Cano Health Provides First Quarter 2021 Business Update
MIAMI, June 9, 2021 /PRNewswire/ -- Cano Health, Inc. (NYSE: CANO), a leading value-based primary care provider for seniors and underserved communities, today announced business and financial results for the first quarter ended March 31, 2021, prior to the closing on June 3, 2021 of the recent business combination between Cano Health and Jaws Acquisition Corp.
First Quarter 2021 Financial Results
- $280.1 million total revenue, up 107% from the prior-year period
- 116,895 members, a 91% increase from the prior-year period. Organic membership increased 43% from the prior-year period
- Net loss of $10.5 million
- $22.8 million Adjusted EBITDA, up 77% from the prior-year period. Adjusted EBITDA margin of 8.1% compared to 9.5% in the prior-year period
- 72 medical centers operated by the Company as of March 31, 2021, compared to 45 centers as of March 31, 2020
First Quarter 2021 Business Highlights
- Solid revenue and membership growth:
- Revenue growth driven by strong capitated revenue
- Robust organic membership growth
- Strong execution:
- Built strong acquisition pipeline
- Completed two tuck-in transactions
- On track to execute acquisition strategy and achieve full-year 2021 guidance
- Published COVID-19 outcomes in The American Journal of Managed Care:
- COVID-19 specific mortality for Cano members 60% lower compared to an age- and gender-matched mirror group between Cano Health members and Florida residents
Recent Business Developments
- Cano shares began trading on the NYSE on June 4, 2021. As of June 9, 2021 there are approximately 473 million shares outstanding.
- Continued to build senior management team with the additions of Brian Koppy as Chief Financial Officer effective April 5, 2021 and Mark Novell as Chief Accounting Officer effective May 12, 2021
- Received assignment of approximately 8,100 Medicare beneficiaries under the Centers for Medicare and Medicaid Services' new Direct Contracting Entity (DCE) program
Financial Outlook
Cano Health is reiterating its full year 2021 financial outlook previously disclosed at its Analyst and Investor Day on March 4, 2021. This outlook includes the impact of potential acquisitions.
- Total Revenue is expected to be between $1,400 million and $1,500 million
- Total Adjusted EBITDA is expected to be between $90 million and $100 million
- Total Members as of December 31, 2021 is expected to be between 154,000 and 162,000
- Total Owned Medical Centers as of December 31, 2021 is expected to be between 95 and 105 centers
Non-GAAP Financial Measures
Financial measures that are not measures under generally accepted accounting principles in the United States ("GAAP") do not replace the most directly comparable GAAP measures and we have included detailed reconciliations thereof in the "Quarterly Results of Operations and Selected Financial Highlights" below.
We exclude the effects of the following items from GAAP Net income (loss) to arrive at Adjusted EBITDA:
- stock-based compensation expense,
- de novo losses (consisting of losses incurred in the twelve months after the opening of a new facility),
- acquisition transaction costs (consisting of transaction costs, fair value adjustments to contingent consideration, management fees, and corporate development payroll costs),
- restructuring and other charges,
- fair value adjustments to an embedded derivative, and
- loss on extinguishment of debt.
Adjusted EBITDA is a key measure used by our management team to assess the operating and financial performance of our business in order to make decisions on allocation of resources.
Supplemental Presentation
In addition to Cano Health's 8-K filing for the completion of its business combination with Jaws Acquisition Corp., the Company filed a separate 8-K containing supplemental materials for the first quarter and a summary of historical quarterly financial results. The information can be found at sec.gov or on the Company's website at investors.canohealth.com.
Conference Calls
Beginning with the announcement of the Company's second quarter 2021 financial results, the Company intends to host a quarterly conference call with members of the management team to discuss the results for the prior quarter. The quarterly conference calls and supplementary materials will be accessible on the Company's website.
About Cano Health
Cano Health operates value-based primary care centers and supports affiliated medical practices that specialize in primary care for seniors in Florida, Texas, Nevada, and Puerto Rico, with additional markets in development. As part of its care coordination strategy, Cano Health provides sophisticated, high-touch population health management programs including telehealth, prescription home delivery, wellness programs, transition of care, and high-risk and complex care management.
