Cano Health, Inc. (NYSE:CANO) Q4 2022 Earnings Call Transcript

Operator: Your next question comes from line of Josh Raskin with Nephron Research. Your line is open.

Joshua Raskin: Hi, thanks and good evening. Was there a thought about slowing membership growth to reduce sort of the short-term losses? Or is it more critical in your mind to fill the centers and maybe specifically on DCE, where if you’re accruing an MLR of I’m just not sure. Maybe that is still profitable with a low G&A, but just curious on thoughts on membership growth?

Marlow Hernandez: Yeah. So we have all of this embedded capacity, which we are growing organically. As you know, Josh, two-thirds of our new patients come from other patients, even as we have reduced as part of our operating efficiencies, marketing costs, we continue to see robust enrollment figures at our centers in light of the state of capital markets, it certainly behooves us to moderate our growth expectations. And so the focus of this year is one in which we fail the existing capacity. We continue to harness further operating efficiencies. And we improved the internal cash generation and liquidity as we optimize our platform to selectively execute on accretive opportunities. But, yes, our growth has to be in line with the cost of capital.

And for us, the investment being made the great momentum in our business, we will be very selective and thoughtful as to which additional growth opportunities to attain our focus this year is growth of the existing markets and centers.

Joshua Raskin: Okay. That makes sense. And then, the comments in the press release, and then Marlow that mentioned on the call about being committed to reviewing all aspects of your value-based care platform to improve liquidity and cash flow and maximizing shareholder value. I guess, simple answer €“ simple question is sort of what does that mean? Are there non-core assets at Cano that that you see in your view with those comments directed at sort of the non-Florida assets? Or maybe just help us understand a little bit more what that review means?

Marlow Hernandez: Yeah. So a review is availing ourselves of all of the options. We’ve got our goals, which we have clearly defined and the options of disposition or closing or consolidation of any of our centers or operations, those are all actively being reviewed. We have a relentless focus on improving our internal cash generation, further strengthening liquidity and balance sheet.

Joshua Raskin: Got you. And the potential, when you say disposition or even closing or selling whatever, is that more a non-Florida comment? Or is that all including Florida?

Marlow Hernandez: I think that it’s in more of all inclusive type comment. Brian mentioned in the prepared remarks to give examples of how we’re seeing very strong growth improvement trajectory outside of Florida, but those markets are still the ones that are using the most cash and those centers are the ones using the most cash. So require a deeper look than our more established based business in Florida. But even that base business in Florida, we are taking a very close look at every medical center, at every operating avenue to align with our 2023 scorecard as I very specifically made that clear.

Joshua Raskin: Okay. Perfect. Thanks.

Operator: Your next question is from the line of Adam Ron with Bank of America. Your line is open.

Adam Ron: Hey, thanks for the question. Can we talk about the renegotiated payor contracts and give us on any color what specifically changed? And you mentioned some remaining action items. And I’m just curious like what the term of those contracts typically are in terms of years? And, finally, just curious how those negotiations typically go in a state like Florida, where you have like much more density versus maybe in Nevada, where you don’t?