Nephron Adds to Physician Enablement Coverage with Cano Health Initiation

Within the context of Nephron’s bullish view on the physician enablement market where companies are developing business models that seek to benefit from the creation of value through more effective care, the Nephron team initiated on Cano Health (CANO) last week with a long-form (~40 pgs) report and have already followed up with a more tactical note today breaking down implications of its announced University Health Care acquisition.  In its initiation to clients, the team laid out its full thesis that included both positives and negatives including a few highlights:

A subset of the positives:

  1. Cano Health produces better healthcare outcomes for its patient population
  2. This model is replicable and portable.
  3. Relative to traditional MA plans, Cano is able to extract more value per member life due to the lack of min MLR requirements and lower capital requirements.

And some of the negatives:

  1. Though the industry remains largely fragmented, we are seeing a wave of new competition from other large clinic-based primary care providers
  2. Acquisitions have been a large contributor to growth and are expected to be a material component to growth over the next several years.
  3. Unlike peers, Cano excludes de novo losses (i.e. losses incurred in the twelve months after the opening of a new facility) from its calculation of adjusted EBITDA.

For the investment conclusion or more information on Nephron Research’s coverage of  Cano Health and the broader Physician Enablement sector, email