Triple-S Management Corporation Reports Third Quarter 2021 Results
11/04/2021 - 07:00 AM
SAN JUAN, Puerto Rico , Nov. 4, 2021 /PRNewswire/ -- Triple-S Management Corporation (NYSE:GTS), a leading healthcare services company in Puerto Rico , today announced its third quarter 2021 results.
Roberto Garcia-Rodriguez , President and Chief Executive Officer, commented: "We had a solid third quarter performance as we continued to record double-digit revenue growth year-over-year, driven by our Medicaid offering along with solid growth at our Life and P&C segments. Moving forward, we continue to progress in our integrated healthcare strategy, enabling us to deliver additional attractive products, along with the high-quality care and superior service to which our members have become accustomed."
Third Quarter 2021 Consolidated Results and Other Highlights
Net income of $8.2 million $0.35 $23.6 million $1.02 Adjusted net income of $9.6 million $0.41 $14.2 million $0.61 Operating revenue of $1.0 billion 10.8% increase from the prior-year period, primarily reflecting higher Managed Care net premiums earned. Consolidated loss ratio of 86.2% , an increase of 370 basis points compared with the third quarter of 2020, reflecting normalized Managed Care utilization patterns in the third quarter of 2021. Medical loss ratio (MLR) of 88.7% , 400 basis points higher than the same period last year. Consolidated operating income of $11.5 million $22.3 million Selected Segment Quarterly Details
Managed Care
Managed Care premiums earned were $939.7 million 10.6% year-over-year. Medicare premiums earned were $423.1 million 5.6% from the prior-year period. The increase was largely due to higher premium rates resulting from a rise in the premium rate benchmark and membership risk score and higher enrollment. Medicaid premiums earned were $302.2 million 25.4% from the prior-year period, primarily reflecting an increase in enrollment of approximately 210,000 member months and higher average premium rates. In addition, following a reconciliation process with ASES this quarter, the Company recognized premiums corresponding to prior periods. These increases were partially offset by the elimination of the HIP fee pass-through in 2021. Commercial premiums earned were $214.4 million 2.9% from the prior-year period, mainly reflecting higher average premium rates in the 2021 period, partially offset by the elimination of the HIP fee pass-through in 2021. Reported MLR was 88.7% , an increase of 400 basis points from the prior-year period, primarily reflecting the elimination of the HIP fee in 2021, normalized utilization of services compared with the low utilization in the prior-year quarter due to the pandemic, higher costs associated with COVID-19-related testing, treatment costs and the waiver of medical and payment policies, and increased benefits in the Medicare product offering in 2021. Managed Care operating expenses were $109.4 million $15.5 million 12.4% , from the prior-year quarter, primarily reflecting the elimination of the HIP fee in 2021 and lower business promotion expenses, partially offset by higher personnel costs. The segment operating expense ratio was 11.6% , a 300 basis-point improvement from the prior-year quarter. Life Insurance Segment
Premiums earned, net were $55.1 million 10.0% increase from the prior-year period, resulting from higher sales across all lines of business, particularly in the Individual Life and Cancer lines of business. Operating income was $5.6 million $5.7 million Property and Casualty Segment
Premiums earned, net were $26.3 million 10.0% from the prior-year period. The increase was primarily due to higher premiums in Personal Package, Commercial Liability, Commercial Auto and Commercial Property products, partially offset by a decrease in Commercial Package products. Operating income was $2.0 million $4.4 million Liquidity and Capital Resources
As of September 30, 2021 , the Company had cash and cash equivalents of $122.7 million $1.9 billion 2021 Outlook and Conference Call
Due to the pending transaction with GuideWell Mutual Holding Corporation announced on August 24, 2021 , the Company will not be hosting a conference call or providing an updated outlook for the fourth quarter or full year 2021. The Company's previously issued full year 2021 outlook should no longer be relied upon. Please visit the Investor Relations section of the Company's website at http://investors.triplesmanagement.com for the latest releases and information.