The Company's personalized patient care and proactive approach to wellness and preventive care sets it apart from competitors. Cano Health has consistently improved clinical outcomes while reducing costs, affording patients the opportunity to lead longer and healthier lives. Cano serves a predominantly minority population (80% of its patients are Latino or African American) and low-income population (50% of its patients are dual eligible for Medicare and Medicaid). For more information visit www.canohealth.com.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995, as amended. These forward-looking statements include statements regarding our future growth and strategy. Words such as "anticipate," "believe," "budget," "contemplate," "continue," "could," "envision," "estimate," "expect," "guidance," "indicate," "intend," "may," "might," "plan," "possibly," "potential," "predict," "probably," "pro-forma," "project," "seek," "should," "target," or "will," or the negative or other variations thereof, and similar words or phrases or comparable terminology, are intended to identify forward-looking statements. These forward-looking statements are not guarantees of future performance, conditions or results, and involve a number of known and unknown risks, uncertainties, assumptions and other important factors, many of which are outside the Company's control, that could cause actual results or outcomes to differ materially from those discussed in the forward-looking statements.
Important risks and uncertainties that could cause our actual results and financial condition to differ materially from those indicated in forward-looking statements include, among others, changes in market or industry conditions, regulatory environment, competitive conditions, and receptivity to our services; our ability to continue our growth; changes in laws and regulations applicable to our business; our ability to maintain our relationships with health plans and other key payers; the impact of COVID-19 or another pandemic, epidemic or outbreak of infectious disease on our business and results of operation; and our ability to recruit and retain qualified team members and independent physicians. For a detailed discussion of the risk factors that could affect our actual results, please refer to the risk factors identified in the definitive Proxy Statement/Prospectus filed with the SEC on May 7, 2021 and in our subsequent reports filed with the SEC. All information provided in this press release is as of the date hereof, and we undertake no duty to update or revise this information unless required by law.
CANO HEALTH, INC. AND SUBSIDIARIES
Quarterly Results of Operations and Selected Financial Highlights
(Dollars in millions)
(Unaudited)
The following table sets forth our unaudited condensed consolidated statement of operations data for each of the quarters in the periods ended March 31, 2021, December 31, 2020 and December 31, 2019. The unaudited quarterly statements of operations data set forth below have been prepared on a basis consistent with our audited annual consolidated financial statements included in our Form 8-K filed with the SEC on June 9, 2021 (the "June 9, 2021 8-K") and include, in our opinion, all normal recurring adjustments necessary for the fair statement of the results of operations for the periods presented. Our historical quarterly results are not necessarily indicative of the results that may be expected in the future. The following quarterly financial data should be read in conjunction with our consolidated financial statements and related notes included in the June 9, 2021 8-K.
For purposes of this presentation, "NCI" refers to Non-Controlling Interests and "PCIH" refers to Primary Care (ITC) Intermediate Holdings, LLC.
