PROSPECTUS SUPPLEMENT NO. 4 (to prospectus dated July 21, 2021) | Filed Pursuant to Rule 424(b)(3) Registration No. 333-257445 |
CANO HEALTH, INC.
Up to 328,758,279 Shares of Class A Common Stock
Up to 33,533,333 Shares of Class A Common Stock Issuable Upon Exercise of Warrants
Up to 10,533,333 Warrants to Purchase Common Stock
This prospectus supplement is being filed to update and supplement the information contained in the prospectus dated July 21, 2021 (as supplemented or amended from time to time, the “Prospectus”), which forms part of our Registration Statement on Form S-1, as amended (File No. 333-257445). This prospectus supplement is being filed to update, amend and supplement the information included in the Prospectus with the information contained or incorporated by reference in our Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on November 9, 2021, which is set forth below.
This prospectus supplement updates and supplements the information in the Prospectus and is not complete without, and may not be delivered or utilized except in combination with, the Prospectus, including any amendments or supplements thereto. This prospectus supplement should be read in conjunction with the Prospectus and if there is any inconsistency between the information in the Prospectus and this prospectus supplement, you should rely on the information in this prospectus supplement.
Our Class A common stock is listed on The New York Stock Exchange under the symbol “CANO”. On November 9, 2021, the closing price of our Class A common stock was $12.40 per share.
We are an “emerging growth company,” as that term is defined under the federal securities laws and, as such, are subject to certain reduced public company reporting requirements.
Investing in our securities involves risks that are described in the “Risk Factors” section beginning on page 23 of the Prospectus.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the securities to be issued under this prospectus or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
The date of this prospectus supplement is November 10, 2021.
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
Class A common stock, $0.0001 par value per share | CANO | The New York Stock Exchange | ||||||||||||
Warrants to purchase one share of Class A common stock, each at an exercise price of $11.50 per share | CANO/WS | The New York Stock Exchange |
Page | |||||
PART I FINANCIAL INFORMATION | |||||
2 | |||||
PART II. OTHER INFORMATION | |||||
(in thousands, except share data) | September 30, 2021 | December 31, 2020 | ||||||||||||
Assets | ||||||||||||||
Current assets: | ||||||||||||||
Cash, cash equivalents and restricted cash | $ | 208,913 | $ | 33,807 | ||||||||||
Accounts receivable, net of unpaid service provider costs (Related parties comprised $92 and $50,015 as of September 30, 2021 and December 31, 2020, respectively) | 223,644 | 76,709 | ||||||||||||
Inventory | 1,777 | 922 | ||||||||||||
Prepaid expenses and other current assets | 30,788 | 8,937 | ||||||||||||
Total current assets | 465,122 | 120,375 | ||||||||||||
Property and equipment, net (Related parties comprised $18,897 and $22,659 as of September 30, 2021 and December 31, 2020, respectively) | 64,156 | 38,126 | ||||||||||||
Goodwill | 765,511 | 234,328 | ||||||||||||
Payor relationships, net | 584,265 | 189,570 | ||||||||||||
Other intangibles, net | 256,327 | 36,785 | ||||||||||||
Other assets | 4,703 | 4,362 | ||||||||||||
Total assets | $ | 2,140,084 | $ | 623,546 | ||||||||||
Liabilities and stockholders' equity / members' capital | ||||||||||||||
Current liabilities: | ||||||||||||||
Current portion of notes payable | $ | 6,493 | $ | 4,800 | ||||||||||
Current portion of equipment loans | 513 | 314 | ||||||||||||
Current portion of capital lease obligations | 1,006 | 876 | ||||||||||||
Current portion of contingent consideration | 8,406 | — | ||||||||||||
Accounts payable and accrued expenses (Related parties comprised $0 and $112 as of September 30, 2021 and December 31, 2020, respectively) | 76,654 | 33,180 | ||||||||||||
Deferred revenue (Related parties comprised $0 and $988 as of September 30, 2021 and December 31, 2020, respectively) | 1,815 | 988 | ||||||||||||
Current portions due to sellers | 24,687 | 27,129 | ||||||||||||
Other current liabilities | 20,000 | 1,333 | ||||||||||||
Total current liabilities | 139,574 | 68,620 | ||||||||||||
Notes payable, net of current portion and debt issuance costs | 916,111 | 456,745 | ||||||||||||
Warrants liabilities | 138,493 | — | ||||||||||||
Equipment loans, net of current portion | 1,454 | 873 | ||||||||||||
Capital lease obligations, net of current portion | 1,559 | 1,580 | ||||||||||||
Deferred rent (Related parties comprised $0 and $92 as of September 30, 2021 and December 31, 2020, respectively) | 5,387 | 3,111 | ||||||||||||
Deferred revenue, net of current portion (Related parties comprised of $0 and $4,277 as of September 30, 2021 and December 31, 2020, respectively) | 4,698 | 4,277 | ||||||||||||
Due to sellers, net of current portion | 170 | 13,976 | ||||||||||||
Contingent consideration | 38,300 | 5,172 | ||||||||||||
Other liabilities (Related parties comprised $0 and $8,142 as of September 30, 2021 and December 31, 2020, respectively) | 36,325 | 11,648 | ||||||||||||
Total liabilities | 1,282,071 | 566,002 | ||||||||||||
Stockholders’ Equity / Members' Capital | ||||||||||||||
Shares of Class A common stock $0.0001 par value (6,000,000,000 shares authorized and 171,594,914 shares issued and outstanding at September 30, 2021) | 17 | — | ||||||||||||
Shares of Class B common stock $0.0001 par value (1,000,000,000 shares authorized and 305,670,386 shares issued and outstanding at September 30, 2021) | 31 | — | ||||||||||||
Members' capital | — | 157,591 | ||||||||||||
Additional paid-in capital | 363,060 | — | ||||||||||||
Accumulated deficit | (52,547) | (99,913) | ||||||||||||
Notes receivable, related parties | — | (134) | ||||||||||||
Total Stockholders' Equity / Members’ Capital attributable to Class A common stockholders | 310,561 | 57,544 | ||||||||||||
Non-controlling interests | 547,452 | — | ||||||||||||
Total Stockholders' Equity / Members’ Capital | 858,013 | 57,544 | ||||||||||||
Total Liabilities and Stockholders' Equity / Members’ Capital | $ | 2,140,084 | $ | 623,546 |
Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||
September 30, | September 30, | |||||||||||||||||||||||||
(in thousands, except share and per share data) | 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||||
Revenue: | ||||||||||||||||||||||||||
Capitated revenue (Related parties comprised $0 and $131,945, and $335,383 and $239,692, in the three months ended September 30, 2021 and 2020, and in the nine months ended September 30, 2021 and 2020, respectively) | $ | 501,780 | $ | 252,974 | $ | 1,148,041 | $ | 544,617 | ||||||||||||||||||
Fee-for-service and other revenue (Related parties comprised $0 and $82, and $631 and $426, in the three months ended September 30, 2021 and 2020, and in the nine months ended September 30, 2021 and 2020, respectively) | 25,018 | 10,159 | 52,055 | 25,020 | ||||||||||||||||||||||
