of Non-GAAP Measures."
The Company has not reconciled its expectations as to non-GAAP measures in future periods to their most directly comparable GAAP measure because certain costs and expenses are outside of its control or cannot be reasonably predicted. Accordingly, reconciliation is not available without unreasonable effort, although it is important to note that these factors could be material to the Company's results computed in accordance with GAAP.
Other
This press release does not constitute an offer to sell or the solicitation of an offer to buy any security and shall not constitute an offer, solicitation, or sale of any security in any jurisdiction in which such offering, solicitation or sale would be unlawful.
About Cano Health
Reconciliation of Non-GAAP Adjusted EBITDA PRELIMINARY - UNAUDITED | ||||
Three Months Ended | ||||
(in millions) | 2022 (UNAUDITED) | 2021 (UNAUDITED) | ||
Net income (loss) | $ (302) | $ 1 | ||
Interest income | (0) | — | ||
Interest expense | 20 | 15 | ||
Income tax expense (benefit) | 2 | 1 | ||
Depreciation and amortization expense | 26 | 19 | ||
EBITDA | $ (254) | $ 36 | ||
Stock-based compensation | 12 | 15 | ||
323 | — | |||
De novo (1) | 19 | 16 | ||
Transaction costs (2) | 11 | 9 | ||
Restructuring and other | 1 | 2 | ||
Change in fair value of contingent consideration | 5 | (8) | ||
Loss on extinguishment of debt | — | (0) | ||
Change in fair value of warrant liabilities | (81) | (58) | ||
Adjusted EBITDA | $ 36 | $ 12 |
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(1) De novo losses include those costs associated with the ramp up of new medical centers and losses incurred |
(2) Transaction costs included |
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