Triple-S Management Corporation Reports Fourth Quarter 2020 Results
02/25/2021 - 06:00 AM
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 $1.13 per diluted share, versus net income of $13.2 million $0.55 per diluted share, in the prior-year period; Adjusted net income of $4.2 million $0.18 per diluted share, versus adjusted net income of $6.0 million $0.25 per diluted share, in the prior-year period; Operating revenues of $969.8 million 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 $8.7 million Selected Segment Quarterly Details
Managed Care
Managed Care premiums earned were $873.1 million 17.7% year-over-year. Medicare premiums earned of $392.5 million 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 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 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 $5.7 million 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 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 72.7% increase compared to $4.4 million Property and Casualty Segment
Premiums earned, net of $25.1 million 10.1% from the prior-year period. Operating income was $8.9 million $0.5 million Reserves related to Hurricane Maria were $183 million 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 $4.02 billion $3.58 billion $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 investorrelations@ssspr.com .
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,
December 31,
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
2020
2019
Percentage
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
Twelve months ended
(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
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SOURCE Triple-S Management Corporation