Total revenue | 526,798 | 263,133 | 1,200,096 | 569,637 | ||||||||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||||
Third-party medical costs (Related parties comprised $0 and $90,166, and $249,819 and $167,109, in the three months ended September 30, 2021 and 2020, and in the nine months ended September 30, 2021 and 2020, respectively) | 379,316 | 184,926 | 866,177 | 382,279 | ||||||||||||||||||||||
Direct patient expense (Related parties comprised $6 and $1,016, and $1,502 and $2,161, in the three months ended September 30, 2021 and 2020, and in the nine months ended September 30, 2021 and 2020, respectively) | 57,708 | 31,108 | 135,777 | 71,441 | ||||||||||||||||||||||
Selling, general, and administrative expenses (Related parties comprised $4,225 and $3,289, and $9,814 and $8,428, in the three months ended September 30, 2021 and 2020, and in the nine months ended September 30, 2021 and 2020, respectively) | 75,926 | 27,391 | 157,348 | 70,234 | ||||||||||||||||||||||
Depreciation and amortization expense | 16,955 | 5,379 | 30,746 | 12,741 | ||||||||||||||||||||||
Transaction costs and other (Related parties comprised $0 and $0, and $1,483 and $5,369 in the three months ended September 30, 2021 and 2020 and nine months ended September 30, 2021 and 2020, respectively) | 6,528 | 7,716 | 32,140 | 29,854 | ||||||||||||||||||||||
Total operating expenses | 536,433 | 256,520 | 1,222,188 | 566,549 | ||||||||||||||||||||||
Income (loss) from operations | (9,635) | 6,613 | (22,092) | 3,088 | ||||||||||||||||||||||
Other income and expense: | ||||||||||||||||||||||||||
Interest expense | (16,023) | (12,346) | (36,363) | (21,728) |
Interest income (Related parties comprised $0 and $0, and $0 and $236, in the three months ended September 30, 2021 and 2020, and in the nine months ended September 30, 2021 and 2020, respectively) | 1 | 80 | 4 | 239 | ||||||||||||||||||||||
Loss on extinguishment of debt | — | — | (13,225) | — | ||||||||||||||||||||||
Change in fair value of embedded derivative | — | (5,138) | — | (5,444) | ||||||||||||||||||||||
Change in fair value of warrant liabilities | (14,650) | — | 24,565 | — | ||||||||||||||||||||||
Other expenses | (29) | — | (54) | (150) | ||||||||||||||||||||||
Total other expense | (30,701) | (17,404) | (25,073) | (27,083) | ||||||||||||||||||||||
Net loss before income tax benefit (expense) | (40,336) | (10,791) | (47,165) | (23,995) | ||||||||||||||||||||||
Income tax benefit (expense) | (547) | (326) | 762 | (294) | ||||||||||||||||||||||
Net loss | $ | (40,883) | $ | (11,117) | $ | (46,403) | $ | (24,289) | ||||||||||||||||||
Net loss attributable to non-controlling interests | (26,246) | — | (41,283) | — | ||||||||||||||||||||||
Net loss attributable to Class A common stockholders | $ | (14,637) | $ | — | $ | (5,120) | $ | — | ||||||||||||||||||
Net loss per share attributable to Class A common stockholders, basic | $ | (0.09) | N/A | $ | (0.03) | N/A | ||||||||||||||||||||
Net loss per share attributable to Class A common stockholders, diluted | $ | (0.09) | N/A | $ | (0.08) | N/A | ||||||||||||||||||||
Weighted-average shares used in computation of earnings per share: | ||||||||||||||||||||||||||
Basic | 170,871,429 | N/A | 168,100,210 | N/A | ||||||||||||||||||||||
Diluted | 170,871,429 | N/A | 169,312,258 | N/A | ||||||||||||||||||||||
Three Months Ended September 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(in thousands, except shares) | Class A Shares | Class B Shares | Additional Paid-in Capital | Notes Receivable | Accumulated Deficit | Non-Controlling Interests | Total Equity | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares | Shares | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
BALANCE—June 30, 2021 | 170,299,189 | $ | 17 | 306,843,662 | $ | 31 | $ | 389,892 | $ | (136) | $ | (37,640) | $ | 536,187 | $ | 888,351 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation expense | — | — | — | — | 8,909 | — | — | — | 8,909 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock for acquisitions | 122,449 | — | — | — | 1,500 | — | (11) | 11 | 1,500 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Exchange of Class B common stock for Class A common stock | 1,173,276 | — | (1,173,276) | — | 2,309 | — | (259) | (2,050) | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Impact of transactions affecting non-controlling interests | — | — | — | — | (39,550) | — | — | 39,550 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Settlement of notes receivable, net | — | — | — | — | — | 136 | — | — | 136 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | (14,637) | (26,246) | (40,883) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
BALANCE—September 30, 2021 | 171,594,914 | $ | 17 | 305,670,386 | $ | 31 | $ | 363,060 | $ | — | $ | (52,547) | $ | 547,452 | $ | 858,013 |
Three Months Ended September 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(in thousands, except shares) | Members' Capital | Class A Shares | Class B Shares | Additional Paid-in Capital | Notes Receivable | Accumulated Deficit | Non-Controlling Interests | Total Equity | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
BALANCE - June 30, 2020 | — | $ | 261,718 | — | $ | — | — | $ | — | $ | — | $ | (132) | $ | (38,213) | $ | 392 | $ | 223,765 | |||||||||||||||||||||||||||||||||||||||||||||||||
Members distributions | — | (6,125) | — | — | — | — | — | — | — | — | (6,125) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation expense | — | 66 | — | — | — | — | — | — | — | — | 66 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest on notes receivable | — | — | — | — | — | — | — | (1) | — | — | (1) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | — | — | (11,117) | — | (11,117) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
BALANCE—September 30, 2020 | — | $ | 255,659 | — | $ | — | — | $ | — | $ | — | $ | (133) | $ | (49,330) | $ | 392 | $ | 206,588 |
Nine Months Ended September 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(in thousands, except shares) | Members' Capital | Class A Shares | Class B Shares | Additional Paid-in Capital | Notes Receivable | Accumulated Deficit | Non-Controlling Interests | Total Equity | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
BALANCE—December 31, 2020 | 14,629,533 | $ | 157,591 | — | $ | — | — | $ | — | $ | — | $ | (134) | $ | (99,913) | $ | — | $ | 57,544 | |||||||||||||||||||||||||||||||||||||||||||||||||
Retrospective application of reverse recapitalization | 292,214,129 | (157,560) | — | — | — | — | 157,560 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ADJUSTED BALANCE - December 31, 2020 | 306,843,662 | $ | 31 | — | $ | — | — | $ | — | $ | 157,560 | $ | (134) | $ | (99,913) | $ | — | $ | 57,544 | |||||||||||||||||||||||||||||||||||||||||||||||||
