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Triple-S Management Corporation Reports Fourth Quarter 2020 Results

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SAN JUAN, Puerto Rico, Feb. 25, 2021 /PRNewswire/ — Triple-S Management Corporation (NYSE:GTS), a leading healthcare company in Puerto Rico, today announced its fourth quarter 2020 results.

Roberto Garcia-Rodriguez, President and Chief Executive Officer, commented: “During the fourth quarter, our enhanced Medicare Advantage and Medicaid offerings, along with our superior service and premier brand, enabled us to further increase our membership numbers and premiums.  Our solid performance was due, in great part, to our team's outstanding efforts to provide critical support to our members, providers and communities throughout an extremely challenging year.”

“In 2021 we will continue investing in informatics and clinical management capabilities that improve service and health outcomes for our members.  As we implement our integrated healthcare-delivery agenda over the next four years, we will be firmly positioned to generate sustainable and profitable growth as the preferred healthcare services company in Puerto Rico.”

Fourth Quarter 2020 Consolidated Results and Other Highlights

  • Net income of $26.2 million, or $1.13 per diluted share, versus net income of $13.2 million, or $0.55 per diluted share, in the prior-year period;
  • Adjusted net income of $4.2 million, or $0.18 per diluted share, versus adjusted net income of $6.0 million, or $0.25 per diluted share, in the prior-year period;
  • Operating revenues of $969.8 million, a 16.7% increase from the prior-year period, primarily reflecting higher Managed Care net premiums earned;
  • Consolidated loss ratio of 86.2%, a 520 basis point increase from the fourth quarter of 2019, reflecting higher Managed Care utilization;
  • Medical loss ratio (MLR) of 89.4%, 570 basis points higher than the same period last year;
  • Consolidated operating loss of $3.9 million, compared with operating income of $8.7 million in the prior-year period.

Selected Segment Quarterly Details

Managed Care

  • Managed Care premiums earned were $873.1 million, up 17.7% year-over-year.
  • Medicare premiums earned of $392.5 million increased 14.7% from the prior-year period. The increase was largely due to an addition of approximately 27,000 member months, which primarily reflects a more competitive product offering and higher premium rates resulting from an increase in the premium rate benchmark and membership risk score.
  • Medicaid premiums earned of $270.3 million increased 34.8% from the prior-year period, primarily reflecting higher member months of approximately 168,000; higher average premium rates following two premium rate increases in 2020; and the reinstatement of the HIP Fee pass-through in 2020.
  • Commercial premiums earned of $210.3 million increased 5.8% from the prior-year period, mainly reflecting higher average premium rates, the reinstatement of the HIP Fee pass-through in 2020 and a reduction in the estimated MLR rebate accrual (which was originally recorded as a reduction of premiums) as utilization of services trended to almost-normalized levels. These increases were partially offset by a reduction of approximately 10,000 fully insured member months.
  • Reported MLR of 89.4% increased 570 basis points from the prior-year period, primarily reflecting unfavorable prior period reserve development, higher non-COVID-19 utilization of services, higher costs associated with the treatment of COVID-19 and increased benefits in the Medicare product offering in 2020.
  • Managed care operating expenses of $119.9 million decreased by $5.7 million, or 4.5%, from the prior-year period, primarily reflecting lower provision for bad debts and professional services, offset in part by the reinstatement of the HIP fee in 2020. The segment operating expense ratio was 13.7%, a 320 basis-point improvement from the prior-year quarter.
  • Life Insurance Segment

    • Premiums earned, net of $51.1 million increased 8.5% from the prior-year period, resulting from new sales and the acquisition of a life insurance portfolio in the second quarter of 2020.
    • Operating income was $7.6 million, a 72.7% increase compared to $4.4 million in the prior-year period, primarily reflecting higher premiums in the 2020 quarter.

