(Reuters) -Cano Health said on Thursday there is substantial doubt about the company’s ability to continue as a going concern within one year, sending shares down about 48% after the bell.
The health insurer, which went public in 2021 after merging with Sternlicht-backed SPAC, also said it is pursuing a process to sell itself and is continuing efforts to divest its non-core assets and business lines.
Under its restructuring plan, the company expects to lower costs by reducing 17% of its current workforce, about 700 employees, in the third quarter of 2023.
The company’s current liquidity as of Aug. 9, 2023 was about $101 million, consisting of cash and cash equivalents, which it said is not sufficient to cover operating, investing and financing uses for the next 12 months.
Its second-quarter net loss widened to $270.75 million from $14.6 million a year earlier, due to reasons such as increased medical costs from a spurt in demand for non-urgent surgeries that were delayed during the pandemic.
The company’s medical cost ratio — or spending on claims as a percentage of premiums — rose to 103.5% in the quarter, compared with 82.6% a year earlier.
Cano has been looking for a new CEO after its former chief Marlow Hernandez stepped down in June.
Cano shareholders, including Cooperstone, Gold & Sternlicht, had issued an open letter in April highlighting an urgent need for leadership changes.
The company’s revenue for the quarter ended June 30 was $766.75 million, below analysts’ average estimate of $828.44 million, according to Refinitiv data.
(Reporting by Pratik Jain in Bengaluru; Editing by Shilpi Majumdar)