Net loss prior to business combination | — | — | — | — | — | — | — | — | (32,078) | — | (32,078) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business combination and PIPE financing | (306,843,662) | (31) | 166,243,491 | 17 | 306,843,662 | 31 | 169,093 | — | 85,663 | 518,320 | 773,093 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation expense | — | — | — | — | — | — | 12,148 | — | — | — | 12,148 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock for acquisitions | — | — | 4,178,147 | — | — | — | 61,500 | — | (840) | 840 | 61,500 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Exchange of Class B common stock for Class A common stock | — | — | 1,173,276 | — | (1,173,276) | — | 2,309 | — | (259) | (2,050) | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Impact of transactions affecting non-controlling interests | — | — | — | — | — | — | (39,550) | — | — | 39,550 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Settlement of notes receivable, net | — | — | — | — | — | — | — | 134 | — | — | 134 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | — | — | (5,120) | (9,208) | (14,328) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
BALANCE—September 30, 2021 | — | $ | — | 171,594,914 | $ | 17 | 305,670,386 | $ | 31 | $ | 363,060 | $ | — | $ | (52,547) | $ | 547,452 | $ | 858,013 |
Nine Months Ended September 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(in thousands, except shares) | Members' Capital | Class A Shares | Class B Shares | Additional Paid-in Capital | Notes Receivable | Accumulated Deficit | Non-Controlling Interests | Total Equity | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
BALANCE - December 31, 2019 | — | $ | 123,242 | — | $ | — | — | $ | — | $ | — | $ | (130) | $ | (25,041) | $ | 392 | $ | 98,463 | |||||||||||||||||||||||||||||||||||||||||||||||||
Members' contributions | — | 95,782 | — | — | — | — | — | — | — | — | 95,782 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation expense | — | 177 | — | — | — | — | — | — | — | — | 177 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock for acquisitions | — | 34,300 | — | — | — | — | — | — | — | — | 34,300 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock for due to sellers balance | — | 2,158 | — | — | — | — | — | — | — | — | 2,158 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest on notes receivable | — | — | — | — | — | — | — | (3) | — | — | (3) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | — | — | (24,289) | — | (24,289) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
BALANCE—September 30, 2020 | — | $ | 255,659 | — | $ | — | — | $ | — | $ | — | $ | (133) | $ | (49,330) | $ | 392 | $ | 206,588 |
Nine Months Ended | ||||||||||||||
September 30, | ||||||||||||||
(in thousands) | 2021 | 2020 | ||||||||||||
Cash Flows from Operating Activities: | ||||||||||||||
Net loss | $ | (46,403) | $ | (24,289) | ||||||||||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||||||||
Depreciation and amortization expense | 30,746 | 12,741 | ||||||||||||
Change in fair value of contingent consideration | (4,152) | — | ||||||||||||
Change in fair value of embedded derivative | — | 5,444 | ||||||||||||
Change in fair value of warrant liabilities | (24,565) | — | ||||||||||||
Loss on extinguishment of debt | 13,225 | — | ||||||||||||
Amortization of debt issuance costs | 7,653 | 3,851 | ||||||||||||
Write off of other receivables | — | 531 | ||||||||||||
Equity-based compensation | 12,148 | 177 | ||||||||||||
Changes in operating assets and liabilities: | ||||||||||||||
Accounts receivable, net (Related parties comprised $(92) and $0 as of September 30, 2021 and 2020, respectively) | (95,991) | (33,286) | ||||||||||||
Inventory | (856) | (484) | ||||||||||||
Other assets | (6,578) | 217 | ||||||||||||
Prepaid expenses and other current assets | (27,358) | 163 | ||||||||||||
Accounts payable and accrued expenses (Related parties comprised $(112) and $(52) as of September 30, 2021 and 2020, respectively) | 56,626 | 10,480 | ||||||||||||
Deferred rent (Related parties comprised $(92) and $0 as of September 30, 2021 and 2020, respectively) | 2,236 | 868 | ||||||||||||
Deferred revenue | 1,147 | — | ||||||||||||
Other liabilities | (9,376) | 2,544 | ||||||||||||
Net cash used in operating activities | (91,498) | (21,043) | ||||||||||||
Cash Flows from Investing Activities: | ||||||||||||||
Purchase of property and equipment (Related parties comprised $5,697 and $5,358 as of September 30, 2021 and 2020, respectively) | (23,221) | (9,442) | ||||||||||||
Acquisitions of subsidiaries including non-compete intangibles, net of cash acquired | (1,068,661) | (205,325) | ||||||||||||
Payments to sellers | (24,148) | (38,748) | ||||||||||||
Other | — | (39) | ||||||||||||
Net cash used in investing activities | (1,116,030) | (253,554) | ||||||||||||
Cash Flows from Financing Activities: | ||||||||||||||
Contributions from member | — | 95,782 | ||||||||||||
Business combination and PIPE financing | 935,362 | — | ||||||||||||
Interest accrued due to sellers | 1,208 | 1,082 | ||||||||||||
Payments of long-term debt | (656,294) | (2,378) | ||||||||||||
Debt issuance costs | (17,689) | (5,655) | ||||||||||||
Proceeds from long-term debt | 1,120,000 | 184,096 | ||||||||||||
Proceeds from revolving credit facility | — | 9,700 | ||||||||||||
Repayments of revolving credit facility | — | (9,700) | ||||||||||||
Proceeds from insurance financing arrangements | 4,401 | 2,864 | ||||||||||||
Payments of principal on insurance financing arrangements | (3,939) | (2,388) | ||||||||||||
Repayments of equipment loans | (233) | (57) | ||||||||||||
Repayments of capital lease obligations | (316) | (518) | ||||||||||||
Settlement of note receivable, net | 134 | — | ||||||||||||
Net cash provided by financing activities | 1,382,634 | 272,828 | ||||||||||||
Net increase (decrease) in cash, cash equivalents and restricted cash | 175,106 | (1,769) | ||||||||||||
Cash, cash equivalents and restricted cash at beginning of year | 33,807 | 29,192 | ||||||||||||
Cash, cash equivalents and restricted cash at end of period | $ | 208,913 | $ | 27,423 | ||||||||||
Supplemental cash flow information: | ||||||||||||||
Interest paid | 28,075 | 11,044 | ||||||||||||
Income taxes paid | 1,150 | — | ||||||||||||
Non-cash investing and financing activities: | ||||||||||||||
Issuance of securities by Cano Health, Inc. in connection with acquisitions | 61,500 | — | ||||||||||||
Issuance of securities in PCIH in connection with acquisitions | — | 34,300 | ||||||||||||
Contingent consideration in connection with acquisitions | 47,900 | — | ||||||||||||
Due to sellers in connection with acquisitions | 1,295 | 16,216 | ||||||||||||
Humana Affiliate Provider clinic leasehold improvements | 5,605 | — | ||||||||||||
Capital lease obligations entered into for property and equipment | 225 | — | ||||||||||||
Equipment loan obligations entered into for property and equipment | 1,013 | — | ||||||||||||
(in thousands) | Recapitalization | ||||
Cash - Jaws' trust and cash, net of redemptions | $ | 690,705 | |||
Cash - PIPE financing | 800,000 | ||||
Less: transaction costs and advisory fees paid | (88,745) | ||||
Less: Distribution to PCIH shareholders | (466,598) | ||||
Net Business Combination and PIPE financing | 935,362 | ||||
Plus: Non-cash net assets assumed | 96 | ||||
Plus: Accrued transaction costs | 8,860 | ||||
Less: Capitalized transaction costs | (8,167) | ||||
Less: Warrant liability assumed | (163,058) | ||||
Net contributions from Business Combination and PIPE financing | $ | 773,093 |
Class A common stock | Class B common stock | |||||||||||||