    Property and Casualty Segment

    • Premiums earned, net of $25.1 million increased 10.1% from the prior-year period.
    • Operating income was $8.9 million, compared with an operating loss of $0.5 million during the prior-year period, primarily driven by lower losses and operating expenses in the 2020 quarter.
    • Reserves related to Hurricane Maria were $183 million as of December 31, 2020. As of December 31, 2020, 355 of the total 17,783 Maria-related claims remained outstanding.

    2021 Outlook

    The Company is initiating the following full year 2021 guidance:

    • Consolidated operating revenue is expected to be between $3.98 billion and $4.02 billion, which includes Managed Care premiums earned, net between $3.58 billion and $3.62 billion;
    • Consolidated claims incurred ratio is expected to be between 83.0% and 84.0%, while Managed Care MLR is expected to be between 86.0% and 87.0%;
    • Consolidated operating expense ratio is expected to be between 15.5% and 16.5%;
    • The effective tax rate is expected to be between 29.0% and 31.0%; and
    • Adjusted net income per diluted share is expected to be between $2.95 and $3.15. Adjusted net income per diluted share does not account for any potential share repurchase activity during 2021. The Company is assuming a weighted average diluted share count for full year 2021 of 23.6 million shares.

    Conference Call and Webcast

    Management will host a conference call and webcast today at 8:30 a.m. Eastern Time to discuss its financial results for the three months ended December 31, 2020. To participate, callers within the U.S. and Canada should dial 1-877-300-8521 and international callers should dial 1-412-317-6026 at least ten minutes before the call.

    To listen to the webcast, participants should visit the “Investor Relations” section of the Company's website at www.triplesmanagement.com several minutes before the event is broadcast and follow the instructions provided to ensure they have the necessary audio application downloaded and installed. This program is provided at no charge to the user. An archived version of the call, also located on the “Investor Relations” section of Triple-S Management's website, will be available about two hours after the call ends for one year. This news release, along with other information relating to the call, will be available on the “Investor Relations” section of the website.

    About Triple-S Management Corporation

    Triple-S Management Corporation is a healthcare services company and one of the top players in the Puerto Rico healthcare industry, with over 60 years of experience as the premier brand serving more people through the most attractive provider networks on the island.  We have the exclusive right to use the Blue Cross Blue Shield name and mark throughout Puerto Rico, the U.S. Virgin Islands, Costa Rica, the British Virgin Islands and Anguilla, and we offer a broad portfolio of managed care and related products in the Commercial, Medicare Advantage and Medicaid markets. Triple-S is also a well-known brand in the life insurance and property and casualty insurance markets in Puerto Rico, with strong customer relationships and a significant market share. For more information about Triple-S Management, visit www.triplesmanagement.com or contact [email protected]

    Non-GAAP Financial Measures

    This earnings release presents information about the Company's adjusted net income, which is a non-GAAP financial metric provided as a complement to the results provided in accordance with accounting principles generally accepted in the United States of America (GAAP). A reconciliation of adjusted net income to net income, the most comparable GAAP financial measure, is provided in the accompanying tables found at the end of this release.

    Forward-Looking Statements

    This document contains forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements include information about possible or assumed future sales, results of operations, developments, regulatory approvals or other circumstances. Sentences that include “believe”, “expect”, “plan”, “intend”, “estimate”, “anticipate”, “project”, “may”, “will”, “shall”, “should” and similar expressions, whether in the positive or negative, are intended to identify forward-looking statements.

    All forward-looking statements in this news release reflect management's current views about future events and are based on assumptions and subject to risks and uncertainties. Consequently, actual results may differ materially from those expressed here as a result of various factors, including all the risks discussed and identified in public filings with the U.S. Securities and Exchange Commission (SEC).