Fiscal Year End: December |
|||||||||
Quarter Ended |
|||||||||
Income Statement ($ in millions) |
1Q19 |
2Q19 |
3Q19 |
4Q19 |
1Q20 |
2Q20 |
3Q20 |
4Q20 |
1Q21 |
Capitated revenue: |
|||||||||
Medicare |
$ 57.4 |
$ 61.6 |
$ 77.4 |
$ 86.4 |
$ 106.0 |
$ 129.4 |
$ 220.6 |
$ 214.4 |
$ 225.9 |
Other capitated revenue |
12.4 |
15.9 |
18.5 |
14.3 |
21.7 |
34.5 |
32.4 |
35.2 |
41.1 |
Total capitated revenue |
69.8 |
77.5 |
95.9 |
100.7 |
127.7 |
163.9 |
253.0 |
249.6 |
267.0 |
Total fee-for-service and other revenue |
4.4 |
4.1 |
5.4 |
6.6 |
7.6 |
7.3 |
10.2 |
10.1 |
13.1 |
Total revenue |
74.2 |
81.6 |
101.3 |
107.3 |
135.3 |
171.2 |
263.2 |
259.7 |
280.1 |
Operating expenses: |
|||||||||
Third - party medical costs |
51.1 |
55.7 |
69.7 |
64.6 |
85.3 |
112.0 |
184.9 |
182.7 |
195.0 |
Direct patient expense |
6.9 |
9.2 |
11.3 |
15.6 |
17.8 |
22.6 |
31.1 |
30.8 |
34.3 |
Selling, general and administrative |
12.7 |
12.2 |
14.6 |
19.6 |
21.0 |
21.9 |
27.4 |
33.7 |
34.9 |
Depreciation and amortization |
1.2 |
1.4 |
1.8 |
2.5 |
3.4 |
4.0 |
5.4 |
5.7 |
5.8 |
Transaction costs and other |
1.3 |
3.3 |
15.6 |
0.2 |
6.5 |
15.7 |
7.7 |
13.7 |
9.3 |
Total operating expenses |
73.2 |
81.8 |
113.0 |
102.5 |
134.0 |
176.2 |
256.5 |
266.6 |
279.3 |
Income / (loss) from operations |
1.0 |
(0.2) |
(11.7) |
4.8 |
1.3 |
(5.0) |
6.7 |
(6.9) |
0.8 |
Interest Expense, net |
(1.7) |
(1.8) |
(2.5) |
(3.8) |
(3.6) |
(5.6) |
(12.3) |
(12.2) |
(10.6) |
Loss on extinguishment of debt |
- |
- |
- |
- |
- |
- |
- |
(23.3) |
- |
FV adjustment, other expenses |
- |
- |
- |
(0.3) |
- |
(0.5) |
(5.1) |
(7.6) |
- |
Total other expense |
(1.7) |
(1.8) |
(2.5) |
(4.1) |
(3.6) |
(6.1) |
(17.4) |
(43.1) |
(10.6) |
Income tax expense / (benefit) |
- |
- |
- |
- |
- |
- |
(0.3) |
(0.4) |
(0.7) |
Net income / (loss) |
(0.7) |
(2.0) |
(14.2) |
0.7 |
(2.3) |
(11.1) |
(11.0) |
(50.4) |
(10.5) |
Net income / (loss) attributable to NCI |
- |
- |
(0.1) |
- |
- |
- |
- |
- |
- |
Net income / (loss) attributable to PCIH |
$ (0.7) |
$ (2.0) |
$ (14.1) |
$ 0.7 |
$ (2.3) |
$ (11.1) |
$ (11.0) |
$ (50.4) |
$ (10.5) |
Adjusted EBITDA |
|||||||||
Net income / (loss) |
$ (0.7) |
$ (2.0) |
$ (14.2) |
$ 0.7 |
$ (2.3) |
$ (11.1) |
$ (11.0) |
$ (50.4) |
$ (10.5) |
Interest expense, net |
1.7 |
1.8 |
2.5 |
3.8 |
3.6 |
5.6 |
12.3 |
12.2 |
10.6 |
Income tax expense / (benefit) |
- |
- |
- |
- |
- |
- |
0.3 |
0.4 |
0.7 |
Depreciation and amortization |
1.2 |
1.4 |
1.8 |
2.5 |
3.4 |
4.0 |
5.4 |
5.7 |
5.8 |
Reported EBITDA (1) |
2.2 |
1.2 |
(9.9) |
7.0 |
4.7 |
(1.5) |
7.0 |
(32.1) |
6.6 |
Stock-based compensation |
- |
- |
- |
0.1 |
0.1 |
0.1 |
0.1 |
0.2 |
0.1 |
De novo losses |
1.0 |
1.3 |
1.5 |
1.7 |
1.4 |
1.0 |
2.0 |
4.3 |
5.5 |
Acquisition transaction costs |
1.4 |
3.4 |
15.7 |
0.3 |
6.5 |
15.8 |
7.8 |
13.9 |
10.1 |
Restructuring and other |
- |
- |
- |
0.3 |
0.2 |
0.5 |
1.1 |
0.6 |
0.5 |
Change FV of embedded derivative |
