$CANO Big Way to Play Boomers Aging, Execs Recently Made Huge Open Market Purchases

***Hello all – a very quick DD read on 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 2022E 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 2021E and 2022E 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
* DO YOU OWN DUE DILIGENCE! Wait for pullbacks to initiate a position, the stock has been very choppy for weeks allowing for great entries
* My positions below:

What do you think?

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  1. These are the companies to buy warrants on. You get insane upside leverage in companies generating free cash-flow for acquisitions just as they keep pulling off, plus revenue, members, and EBITDA keeps growing. This could be big.

    Looking at the comps to OSH and AGL, this is a no brainer.

  2. Worth noting for the uninitiated WSB user:

    Warrants are the dipshit cousin to leap options. They represent the ability to buy a share at 11.50 and have a 5 year run time (minus conditions which allow them to be called/redeemed).

    Since they can go to zero, if the underlying is below 11.50, they are inherently riskier than shares but thereby offer more leverage. C Level execs loading Warrants is pretty bullish. No position but eyes on a dip.

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