Hello all – a very quick DD read on Cano Health (CANO), a disruptive value-based primary care provider that should trade at least inline with peers, which would suggest a $22-$24 price.
- CANO Health is a primary care provider for Medicare patients
- CANO delivers value-based care to patients through a fixed or capitated payment from insurers
- CANO assumes all risk and benefit, incentivizing it to invest in preventative care to optimize outcomes and lower costs
- CANO is part of a growing trend towards value-based care which increases effectiveness and reduces overall healthcare costs as demonstrated by the company’s growing partnerships and financial performance
- CANO currently serves 156k members in 15 markets with only 6% penetration in existing markets.
- The overall TAM is enormous at 24.1M Medicare Advantage enrollees in 2020
- The company has plenty of runway to grow organically and through acquisitions
- Acquired University Health Care on 6/14 for $600M adding 24k Medicare Advantage members
- Acquired Doctors Medical Center on 7/2 for $300M adding 7k Medicare Advantage members, 31k Medicaid members, and 14k ACA members
- CANO compares very favorably to its publicly traded peers $AGL, $ONEM and $OSH
- Not only is CANO projected to have higher revenue growth, it is also CURRENTLY EBITDA PROFITABLE
- CANO is expected grow at a 55% CAGR from 2020-2023E, however only trades at 3.2x 2023E revenue compared to slower growing $ONEM @ 5.4x and $AGL @ 5.7x or similarly growing $OSH @ 5.4x
- If you were to value $CANO at a similar valuation multiple, you’d get to a $22-$24 stock price
- Underscoring how cheaply valued CANO trades, executives recently made large open market purchases of stock and warrants from August 16th – August 30th
- CEO purchased $16.9M of stock and $812k of warrants
- Chief Clinical officer purchased $8.5M of stock and $176k of warrants
- General Counsel purchase $150k of stock
- CANO has beat earnings each quarter and importantly has steadily raised 2023E and 2023E guidance as you can see below:
- In summary, CANO is a rapidly growing and profitable company attacking massive market that needs disruption and is attractively valued at an almost 50% discount to peers, which executives have recently validated with large open market purchases
This article is written by u/apan-man.