- |
- |
- |
- |
- |
0.3 |
5.1 |
7.3 |
- |
Loss on extinguishment of debt |
- |
- |
- |
- |
- |
- |
- |
23.3 |
- |
Adjusted EBITDA (2) |
$ 4.6 |
$ 5.9 |
$ 7.3 |
$ 9.4 |
$ 12.9 |
$ 16.2 |
$ 23.1 |
$ 17.5 |
$ 22.8 |
Adjusted EBITDA Margin |
6.2% |
7.2% |
7.2% |
8.8% |
9.5% |
9.5% |
8.8% |
6.7% |
8.1% |
(1) |
EBITDA and Adjusted EBITDA are non-GAAP financial measures. A non-GAAP financial measure is a performance metric that departs from GAAP because it excludes earnings components that are required under GAAP. Other companies may define non-GAAP financial measures differently and, as a result, our non-GAAP financial measures may not be directly comparable to those of other companies. |
|||||||||
(2) |
Adjusted EBITDA is EBITDA adjusted to add back the effect of certain expenses, such as stock-based compensation expense, de novo losses (consisting of losses incurred in the twelve months after the opening of a new facility), acquisition transaction costs (consisting of transaction costs, fair value adjustments to contingent consideration, management fees and corporate development payroll costs), restructuring and other charges, fair value adjustments to an embedded derivative, and loss on extinguishment of debt. Adjusted EBITDA is a key measure used by our management to assess the operating and financial performance of our health centers in order to make decisions on allocation of resources. |
|||||||||
Operating Metrics
The following table sets forth the Company's member and member month figures as of and for the three months ended for each of the quarters in the periods ended March 31, 2021, December 31, 2020 and December 31, 2019:
As of |
|||||||||
Members: |
1Q19 |
2Q19 |
3Q19 |
4Q19 |
1Q20 |
2Q20 |
3Q20 |
4Q20 |
1Q21 |
Medicare |
17,526 |
18,252 |
23,833 |
31,302 |
38,674 |
72,576 |
72,806 |
74,644 |
75,488 |
Other |
10,091 |
9,852 |
10,332 |
10,215 |
22,674 |
26,700 |
29,961 |
31,063 |
41,407 |
Total |
27,617 |
28,104 |
34,165 |
41,517 |
61,348 |
99,276 |
102,767 |
105,707 |
116,895 |
Owned medical centers: |
26 |
33 |
35 |
35 |
45 |
61 |
71 |
71 |
72 |
Quarter Ended |
|||||||||
Member months: |
1Q19 |
2Q19 |
3Q19 |
4Q19 |
1Q20 |
2Q20 |
3Q20 |
4Q20 |
1Q21 |
Medicare |
51,893 |
54,416 |
62,374 |
86,907 |
114,761 |
152,764 |
216,353 |
224,627 |
224,830 |
Other |
30,590 |
30,535 |
29,965 |
31,134 |
67,450 |
75,989 |
85,796 |
89,933 |
118,945 |
Total |
82,483 |
84,951 |
92,339 |
118,041 |
182,211 |
228,753 |
302,149 |
314,560 |
343,775 |
Revenue Per Member per Month: |
1Q19 |
2Q19 |
3Q19 |
4Q19 |
1Q20 |
2Q20 |
3Q20 |
4Q20 |
1Q21 |
Medicare |
$1,107 |
$1,132 |
$1,241 |
$994 |
$924 |
$847 |
$1,020 |
$954 |
$1,005 |
Other |
$405 |
$522 |
$616 |
$461 |
$322 |
$455 |
$377 |
$391 |
$346 |
Total |
$847 |
$912 |
$1,038 |
$853 |
$701 |
$717 |
$837 |
$793 |
$777 |
SOURCE Cano Health, LLC
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