Third Point Sells Cano Stake as Medical Provider’s Cash Dwindles

(Bloomberg) — Daniel Loeb’s Third Point sold its remaining stake in Cano Health Inc. amid mounting concerns around the healthcare provider’s liquidity, according to people with knowledge of the situation.

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Third Point sold out of Cano through a block trade last week, said the people, who asked not to be identified because the matter is private. The New York-based hedge fund had disclosed a 3.5% position in October, down from 6.4% in March, public filings show.

Meanwhile, some of Cano Health’s biggest creditors are in the early stages of organizing ahead of potential debt discussions, the people said.

Representatives for Third Point and Cano Health declined to comment.

Cano Health, which provides primary care mainly to seniors in Florida, has been burning cash to grow its business and saw weaker performance in spite of higher membership count. Bloomberg reported that the company began weighing a sale, but no deal has materialized so far.

Multiple equity analysts cut their ratings on the company after Cano reported weaker third-quarter results and revised full-year guidance. S&P Global Ratings also downgraded its credit grade on the company to B- last month, citing the company’s weak credit measures that leave it with little room to underperform.

As of the third quarter, Cano had $24 million of cash on hand, down from roughly $163 million at the end of last year. Management said on a recent earnings call that it’s focused on improving the company’s cash flow and profitability.

Citigroup Inc. analyst Jason Cassorla expects Cano to draw on its $120 million revolver to support operations, while external financing needs remain uncertain.

Cano’s shares have slumped roughly 82% since it went public in 2020 via a combination with a special-purpose acquisition company backed by billionaire Barry Sternlicht.

The company’s term loan due 2027 is currently quoted at 71.6 cents on the dollar, according to data compiled by Bloomberg.