Cano, Community Health, Bausch mixed; Rite Aid bonds improve; WeWork notes move higher

By Cristal Cody

Tupelo, Miss., April 17 – The health care space stayed under pressure on Monday with a range of news from several issuers.

Cano Health LLC’s 6¼% senior notes due 2028 (Ca/CCC) remained quiet after the company issued a strongly-worded letter to shareholders, a source said.

The bonds went out Friday more than 5 points higher on the week with a 58 bid handle.

Cano Health reported Monday to shareholders that “three directors who recently resigned from the board have taken destructive actions that appear to be aimed at serving their own short-term interests at the expense of long-term value creation for all our shareholders.”

The company added that its “acquisitions of University Healthcare and Doctors Medical Center for approximately $900 million in the summer of 2021 as well as Cano Health's expansion outside of Florida – came after full board deliberation and were the result of unanimous board support, including from each of the former directors who now criticize those transactions as well.”

The Miami-based health care company’s notes were issued in a $300 million offering on Sept. 23, 2021 at par.

The session also saw Healthcare Support (Newcastle) Finance plc report a default on its 2.187% secured bonds and a revised outlook to negative from stable for high-grade-rated Omega Healthcare Investors, Inc. from Fitch Ratings.

Community Health Systems Inc.’s bonds were mixed over the session.

The company’s 6 1/8% notes due 2030 (Caa2/CCC-) added ¾ point after climbing 3 points on Friday.

Community Health will kick off May with the release of its first-quarter earnings report.

“CYH posted a strong finish to 2022, with 4Q marking the company's strongest volume quarter of the year,” RBC Capital Markets, LLC analyst Ben Hendrix said in a note released Monday.

Bausch Health Cos. Inc.’s 6¼% notes due 2029 (Ca/CCC-) were trading more than 1 point higher around the 42 bid area on thin activity, a source said.

Stocks closed higher on Monday as volatility stayed mostly flat.

The S&P 500 index rose 0.33%.

The iShares iBoxx High Yield Corporate Bond ETF softened 20 cents, or 0.27%, to $75.08.

The CBOE Volatility index edged down 0.7% to 16.95.

Rite Aid Corp.’s paper traded about 1 point to 1½ points higher on Monday ahead of the company’s earnings release later in the week.

Also Monday, WeWork Inc.’s 7 7/8% senior notes due 2025 (CC) gained 3 points in light trading after the company announced the early tender results for its debt exchange offers and filed a prospectus supplement to issue new class A common stock and warrants.

Community Health mixed

Community Health’s bonds were mixed over the session in light trading, according to market sources.

The company’s 6 1/8% notes due 2030 (Caa2/CCC-) added ¾ point to a quote of 65¾ bid.

The issue went out Friday more than 3 points better on a 65 bid handle.

Meanwhile, Community Health’s 6% notes due 2029 (B3/B-) declined 1½ points to 87¼ bid on Monday.

The Franklin, Tenn.-based operator of acute care and outpatient facilities will report first-quarter earnings results on May 1.

RBC in February raised its price target on the company to $11 a share from $7 a share.

Community Health’s stock closed Monday down 2.49% at $5.09 in thin trading.

Rite Aid bonds up

Rite Aid’s bonds traded about 1 point to 1½ points higher on Monday in light trading, according to market sources.

The company’s 8% senior secured notes due 2026 (Caa3/CCC-/CCC) improved 1 point to 49¼ bid.

Rite Aid’s 7½% senior secured notes due 2025 (Caa3/CCC-) traded up 1½ points to 61 bid on $1.24 million of volume.

The Camp Hill, Pa.-based drugstore chain will report fiscal year 2023 fourth-quarter earnings on Thursday.

Rite Aid’s stock rallied 7.35% to $2.63 over the session.

WeWork paper gains

WeWork’s 7 7/8% senior notes due 2025 were quoted Monday up 3 points at 43 1/8 bid in light trading totaling $1.05 million, a source said.

The notes traded Friday 1½ points higher but declined about 8 points on the week.

WeWork announced the early tender results on Monday for its exchange offers and consent bids for two tranches of notes that were launched on April 3.

The company also filed a supplement with the Securities and Exchange Commission on Monday to issue additional shares of its class A common stock and warrants, both traded on the New York Stock Exchange.

WeWork’s stock hit new consecutive record lows in the prior week.

Shares fell 2.56% on Monday to 48 cents on less than average trading volume.

The New York-based office share company will release first-quarter earnings results on May 9.

Distressed returns positive

S&P U.S. High Yield Corporate Distressed Bond index one-day returns finished Friday at 0.34%, compared to 0.55% on Thursday, 0.62% on Wednesday, 0.24% on Tuesday and 0.06% at the prior week’s start.

Month-to-date returns rose Friday to 1.66% versus 1.31% on Thursday, 0.76% on Wednesday, 0.14% on Tuesday and minus 0.11% in the April 10 session.

Year-to-date total returns improved to 6.26% as the week closed, up from 5.89% on Thursday, 5.32% on Wednesday, 4.66% on Tuesday and 4.41% in the week’s first session.

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