Common stock outstanding prior to Business Combination | 69,000,000 | — | ||||||||||||
Less: redemption of Jaws shares | (6,509) | — | ||||||||||||
Ordinary shares of Jaws | 68,993,491 | — | ||||||||||||
Jaws Sponsor Shares | 17,250,000 | — | ||||||||||||
Shares issued in PIPE financing | 80,000,000 | — | ||||||||||||
Business Combination and PIPE financing shares | 166,243,491 | — | ||||||||||||
Shares to PCIH shareholders | — | 306,843,662 | ||||||||||||
Total shares of common stock outstanding immediately after the Business Combination | 166,243,491 | 306,843,662 |
Three Months Ended September 30, | ||||||||||||||||||||||||||
(in thousands) | 2021 | 2020 | ||||||||||||||||||||||||
Revenue $ | Revenue % | Revenue $ | Revenue % | |||||||||||||||||||||||
Capitated revenue: | ||||||||||||||||||||||||||
Medicare | $ | 447,250 | 84.9% | $ | 220,591 | 83.8 | % | |||||||||||||||||||
Other capitated revenue | 54,530 | 10.4% | 32,383 | 12.3 | % | |||||||||||||||||||||
Total capitated revenue | 501,780 | 95.3% | 252,974 | 96.1 | % | |||||||||||||||||||||
Fee-for-service and other revenue: | ||||||||||||||||||||||||||
Fee-for-service | 8,176 | 1.6% | 3,258 | 1.2 | % | |||||||||||||||||||||
Pharmacy | 10,096 | 1.8% | 6,154 | 2.4 | % | |||||||||||||||||||||
Other | 6,746 | 1.3% | 747 | 0.3 | % | |||||||||||||||||||||
Total fee-for-service and other revenue | 25,018 | 4.7% | 10,159 | 3.9 | % | |||||||||||||||||||||
Total revenue | $ | 526,798 | 100.0% | $ | 263,133 | 100.0 | % |
Nine Months Ended September 30, | ||||||||||||||||||||||||||
2021 | 2020 | |||||||||||||||||||||||||
(in thousands) | Revenue $ | Revenue % | Revenue $ | Revenue % | ||||||||||||||||||||||
Capitated revenue: | ||||||||||||||||||||||||||
Medicare | $ | 1,008,329 | 84.0 | % | $ | 455,986 | 80.0 | % | ||||||||||||||||||
Other capitated revenue | 139,712 | 11.6 | % | 88,631 | 15.6 | % | ||||||||||||||||||||
Total capitated revenue | 1,148,041 | 95.7 | % | 544,617 | 95.6 | % | ||||||||||||||||||||
Fee-for-service and other revenue: | ||||||||||||||||||||||||||
Fee-for-service | 17,113 | 1.4 | % | 6,269 | 1.1 | % | ||||||||||||||||||||
Pharmacy | 25,619 | 2.1 | % | 17,207 | 3.0 | % | ||||||||||||||||||||
Other | 9,323 | 0.8 | % | 1,544 | 0.3 | % | ||||||||||||||||||||
Total fee-for-service and other revenue | 52,055 | 4.3 | % | 25,020 | 4.4 | % | ||||||||||||||||||||
Total revenue | $ | 1,200,096 | 100.0 | % | $ | 569,637 | 100.0 | % |
As of, | ||||||||||||||
(in thousands) | September 30, 2021 | December 31, 2020 | ||||||||||||
Accounts receivable | $ | 242,086 | $ | 113,089 | ||||||||||
Medicare risk adjustment | 108,570 | 18,144 | ||||||||||||
Unpaid service provider costs | (127,012) | (54,524) | ||||||||||||
Accounts receivable, net | $ | 223,644 | $ | 76,709 |
For the nine months ended September 30, | ||||||||||||||
(in thousands) | 2021 | 2020 | ||||||||||||
Balance as at January 1, | $ | 54,524 | $ | 19,968 | ||||||||||
Incurred related to: | ||||||||||||||
Current year | 566,473 | 216,044 | ||||||||||||
Prior years | 3,526 | 793 | ||||||||||||
569,999 | 216,837 | |||||||||||||
Paid related to: | ||||||||||||||
Current year | 439,460 | 172,749 | ||||||||||||
Prior years | 58,051 | 20,761 | ||||||||||||
497,511 | 193,510 | |||||||||||||
Balance as at September 30, | $ | 127,012 | $ | 43,295 |
(in thousands) | ||||||||
Accounts receivable, net of unpaid service provider costs | $ | 6,641 | ||||||
Property and equipment, net | 1,283 | |||||||
Other assets | 142 | |||||||
Favorable leasehold interest | 110 | |||||||
Non-compete intangibles | 1,700 | |||||||
Trade name | 25,500 | |||||||
Payor relationships | 115,100 | |||||||
Goodwill | 151,188 | |||||||
Accounts payable and accrued expenses | (1,001) | |||||||
Total purchase price, including non-compete intangibles | $ | 300,663 |
(in thousands) | ||||||||
Accounts receivable, net of unpaid service provider costs | $ | 2,217 | ||||||
Inventory | 264 | |||||||
Property and equipment, net | 1,636 | |||||||
Payor relationships | 175,172 | |||||||
Non-compete intangibles | 45,191 | |||||||
Other acquired intangibles | 113,237 | |||||||
Other assets | 116 | |||||||
Goodwill | 273,427 | |||||||
Accounts payable and accrued expenses | (140) | |||||||
Total purchase price, including non-compete intangibles | $ | 611,120 |
(in thousands) | ||||||||
Property and equipment | $ | 2,409 | ||||||
Non-compete intangibles | 1,022 | |||||||
Acquired intangibles | 117,014 | |||||||
Goodwill | 74,852 | |||||||
Other assets | 87 | |||||||
Total purchase price, including non-compete intangibles | $ | 195,384 |
(in thousands) | ||||||||
Cash and cash equivalents | $ | 191 | ||||||
Accounts receivable | 486 | |||||||
Inventory | 155 | |||||||
Property and equipment | 1,518 | |||||||
Non-compete intangibles | 846 | |||||||
Acquired intangibles | 43,549 | |||||||
Goodwill | 13,738 | |||||||
Accounts payable | (274) | |||||||
Total purchase price, including non-compete intangibles | $ | 60,209 |
Nine Months Ended September 30, | ||||||||||||||
(in thousands) | 2021 | 2020 | ||||||||||||
Assets Acquired | ||||||||||||||
Accounts receivable | $ | 50,979 | $ | 486 | ||||||||||
Other assets | 2,050 | 433 | ||||||||||||
Property and equipment | 3,411 | 4,011 | ||||||||||||
Goodwill | 531,162 | 89,976 | ||||||||||||
Intangibles | 637,537 | 162,537 | ||||||||||||
Total assets acquired | 1,225,139 | 257,443 | ||||||||||||
Liabilities Assumed | ||||||||||||||
Due to sellers | 1,295 | 16,288 | ||||||||||||
Contingent consideration | 47,900 | — | ||||||||||||
Other liabilities | 45,783 | 1,530 | ||||||||||||
Total liabilities assumed | 94,978 | 17,818 | ||||||||||||
Net Assets Acquired | 1,130,161 | 239,625 | ||||||||||||
Issuance of Parent equity in connection with acquisitions | 61,500 | 34,300 | ||||||||||||
Acquisitions of subsidiaries, including non-compete intangibles, net of cash acquired | $ | 1,068,661 | $ | 205,325 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
(in thousands) | 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||
Revenue | $ | 526,798 | $ | 350,976 | $ | 1,354,547 | $ | 979,355 | |||||||||||||||
Net loss | $ | (40,883) | $ | (14,398) | $ | (53,592) | $ | (8,566) |
As of | |||||||||||||||||
(in thousands) | September 30, | December 31, | |||||||||||||||
Assets Classification | Useful Life | 2021 | 2020 | ||||||||||||||
Leasehold improvements | Lesser of lease term or 15 years | $ | 33,288 | $ | 25,021 | ||||||||||||
Machinery and equipment | 3-12 years | 14,403 | 8,288 | ||||||||||||||
Automobiles | 3-5 years | 6,679 | 4,900 | ||||||||||||||
Computer and equipment | 5 years | 5,950 | 4,475 | ||||||||||||||
Furniture and equipment | 3-7 years | 3,242 | 2,390 | ||||||||||||||
Construction in progress | 19,057 | 4,155 | |||||||||||||||
Total | 82,619 | 49,229 | |||||||||||||||
Less: Accumulated depreciation and amortization | (18,463) | (11,103) | |||||||||||||||
Property and equipment, net | $ | 64,156 | $ | 38,126 |
(in thousands) | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | |||||||||||||||||
Intangibles: | ||||||||||||||||||||
Trade names | $ | 1,409 | $ | (747) | $ | 662 | ||||||||||||||
Brand | 183,217 | (6,286) | 176,931 | |||||||||||||||||
Non-compete | 75,626 | (8,270) | 67,356 | |||||||||||||||||