About Triple-S Management Corporation
Triple-S Management, a health services company, serves more than 1 million customers in Puerto Rico , which represents nearly one-third of the island's population. With over 60 years of experience, it is the premier insurance and managed care brand, with the largest customer base and broadest provider networks on the island. 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 , Costa Rica , the British Virgin Islands and Anguilla , and offers a broad portfolio of managed care and related products in the commercial, Medicare Advantage and Medicaid segments. Triple-S Management is also a well-known brand in the life insurance and property and casualty insurance segments 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 in thousands)
Unaudited
September 30,
December 31,
Assets
Investments
$
1,940,745
$
1,874,024
Cash and cash equivalents
122,709
110,989
Premium and other receivables, net
496,477
488,840
Deferred policy acquisition costs and value of business acquired
255,010
248,325
Property and equipment, net
137,762
131,974
Other assets
238,963
234,266
Total assets
$
3,191,666
$
3,088,418
Liabilities and Stockholders' Equity
Policy liabilities and accruals
$
1,588,117
$
1,550,798
Accounts payable and accrued liabilities
537,110
487,356
Short-term borrowings
-
30,000
Long-term borrowings
49,498
52,751
Total liabilities
2,174,725
2,120,905
Stockholders' equity:
Common stock
23,795
23,430
Other stockholders' equity
993,879
944,800
Total Triple-S Management Corporation stockholders' equity
1,017,674
968,230
Non-controlling interest in consolidated subsidiary
(733)
(717)
Total stockholders' equity
1,016,941
967,513
Total liabilities and stockholders' equity
$
3,191,666
$
3,088,418
Exhibit II
Condensed Consolidated Statements of Earnings
(dollar in thousands, except per share information)
Unaudited
For the Three Months Ended
For the Nine Months Ended
September 30,
September 30,
2021
2020
2021
2020
Revenues
Premiums earned, net
$
1,019,696
$
922,934
$
3,016,012
$
2,657,366
Administrative service fees
3,875
3,752
9,316
8,755
Net investment income
17,572
14,168
46,178
42,294
Other operating revenues
3,925
2,052
8,518
6,394
Total operating revenues
1,045,068
942,906
3,080,024
2,714,809
Net realized investment gains (losses)
1,015
507
3,746
(180)
Net unrealized investment (losses) gains on equity investments
(7,912)
11,040
13,383
(17,428)
Other income, net
11,085
1,811
19,047
6,217
Total revenues
1,049,256
956,264
3,116,200
2,703,418
Benefits and expenses
Claims incurred, net of reinsurance
878,947
761,792
2,573,569
2,129,401
Operating expenses
154,526
158,809
456,880
499,669
Total operating costs
1,033,473
920,601
3,030,449
2,629,070
Interest expense
2,016
2,096
6,225
5,813
Total benefits and expenses
1,035,489
922,697
3,036,674
2,634,883
Income before taxes
13,767
33,567
79,526
68,535
Income tax expense
5,607
9,989
24,505
27,520
Net income
8,160
23,578
55,021
41,015
Net loss attributable to the non-controlling interest
7
3
16
20
Net income attributable to Triple-S Management Corporation
$
8,167
$
23,581
$
55,037
$
41,035
Earnings per share attributable to Triple-S Management Corporation:
Basic net income per share
$
0.35
$
1.02
$
2.35
$
1.77
Diluted net income per share
$
0.35
$
1.02
$
2.34
$
1.76
Weighted average of common shares
23,494,415
23,073,511
23,402,622
23,215,840
Diluted weighted average of common shares
23,610,672
23,193,980
23,546,277
23,318,069
Exhibit III
Condensed Consolidated Statements of Cash Flows
(dollar in thousands)
Unaudited
For the Nine Months Ended
September 30,
2021
2020
Net cash provided by operating activities
$
100,699
$
223,681
Cash flows from investing activities:
Proceeds from investments sold or matured:
Securities available-for-sale:
Fixed-maturities sold
140,866
94,557
Fixed-maturities matured/called
18,271
37,450
Securities held-to-maturity - fixed-maturities matured/called
747
1,079
Equity investments sold
99,951
80,152
Other invested assets sold
19,652
13,231
Acquisition of investments:
Securities available-for-sale - fixed-maturities
(129,066)
(206,387)
Securities held-to-maturity - fixed-maturities
(751)
(1,087)
Equity investments
(199,046)
(201,324)
Other invested assets
(9,317)
(25,442)
(Decrease) increase in other investments
(4,470)
(3,924)
Net change in policy loans
(21)
240
Net capital expenditures
(16,948)
(52,549)
Capital contribution on equity method investees
-
(7,083)
Net cash used in investing activities
(80,132)
(271,087)
Cash flows from financing activities:
Change in outstanding checks in excess of bank balances
20,594
16,814
Net change in short-term borrowings
(30,000)
28,500
Proceeds of long-term borrowings
-
30,841
Repayments of long-term borrowings
(3,370)
(2,760)
