Humana, CVS Circle Cano Health as potential buyers

Bloomberg later reported on CVS’s interest.

It’s not possible to tell what other potential buyers might be in the mix, but Cano could be Humana to lose because the health insurer has a right of first refusal on any sale, part of an agreement originally struck in 2019.

Miami-based Cano operates primary care centers in California, Florida, Nevada, New Mexico, Texas, Illinois, New York, New Jersey and Puerto Rico, according to company documents. It primarily serves Medicare Advantage members, which is a private alternative to Medicare for seniors.

Ties between the two companies run deep: Cano was Humana’s largest independent primary care provider in Florida, serving more than 68,000 Medicare Advantage members at the end of last year, according to a securities filing. The filing added that Kano also operates 11 medical centers in Texas and Nevada, for which Humana is the exclusive Medicare Advantage health plan.

Humana has already created a footprint in primary care, which continues to expand. Earlier this year, CenterWell’s senior primary care business joined forces with private equity firm Welsh, Carson, Anderson & Stowe to open nearly 100 new senior-focused primary care clinics between 2023 and 2025, building on a similar previous partnership.

At Investor Day last week, Humana CEO Bruce Broussard said the company sees a total addressable market of more than $700 billion in “value-based” primary care for seniors. He noted that Humana has accelerated its investments in the sector over the past five years, becoming the largest dedicated primary care provider in the country.

There has been a frenzy of dealmaking involving large companies taking over primary care assets as a way to get closer to patients and provide them with more personalized services.

Amazon.com a company

Agree to buy The mother of primary care clinic operator One Medical for $3.9 billion in July, while CVS Health Corp. Agree to buy

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for $8 billion earlier this month.

Kano Released to the public in 2020 Through a special purpose acquisition vehicle backed by real estate investor Barry Sternlicht, who sits on its board of directors. The deal value was $4.4 billion.

Cano has been the target of two contributing activists this year, both of whom have independently pushed for its sale. Dan Loeb’s Third Point LLC currently owns approximately 5% of the healthcare company. In March, he cited the unfavorable market view of companies going public through SPACs as a reason to explore strategic alternatives.

Then in late August, Owl Creek Asset Management LP sent a letter to Cano’s board stating that it had raised approximately 4% of the stock and urged the company to hire investment bankers to explore a sale to a strategic buyer.

Cano has been backed by healthcare focused private equity firm InTandem Capital Partners since 2016. The company primarily invests in small to medium-sized businesses.

– Cara Lombardo contributed to this article.

write to Laura Cooper at [email protected] and Dana Similuca at [email protected]