Cano Health Inc. (CANO) Stock Fell 73% After Earnings, Why?

• CANO stock fell 73.52% in a week, 70.47% YTD, and 91.41% in a year. 
• The stock is closing its operations in multiple locations and is looking for a buyer. 

Cano Health Inc. (NYSE: CANO) reported Q2 earnings on August 10, 2023. The adverse reports and other factors caused the stock to drop 73%. During the earnings announcement, it was also revealed that the company is planning to exit the operations in California, New Mexico, and Illinois by fall 2023, and they will leave Puerto Rico by January 1, 2024. 

Cano Health Inc. (CANO) Stock: Anatomy of 73% Drop

The healthcare company posted negative earnings, and the management seems concerned about Cano Health’s survival ability. They are also thinking about selling the company. The closure of operations in New Mexico and other locations can be considered a buildup for sale. 

The data suggests that Cano Health hasn’t found anything to make the company profitable. During the Q2 earnings report, they posted a net loss of $270.7 Million, a steep drop from the loss of $14.6 Million in Q2 2022. If it’s a sigh of relief, revenue gained 11% year-over-year (YoY) to $766.7 Million. 

The primary care provider went public in 2021 after its merger with Sternlicht-backed SPAC. Along with the ongoing reduction plan, the management also looks to lower costs by 17%. This would require Cano to lay off 700 employees in Q3 2023. 

Cano has a liability of nearly $101 Million, comprising cash and cash equivalents. But more is needed to cover the operating and investing expenditure for twelve months. Hence, it would be better if the company finds a buyer before it runs out of money and goes bankrupt. Pfizer Inc. (NYSE: PFE) gained 0.87% to $36.04.

Cano Health Inc. (NYSE: CANO): Technical Analysis

CANO stock, at press time, was trading at $0.4104 and registered a massive fall of 73%; previous close and open were at $1.52 and $0.78, respectively. The 52-week range is from $0.3844 to $9.7500, respectively. With a volume of 91.29 Million shares, the market cap is $220.00 Million. 

The trailing twelve-month (TTM) earnings per share (EPS) is negative 1.02, indicating financial weakness. Still optimistic, analysts estimated a price target of $2.69 with a whopping 555.9% upside and provided a 1.89 rating for reduction. 

Cano Health reported earnings on August 10, 2023, where the reported earnings of negative $0.51 massively failed to surpass the estimated value of minus $0.093 by a whopping 446.35%. At the same time, the reported revenue of $766.746 Million also could not beat the expected value of $828.997 Million by 7.51%.

In June 2023, the company’s CEO, Marlow Hernandez stepped down, and they have been looking for someone to fill the boots since then. The company’s medical cost ratio gained 103.5%, 82.6% a year ago. 

Cano Health Inc. (CANO) Stock: Candle Exploration

CANO stock dropped heavily by 73% after the earnings announcement. Also, the RSI fell to 22.76 into the oversold zone. However, it generally hints toward reversal but experts are not sure this time. 50EMA is relatively flat indicative of consolidation, while the steep descent of 200EMA implies a further drop. 

If CANO stock price falls further, it could go to the possible low of $0.2500. If there is a reversal, price action will have to cross immediate resistance at $0.7968 and sustain above it to be strong enough to cross R1 at $1.31. With Cano’s ongoing financials, the chances of a bullish momentum are slim.  

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