Canoe Health CEO Dr. Marlo Hernandez Exits as Chairman

Canoe Health is separating the roles of CEO and board chairman following a public conflict with three directors who resigned last month.

The company said Monday that Solomon Trujillo, a communications executive and serial investor who has served as an independent director through 2021, was named president of Cano. CEO Dr. Marlo Hernandez, who served as chairman, will remain a director.

The move comes after Barry Sternlicht, a billionaire real estate investor; Dr. Lewis Gould, Co-Founder of Sheridan Healthcare; and Elliot Cooperstone, Managing Partner at Intendum Capital Partners, resigned from the board in late March and called for Hernandez’s ouster.

Last week, three former directors entered into a group agreement to pursue changes at the company, according to a Securities and Exchange Commission filing. The three together own about 35.7% of Cano’s shares.

A spokeswoman for Sternlicht, Gold & Cooperstone declined to comment on the appointment.

Sternlicht helped the Miami-based primary care provider go public in 2021 through a special purpose acquisition company. He and other investors provided $1.4 billion in capital to the company in June 2021, bringing its valuation to $4.4 billion.

The company had a market capitalization of $744.7 million as of Monday.

Outside of Florida, the company has clinics in California, Illinois, Nevada, New Mexico, Puerto Rico and Texas.

In a statement on Monday, Trujillo said the board will focus on improving Cano’s cash flow and stakeholder value.

Canoe is facing a major liquidity problem amid rapid growth. According to regulatory filings, the company reported a $428 million net loss in 2022 on $2.7 billion in revenue, partly due to a non-cash goodwill impairment loss. Canoe treats 310,000 patients, more than half of whom are Medicare enrollees covered under a cost-based arrangement.

In a letter to shareholders Monday, Canoe Health committed to liquidity at its existing medical centers to increase capacity, improve patient engagement and accelerate profitability. The company said it is strengthening its network of clinics and looking at sale of non-core assets.

“We are not satisfied with our recent stock price performance, but with consensus aligned at the board level, we are taking immediate actions aimed at realizing the intrinsic value of our model by driving greater efficiency, productivity and sustainable profitability.” The company told shareholders.

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