Cano Health, Inc.
|Company Name||Cano Health, Inc.|
|Class Period||May 18, 2020 to February 25, 2022|
|Lead Plaintiff Motion Deadline||May 17, 2022|
On June 3, 2021, Jaws, a special purpose acquisition company, completed a business combination with Primary Care (ITC) Intermediate Holdings, LLC, and the combined company was renamed Cano (the “Business Combination”).
On February 28, 2022, Cano announced that it would be delaying the release of its financial results from the fourth quarter and full year 2021 due to the results of a recent internal audit. The audit “identified certain non-cash adjustments to account for revenue recognition under accounting standard ASC 606 . . . related to Medicare Risk Adjustments.”
On this news, Cano’s Class A common stock fell $0.32, or 6.2%, to close at $4.87 per share on February 28, 2022, thereby injuring investors.
Then, on March 14, 2022, Cano filed its annual report for fiscal 2021, stating that “[t]he correction in the timing of revenue recognition under ASC 606 resulted in adjustments to capitated revenue, direct patient expense, accounts receivable, net of unpaid service provider costs, and accounts payable and accrued expenses.” As a result, the Company restated its financial statements for each of the quarterly periods in fiscal 2021, including to report that capitated revenue decreased 2.13% for the three months ended March 31, 2021; 13.11% for the three months ended June 30, 2021; and 5.58% for the three months ended September 30, 2021.
The complaint alleges that defendants throughout the Class Period made false and/or misleading statements and/or failed to disclose that: (1) Cano overstated its due diligence efforts and expertise with respect to acquiring target businesses; (2) accordingly, Cano performed inadequate due diligence into whether the Company, post-Business Combination, could properly account for the timing of revenue recognition as prescribed by ASC 606, particularly with respect to Medicare risk adjustments; (3) as a result, the Company misstated its capitated revenue, direct patient expense, accounts receivable, net of unpaid service provider costs, and accounts payable and accrued expenses; (4) accordingly, the Company was at an increased risk of failing to timely file one or more of its periodic financial reports; and (5) as a result of the foregoing, Defendants’ public statements were materially false and misleading at all relevant times.
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