Customer relationships | 880 | (171) | 709 | |||||||||||||||||
Payor relationships | 609,322 | (25,057) | 584,265 | |||||||||||||||||
Provider relationships | 12,242 | (1,573) | 10,669 | |||||||||||||||||
Total intangibles, net | $ | 882,696 | $ | (42,104) | $ | 840,592 |
(in thousands) | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | |||||||||||||||||
Intangibles: | ||||||||||||||||||||
Trade names | $ | 1,409 | $ | (630) | $ | 779 | ||||||||||||||
Brand | 29,486 | (2,171) | 27,315 | |||||||||||||||||
Non-compete | 7,733 | (3,373) | 4,360 | |||||||||||||||||
Customer relationships | 880 | (135) | 745 | |||||||||||||||||
Payor relationships | 201,530 | (11,960) | 189,570 | |||||||||||||||||
Provider relationships | 4,119 | (533) | 3,586 | |||||||||||||||||
Total intangibles, net | $ | 245,157 | $ | (18,802) | $ | 226,355 |
Year ending December 31, | Amount (in thousands) | |||||||
Remainder of 2021 | $ | 15,075 | ||||||
2022 | 59,423 | |||||||
2023 | 57,585 | |||||||
2024 | 55,644 | |||||||
2025 | 54,218 | |||||||
Thereafter | 598,647 | |||||||
Total | $ | 840,592 |
Year ending December 31, | Amount (in thousands) | |||||||
Remainder of 2021 | $ | 307 | ||||||
2022 | 1,151 | |||||||
2023 | 819 | |||||||
2024 | 514 | |||||||
2025 | 76 | |||||||
2026 | 25 | |||||||
Total minimum lease payments | 2,892 | |||||||
Less: amount representing interest | (327) | |||||||
Total capital lease obligations | 2,565 | |||||||
Less: current maturities | (1,006) | |||||||
Total long-term capital lease obligations | $ | 1,559 |
Year ending December 31, | Amount (in thousands) | |||||||
2021 | $ | 1,038 | ||||||
2022 | 919 | |||||||
2023 | 586 | |||||||
2024 | 271 | |||||||
Total minimum lease payments | 2,814 | |||||||
Less: amount representing interest | (358) | |||||||
Total capital lease obligations | 2,456 | |||||||
Less: current maturities | (876) | |||||||
Total long-term capital lease obligations | $ | 1,580 |
As of, | ||||||||||||||
(in thousands) | September 30, 2021 | December 31, 2020 | ||||||||||||
Notes payable bearing interest at 17.2%; due July 2022, secured by certain property and equipment | $ | 28 | $ | 51 | ||||||||||
Notes payable bearing interest at 12.5%, 12.8%, and 11.0%; all due June 2023, all secured by certain property and equipment | 41 | 82 | ||||||||||||
Notes payable bearing interest at 10.7%; due June 2023, secured by certain property and equipment | 60 | 58 | ||||||||||||
Notes payable bearing interest at 7.2%; due April 2025, secured by certain property and equipment | 78 | 92 | ||||||||||||
Notes payable bearing interest at 4.2%; due December 2024, secured by certain property and equipment | 746 | 904 | ||||||||||||
Notes payable bearing interest at 3.4%; due March 2026, secured by certain property and equipment | 1,014 | — | ||||||||||||
Total equipment loans | 1,967 | 1,187 | ||||||||||||
Less: Current portion | (513) | (314) | ||||||||||||
Total equipment loans, net of current portion | $ | 1,454 | $ | 873 |
(in thousands) | For the three months ended September 30, 2021 | |||||||
Balance as at June 30, 2021 | $ | 5,936 | ||||||
Increases due to amounts collected | 990 | |||||||
Revenues recognized from current period increases | (413) | |||||||
Balance as at September 30, 2021 | $ | 6,513 | ||||||
(in thousands) | For the nine months ended September 30, 2021 | |||||||
Balance as at January 1, 2021 | $ | 5,265 | ||||||
Increases due to amounts collected | 2,290 | |||||||
Revenues recognized from current period increases | (1,042) | |||||||
Balance as at September 30, 2021 | $ | 6,513 |
Long-Term Debt | As of, | |||||||||||||
(in thousands) | September 30, 2021 | December 31, 2020 | ||||||||||||
Term loan 3 | $ | 252,531 | $ | 480,000 | ||||||||||
Term loan 4 | 293,525 | — | ||||||||||||
Term loan 5 | 100,000 | — | ||||||||||||
Senior Notes | 300,000 | — | ||||||||||||
Less: Current portion of notes payable | (6,493) | (4,800) | ||||||||||||
939,563 | 475,200 | |||||||||||||
Less: debt issuance costs | (23,452) | (18,455) | ||||||||||||
Notes payable, net of current portion | $ | 916,111 | $ | 456,745 |
(in millions) | ||||||||
Year ending December 31, | Amount | |||||||
Remainder of 2021 | $ | 1,623 | ||||||
2022 | 6,493 | |||||||
2023 | 6,493 | |||||||
2024 | 6,493 | |||||||
2025 | 6,493 | |||||||
Thereafter | 918,461 | |||||||
Total | $ | 946,056 |
Range as of | |||||||||||||||||
Unobservable Input | June 1, 2020 | September 30, 2020 | |||||||||||||||
Probability of change of control | 90% | 80% | |||||||||||||||
Probability of issuance of debt | 5% | 15% | |||||||||||||||
Expected date of event | Fourth Quarter 2020 | Fourth Quarter 2020 | |||||||||||||||
Discount rate | 39% | 38% |
As of | ||||||||||||||||||||
Unobservable Input | June 3, 2021 | September 30, 2021 | ||||||||||||||||||
Exercise price | $11.50 | $11.50 | ||||||||||||||||||
Stock price | $14.75 | $12.68 | ||||||||||||||||||
Term (years) | 5.0 | 4.7 | ||||||||||||||||||
Volatility | 37.1% | —% | ||||||||||||||||||
Risk free interest rate | 0.8% | 0.9% | ||||||||||||||||||
Dividend yield | None | None | ||||||||||||||||||
Public warrant price | None | $4.13 |
(in thousands) | Carrying Value | Quoted Prices in Active Markets for Identical Items (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||||||||||||||||||||||||
Liabilities measured at fair value on a recurring basis: | ||||||||||||||||||||||||||||||||||||||
Contingent consideration | $ | 46,706 | $ | — | $ | — | $ | 46,706 | ||||||||||||||||||||||||||||||
Public Warrant Liabilities | 94,990 | 94,990 | — | — | ||||||||||||||||||||||||||||||||||
Private Placement Warrant Liabilities | 43,503 | — | — | 43,503 | ||||||||||||||||||||||||||||||||||
Total Liabilities | $ | 185,199 | $ | 94,990 | $ | — | $ | 90,209 |
(in thousands) | Carrying Value | Quoted Prices in Active Markets for Identical Items (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||||||||||||||||||||||||
Liabilities measured at fair value on a recurring basis: | ||||||||||||||||||||||||||||||||||||||
Contingent consideration | $ | 5,172 | $ | — | $ | — | $ | 5,172 | ||||||||||||||||||||||||||||||
Total Liabilities | $ | 5,172 | $ | — | $ | — | $ | 5,172 |
Fair Value Measurements | ||||||||||||||
For the three months ended September 30, | ||||||||||||||
2021 | 2020 | |||||||||||||
Opening balance as at July 1, | $ | 136,190 | $ | 75,800 | ||||||||||
Change in fair value of embedded derivative | — | 5,138 | ||||||||||||
Change in fair value of contingent consideration | (3,940) | — | ||||||||||||
Contingent consideration recognized due to acquisitions | 38,300 | — | ||||||||||||
Change in fair value of warrants | 14,649 | — | ||||||||||||
Contingent consideration reclassified to due to seller | — | (16,059) | ||||||||||||
Contingent consideration payments | — | (3,000) | ||||||||||||
Closing balance as at September 30, | $ | 185,199 | $ | 61,879 | ||||||||||
Fair Value Measurements | ||||||||||||||
For the nine months ended September 30, | ||||||||||||||
2021 | 2020 | |||||||||||||
Opening balance as at January 1, | $ | 5,172 | $ | 23,429 | ||||||||||
Embedded derivative recognized under Term Loan 2 | — | 51,328 | ||||||||||||
Change in fair value of embedded derivative | — | 5,444 | ||||||||||||
