Cano Health (NYSE:CANO) plummeted 42% on a report that CVS Health (NYSE:CVS) has decided not purse an acquisition of Cano. CVS rose 1.7%.Cano has decided to walk away at this time, according to a Dealreporter item, which cited sources familiar.
CVS is expected to look to return capital to holders, potential through an accelerated repurchase plan, which may be announced next month.
The news comes after Bloomberg earlier this month reported that CVS (CVS) was said in exclusive talks to purchase the health-care provider. The report added at the time that CVS was currently conducting due diligence on the operator of primary care facilities.
Morgan Stanley also issued a note last Monday where the firm argued that CVS should now be targeting stock buybacks over M&A.
"We see more potential integration risk under a hypothetical take-out scenario and question whether it's the foundational platform to launchpad CVS's primary care offering," Morgan Stanley analyst Ricky Goldwasser wrote last month.
Cano Health at it's current price Monday is now trading below levels reached on Aug. 22, when CANO rose in sympathy after reports that home health service provider Signify Health (SGFY) was evaluating multiple potential buyout offers. CVS (CVS) agreed to buy Signify for $30.50/share, or about $8 billion early last month.
Cano Health (CANO) has not only been the subject of takeover reports, but the home health care provider has also been under pressure from activist investors. Own Creek Asset Management in August urged Cano to engage with investment bankers to pursue a sale to a strategic buyer.