Cano Health, a value-based primary care provider and population health company, consummated the closing of a $150 million senior secured term loan (2023 term loan), maturing Nov. 23, 2027.

Lenders in the 2023 term loan were Diameter Capital Partners, Rubicon Founders and their respective affiliates and managed funds.

The 2023 term loan bears interest at 14% per annum in the first two years after initial funding, payable quarterly in cash or in-kind as an addition to the principal balance of the 2023 term loan, at the company’s election, and, thereafter, 13% per annum, payable quarterly in cash. The 2023 term loan ranks pari passu in right of payment and lien priority with indebtedness under the company’s existing senior credit facilities.

In connection with the 2023 term loan, the company issued to the lenders warrants to purchase up to approximately 29.5 million shares of the company’s Class A common stock, or up to 5.5% of pro forma fully diluted shares outstanding, exercisable until Feb. 24, 2028, at an exercise price of $0.01 per share. The company has agreed to register the shares of Class A common stock underlying the warrants with the U.S. Securities and Exchange Commission.

Cano Health intends to use proceeds from the transaction for general corporate purposes, including the repayment of amounts outstanding under its existing revolving credit facility and to pay transaction fees and expenses related to the 2023 term loan.

“We are pleased to partner with experienced investors like Diameter and Rubicon who recognize the value of our platform,” Dr. Marlow Hernandez, chairman and CEO of Cano Health, said. “With the completion of this financing, we remain focused on optimizing our existing capacity to continue to unlock the embedded profitability within our medical centers. In addition, the company will continue to review our operations with the objective of further enhancing liquidity, improving margins and maximizing long-term shareholder value.”

“As an existing lender to Cano Health, we are pleased to demonstrate our conviction in the company,” Jonathan Lewinsohn and Scott Goodwin, co-founders and managing partners of Diameter Capital Partners, said in a joint statement. “Cano Health operates in one of the most exciting areas of healthcare services, and we believe that the current capital infusion will help the company realize its unique potential.”

“Our partnership with Cano Health meets our mission of advancing value-based primary care for underserved populations. We are pleased to support Cano Health in continuing to fulfill its goals of improving patient health and outcomes in the communities it serves,” Adam Boehler, managing partner of Rubicon Founders, said.

JPMorgan Chase Bank served as sole lead arranger and sole bookrunner in connection with the 2023 term loan and Goodwin Procter served as legal advisor to Cano Health in connection with the 2023 term loan and warrants.