CANO

Please note, on 6/4/21 Jaws Acquisition Corp. (JWS) changed its company name and ticker to Cano Health Inc (CANO). The content of this idea will make reference to the original company name and ticker symbol.

Publicly traded companies mentioned herein: Anthem Inc (ANTM), BlackRock Inc (BLK), Cigna Corp (CI), Humana Inc (HUM), Jaws Acquisition Corp (JWS), Oak Street Health Inc (OSH), UnitedHealth Group Inc (UNH)

Highlights

The presenter is long shares of Jaws Acquisition Corp (JWS), a blank check company that announced in November 2020 its agreement to merge with Cano Health (Cano). The transaction is expected to close in late Q1’21 or early Q2’21, at which point the proforma company will relist under the new ticker symbol CANO. Cano is one of the largest and fastest growing providers of value-based care to Medicare Advantage patients (i.e., the senior citizen market) in the US, a $270B market that is rapidly growing and is expected to reach $500B – $600B in 2025. JWS is led by Barry Sternlicht and notable investors include Fidelity, BlackRock, Third Point, and Maverick Capital. The stock currently trades at ~$15 per share with a ~$7B market cap and a ~$6.8B enterprise value. The presenter is bullish on the market and believes JWS is the best player in the space. The company anticipates generating ~$1.4B of revenues in 2021, and the presenter considers its <5x EV/Revenue valuation as cheap, especially when compared to OSH’s ~12x revenue multiple. He expects meaningful upside as the deal closes and applies a 10x multiple, which implies an equity value of ~$31 per share.