    In addition, the Company operates in a highly competitive, constantly changing environment, influenced by very large organizations that have resulted from business combinations, aggressive marketing and pricing practices of competitors, and regulatory oversight. The following factors, if markedly different from the Company's planning assumptions (either individually or in combination), could cause Triple-S Management's results to differ materially from those expressed in any forward-looking statements shared here:

    • Trends in health care costs and utilization rates
    • Ability to secure sufficient premium rate increases
    • Competitor pricing below market trends of increasing costs
    • Re-estimates of policy and contract liabilities and reserves
    • Changes in government laws and regulations of managed care, life insurance or property and casualty insurance
    • Significant acquisitions or divestitures by major competitors
    • Introduction and use of new prescription drugs and technologies
    • A downgrade in the Company's financial strength ratings
    • Litigation or legislation targeted at managed care, life insurance or property and casualty insurance companies
    • Ability to contract with providers and government agencies consistent with past practice
    • Ability to successfully implement the Company's disease management, utilization management and Star ratings programs
    • Ability to maintain Federal Employees, Medicare and Medicaid contracts
    • Volatility in the securities markets and investment losses and defaults
    • General economic downturns, major disasters and epidemics

    This list is not exhaustive. Management believes the forward-looking statements in this release are reasonable. However, there is no assurance that the actions, events or results anticipated by the forward-looking statements will occur or, if any of them do, what impact they will have on the Company's results of operations or financial condition. In view of these uncertainties, investors should not place undue reliance on any forward-looking statements, which are based on current expectations. In addition, forward-looking statements are based on information available the day they are made, and (other than as required by applicable law, including the securities laws of the United States) the Company does not intend to update or revise any of them in light of new information or future events.

    Readers are advised to carefully review and consider the various disclosures in the Company's SEC reports.

    Earnings Release Schedules and Supplemental Information

    Condensed Consolidated Balance Sheets……………………………………………………………………… Exhibit I

    Condensed Consolidated Statements of Earnings…………………………………………………………… Exhibit II

    Condensed Consolidated Statements of Cash Flows……………………………………………………….. Exhibit III

    Segment Performance Supplemental Information………………………………………………………….. Exhibit IV

    Reconciliation of Non-GAAP Financial Measures…………………………………………………………….. Exhibit V

     

    Exhibit I

    Condensed Consolidated Balance Sheets

    (dollar amounts in thousands)

    Unaudited

    December 31,
    2020

    December 31,
    2019

    Assets

    Investments

    $

    1,874,024

    $

    1,643,637

    Cash and cash equivalents

    110,989

    109,837

    Premium and other receivables, net

    488,840

    567,692

    Deferred policy acquisition costs and value of business acquired

    248,325

    234,885

    Property and equipment, net

    131,974

    88,588

    Other assets

    234,266

    174,187

    Total assets

    $

    3,088,418

    $

    2,818,826

    Liabilities and Stockholders' Equity

    Policy liabilities and accruals

    $

    1,550,798

    $

    1,425,477

    Accounts payable and accrued liabilities

    487,356

    370,483

    Short-term borrowings

    30,000

    54,000

    Long-term borrowings

    52,751

    25,694

    Total liabilities

    2,120,905

    1,875,654

    Stockholders' equity:

    Common stock

    23,430

    23,800

    Other stockholders' equity

    944,800

    920,065

    Total Triple-S Management Corporation stockholders' equity

    968,230

    943,865

    Non-controlling interest in consolidated subsidiary

    (717)

    (693)

    Total stockholders' equity

    967,513

    943,172

    Total liabilities and stockholders' equity

    $

    3,088,418

    $

    2,818,826

     

    Exhibit II

    Condensed Consolidated Statements of Earnings

    (dollar amounts in thousands, except per share data)

    Unaudited

     

     

    For the Three Months Ended

     

    For the Twelve Months Ended

    December 31,

    December 31,

    2020

    2019

    2020

    2019

    Revenues:

