---

Cano Health $CANO was atypical for the time when, in November 2020, it announced its plan to go public via a merger with SPAC (special purpose acquisition company) Jaws Acquisition. In the frothy market of Q4 2020, in particular, most SPACs were targeting speculative, buzzy names with little or sometimes zero revenue. Cano, however, was an established provider of primary care services to seniors, with projected 2021 revenue of nearly $1.5 billion. 

Yet Cano wound up at the same place as so many companies that went public via the same route at the same time: with a share price barely above $1. 

For many of those other de-SPACs, as they’re known, the plunge from the merger price of $10 was almost pre-ordained. As we’ve noted in past commentaries on the group, there were a ridiculous number of ridiculous businesses (nine different lidar developers!) going public at roughly the same time. For CANO, however, the plunge to Friday’s close of $1.07 seems more the result of self-inflicted wounds, particularly in the second half of the year.

The worst part for CANO shareholders is that the company was supposed to be going private at this point. In September, the Wall Street Journal reported that CVS Health $CVS and Humana $HUM — the latter of which already was a Cano partner — were "circling" the healthcare provider. As the _Journal_noted, in the preceding three months, two other primary care operators had agreed to sell themselves. The market clearly saw Cano as the logical next domino to fall: CANO doubled in less than eight weeks into and out of the Journal report.

But CVS in fact walked away, as did Humana (the latter perhaps because its interest was only driven by a right of first refusal clause; once CVS exited, Humana likely was happy to maintain the status quo). CANO plunged 42% in a single session in October on dashed M&A hopes, and another 35% after Q3 earnings the following month showed weak revenue from new customers. 

It’s probably too aggressive to believe that Cano would be defensive enough to survive the 2022 bear market without some decline. Peer Oak Street Health $OSH , for instance, is down 37% year-to-date.

CANO, however, is off 88%. Institutional investors — including Daniel Loeb’s Third Point — are fleeing amid liquidity concerns. It’s possible Cano can right the ship in 2023, but there seems a very real possibility that the poor performance this year will lead to the stock being zeroed next year.

The stock has gone to 1.3. You don't know enough about the US health care system to plunge in here.