The company is seeking ways to improve cash flow to stay afloat.
Cano Health found a lifeline in its sale of its Texas and Nevada primary care centers and more divestitures could be on the way for the company as it claws for liquidity.
By selling its clinics to Humana's CenterWell Senior Primary Care business, the value-based primary care chain brings in nearly $67 million, including over $35 million in cash paid at closing, Cano announced. The sale comes weeks after the company said in its second quarter earnings report that there was "substantial doubt" about its ability to financially continue within the next year.
With the sale to Humana's subsidiary, Cano now has approximately $109 million in available liquidity, of which $80 million will be used to pay off debt so the company can avoid being required to comply with the financial maintenance covenant.
Cano CEO Mark Kent said in the news release that the sale refines the company's footprint and focus on improving operational and medical cost performance in the Florida market.
"The net cash proceeds from this sale strengthen our balance sheet, allowing us to continue executing on our plan and supporting our mission of providing market-leading primary care," Kent said.
According to Kent, the sale is also one of "many planned steps" in Cano's strategy to gain financial flexibility, which means more selling of assets could be on the way for the company.
Overseeing potential moves in the immediate future will be Eladio Gil, who steps into the role of interim CFO after Brian Koppy departed at the end of September, the company announced.
Cano has had to weather unrest in its leadership, with three board members resigning earlier this year while criticizing the company for poor corporate governance and increasing debt.
Meanwhile, founder and CEO Marlow Hernandez stepped down from his role in June after the backlash.
Jay Asser is the contributing editor for strategy at HealthLeaders.
KEY TAKEAWAYS
Cano Health is netting nearly $67 million by selling its Texas and Nevada centers to Humana's subsidiary, bringing it to approximately $109 million in available liquidity.
After using $80 million of that liquidity to pay off debt, it's likely Cano will continue seeking sale partners to bring in more cash and keep the business going.