Cano Health, a value-based primary care provider and population health company based in Miami, is dealing with a tumultuous moment after three of its board members recently resigned and formed a group to boost shareholder value.
Barry Sternlicht, a billionaire and founder and CEO of Starwood Capital Group, was one of the board members who resigned. He gave notice of his resignation March 30, citing mismanagement of the company following the merger of JAWS Acquisition Corp. with Cano Health, which Cano officially became a public company, in June 2021. According to Sternlicht, Cano Health has burned through its cash on hand and not improved profitability over the past few years.
He specifically called out Cano Health CEO Marlow Hernandez, who Sternlicht believes should no longer be CEO. Sternlicht called Hernandez “harmful” to shareholders and employees of the company.
“I remain extremely troubled by the poor operating decisions and performance, by what I consider the opacity and obfuscation of information furnished to the board, and by the inability to forecast the company's financial performance over which Marlow and his management team have presided,” Sternlicht said in a statement of his resignation. “These factors have caused the company's stock price to be decimated, dropping over 90% from its debut, and the company is now saddled with a crippling debt burden.”
In addition to Sternlicht’s resignation, Elliot Cooperstone and Dr. Lewis Gold resigned as members of the board on the same day.
“We are disappointed that three directors chose to resign due to what we believe is their focus solely on the short term,” Cano Health said in a statement. “We strongly disagree with their representations about the Company and their assessment of Dr. Hernandez's performance.”
The three former board members also banded together in a new group to enact change at Cano Health, including replacing Hernandez as CEO, sale of non-core assets and enhancement of shareholder value, according to a filing with the Securities Exchange Commission (SEC).
The board member turnover comes after Cano Health has seen its share price value decrease significantly, dropping from nearly $9 per share in late 2022 to $1.30 per share as of April 5, according to Market Watch.
Cano Health also announced the appointment of Mark Kent as its new chief strategy officer on April 5. Kent will lead strategy development, spearhead operational initiatives and consolidate oversight of key administrative supporting functions, including contracting, billing and coding, credentialing, payor relations and information technology (IT).
“At Cano Health, we continually seek to strengthen our leadership team and organizational efficiency in order to advance our mission and increase value for our shareholders,” Hernandez said in a statement. “Mark’s extensive experience leading, operating, and growing primary care practices profitably will bolster our efforts to help more patients live a longer and healthier life.
Amy joined TriMed Media as a Senior Writer for HealthExec after covering home care for three years. When not writing about all things healthcare, she fulfills her lifelong dream of becoming a pirate by sailing in regattas and enjoying rum. Fun fact: she sailed 333 miles across Lake Michigan in the Chicago Yacht Club "Race to Mackinac."