Triple-S Management Corporation Reports First Quarter 2015 Results

SAN JUAN, Puerto Rico, May 7, 2015 /PRNewswire/ -- Triple-S Management Corporation (NYSE:GTS), a leading managed care company in Puerto Rico, today announced consolidated revenues of $581.7 million and net income of $14.8 million, or $0.56 per diluted share for the quarter ended March 31, 2015.

Quarterly Consolidated Highlights

• Consolidated operating revenues were $573.8 million;
• Consolidated operating income was $14.0 million;
• Consolidated loss ratio was 81.2%; 
• Medical loss ratio (MLR) was 84.7%;
• Managed Care member month enrollment decreased 3.1% year over year.

Ramon Ruiz-Comas, President and Chief Executive Officer of Triple-S Management said, "Overall, we reported good results in a quarter that typically has high utilization. MLR continues to improve in our Commercial business despite declining membership, reinforcing our strategic decision to focus on profitability over market share and further align price increases with claims trends.  In spite of ongoing challenges in the Medicare Advantage business, Managed Care operating income nearly tripled. The Life Insurance segment had another solid performance and the Property & Casualty business doubled its quarterly operating profit."   

Ruiz-Comas continued, "Although MLR in the Medicare Advantage segment increased during the period, the business had a better showing than we anticipated, largely reflecting the progress of initiatives implemented by Madeline Hernandez, the new head of that business unit. The legacy American Health and Triple-S offerings have been consolidated into a single HMO and PPO product and the number of IPA providers has been halved. Having strengthened her executive staff, Madeline will be mainly focused on streamlining and automating information flows within the organization, emphasizing improved STAR ratings and making the business more consumer-centric."

He concluded, "We were pleased with our quarterly performance and our strong balance sheet will aid us in continuing to navigate what has been a difficult environment. Nonetheless, given the issues that we face, including declining Medicare rates, the local government's fiscal situation, the weak local economy, and the uncertainty surrounding the local government's tax reform legislation, we are not providing 2015 guidance."  

Selected Quarterly Details

• Pro Forma Net Income Was $9.8 Million, or $0.37 Per Diluted Share.  Weighted average shares outstanding were 26.6 million. This compares with pro forma net income of $6.9 million, or $0.25 per diluted share, in the corresponding quarter of 2014, based on weighted average shares outstanding of 27.4 million.
• Managed Care Membership.  Our Managed Care membership decreased by 3.0% year over year, reflecting declines in the Commercial fully-insured and self-insured membership of 12.2% and 8.6%, respectively. Medicare membership was down 2.9% year over year, to 116,292. Medicaid membership (all self-funded) rose 0.6%, to 1,407,045.
• Consolidated Premiums Earned Fell 1.7%, to $532.6 Million.  The decrease in consolidated premiums earned was principally due to lower Managed Care and Property & Casualty premiums, partially offset by higher premiums in the Life Insurance segment.  The lower Managed Care premiums earned primarily reflect the decline in fully-insured Commercial member month enrollment. 
• Administrative Service Fees Were Down 2.0%, to $29.1 Million.  The lower service fee income reflects the reduction in self-funded Commercial membership described above.
• Managed Care MLR Improved 190 Basis Points, to 84.7%.  The lower MLR largely reflects favorable prior-period reserve developments in both the Commercial and Medicare sectors, offset in part by higher pharmacy costs.
• Consolidated Loss Ratio Fell 170 basis points, to 81.2%.  The consolidated loss ratio reflects improvements in the Managed Care MLR and the Property and Casualty segment's loss ratio of 190 and 270 basis points, respectively.
• Consolidated Operating Expense Ratio Rose 80 Basis Points, to 22.7%.  The higher consolidated operating expense ratio is mostly due to the decrease in consolidated premiums earned and an increase in professional services incurred.
• Consolidated Operating Income Increased to $14.0 Million.  The increase in operating income primarily reflects improved profitability in the Managed Care segment, resulting in a 70-basis-point increase in the consolidated operating margin.
• Share Repurchase Program. The Corporation repurchased 683,000 shares during the quarter, leaving $29.7 million remaining under the current buyback authorization.

Segment Performance

Triple-S Management operates in three segments: 1) Managed Care, 2) Life Insurance, and 3) Property & Casualty Insurance. Management evaluates performance based primarily on the operating revenues and operating income of each segment. Operating revenues include premiums earned, net, administrative service fees and net investment income. Operating costs include claims incurred and operating expenses. The Company calculates operating income or loss as operating revenues minus operating expenses. Operating margin is defined as operating income or loss divided by operating revenues. The adjusted medical loss ratio accounts for subsequent adjustments to estimates, such as MA premium adjustments and prior period reserve developments, and presents them in the corresponding period. 

Conference Call and Webcast

Management will host a conference call and webcast on May 7, 2015 at 9:00 a.m. Eastern Time to discuss its financial results for the three months ended March 31, 2015. To participate, callers within the U.S. and Canada should dial 1-855-327-6837, and international callers should dial 1-631-982-4565 about five minutes before the call.

To listen to the webcast, participants should visit the "Investor Relations" section of the Company's Web site 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 Web site, will be available about two hours after the call ends and for at least the following two weeks. This news release, along with other information relating to the call, will be available on the "Investor Relations" section of the Web site.

About Triple-S Management Corporation

Triple-S Management Corporation is an independent licensee of the Blue Cross Blue Shield Association. It is one of the leading players in the managed care industry in Puerto Rico. Triple-S Management has the exclusive right to use the Blue Cross Blue Shield name and mark throughout Puerto Rico, the U.S. Virgin Islands, and Costa Rica. With more than 50 years of experience in the industry, Triple-S Management offers a broad portfolio of managed care and related products in the Commercial and Medicare Advantage markets under the Blue Cross Blue Shield marks. In addition to its managed care business, Triple-S Management provides non-Blue Cross Blue Shield branded life and property and casualty insurance in Puerto Rico.

For more information about Triple-S Management, visit www.triplesmanagement.com or contact [email protected].

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
• 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
• A downgrade in the Government of Puerto Rico's debt
• Litigation or legislation targeted at managed care, life insurance or property and casualty insurance companies
• Ability to contract with providers 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.

SOURCE Triple-S Management Corporation

Related Links

http://www.triplesmanagement.com

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