Change in fair value of contingent consideration | (4,152) | — | ||||||||||||
Contingent consideration recognized due to acquisitions | 47,900 | 2,695 | ||||||||||||
Warrants acquired in the Business Combination | 163,058 | — | ||||||||||||
Change in fair value of warrants | (24,565) | — | ||||||||||||
Contingent consideration reclassified to due to seller | — | (16,059) | ||||||||||||
Contingent consideration settled through equity | — | (1,958) | ||||||||||||
Contingent consideration payments | (2,214) | (3,000) | ||||||||||||
Closing balance as at September 30, | $ | 185,199 | $ | 61,879 |
As of, | ||||||||||||||
(in thousands) | September 30, 2021 | December 31, 2020 | ||||||||||||
Total Assets | $ | 30,483 | $ | 8,182 | ||||||||||
Total Liabilities | $ | 23,234 | $ | 12,371 |
Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||
September 30, | September 30, | |||||||||||||||||||||||||
(in thousands) | 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||||
Total revenue | $ | 12,321 | $ | 79 | $ | 14,621 | $ | 79 | ||||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||||
Third-party medical costs | 8,582 | — | 8,582 | — | ||||||||||||||||||||||
Direct patient expense | 2,413 | 295 | 5,203 | 295 | ||||||||||||||||||||||
Selling, general and administrative expenses | 7,277 | 1,125 | 12,540 | 1,324 | ||||||||||||||||||||||
Depreciation and amortization expense | 353 | — | 860 | — | ||||||||||||||||||||||
Total operating expenses | 18,625 | 1,420 | 27,185 | 1,619 | ||||||||||||||||||||||
Net loss | $ | (6,304) | $ | (1,341) | $ | (12,564) | $ | (1,540) |
As of June 3, 2021 | |||||
Closing Cano share price as of valuation date | $ | 14.75 | |||
Risk-free interest rate | 1.68% - 2.0% | ||||
Expected volatility | 45.0% | ||||
Expected dividend yield | 0.0% | ||||
Expected cost of equity | 9.0% |
Shares | Weighted Average Grant Date Fair Value | |||||||||||||
Balance, January 1, 2021 | — | — | ||||||||||||
Granted | 12,831,184 | $4.23 | ||||||||||||
Vested | — | — | ||||||||||||
Forfeitures | (97,486) | 4.23 | ||||||||||||
Balance, September 30, 2021 | 12,733,698 | $4.23 |
Shares | Weighted Average Grant Date Fair Value | |||||||||||||
Balance, January 1, 2021 | — | — | ||||||||||||
Granted | 4,840,444 | $14.46 | ||||||||||||
Vested | — | — | ||||||||||||
Forfeitures | (16,750) | 14.75 | ||||||||||||
Balance, September 30, 2021 | 4,823,694 | $14.46 |
Year ending December 31, | Amount (in thousands) | |||||||
Remainder of 2021 | $ | 3,876 | ||||||
2022 | 13,987 | |||||||
2023 | 12,763 | |||||||
2024 | 11,125 | |||||||
2025 | 9,451 | |||||||
Thereafter | 27,908 | |||||||
Total | $ | 79,110 |
For the Three Months Ended | For the Nine Months Ended | |||||||||||||||||||||||||
September 30, | September 30, | |||||||||||||||||||||||||
(in thousands) | 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||||
Jurisdictional earnings: | ||||||||||||||||||||||||||
U.S. losses | $ | (41,206) | $ | (11,760) | $ | (46,053) | $ | (25,456) | ||||||||||||||||||
Foreign income (losses) | 870 | 969 | (1,112) | 1,461 | ||||||||||||||||||||||
Total losses | (40,336) | (10,791) | (47,165) | (23,995) | ||||||||||||||||||||||
Current: | ||||||||||||||||||||||||||
U.S. Federal | — | — | — | — | ||||||||||||||||||||||
U.S. State and local | — | (29) | — | (26) | ||||||||||||||||||||||
Foreign | — | (251) | — | (222) | ||||||||||||||||||||||
Total current tax expense | — | (280) | — | (248) | ||||||||||||||||||||||
Deferred: | ||||||||||||||||||||||||||
U.S. Federal | — | — | — | — | ||||||||||||||||||||||
U.S. State and local | (221) | — | 282 | — | ||||||||||||||||||||||
Foreign | (326) | (46) | 480 | (46) | ||||||||||||||||||||||
Total deferred tax benefit (expense) | (547) | (46) | 762 | (46) | ||||||||||||||||||||||
Total tax benefit (expense) | $ | (547) | $ | (326) | $ | 762 | $ | (294) |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||||||||
(in thousands, except shares and per share data) | 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||
Numerator: | |||||||||||||||||||||||
Net loss | $ | (40,883) | $ | (11,117) | $ | (46,403) | $ | (24,289) | |||||||||||||||
Less: net loss attributable to non-controlling interests | (26,246) | — | (41,283) | — | |||||||||||||||||||
Net loss attributable to Class A common stockholders | (14,637) | — | (5,120) | — | |||||||||||||||||||
Dilutive effect of warrants on net loss to Class A common stockholders | — | N/A | (8,780) | N/A | |||||||||||||||||||
Net loss attributable to Class A common stockholders - Diluted | (14,637) | N/A | (13,900) | N/A | |||||||||||||||||||
Basic and Diluted Earnings Per Share denominator: | |||||||||||||||||||||||
Weighted average common stock outstanding - basic | 170,871,429 | N/A | 168,100,210 | N/A | |||||||||||||||||||
Net loss per share - basic | $ | (0.09) | N/A | $ | (0.03) | N/A | |||||||||||||||||
Diluted Earnings Per Share: | |||||||||||||||||||||||
Dilutive effect of warrants on weighted average common stock outstanding | — | N/A | 1,212,048 | N/A | |||||||||||||||||||
Weighted average common stock outstanding - diluted | 170,871,429 | N/A | 169,312,258 | N/A | |||||||||||||||||||
Net loss per share - diluted | $ | (0.09) | N/A | $ | (0.08) | N/A |
As of September 30, 2021 | |||||
Public Warrants | 23,000,000 | ||||
Private Placement Warrants | 10,533,333 | ||||
Restricted Stock Units | 4,823,694 | ||||
Stock Options | 12,733,698 | ||||
Contingent Shares Issued in Connection with Acquisitions | 2,720,966 | ||||
Potential Common Stock Equivalents | 53,811,691 |
September 30, 2021 | December 31, 2020 | September 30, 2020 | |||||||||
Members | 210,663 | 105,707 | 102,767 | ||||||||
Owned medical centers | 113 | 71 | 71 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
($ in thousands) | 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||||
Revenue: | ||||||||||||||||||||||||||
Capitated revenue | $ | 501,780 | $ | 252,974 | $ | 1,148,041 | $ | 544,617 | ||||||||||||||||||
Fee-for-service and other revenue | 25,018 | 10,159 | 52,055 | 25,020 | ||||||||||||||||||||||
Total revenue | 526,798 | 263,133 | 1,200,096 | 569,637 | ||||||||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||||
Third-party medical costs | 379,316 | 184,926 | 866,177 | 382,279 | ||||||||||||||||||||||
Direct patient expense | 57,708 | 31,108 | 135,777 | 71,441 | ||||||||||||||||||||||
Selling, general, and administrative expenses | 75,926 | 27,391 | 157,348 | 70,234 | ||||||||||||||||||||||
Depreciation and amortization expense | 16,955 | 5,379 | 30,746 | 12,741 | ||||||||||||||||||||||
Transaction costs and other | 6,528 | 7,716 | 32,140 | 29,854 | ||||||||||||||||||||||
Total operating expenses | 536,433 | 256,520 | 1,222,188 | 566,549 | ||||||||||||||||||||||
Income (loss) from operations | (9,635) | 6,613 | (22,092) | 3,088 | ||||||||||||||||||||||
Other income and expense: | ||||||||||||||||||||||||||
Interest expense | (16,023) | (12,346) | (36,363) | (21,728) | ||||||||||||||||||||||
Interest income | 1 | 80 | 4 | 239 | ||||||||||||||||||||||
Loss on extinguishment of debt | — | — | (13,225) | — | ||||||||||||||||||||||
Change in fair value of embedded derivative | — | (5,138) | — | (5,444) | ||||||||||||||||||||||
