Hudson Labs provides machine-learned forensic risk assessment tools and advanced SEC filing navigation. Our proprietary risk scores and red flags predict price collapse. Learn more on our Research & White Papers page.
Hudson Labs was predicting a collapse at Cano Health as early as August 16, 2021, which was when the company filed its first quarterly report (10-Q) after going public via SPAC merger. At this time, the company’s risk score, as determined by our algorithms, was 76 (very high risk).
Since August 16, 2021 Cano's stock price decreased from over $10 to now under $2 (as of writing). While the stock market was weaker during that period (the S&P was down 12%), Cano was still one of the worst performing stocks in the Russell 3000, with its 80 percent drop.
In addition to Cano's high Hudson Labs Risk Score, we flagged multiple high severity red flags to our subscribers. We walk through more details regarding risk scoring and red flags at Cano Health here - Hudson Labs core features with illustrative examples.
Hudson Labs machine-learned red flags detected at Cano in 2021 included:
Internal control weaknesses: In its Q2 2021 Form 10-Q, Cano disclosed that it had material control weaknesses relating to its financial statement close process and its accounting for business combinations.
Legal and regulatory red flags: In May 2020, Cano received a subpoena from the US Department of Justice seeking records relating to its prescriptions of hydroxychloroquine during the early days of the COVID-19 pandemic.
Related party transactions: The company paid millions of dollars to a related party for construction costs in 2021. Learn more about related party transactions here - Red Flag Guide I.
A few algorithmic red flags from 2021 as shown on Hudson Labs Forensic Intelligence:
The Hudson Labs team also highlighted red flags at Cano on Twitter earlier in March 2022, when the company reported ANOTHER accounting restatement, this time related to revenue recognition. LedgeBot is our AI-curated 8-K twitter bot.