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“I’ve by no means witnessed such poor company governance at any firm, not to mention a public firm, and I’ve been concerned in a minimum of 9 and served as chairman or CEO of six,” Sternlicht professed in his resignation letter.
Cano Health is a publicly traded Miami-based firm that runs major care facilities and well being providers for greater than a quarter-million sufferers, largely seniors. Sternlicht is certainly one of Cano’s greatest shareholders and helped the corporate go public in a $4.4 billion merger in 2021.
Evidently, the rich actual property investor and cofounder of Starwood Capital Group was not ecstatic that the corporate’s inventory worth has since tumbled from roughly $11 a share initially of August 2021 to $1.34 as of April 3.
In the scathing letter, Sternlicht claimed the corporate’s administration missteps have been exemplified by transactions with fellow Miami-area billionaire John Ruiz’s agency MSP Recovery. It was a pointed and considerably cryptic jab within the path of MSP, an organization that Cano enlists for medical claims assortment.
“The quantity and nature of associated celebration transactions, along with what I think about poor governance (demonstrated by transactions similar to MSP Recovery), is very regarding to me accurately to the remainder of the Board,” Sternlicht wrote.
While Sternlicht’s workplace declined to elaborate on his feedback when reached by New Times, Cano’s public filings element an association wherein Cano assigns claims to MSP Recovery in trade for money or inventory. Late final yr, Cano additionally examined out a few of MSP’s healthcare knowledge instruments as a part of MSP’s rebranding underneath its new LifeWallet moniker.
Ruiz tells New Times he is at a loss to elucidate why his firm was focused in Sternlicht’s barrage.
“I suppose possibly he does not perceive in all probability what we do… It must be gravy to them anyway. Because he was by no means at a gathering, he does not perceive the way it works. He does not perceive the worth behind it,” Ruiz says.
“It actually does not price Cano a lot of something in any respect aside from participating us to do some knowledge software program, putting in LifeWallet programs: an enchancment of each the payer and the sufferers themselves. It’s simply very bizarre. I simply assume he is bought a vendetta towards anyone.”
Ruiz provides Sternlicht’s feedback have been in “poor style.”
“And on prime of that, I feel {that a} board member exhibits a scarcity of professionalism in conducting himself the best way that he did it. [It] turns into fairly apparent that there is an agenda behind the style wherein it was carried out.”
MSP makes a speciality of medical claims restoration in conditions the place a major insurer like an auto insurer allegedly fails to pay up for therapy of an injured affected person, placing the burden on Medicare, Medicaid, or different well being plans.
As of December 2022, MSP Recovery owed Cano roughly $60 million in receivables. The debt was due earlier than the submitting of an annual report, and MSP had the choice to both pay Cano in money or inventory.
LifeWallet chief communications officer Diana Diaz says the corporate didn’t have any particular association with Cano. It supplied the identical providers because it does for common clientele, together with analyzing knowledge to determine “each recoverable occasion” for medical claims.
“It was our enterprise mannequin… that we provide to all of our shoppers,” Diaz tells New Times. “There was no distinction between the Cano buy and others that we have carried out for shoppers. We bought the restoration rights. In this case, these restoration rights have been paid in shares.”
MSP rebranded as LifeWallet in December 2022 after a troublesome yr wherein its inventory tanked upon going public, in an SPAC-merger akin to Cano’s. Within every week of opening buying and selling on the NASDAQ, the Coral Gables-based firm misplaced greater than 90 % of its share worth, shedding billions of {dollars} in market capitalization.
In the bid to rebrand, MSP launched new patient-centered healthcare merchandise and a blockchain-based software that it mentioned would assist course of claims extra effectively.
The firm additionally touted Ruiz’s much-publicized foray into the world of collegiate sports activities advertising and marketing. A prime funder of “identify, picture, and likeness” (NIL) offers for college athletes, Ruiz has enlisted a number of Miami Hurricanes gamers for endorsement offers with LifeWallet.
In August 2022, Cano Health introduced a partnership with LifeWallet to implement a check program slated to incorporate facial-recognition for affected person check-in and instruments to make sure accuracy of sufferers’ medical information. Three months later, Cano mentioned it will check out LifeWallet’s blockchain know-how as a part of an analogous pilot program.
Ruiz says he believes the “transactions” Sternlicht criticized have been associated to claims acquisition, not the LifeWallet pilot packages.
Sternlicht was not the one Cano director to resign final week. As reported by Forbes, Lewis Gold and Elliot Cooperstone additionally stepped down. In wake of the resignations, Cano’s inventory worth fell beneath $1. It bounced again to $1.34 on April 4 (larger than it was earlier than the resignation) after Sternlicht, Gold, and Cooperstone introduced they might be utilizing their leverage as major shareholders in Cano to push for the sale of property and the substitute of CEO Hernandez.
Cano went public in June 2021 by a merger with Sternlicht’s particular function acquisition firm (SPAC) JAWS Acquisition Corp.
In his departing letter, Sternlicht mentioned he had initially been “impressed by the private story, ardour, and conviction” of Hernandez and the corporate’s mission, main him to speculate $50 million.
“In whole, we handed the corporate in extra of $1.4 billion in June 2021, lower than two years in the past,” he added. “Fast ahead to right now, this administration staff has expended practically all this money and the corporate has not loved any demonstrable enchancment in its core profitability.”
In response to Sternlicht’s letter, Cano Health known as his “technique of resignation notably reckless.”
“It is especially regarding that Mr. Sternlicht determined to share his particular person perspective on confidential board deliberations and communications, which is deceptive to shareholders and undermines the board’s potential to have interaction within the vigorous trade of numerous views that’s vital for good governance,” the corporate’s assertion learn.
While the corporate’s inventory worth has plummeted over the past six month, Cano rebuffed Sternlicht’s feedback on Hernandez’s management and administration choices.
“Cano Health has established a powerful efficiency observe file — offering sufferers improved entry to care, decreasing hospital admissions, and considerably decreasing medical prices,” the corporate mentioned.
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