Repurchase and retirement of common stock
-
(14,980)
Proceeds from policyholder deposits
12,594
21,586
Surrender of policyholder deposits
(8,665)
(12,829)
Net cash (used in) provided by financing activities
(8,847)
67,172
Net increase in cash and cash equivalents
11,720
19,766
Cash and cash equivalents, beginning of period
110,989
109,837
Cash and cash equivalents, end of period
$
122,709
$
129,603
Exhibit IV
Segment Performance Supplemental Information
(Unaudited)
Three months ended September 30,
Nine months ended September 30,
(dollar in millions)
2021
2020
Percentage
2021
2020
Percentage
Premiums earned, net:
Managed Care:
Medicare
$ 423.1
$ 400.7
5.6%
$ 1,233.8
$ 1,160.9
6.3%
Medicaid
302.2
240.9
25.4%
916.7
682.9
34.2%
Commercial
214.4
208.4
2.9%
631.0
605.3
4.2%
Total Managed Care
939.7
850.0
10.6%
2,781.5
2,449.1
13.6%
Life Insurance
55.1
50.1
10.0%
161.6
144.9
11.5%
Property and Casualty
26.3
23.9
10.0%
76.9
66.9
14.9%
Other
(1.4)
(1.0)
(40.0% )
(4.0)
(3.5)
(14.3% )
Consolidated premiums earned, net
$ 1,019.7
$ 923.0
10.5%
$ 3,016.0
$ 2,657.4
13.5%
Operating revenues: 1
Managed Care
$ 951.7
$ 858.2
10.9%
$ 2,810.6
$ 2,473.7
13.6%
Life Insurance
61.9
57.0
8.6%
181.5
165.5
9.7%
Property and Casualty
28.8
26.1
10.3%
83.7
73.5
13.9%
Other
2.6
1.6
62.5%
4.2
2.1
100.0%
Consolidated operating revenues
$ 1,045.0
$ 942.9
10.8%
$ 3,080.0
$ 2,714.8
13.5%
Operating income (loss): 2
Managed Care
$ 8.5
$ 13.0
(34.6% )
$ 34.5
$ 56.5
(38.9% )
Life Insurance
5.6
5.7
(1.8% )
17.8
20.2
(11.9% )
Property and Casualty
2.0
4.4
(54.5% )
7.8
10.9
(28.4% )
Other
(4.6)
(0.8)
(475.0% )
(10.6)
(1.9)
(457.9% )
Consolidated operating income
$ 11.5
$ 22.3
(48.4% )
$ 49.5
$ 85.7
(42.2% )
Operating margin: 3
Managed Care
0.9%
1.5%
-60 bp
1.2%
2.3%
-110 bp
Life Insurance
9.0%
10.0%
-100 bp
9.8%
12.2%
-240 bp
Property and Casualty
6.9%
16.9%
-1,000 bp
9.3%
14.8%
-550 bp
Consolidated
1.1%
2.4%
-130 bp
1.6%
3.2%
-160 bp
Depreciation and amortization expense
$ 3.6
$ 3.1
16.1%
$ 10.7
$ 10.9
(1.8% )
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
Three months ended September 30,
Nine months ended
(Unaudited)
2021
2020
2021
2020
Member months enrollment:
Medicare Advantage
410,939
407,170
1,228,732
1,220,280
Medicaid
1,342,953
1,132,626
3,972,136
3,278,098
Commercial:
Fully insured
966,002
966,906
2,871,788
2,920,460
Self-insured
281,153
324,372
875,844
981,634
Total Commercial
1,247,155
1,291,278
3,747,632
3,902,094
Total member months
3,001,047
2,831,074
8,948,500
8,400,472
Claim liabilities (in millions)
$ 533.7
$ 417.6
Days claim payable
60
57
Premium PMPM:
Managed Care
$ 345.49
$ 339.09
$ 344.56
$ 330.12
Medicare Advantage
1,029.59
984.11
1,004.12
951.34
Medicaid
225.03
212.69
230.78
208.32
Commercial
221.95
215.53
219.72
207.26
Medical loss ratio:
88.7%
84.7%
88.0%
82.7%
Medicare Advantage
82.5%
80.6%
85.1%
80.2%
Medicaid
95.2%
94.0%
92.1%
92.7%
Commercial
91.9%
81.9%
87.9%
76.1%
Adjusted medical loss ratio: 1
90.7%
81.8%
89.9%
81.1%
Medicare Advantage
84.6%
75.0%
86.8%
77.4%
Medicaid
99.2%
90.9%
95.6%
91.1%
Commercial
90.5%
83.8%
87.8%
76.5%
Operating expense ratio:
Consolidated
15.1%
17.1%
15.1%
18.7%
Managed Care
11.6%
14.6%
11.7%
15.9%
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 Business
Managed Care Membership by Segment
As of September 30,
2021
2020
Members:
Medicare Advantage
136,459
136,135
Medicaid
449,474
385,344
Commercial:
Fully insured
321,772
321,673
Self-insured
94,261
107,830
Total Commercial
416,033
429,503
Total members
1,001,966
950,982
Exhibit V
Reconciliation of Non-GAAP Financial Measures
Adjusted Net Income
(Unaudited)
Three months ended
Nine months ended
(dollar in millions)
2021
2020
2021
2020
Net income
$ 8.2
$ 23.6
$ 55.0
$ 41.0
Less adjustments:
Net realized investment gains (losses)
1.0
0.5
3.7
(0.2)
Unrealized (losses) gains on equity investments
(7.9)
11.0
13.4
(17.4)
Contingency accrual
-
-
-
(32.0)
Private equity investment income
8.4
0.2
10.8
3.9
GuideWell transaction costs
(1.8)
-
(1.8)
-
Tax impact of non-GAAP adjustments
(1.095)
(2.3)
(6.80)
14.0
Adjusted net income
$ 9.6
$ 14.2
$ 35.7
$ 72.7
Diluted adjusted net income per share
$ 0.41
$ 0.61
$ 1.52
$ 3.12
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. The Company estimates tax impact of net realized and non-realized gains (losses), private equity investment income and contingency accrual at the applicable statutory tax rates. These non-GAAP metrics do 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:
Victor J. Haddock-Morales
Mr. Garrett Edson
EVP and Chief Financial Officer
ICR
(787) 749-4949
(787) 792-6488
https://www.prnewswire.com/news-releases/triple-s-management-corporation-reports-third-quarter-2021-results-301416318.html
SOURCE Triple-S Management Corporation
