Cano Health, Inc.
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(Name of Issuer)
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Class A common stock, $0.0001 par value per share
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(Title of Class of Securities)
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13781Y103
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(CUSIP Number)
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
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July 17, 2023
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(Date of Event which Requires Filing of this Statement)
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CUSIP No. 13781Y103
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2 of 3 Pages
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SCHEDULE 13D
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Item 4. |
Purpose of Transaction.
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Item 7. |
Material to Be Filed as Exhibits.
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CUSIP No. 13781Y103
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3 of 3 Pages
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SCHEDULE 13D
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Dated: July 19, 2023
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Barry Stuart Sternlicht
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By:
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/s/ Michael Racich, Attorney-in-Fact for Barry Stuart Sternlicht
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Barry S. Sternlicht
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A
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–
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Joint Filing Agreement, dated June 14, 2021.*
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B
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–
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Private Placement Warrants Purchase Agreement (incorporated by reference to Exhibit 10.1 of the Issuer’s current report on Form 8-K, filed with the SEC on May 18, 2020).*
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C
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–
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Form of Subscription Agreement (incorporated by reference to Exhibit 10.1 of the Issuer’s current report on Form 8-K, filed with the SEC on November 11, 2020).*
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D
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–
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Form of Investor Rights Agreement (incorporated by reference to Exhibit 10.2 of the Issuer’s current report on Form S-4/A, filed with the SEC on April 28, 2021).*
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E
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–
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Business Combination Agreement (incorporated by reference to Exhibit 2.1 of the Issuer’s current report on Form 8-K, filed with the SEC on November 11, 2020).*
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F
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–
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Sponsor Letter Agreement (incorporated by reference to Exhibit 10.2 of the Issuer’s current report on Form 8-K, filed with the SEC on November 11, 2020).*
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G
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–
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Resignation Letter, dated March 30, 2023, from the Reporting Person to the Board of Directors of Cano Health, Inc.*
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H
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–
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Group Agreement, dated as of April 2, 2023, among the Reporting Person and other parties identified therein.*
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I
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–
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Press Release, dated April 10, 2023.*
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J
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–
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Press Release, dated April 17, 2023.*
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K
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–
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Press Release, dated April 26, 2023.*
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L
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–
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Press Release and Letter, dated May 11, 2023.*
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M
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–
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Press Release, dated May 18, 2023.*
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N
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–
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Joint Filing and Solicitation Agreement, dated May 18, 2023.*
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–
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Press Release, dated July 17, 2023.
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1.
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The Board has disregarded the unambiguous results of the Annual Meeting, where more than 82% of the votes cast WITHHELD support for Dr. Alan Muney and Kim Rivera. We question how Dr. Muney, Chair of the Compensation Committee, and Ms. Rivera, Chair of the
Nominating & Corporate Governance Committee, can possibly continue to retain their leadership positions as Committee Chairs, much less their board seats. Their unwillingness to step down from the Board reflects a clear disregard for
good corporate governance and the will of the stockholders they are supposed to represent. This seems to align with the Board’s general unwillingness to adopt the widely utilized “Majority Voting Standard,” which the Council of
Institutional Investors estimates has been adopted by the vast majority of S&P 500 companies and a majority of Russell 3000 companies.
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2.
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The Board has elected to keep Dr. Marlow Hernandez as a director, despite him being a failed leader who should have been required to
step off following his recent resignation as an executive. Dr. Hernandez’s employment agreement plainly stated that “the Executive shall be deemed to have resigned from
all officer and board member positions that the Executive holds with the Company or any of its respective subsidiaries and affiliates upon the termination of the Executive’s employment for any reason.” Mr. Kent needs to be given
the opportunity to refresh the leadership team and put Cano on the path to value creation, which we believe he cannot do with Dr. Hernandez’s continued involvement in any capacity at the Company. Beyond this, we question how Dr. Hernandez
can continue to even serve as a fiduciary when he is in debt to executives of Cano (stemming from a series of loans and pledges of stock that were only disclosed at our prior behest) and still entangled with other related-party
transactions.
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3.
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The Board continues to keep in place Sol Trujillo as Chairman and Angel Morales as Chair of the Audit Committee. This is a
slap in the face to stockholders considering that they both acted as blind allies of Dr. Hernandez, having stood by him as approximately 90% of Cano’s equity market value was destroyed. We hold Messrs. Trujillo and Morales directly
accountable for Cano’s shoddy governance, back-to-back delayed 10-Ks and participation in the egregious $57.8 million transaction with MSP Recovery, Inc. (“MSP”). We firmly believe Messrs. Trujillo and Morales knew Cano would be issued
practically worthless MSP shares in exchange for sold receivables, which was recently confirmed in MSP’s July 7th 8-K filing.1 In our view, this speaks
to their motivations in not bringing such a significant transaction to their fellow directors for approval in the first place.
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4.
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The Board remains comfortable with sweetheart severance deals for executives, as evidenced by what we deem to be a golden
parachute for Dr. Hernandez. It is completely irresponsible for these directors, who claim to be prioritizing stockholders’ interests, to be authorizing sweetheart deals for failed leaders from scarce stockholder capital.
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5.
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The Board continues to keep in place Frederick S. Green, who up until last year worked at Cano’s outside law firm, Weil,
Gotshal & Manges LLP (“Weil”), as the Company’s Interim Chief Legal Officer. In our view, the Company should not continue providing exorbitant monthly equity awards to Mr. Green. How can the Board claim to be putting stockholders
first when it is relying on an in-house attorney that appears incentivized to maintain the value-destructive status quo?
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6.
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Directors Muney and Rivera as well as Jacqueline Guichelaar remain unwilling to buy any stock of the Company on the open
market, thereby perpetuating their misalignment with stockholders. We do not believe a Board comprised of such misaligned and uncommitted independent members should continue to deny a critical mass of stockholders a say in the Company’s
future.
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7.
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The Board has refused to include Guy P. Sansone and Joseph Berardo, Jr., who we put forth as director candidates, in its
purported refreshment process. This is the case despite Messrs. Sansone and Berardo having valuable experience with liquidity-constrained companies in the healthcare services industry. We seriously question how these directors can be so
arrogant as to try to pick their own colleagues and replacements above the clear objections of major stockholders.
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The Board needs to collaborate with us, Cano’s largest stockholder, on a refreshment process that results in the departures of Dr. Hernandez, Mr. Trujillo, Dr.
Muney, Ms. Rivera and Mr. Morales. We remind stockholders that Dr. Hernandez and Mr. Morales are “lame ducks” given they are up for election in 2024. Should they not step down prior to the opening of the Company’s nominating window, we
intend to instead nominate competent, integrity-rich and experienced directors to replace them then.
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The Board, once properly reconstituted, needs to elect a Chairman and Committee Chairs that have the confidence of stockholders.
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The Board, once properly reconstituted, needs to publicly commit to supporting Mr. Kent and his team in accelerating the divesting of Cano’s non-core assets in
order to support debt reduction and a more focused strategy that targets the high-growth Florida market.
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The Board, once properly reconstituted, needs to revise and actively enforce Cano’s policies to limit related-party transactions, insider dealings and excessive
stock pledging on the part of insiders.
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The Board’s members need to show alignment with stockholders by purchasing stock on the open market during future open windows.
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Elliot Cooperstone
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Lewis Gold
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Barry Sternlicht
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