Triple-S Management Corporation Reports Fourth Quarter 2019 Results

SAN JUAN, Puerto Rico, Feb. 27, 2020 /PRNewswire/ -- Triple-S Management Corporation (NYSE: GTS), a leading managed care company in Puerto Rico, today announced its fourth quarter 2019 results.

Quarterly Consolidated and Other Highlights

• Net income of $13.2 million, or $0.55 per diluted share, versus net loss of $10.9 million, or $0.48 per share, in the prior-year period;
• Adjusted net income of $6.0 million, or $0.25 per diluted share, versus adjusted net income of $10.1 million, or $0.44 per diluted share, in the prior-year period;
• Operating revenues of $831.2 million, a 14.9% increase from the prior-year period, primarily reflecting higher Managed Care net premiums earned;
• Consolidated loss ratio of 81.0%, a 10 basis point increase versus the fourth quarter of 2018;
• Medical loss ratio ("MLR") improved 10 basis points to 83.7%;
• Consolidated operating income was $8.7 million, compared to consolidated operating income of $9.8 million in the prior-year period;
• Under the Company's share repurchase program, during the fourth quarter of 2019, the Company repurchased 527,881 shares at an aggregate cost of approximately $10.0 million. As of February 26, 2020, $10.0 million remains available under the program.

"Our fourth quarter results concluded a strong 2019, exceeding our expectations with excellent growth in premiums earned at our core Managed Care segment," said Roberto Garcia-Rodriguez, President and Chief Executive Officer.  "We also had a solid open enrollment season in Medicare Advantage−aided by an attractive product offering, a smart brand strategy, and focused retention efforts−and continue to see gains in our fully insured Commercial membership."

"Looking ahead into 2020, we aim to further strengthen our core Managed Care products and membership rolls, particularly in Medicare Advantage and Commercial," added Mr. Garcia-Rodriguez.  "We will also undertake additional initiatives to help ensure our customers continue to receive superior service, while keeping a watchful eye on medical cost trends and operating expenses.  Overall, we remain focused on generating long-term growth by creating a unique value proposition and healthcare experience for our members in partnership with our provider community."   

Selected Consolidated Quarterly Details

• Consolidated net premiums earned were $810.4 million, up 15.4% from the prior-year period, primarily reflecting an increase in membership and higher average premium rates within the Managed Care segment.
• Consolidated claims incurred were $656.7 million, up 15.6% year-over-year. Consolidated loss ratio of 81.0% rose 10 basis points from the prior-year period, mostly reflecting higher loss ratios in the Company's complementary businesses.
• Consolidated operating expenses of $165.8 million increased by $19.8 million, or 13.6%, from the prior-year period, primarily resulting from higher provision for bad debt, personnel costs and other expenses related to an increase in volume. These increases were partially offset by the waiver of the 2019 HIP Fee. The Company's operating expense ratio improved by 30 basis points year-over-year to 20.4%, primarily driven by premium growth compared to the prior-year quarter.

Selected Managed Care Segment Quarterly Details

• Managed Care premiums earned were $741.6 million, up 15.3% year over year.
• Medicare premiums earned of $342.3 million increased 22.7% from the prior-year period, largely due to an increase of approximately 55,000 member months and higher average premium rates, primarily reflecting a more competitive product offering and an increase in the average membership risk score.
• Commercial premiums earned of $198.8 million increased 3.5% from the prior-year period, mainly reflecting an increase in fully insured enrollment during the quarter of approximately 37,000 member months, and partially offset by the suspension of the HIP Fee in 2019.
• Medicaid premiums earned of $200.5 million increased 16.5% from the prior-year period, primarily reflecting higher membership of approximately 78,000 member months during the quarter and higher average premium rates, partially offset by the suspension of the HIP Fee in 2019.
• Reported MLR of 83.7% improved 10 basis points from the prior-year period, reflective of better utilization trends in the Medicare and Commercial businesses, offset by the impact of the elimination of the 2019 HIP Fee and timing of the recognition of member acuity in Medicaid premiums.

Update on P&C Segment Reserves related to Hurricane María

As of December 31, 2019:

• Triple-S Propiedad, Inc. (TSP), the Company's P&C subsidiary, has paid a cumulative amount of $729 million in claims and expenses related to Hurricane María. Estimated gross losses remain unchanged at $967 million.
• TSP received 20 new claims and closed 84 claims during the fourth quarter of 2019. 645 claims remain open.
• Of the 645 claims that remain open, the Company has been served with process in 313 cases and identified an additional 94 lawsuits that have been filed against TSP that had not been served as required by law.
• As is the case for all claim liabilities, the gross losses related to Hurricane Maria are based on the Company's best estimate of the ultimate expected cost of claims with the information currently on hand and are subject to change.

2020 Outlook

The Company is initiating the following full year 2020 guidance:

• Consolidated operating revenue is expected to be between $3.62 billion and $3.66 billion, which includes Managed Care premiums earned, net between $3.25 billion and $3.29 billion;
• Consolidated claims incurred ratio is expected to be between 81.0% and 83.0%, while the Managed Care MLR is expected to be between 83.5% and 85.5%;
• Consolidated operating expense ratio is expected to be between 17.5% and 18.5%;
• The effective tax rate is expected to be between 28.0% and 30.0%; and
• Adjusted net income per diluted share is expected to be between $2.60 and $2.80. This expectation is inclusive of the impact of approximately $0.24 per diluted share of estimated losses incurred at the Company's Property and Casualty segment after the recent earthquake activity experienced in Puerto Rico during January 2020. Adjusted net income per diluted share does not account for any potential share repurchase activity during 2020. The Company is assuming a weighted average diluted share count for full year 2020 of 23.1 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, 2019. To participate, callers within the U.S. and Canada should dial 1-877-451-6152 and international callers should dial 1-201-389-0879 at least five 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 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 website.

In addition, a replay will be available through March 12, 2020 by calling 1-844-512-2921 or 1-412-317-6671 and entering passcode 13698869. A replay will also be available at www.triplesmanagement.com for 30 days.

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 over 60 years of experience in the industry, Triple-S Management offers a broad portfolio of managed care and related products in the Commercial, Medicare Advantage, and Medicaid markets under the Blue Cross Blue Shield marks.  It also 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].

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
• 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 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

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.

SOURCE Triple-S Management Corporation

Related Links

http://www.triplesmanagement.com

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