Citi Downgrades Cano Health (CANO) to Neutral, 'Pressures Persist & Insolvency Risk Intensifies'

Citi analyst Jason Cassorla downgraded Cano Health (NYSE: CANO) from Buy to Neutral with a price target of $0.80 (from $4.00).

The analyst comments "

We’re downgrading CANO to Neutral/High Risk (from Buy/High Risk) following 2Q23 results. The $58M MRA headwind, $44M unfavorable PPD, and impacts from heightened supplemental benefits utilization caused material EBITDA degradation (-$150M vs consensus $11M). CANO also withdrew 2023 guidance, and amended its credit agreement after tripping covenants to ensure some level of compliance as it divests assets, reduces its workforce, and potentially looks to sell itself within its strategic review, although insolvency risk is only intensified amid this backdrop. We continue to believe there is inherent value in CANO’s high-touch, VBC-centric approach to managing underserved populations. But with unfavorable trend development over recent quarters, solvency concerns, a difficult MA backdrop in 2024, and a host of initiatives to juggle in an effort to shore up operations, it is difficult to maintain a more positive stance at this juncture. We lowered our estimates and reduced our TP to $0.80 (from $4)."

For an analyst ratings summary and ratings history on Cano Health click here. For more ratings news on Cano Health click here.

Shares of Cano Health closed at $1.52 yesterday.

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