Cano Health Inc.

Cano Health, Inc. (NYSE: CANO) is a company focused on delivering value-driven primary healthcare and improving the health of populations. They manage primary care medical centers specializing in value-based healthcare for elderly individuals and assist associated healthcare providers in various states, including Florida, Texas, Nevada, New Jersey, New York, New Mexico, Illinois, California, Arizona, and Puerto Rico. Their services encompass comprehensive virtual care, supplementary healthcare offerings, in-home services, transportation support, telemedicine, and a 24/7 emergency hotline.

Recent Financial and Business Updates:

• Second Quarter Income Statement Review:
• The overall membership stood at 381,066, representing a 35% growth compared to the previous year.
• Total revenue reached USD766.7 million, marking an 11% increase compared to the previous year's USD689.4 million.
• CANO reported a net loss of USD270.7 million, primarily attributed to a higher operating loss due to lower-than-anticipated Medicare Risk Adjustment ("MRA") revenue, increased third-party medical expenses, and a modification in the reserve for other assets connected to MRA.
• The adjusted EBITDA for the quarter was negative USD149.7 million, compared to USD9.9 million in the prior year.
• Balance Sheet Review:
  • Total assets amounted to USD1.7 billion as of June 30, 2023.
  • Total liabilities for CANO were USD1.47 billion as of June 30, 2023.
• Business Update:
  • The company received a notification from NYSE Regulation Inc. indicating that it has failed to meet the requirements outlined in Section 802.01C of the NYSE Listed Company Manual.
  • This non-compliance stems from the fact that the average closing stock price of the Company's Class A common stock remained below USD1.00 per share for a continuous 30-day trading period.
  • In accordance with the Listing Rule, the company has a 6-month period starting from the date of the NYSE notification to rectify its non-compliance with the Listing Rule. During this duration, the company's Class A common stock will remain listed on the NYSE.
  • If the company decides that the best way to rectify the price condition involves an action that necessitates approval from its shareholders, such as a reverse stock split, the 6-month timeframe may be extended.
  • The company plans to enhance the value of its Class A common stock shares by implementing its previously disclosed business strategy. Additionally, it is exploring various alternatives to meet the requirements of the Listing Rule. One of these options is a potential reverse stock split, contingent upon obtaining approval from its shareholders. The company aims to secure this approval by the time of its next annual stockholders' meeting.

Technical Observation (on the daily chart)

The Relative Strength Index (RSI) over a 14-day period is currently in the oversold zone with value of 29.65, with expectations of a consolidation. Meanwhile, the stock price has converged with the 21-day Simple Moving Average (SMA), which has acted as a resistance level. Both 21-period SMA and 50-period SMA may then serve as the new short-term resistance levels.

As per the above-mentioned price action, recent key business and financial updates, momentum in the stock over the last month, and technical indicators analysis, a “WATCH” rating is recommended for Cano Health Inc. (NYSE: CANO) at its current price of USD 0.29 on September 19, 2023, at 08:10 am PDT.

Individuals can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario.

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing. 

Related Risk: This report may be looked at from a high-risk perspective and a recommendation is provided for a short duration. This report is solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc. 

How to Read the Charts?

The yellow colour line reflects the 21-period simple moving average (SMA) while the blue line indicates the 50- period simple moving average (SMA). SMA helps to identify existing price trends. If the prices are trading above the 21-period and 50-period moving average, then it shows prices are currently trading in a bullish trend.

The orange colour line in the chart’s lower segment reflects the Relative Strength Index (14-Period) which indicates price momentum and signals momentum in trend. A reading of 70 or above suggests overbought status while a reading of 30 or below suggests an oversold status.

The red and green colour bars in the chart’s lower segment show the volume of the stock. The volume is the number of shares that changed hands during a given day. Stocks with high volumes are more liquid than stocks with lesser volume as liquidity in stocks helps with easier and faster execution of the order.

The Orange colour lines are the trend lines drawn by connecting two or more price points and used for trend identification purposes. The trend line also acts as a line of support and resistance.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock. 

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock. 

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices. 

The reference date for all price data, currency, technical indicators, support, and resistance levels is September 19, 2023. The reference data in this report has been partly sourced from REFINITIV. 

Abbreviations

CMP: Current Market Price

SMA: Simple Moving Average

RSI: Relative Strength Index

USD: United States dollar 

Note: Trading decisions require a thorough analysis by individual. Technical reports in general chart out metrics that may be assessed by individuals before any stock evaluation. The above are illustrative analytical factors used for evaluating the stocks; other parameters can be looked at along with additional risks per se. Past performance is neither an indicator nor a guarantee of future performance.

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