    Premiums earned, net

    $

    948,084

    $

    810,364

    $

    3,605,450

    $

    3,252,880

    Administrative service fees

    3,830

    2,251

    12,585

    9,946

    Net investment income

    15,253

    16,393

    57,547

    62,007

    Other operating revenues

    2,597

    2,218

    8,991

    8,553

    Total operating revenues

    969,764

    831,226

    3,684,573

    3,333,386

    Net realized investment gains on sale of securities

    821

    1,077

    641

    5,843

    Net unrealized investment gains on equity investments

    25,067

    7,892

    7,639

    32,151

    Other income, net

    3,368

    847

    9,585

    4,206

    Total revenues

    999,020

    841,042

    3,702,438

    3,375,586

    Benefits and expenses:

    Claims incurred

    817,419

    656,752

    2,946,820

    2,666,256

    Operating expenses

    156,230

    165,777

    655,899

    569,406

    Total operating costs

    973,649

    822,529

    3,602,719

    3,235,662

    Interest expense

    2,173

    1,991

    7,986

    7,672

    Total benefits and expenses

    975,822

    824,520

    3,610,705

    3,243,334

    Income before taxes

    23,198

    16,522

    91,733

    132,252

    Income tax expense (benefit)

    (2,952)

    3,300

    24,568

    39,375

    Net income

    26,150

    13,222

    67,165

    92,877

    Net loss attributable to the non-controlling interest

    (4)

    (7)

    (24)

    (17)

    Net income attributable to Triple-S Management Corporation

    $

    26,154

    $

    13,229

    $

    67,189

    $

    92,894

    Earnings per share attributable to Triple-S Management Corporation:

    Basic net income per share

    $

    1.13

    $

    0.55

    $

    2.90

    $

    3.98

    Diluted net income per share

    $

    1.13

    $

    0.55

    $

    2.88

    $

    3.97

    Weighted average of common shares

    23,067,274

    23,839,165

    23,179,544

    23,318,742

    Diluted weighted average of common shares

    23,237,694

    23,901,874

    23,309,742

    23,385,293

     

    Exhibit III

    Condensed Consolidated Statements of Cash Flows

    (dollar amounts in thousands)

    Unaudited

     

    For the Twelve Months Ended

    December 31,

    2020

    2019

    Net cash provided by (used in) operating activities

    $

    257,845

    $

    (16,826)

    Cash flows from investing activities:

    Proceeds from investments sold or matured:

    Securities available for sale:

       Fixed maturities sold

    149,265

    424,239

       Fixed maturities matured/called

    84,416

    21,258

    Securities held to maturity – fixed maturities matured/called

    1,079

    1,708

    Equity investments sold

    134,926

    169,153

    Other invested assets sold

    17,013

    4,554

    Acquisition of investments:

    Securities available for sale – fixed maturities

    (287,998)

    (449,043)

    Securities held to maturity – fixed maturities

    (1,088)

    (1,078)

    Equity investments

    (248,123)

    (143,972)

    Other invested assets 

    (30,178)

    (28,501)

    Increase in other investments

    (5,683)

    (2,981)

    Net change in policy loans

    402

    (1,392)

    Net capital expenditures

    (57,873)

    (20,820)

    Capital contribution to equity method investees

    (8,184)

    (11,418)

          Net cash used in investing activities

    (252,026)

    (38,293)

    Cash flows from financing activities:

    Change in outstanding checks in excess of bank balances

    (3,249)

    (2,384)

    Net change in short-term borrowings

    (24,000)

    54,000

    Proceeds of long-term borrowings

    30,841

    Repayments of long-term borrowings

    (3,883)

    (3,236)

    Repurchase and retirement of common stock

    (14,982)

    (9,989)

    Dividends paid

    (11)

    Proceeds from policyholder deposits

    25,740

    28,879

    Surrender of policyholder deposits

    (15,134)

    (19,847)

          Net cash (used in) provided by financing activities

    (4,667)

    47,412

          Net increase (decrease) in cash and cash equivalents

    1,152

    (7,707)

    Cash and cash equivalents, beginning of period

    109,837

    117,544

    Cash and cash equivalents, end of period

    $

    110,989

    $

    109,837

     

