Humana, CVS reportedly eyeing Cano Health acquisition

Yahoo Finance Live anchors discuss reports that Humana and CVS are interested in acquiring Cano Health.

Video transcript

[AUDIO LOGO]

JULIE HYMAN: So coolers may not be the hot product right now. You know what's really hot?

BRAD SMITH: What's that?

JULIE HYMAN: Primary care providers, apparently.

BRAD SMITH: Smoking.

JULIE HYMAN: Humana and CVS reportedly interested in striking a deal to purchase Cano Health. Cano's talks with Humana appear to be serious. That's according to "The Wall Street Journal." A deal could be struck in the next several weeks. And shares of Cano are up by 3%. They surged yesterday. Late yesterday is when this report came out and they went up quite a bit.

There's been a lot of deals for primary care providers, right? We had Amazon agreeing to buy One Medical or the parent of One Medical. CVS buying Signify Health for $8 billion. And there have been activists that have been pushing for Cano to sell itself as well, including Third Point, which is Dan Loeb's firm and Owl Creek Asset Management.

BRAD SMITH: Yeah, for Cano, they've actually got a lot that's working in their favor right now. They had already updated their guidance for the full year 2022. And that was in June, so the midpoint of this year.

They are looking for this membership to come in the range of 300,000 to 305,000. That's an increase from where they were sitting at prior. And that was at a ballpark of about 290,000 to 295,000. They also increased their revenue range versus the prior guidance of $2.8 billion to $2.9 billion. That's set about the midpoint of there. And then also hitting, still, at the top end of the $2.9 billion there.

So all of this considered, I think for whoever is able to get this deal through, there is a lot of growth prospect that Cano can add to their core business. And whichever parent company is able to win over this deal, you've got to imagine that there's going to be a pretty premium that's attached to this deal with the type of growth that Cano is forecasting right now.

JULIE HYMAN: So, and it's interesting here, too, because Humana probably has the highest-- biggest hand in terms of being able to buy this company because there's an agreement between the two companies that gives Humana first right of refusal when it comes to buying Cano. So that definitely makes it more likely than not that they would be the winner.

BRAD SMITH: Absolutely.