Barry Sternlicht-Backed Cano Health Warns It Could Go Under, Shares Fall 70%

Shares of Cano Health, a former special purpose acquisition company bankrolled by real estate tycoon Barry Sternlicht and other prominent investors, fell 70 percent on Friday, a day after the company warned that it likely won't be able to continue operations due to a lack of cash.

The Miami-based primary health care provider said in its latest quarterly earnings report that it doesn’t have enough liquidity to cover operating expenses for the next 12 months and is pursuing plans to sell the business.

“Management has concluded that there is substantial doubt about the company's ability to continue as a going concern within one year,” said the company’s report.

Cano Health also announced that they are exiting operations in California, New Mexico, Illinois this year and in Puerto Rico in 2024.

In the third quarter, the company plans to cut its workforce by 17%, about 700 jobs.

The company reported a $270 million net loss in the second quarter, compared to a net loss of $14.6 million in the same period last year.

In June 2021, Cano Health was merged into a SPAC created by Sternlicht in a $1.7 billion deal. Other prominent investors included hedge fund Third Point as well as funds affiliated with Fidelity Investments, BlackRock, and hedge fund Maverick Capital.

In March of 2022, as the shares of Cano and other former SPACs tumbled, Third Point, led by activist Dan Loeb, pressed for a sale of the company, but ultimately sold its position.

In an April 10 letter, Sternlicht, who had resigned his board position at the company, and two other former directors called on then Cano CEO Marlow Hernandez to resign, citing dwindling cash reserves and the company's failure to file 10-K financial reports on time as well as dubious related party transactions.

Following a shareholder vote, Marlow resigned in June and was replaced by chief strategy officer Mark Kent.