InTandem’s Cano Health awaits final bids

With a few remaining bidders in the running, sources are at odds over where the deal will ultimately be valued for the risk-bearing primary care provider.

Final bids are coming up for InTandem Capital Partners’ Cano Health, a fast-growing primary care provider for seniors, according to multiple sources familiar with the process. 

PE Hub originally wrote in February, ahead of the crisis, that Moelis had been engaged to advise the Miami-based company on an upcoming sale process. 

With the process now in its late stages, those anticipated to bid include Bain Capital, as well as OMERS Private Equity in partnership with Ontario Teachers’ Pension Plan, some of the people said. Advent International and Centerbridge Partners are also expected to jointly bid, sources told PE Hub. The latter invested in Cano this summer through its credit fund to support Cano’s acquisition of Healthy Partners, they said. 

Final bids are due on Thursday, one person said.

The sell-side marketed approximately $95 million in adjusted EBITDA for the company, giving full credit for recent M&A.

The sell-side aims to command a 15x to 16x multiple off of the $95 million, one person said, while another source said the sellers hope to fetch closer to $2 billion.

At the same time, four of the sources said sponsors in the mix are anticipated to bid around a mid-teens multiple based upon a lower EBITDA figure – suggesting a deal valued in the low $1 billion range. “There’s a big debate on what it’s worth,” one source said. 

“What number [EBITDA] is the big question,” another said. 

Part of the complexity in valuing Cano is its rapid growth and aggressive M&A playbook, sources said. 

The primary care group has grown significantly since InTandem invested in the Cano Health brand in January 2017, simultaneously merging and acquiring two clinics, Cano Health and Comfort Health.

Its latest acquisition came in June, when it bought Healthy Partners to bring its footprint to 61 medical centers providing care to 90,000 patients, an announcement said at the time. 

Just six months earlier, Cano’s footprint stood at 35 primary care centers following its January acquisition of Primary Care Physicians of Hollywood. 

Cano Health also operates in Puerto Rico and recently entered San Antonio, Texas, with plans to open clinics in Las Vegas later this year.

Cano’s primary care clinics are tailored to seniors in the fast-growing Medicare Advantage market. It operates a risk-bearing or capitated care model, through which doctors take on risk for the services they provide, sources said. 

In addition to primary care and pharmacy services, Cano offers population health management programs such as home visits, telehealth, transition of care, and high-risk & complex-care management.

InTandem, which backs mid-market healthcare and insurance services companies, looks set to make out well in a potential sale.

The firm bought the pair of initial primary care clinics for roughly $30 million, Cano CEO Marlow Hernandez, who founded Cano in 2010, told Inc. magazine in its 2019 report.

In September, Hernandez told Inc. that “the company is in the midst of its greatest single year of growth in its history.” Cano is now treating more than 6,000 patients per day, up 50 percent from pre-covid levels – with telemedicine visits about 70 percent of that total, Hernandez told Inc.

Moelis, Advent, OMERS, Centerbridge and Bain declined to comment. Cano, InTandem and OTPP didn’t return PE Hub‘s requests for comment.