    Exhibit IV

    Segment Performance Supplemental Information

    (Unaudited)

    Three months ended December 31,

    Twelve months ended December 31,

    (dollar amounts in millions)

    2020

    2019

    Percentage
    Change

    2020

    2019

    Percentage
    Change

    Premiums earned, net:

    Managed Care:

    Commercial

    $ 210.3

    $ 198.8

    5.8%

    $    815.6

    $    801.2

    1.8%

    Medicare

    392.5

    342.3

    14.7%

    1,553.5

    1,408.0

    10.3%

    Medicaid

    270.3

    200.5

    34.8%

    953.2

    778.3

    22.5%

    Total Managed Care

    873.1

    741.6

    17.7%

    3,322.3

    2,987.5

    11.2%

    Life Insurance

    51.1

    47.1

    8.5%

    196.0

    182.2

    7.6%

    Property and Casualty

    25.1

    22.8

    10.1%

    92.0

    87.7

    4.9%

    Other

    (1.2)

    (1.1)

    (9.1%)

    (4.8)

    (4.5)

    (6.7%)

    Consolidated premiums earned, net

    $ 948.1

    $ 810.4

    17.0%

    $ 3,605.5

    $ 3,252.9

    10.8%

    Operating revenues: 1

    Managed Care

    $ 882.3

    $ 751.5

    17.4%

    $ 3,356.1

    $ 3,025.3

    10.9%

    Life Insurance

    57.8

    54.4

    6.3%

    223.3

    209.5

    6.6%

    Property and Casualty

    27.5

    25.1

    9.6%

    101.0

    97.5

    3.6%

    Other

    2.2

    0.2

    1000.0%

    4.2

    1.1

    281.8%

    Consolidated operating revenues

    $ 969.8

    $ 831.2

    16.7%

    $ 3,684.6

    $ 3,333.4

    10.5%

    Operating income (loss): 2

    Managed Care

    $  (18.2)

    $     5.1

    (456.9%)

    $      38.3

    $      61.9

    (38.1%)

    Life Insurance

    7.6

    4.4

    72.7%

    27.8

    21.9

    26.9%

    Property and Casualty

    8.9

    (0.5)

    1880.0%

    19.9

    14.5

    37.2%

    Other

    (2.2)

    (0.3)

    633.3%

    (4.1)

    (0.6)

    583.3%

    Consolidated operating (loss) income 

    $    (3.9)

    $     8.7

    (144.8%)

    $      81.9

    $      97.7

    (16.2%)

    Operating margin: 3

    Managed Care

    (2.1%)

    0.7%

    -280 bp

    1.1%

    2.0%

    -90 bp

    Life Insurance

    13.1%

    8.1%

    500 bp

    12.4%

    10.5%

    190 bp

    Property and Casualty

    32.4%

    (2.0%)

    3,440 bp

    19.7%

    14.9%

    480 bp

    Consolidated

    (0.4%)

    1.0%

    -140 bp

    2.2%

    2.9%

    -70 bp

    Depreciation and amortization expense

    $     3.5

    $     3.9

    (10.3%)

    $      14.4

    $      14.6

    (1.4%)

    1 

    Operating revenues include premiums earned, net, administrative service fees and net investment income.

    2 

    Operating income or loss include operating revenues minus operating costs. Operating costs include claims incurred and operating expenses.

    3 

    Operating margin is defined as operating income or loss divided by operating revenues.