Change in fair value of warrant liabilities | (14,650) | — | 24,565 | — | ||||||||||||||||||||||
Other expenses | (29) | — | (54) | (150) | ||||||||||||||||||||||
Total other income (expense) | (30,701) | (17,404) | (25,073) | (27,083) | ||||||||||||||||||||||
Net loss before income tax benefit (expenses) | (40,336) | (10,791) | (47,165) | (23,995) | ||||||||||||||||||||||
Income tax benefit (expense) | (547) | (326) | 762 | (294) | ||||||||||||||||||||||
Net loss | (40,883) | (11,117) | (46,403) | (24,289) | ||||||||||||||||||||||
Net loss attributable to non-controlling interests | (26,246) | — | (41,283) | — | ||||||||||||||||||||||
Net loss attributable to Class A common stockholders | $ | (14,637) | $ | — | $ | (5,120) | $ | — |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
(% of revenue) | 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||||
Revenue: | ||||||||||||||||||||||||||
Capitated revenue | 95.3 | % | 96.1 | % | 95.7 | % | 95.6 | % | ||||||||||||||||||
Fee-for-service and other revenue | 4.7 | % | 3.9 | % | 4.3 | % | 4.4 | % | ||||||||||||||||||
Total revenue | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||||
Third-party medical costs | 72.0 | % | 70.3 | % | 72.2 | % | 67.1 | % | ||||||||||||||||||
Direct patient expense | 11.0 | % | 11.8 | % | 11.3 | % | 12.5 | % | ||||||||||||||||||
Selling, general, and administrative expenses | 14.4 | % | 10.4 | % | 13.1 | % | 12.3 | % | ||||||||||||||||||
Depreciation and amortization expense | 3.2 | % | 2.0 | % | 2.6 | % | 2.2 | % | ||||||||||||||||||
Transaction costs and other | 1.2 | % | 2.9 | % | 2.7 | % | 5.2 | % | ||||||||||||||||||
Total operating expenses | 101.8 | % | 97.4 | % | 101.9 | % | 99.3 | % | ||||||||||||||||||
Loss from operations | (1.8) | % | 2.6 | % | (1.9) | % | 0.7 | % | ||||||||||||||||||
Other income and expense: | ||||||||||||||||||||||||||
Interest expense | (3.0) | % | (4.7) | % | (3.0) | % | (3.8) | % | ||||||||||||||||||
Interest income | 0.0 | % | 0.0 | % | 0.0 | % | 0.0 | % | ||||||||||||||||||
Loss on extinguishment of debt | 0.0 | % | 0.0 | % | (1.1) | % | 0.0 | % | ||||||||||||||||||
Change in fair value of embedded derivative | 0.0 | % | (2.0) | % | 0.0 | % | (1.0) | % | ||||||||||||||||||
Change in fair value of warrant liabilities | (2.8) | % | 0.0 | % | 2.0 | % | 0.0 | % | ||||||||||||||||||
Other expenses | 0.0 | % | 0.0 | % | 0.0 | % | 0.0 | % | ||||||||||||||||||
Total other income (expense) | (5.8) | % | (6.7) | % | (2.1) | % | (4.8) | % | ||||||||||||||||||
Net loss before income tax benefit (expenses) | (7.6) | % | (4.1) | % | (4.0) | % | (4.1) | % | ||||||||||||||||||
Income tax benefit (expense) | (0.1) | % | (0.1) | % | 0.1 | % | (0.1) | % | ||||||||||||||||||
Net loss | (7.7) | % | (4.2) | % | (3.9) | % | (4.2) | % | ||||||||||||||||||
Net loss attributable to non-controlling interests | (5.0) | % | — | % | (3.4) | % | — | % | ||||||||||||||||||
Net loss attributable to Class A common stockholders | (2.7) | % | — | % | (0.5) | % | — | % |
Three Months Ended September 30, | ||||||||||||||||||||||||||
2021 | 2020 | |||||||||||||||||||||||||
($ in thousands) | Revenue $ | Revenue % | Revenue $ | Revenue % | ||||||||||||||||||||||
Capitated revenue: | ||||||||||||||||||||||||||
Medicare | $ | 447,250 | 84.9 | % | $ | 220,591 | 83.8 | % | ||||||||||||||||||
Other capitated revenue | 54,530 | 10.4 | % | 32,383 | 12.3 | % | ||||||||||||||||||||
Total capitated revenue | 501,780 | 95.3 | % | 252,974 | 96.1 | % | ||||||||||||||||||||
Fee-for-service and other revenue: | ||||||||||||||||||||||||||
Fee-for-service | 8,176 | 1.6 | % | 3,258 | 1.2 | % | ||||||||||||||||||||
Pharmacy | 10,096 | 1.8 | % | 6,154 | 2.4 | % | ||||||||||||||||||||
Other | 6,746 | 1.3 | % | 747 | 0.3 | % | ||||||||||||||||||||
Total fee-for-service and other revenue | 25,018 | 4.7 | % | 10,159 | 3.9 | % | ||||||||||||||||||||
Total revenue | $ | 526,798 | 100.0 | % | $ | 263,133 | 100.0 | % |
Nine Months Ended September 30, | ||||||||||||||||||||||||||
2021 | 2020 | |||||||||||||||||||||||||
($ in thousands) | Revenue $ | Revenue % | Revenue $ | Revenue % | ||||||||||||||||||||||
Capitated revenue: | ||||||||||||||||||||||||||
Medicare | $ | 1,008,329 | 84.0 | % | $ | 455,986 | 80.0 | % | ||||||||||||||||||
Other capitated revenue | 139,712 | 11.6 | % | 88,631 | 15.6 | % | ||||||||||||||||||||
Total capitated revenue | 1,148,041 | 95.7 | % | 544,617 | 95.6 | % | ||||||||||||||||||||
Fee-for-service and other revenue: | ||||||||||||||||||||||||||
Fee-for-service | 17,113 | 1.4 | % | 6,269 | 1.1 | % | ||||||||||||||||||||
Pharmacy | 25,619 | 2.1 | % | 17,207 | 3.0 | % | ||||||||||||||||||||
Other | 9,323 | 0.8 | % | 1,544 | 0.3 | % | ||||||||||||||||||||
Total fee-for-service and other revenue | 52,055 | 4.3 | % | 25,020 | 4.4 | % | ||||||||||||||||||||
Total revenue | $ | 1,200,096 | 100.0 | % | $ | 569,637 | 100.0 | % |
Three Months Ended September 30, | ||||||||||||||||||||
2021 | 2020 | % Change | ||||||||||||||||||
Members: | ||||||||||||||||||||
Medicare | 120,086 | 72,806 | 64.9 | % | ||||||||||||||||
Medicaid | 63,871 | 19,169 | 233.2 | % | ||||||||||||||||
ACA | 26,706 | 10,792 | 147.5 | % | ||||||||||||||||
Total members | 210,663 | 102,767 | 105.0 | % | ||||||||||||||||
Member months: | ||||||||||||||||||||
Medicare | 360,439 | 216,353 | 66.6 | % | ||||||||||||||||
Medicaid | 187,212 | 53,511 | 249.9 | % | ||||||||||||||||
ACA | 81,437 | 32,285 | 152.2 | % | ||||||||||||||||
Total member months | 629,088 | 302,149 | 108.2 | % | ||||||||||||||||
Per Member Per Month ("PMPM"): | ||||||||||||||||||||
Medicare | $ | 1,241 | $ | 1,020 | 21.7 | % | ||||||||||||||
Medicaid | $ | 271 | $ | 585 | (53.7) | % | ||||||||||||||
ACA | $ | 47 | $ | 33 | 42.4 | % | ||||||||||||||
Total PMPM | $ | 798 | $ | 837 | (4.7) | % | ||||||||||||||
Owned medical centers | 113 | 71 |
Nine Months Ended September 30, | ||||||||||||||||||||
2021 | 2020 | % Change | ||||||||||||||||||
Members: | ||||||||||||||||||||
Medicare | 120,086 | 72,806 | 64.9 | % | ||||||||||||||||
Medicaid | 63,871 | 19,169 | 233.2 | % | ||||||||||||||||
ACA | 26,706 | 10,792 | 147.5 | % | ||||||||||||||||
Total members | 210,663 | 102,767 | 105.0 | % | ||||||||||||||||
Member months: | ||||||||||||||||||||
Medicare | 867,520 | 483,878 | 79.3 | % | ||||||||||||||||
Medicaid | 321,581 | 136,658 | 135.3 | % | ||||||||||||||||
ACA | 195,290 | 92,577 | 110.9 | % | ||||||||||||||||
Total member months | 1,384,391 | 713,113 | 94.1 | % | ||||||||||||||||
Per Member Per Month ("PMPM"): | ||||||||||||||||||||
Medicare | $ | 1,162 | $ | 942 | 23.4 | % | ||||||||||||||
Medicaid | $ | 414 | $ | 631 | (34.4) | % | ||||||||||||||
ACA | $ | 36 | $ | 26 | 38.5 | % | ||||||||||||||
Total PMPM | $ | 829 | $ | 764 | 8.5 | % | ||||||||||||||
Owned medical centers | 113 | 71 |
Three Months Ended September 30, | ||||||||||||||||||||||||||
($ in thousands) | 2021 | 2020 | $ Change | % Change | ||||||||||||||||||||||
Revenue: | ||||||||||||||||||||||||||
Capitated revenue | $ | 501,780 | $ | 252,974 | $ | 248,806 | 98.4 | % | ||||||||||||||||||
Fee-for-service and other revenue | 25,018 | 10,159 | 14,859 | 146.3 | % | |||||||||||||||||||||
Total revenue | $ | 526,798 | $ | 263,133 | $ | 263,665 |
