Cano Health, Inc. (NYSE: CANO) announced on November 2, 2023, that it has successfully completed a 1-for-100 reverse stock split of its Class A and Class B common stock, encompassing both issued and outstanding, as well as unissued shares. The decision followed approval from the Company’s stockholders and its Board of Directors. In response to the announcement, Cano Health’s stock experienced a significant decline.
At the time of this publication, Cano Health Inc stock (CANO) has witnessed a decline.
Cano Health Inc
Current Price: $0.11
Change : -0.04
Change (%): (-25.99%)
Volume: 15.6M
Source: Tomorrow Events Market Data
Solomon Trujillo, Chairman of the Board, expressed satisfaction with the overwhelming support received for the Reverse Stock Split during the preliminary vote tabulation at the special stockholders’ meeting earlier in the day. Trujillo stated, “The Board and management are very pleased that our stockholders expressed overwhelming support for the Reverse Stock Split at this time, which we expect will enable the Company’s Class A common stock to regain compliance with the New York Stock Exchange’s (the ‘NYSE’) listing rules.” He also noted that the Company looks forward to providing more details on its performance during the third quarter 2023 earnings call, scheduled for November 9, 2023.
The Reverse Stock Split took effect immediately upon the Company’s filing of the Certificate of Amendment to the Company’s Certificate of Incorporation with the Secretary of State of the State of Delaware on November 2, 2023. Consequently, Cano Health’s Class A common stock will commence trading on a split-adjusted basis when the NYSE opens on November 3, 2023, maintaining the symbol “CANO,” but with a new CUSIP number (13781Y 202). The trading symbol and CUSIP number for the Company’s warrants remain unchanged.
Following the Reverse Stock Split, Class A and Class B stockholders will receive one new share of Class A or Class B common stock, respectively, for every 100 shares they hold. This 1-for-100 ratio was applied uniformly to both Class A and Class B common stock, warrants, and other rights, ensuring proportional impact on all stockholders.
Consequently, the total number of authorized Class A common stock and Class B common stock was reduced from 6,000,000,000 to 60,000,000 and from 1,000,000,000 to 10,000,000 shares, respectively. As of October 30, 2023, after applying the Reverse Stock Split ratio, the Company has approximately 2,887,607 shares of Class A common stock and approximately 2,518,935 shares of Class B common stock outstanding, each valued at $0.01 per share. The Reverse Stock Split does not alter the number of authorized preferred stock, which remains at 10,000,000 shares.
Adjustments were made to the number of shares of Class A common stock related to outstanding stock options and unvested restricted stock units (RSUs) to align with the Reverse Stock Split. Consequently, approximately 9,521,703 outstanding stock options and 19,635,760 unvested RSUs were reduced to approximately 95,217 outstanding stock options and 196,357 unvested RSUs, respectively. The number of shares authorized for issuance under the Company’s stock plan was similarly reduced from 52 million shares of Class A common stock to 520,000 shares using the 1-for-100 split ratio.
The Reverse Stock Split maintains existing stockholder ownership percentages and voting power, except for cases where a stockholder receives cash in lieu of fractional shares.
Cano Health anticipates that the Reverse Stock Split will lead to an increase in the price per share of its Class A common stock, potentially aiding the Company in regaining compliance with the NYSE’s listing criteria and making the common stock more appealing to a broader range of investors. However, the Company cannot guarantee that the post-split stock price will precisely reflect the 1-for-100 reverse split ratio or that it will be sustained over time.
No fractional shares will be issued in connection with the Reverse Stock Split. Instead, Cano Health’s transfer agent, Continental Stock Transfer & Trust Company (CST), will consolidate fractional shares and arrange for their sale on the open market. The proceeds will then be distributed pro rata to record holders in lieu of fractional shares as soon as practicable following the Effective Time. Stockholders will not receive interest for the period between the Effective Time and the date of receiving their cash payment for fractional shares, if applicable.
All outstanding warrants for the purchase of Cano Health’s Class A common stock will be proportionately adjusted in accordance with the terms of the warrants. Similar adjustments will be made to the Company’s equity awards and the number of shares issuable under the 2021 Stock Option and Incentive Plan and 2021 Employee Stock Purchase Plan, as amended.