     

    Managed Care Additional Data

    Managed Care Additional Data

    Three months ended December 31,

    Twelve months ended December 31,

    (Unaudited)

    2020

    2019

    2020

    2019

    Member months enrollment:

    Commercial:

    Fully-insured

    961,725

    971,270

    3,882,185

    3,844,106

    Self-insured

    303,732

    353,843

    1,285,366

    1,426,353

    Total Commercial

    1,265,457

    1,325,113

    5,167,551

    5,270,459

    Medicare Advantage

    410,779

    384,038

    1,631,059

    1,540,476

    Medicaid

    1,237,098

    1,069,428

    4,515,196

    4,257,181

    Total member months

    2,913,334

    2,778,579

    11,313,806

    11,068,116

    Claim liabilities (in millions)

    $        445.7

    $        341.3

    Days claim payable

    58

    49

    Premium PMPM:

    Managed Care

    $    334.57

    $    305.85

    $      331.29

    $      309.85

    Commercial

    218.67

    204.68

    210.09

    208.42

    Medicare Advantage

    955.50

    891.32

    952.45

    914.00

    Medicaid 

    218.50

    187.48

    211.11

    182.82

    Medical loss ratio:

    89.4%

    83.7%

    84.5%

    84.6%

    Commercial

    87.8%

    81.3%

    79.1%

    82.4%

    Medicare Advantage

    82.7%

    75.0%

    80.9%

    79.8%

    Medicaid 

    100.3%

    100.9%

    94.9%

    95.4%

    Adjusted medical loss ratio: 1

    87.1%

    85.7%

    83.5%

    86.1%

    Commercial

    82.8%

    80.6%

    78.0%

    84.0%

    Medicare Advantage

    82.8%

    81.9%

    79.9%

    81.4%

    Medicaid 

    96.7%

    97.1%

    94.1%

    96.8%

    Operating expense ratio:

    Consolidated

    16.4%

    20.4%

    18.1%

    17.5%

    Managed Care

    13.7%

    16.9%

    15.4%

    14.5%

    1 

    The adjusted medical loss ratio accounts for subsequent adjustments to estimates, such as prior-period reserve developments and Medicare premium adjustments and presents them in their corresponding period.

     

    Managed Care Membership by Segment

    Managed Care Membership by Segment

    As of December 31,

    2020

    2019

    Members:

    Commercial:

    Fully-insured

    320,180

    322,973

    Self-insured

    99,478

    117,696

    Total Commercial

    419,658

    440,669

    Medicare Advantage

    137,092

    127,789

    Medicaid

    422,023

    355,465

    Total members

    978,773

    923,923

     

    Exhibit V

    Reconciliation of Non-GAAP Financial Measures

    Adjusted Net Income

    (Unaudited)

    Three months ended
    December 31,

    Twelve months ended
    December 31,

    (dollar amounts in millions)

    2020

    2019

    2020

    2019

    Net income

    $26.2

    $13.2

    $67.2

    $92.9

    Less adjustments:

    Net realized investment gains, net of tax

    0.7

    0.8

    0.5

    4.7

    Unrealized gains on equity investments

    20.1

    6.3

    6.1

    25.7

    Private equity investment income, net of tax

    1.2

    0.1

    3.7

    1.0

    Contingency accrual

    (20.0)

    Adjusted net income

    $  4.2

    $  6.0

    $76.9

    $61.5

    Diluted adjusted net income per share

    $0.18

    $0.25

    $3.30

    $2.63

    Adjusted net income is a non-GAAP financial metric and should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP.  Management believes that the use of this adjusted net income and adjusted net income per share provides investors and management useful information about the earnings impact of realized and unrealized investment gains or losses, as well as other non-recurring items impacting the Company's results of operations.  This non-GAAP metric does not consider all the items associated with the Company's operations as determined in accordance with GAAP.  As a result, one should not consider these measures in isolation.

    FOR FURTHER INFORMATION:

    AT THE COMPANY:                  

    INVESTOR RELATIONS:

    Juan José Román-Jiménez      

    Mr. Garrett Edson

    EVP and Chief Financial Officer            

    ICR

    (787) 749-4949             

    (787) 792-6488

     

    Cision View original content to download multimedia:http://www.prnewswire.com/news-releases/triple-s-management-corporation-reports-fourth-quarter-2020-results-301235356.html

    SOURCE Triple-S Management Corporation

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