Three Months Ended September 30, | ||||||||||||||||||||||||||
($ in thousands) | 2021 | 2020 | $ Change | % Change | ||||||||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||||
Third-party medical costs | $ | 379,316 | $ | 184,926 | $ | 194,390 | 105.1 | % | ||||||||||||||||||
Direct patient expense | 57,708 | 31,108 | 26,600 | 85.5 | % | |||||||||||||||||||||
Selling, general, and administrative expenses | 75,926 | 27,391 | 48,535 | 177.2 | % | |||||||||||||||||||||
Depreciation and amortization expense | 16,955 | 5,379 | 11,576 | 215.2 | % | |||||||||||||||||||||
Transaction costs and other | 6,528 | 7,716 | (1,188) | (15.4) | % | |||||||||||||||||||||
Total operating expenses | $ | 536,433 | $ | 256,520 | $ | 279,913 |
Three Months Ended September 30, | ||||||||||||||||||||||||||
($ in thousands) | 2021 | 2020 | $ Change | % Change | ||||||||||||||||||||||
Other income and expense: | ||||||||||||||||||||||||||
Interest expense | $ | (16,023) | $ | (12,346) | $ | (3,677) | 29.8 | % | ||||||||||||||||||
Interest income | 1 | 80 | (79) | (98.8) | % | |||||||||||||||||||||
Change in fair value of embedded derivative | — | (5,138) | 5,138 | (100.0) | % | |||||||||||||||||||||
Change in fair value of warrant liabilities | (14,650) | — | (14,650) | 0.0 | % | |||||||||||||||||||||
Other expenses | (29) | — | (29) | 0.0 | % | |||||||||||||||||||||
Total other income (expense) | $ | (30,701) | $ | (17,404) | $ | (13,297) | ||||||||||||||||||||
Nine Months Ended September 30, | ||||||||||||||||||||||||||
($ in thousands) | 2021 | 2020 | $ Change | % Change | ||||||||||||||||||||||
Revenue: | ||||||||||||||||||||||||||
Capitated revenue | $ | 1,148,041 | $ | 544,617 | $ | 603,424 | 110.8 | % | ||||||||||||||||||
Fee-for-service and other revenue | 52,055 | 25,020 | 27,035 | 108.1 | % | |||||||||||||||||||||
Total revenue | $ | 1,200,096 | $ | 569,637 | $ | 630,459 | 110.7 | % |
Nine Months Ended September 30, | ||||||||||||||||||||||||||
($ in thousands) | 2021 | 2020 | $ Change | % Change | ||||||||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||||
Third-party medical costs | $ | 866,177 | $ | 382,279 | $ | 483,898 | 126.6 | % | ||||||||||||||||||
Direct patient expense | 135,777 | 71,441 | 64,336 | 90.1 | % | |||||||||||||||||||||
Selling, general, and administrative expenses | 157,348 | 70,234 | 87,114 | 124.0 | % | |||||||||||||||||||||
Depreciation and amortization expense | 30,746 | 12,741 | 18,005 | 141.3 | % | |||||||||||||||||||||
Transaction costs and other | 32,140 | 29,854 | 2,286 | 7.7 | % | |||||||||||||||||||||
Total operating expenses | $ | 1,222,188 | $ | 566,549 | $ | 655,639 |
Nine Months Ended September 30, | ||||||||||||||||||||||||||
($ in thousands) | 2021 | 2020 | $ Change | % Change | ||||||||||||||||||||||
Other income and expense: | ||||||||||||||||||||||||||
Interest expense | $ | (36,363) | $ | (21,728) | $ | (14,635) | 67.4 | % | ||||||||||||||||||
Interest income | 4 | 239 | (235) | (98.3) | % | |||||||||||||||||||||
Loss on extinguishment of debt | (13,225) | — | (13,225) | — | % | |||||||||||||||||||||
Change in fair value of embedded derivative | — | (5,444) | 5,444 | (100.0) | % | |||||||||||||||||||||
Change in fair value of warrant liabilities | 24,565 | — | 24,565 | — | % | |||||||||||||||||||||
Other expenses | (54) | (150) | 96 | (64.0) | % | |||||||||||||||||||||
Total other income (expense) | $ | (25,073) | $ | (27,083) | $ | 2,010 | ||||||||||||||||||||
Nine Months Ended September 30, | ||||||||||||||
($ in thousands) | 2021 | 2020 | ||||||||||||
Net cash used in operating activities | $ | (91,498) | $ | (21,043) | ||||||||||
Net cash used in investing activities | (1,116,030) | (253,554) | ||||||||||||
Net cash provided by financing activities | 1,382,634 | 272,828 | ||||||||||||
Net increase (decrease) in cash, cash equivalents and restricted cash | 175,106 | (1,769) | ||||||||||||
Cash, cash equivalents and restricted cash at beginning of year | 33,807 | 29,192 | ||||||||||||
Cash, cash equivalents and restricted cash at end of period | $ | 208,913 | $ | 27,423 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
($ in thousands) | 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||||
Net loss | $ | (40,883) | $ | (11,117) | $ | (46,403) | $ | (24,289) | ||||||||||||||||||
Interest income | (1) | (80) | (4) | (239) | ||||||||||||||||||||||
Interest expense | 16,023 | 12,346 | 36,363 | 21,728 | ||||||||||||||||||||||
Income tax expense (benefit) | 547 | 326 | (762) | 294 | ||||||||||||||||||||||
Depreciation and amortization expense | 16,955 | 5,379 | 30,746 | 12,741 | ||||||||||||||||||||||
EBITDA | $ | (7,359) | $ | 6,854 | $ | 19,940 | $ | 10,235 | ||||||||||||||||||
Stock-based compensation | 8,909 | 66 | 12,148 | 177 | ||||||||||||||||||||||
De novo losses (1) | 9,016 | 2,025 | 21,496 | 4,373 | ||||||||||||||||||||||
Acquisition transaction costs (2) | 7,825 | 7,827 | 35,163 | 30,121 | ||||||||||||||||||||||
Restructuring and other | 2,123 | 1,113 | 5,513 | 1,829 | ||||||||||||||||||||||
Loss on extinguishment of debt | — | — | 13,225 | — | ||||||||||||||||||||||
Change in fair value of embedded derivative | — | 5,138 | — | 5,444 | ||||||||||||||||||||||
Change in fair value of warrant liabilities | 14,650 | — | (24,565) | — | ||||||||||||||||||||||
Adjusted EBITDA | $ | 35,164 | $ | 23,023 | $ | 82,921 | $ | 52,179 |
Exhibit Number | Description | |||||||
2.1 | ||||||||
3.1 | ||||||||
3.2 | ||||||||
3.3 | ||||||||
4.1 | ||||||||
4.2 | ||||||||
10.1 | ||||||||
10.2 | Bridge Loan Agreement, dated July 2, 2021, by and among Cano Health, LLC, Primary Care (ITC) Intermediate Holdings, LLC, Credit Suisse AG, Cayman Islands Branch and the lenders from time to time party thereto ( i ncorporated by reference to Exhibit 10.15 to the Company’s quarterly report on Form 10- Q filed on August 15, 2021). | |||||||
10.3 | ||||||||
31.1* | Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |||||||
31.2* | Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |||||||
32.1** | Certification of Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |||||||
32.2** | Certification of Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |||||||
101.SCH* | XBRL Taxonomy Extension Schema Document | |||||||
101.CAL* | XBRL Taxonomy Extension Calculation Linkbase Document | |||||||
101.DEF* | XBRL Taxonomy Extension Definition Linkbase Document | |||||||
101.LAB* | XBRL Taxonomy Extension Label Linkbase Document | |||||||
101.PRE* | XBRL Taxonomy Extension Presentation Linkbase Document | |||||||
104* | Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101.) |
* | Filed herewith. | ||||
** | Furnished herewith. | ||||
+ | Indicates a management contract or any compensatory plan, contract or arrangement. |
November 9, 2021 | By: | /s/ Dr. Marlow Hernandez | Chief Executive Officer | |||||||||||||||||
Dr. Marlow Hernandez | (Principal Executive Officer) | |||||||||||||||||||
November 9, 2021 | By: | /s/ Brian D. Koppy | Chief Financial Officer | |||||||||||||||||
Brian D. Koppy | (Principal Financial Officer) | |||||||||||||||||||
November 9, 2021 | By: | /s/ Mark Novell | Chief Accounting Officer | |||||||||||||||||
Mark Novell | (Principal Accounting Officer) |