Triple-S Management Corporation Provides COVID-19 Update and Reports First Quarter 2020 Results

SAN JUAN, Puerto Rico, May 7, 2020 /PRNewswire/ -- Triple-S Management Corporation (NYSE:GTS), a leading managed care company in Puerto Rico, today provided an update on its operations related to COVID-19 and reported its first quarter 2020 results.

"Since the onset of the COVID-19 pandemic across the world in March, our team has been fully engaged to support our members, providers and employees," said Roberto Garcia-Rodriguez, President and Chief Executive Officer. "Our community and front-line workers are our backbone, and their resiliency in these challenging times gives us confidence as the economy reopens and we learn to live with COVID-19 in the weeks and months ahead."

"Our team has worked tirelessly to ensure that members can continue accessing quality health care services during the pandemic," added Mr. Garcia-Rodriguez. "We are proud of their dedication and commitment, and we will continue to fully support the communities we serve throughout the pandemic and beyond."

COVID-19 Operational Update

The Company took quick action at the onset of the pandemic, activating its business continuity plans. The large majority of Triple-S employees and management seamlessly transitioned to working from home, while essential employees are onsite but adhering closely to Centers for Disease Control and local guidelines.


The well-being of Triple-S employees is an essential priority. Recognized as one of Puerto Rico's Best Employers, the Company rapidly implemented remote work arrangements for over 85% of its workforce throughout the lockdown, which was declared in mid-March. Though not all essential job duties can be performed from home, the Company has continued to meet its payroll responsibility toward its employees. Triple-S has maximized technology for companywide communications, including live employee meetings, as well as virtual workshops on crisis leadership and coping strategies. Its human resources team has reached out to employees through one-on-one calls and a survey to identify and address their needs for subsequent phases and their eventual return to work.

Member Support and Community

The Company is supporting its community and members during the pandemic to ensure their safety and care. At the onset of the crisis, Triple-S waived prior authorizations and copayments for diagnostic tests and covered services that are medically necessary for members diagnosed with COVID-19. It also increased access to prescription medications by waiving early medication refill limits on 30-day prescriptions. Other initiatives, in addition to those required by local and federal regulators, include:

    --  Physicians, psychologists and other providers within its network can now
        use voice and video calls to replace office visits where appropriate,
        reducing exposure to the virus. Lab test orders can be sent via e-mail
        and drug prescriptions via e-prescribing.
    --  The Company has expanded access to its 24/7 nurse triage and advice
        service, TeleConsulta, to assist people who may not require emergency
        care or can self-care at home.
    --  The Company has also expanded the availability of its telehealth
        platform, TeleConsulta MD, which allows members to make virtual medical
        consultations with primary care physicians via smartphone, tablet or
    --  The Company has recently implemented a prescription drug home delivery
    --  Triple-S Foundation committed an initial $250,000 donation to various
        organizations addressing food insecurity, including funds to bolster
        small farmers, provide food for the homeless, the general population
        through Puerto Rico's Food Bank, and an NGO serving the elderly in rural

Strong Balance Sheet / Liquidity

    --  As of March 31, 2020, the Company has cash and cash equivalents of
        $104.6 million, including $9.0 million at the parent company level.
        Triple-S's investment portfolio stood at $1.7 billion as of March 31, of
        which 76% where investment-grade fixed income securities. The Company
        also believes it would be able to access additional debt, if necessary,
        to further reinforce its liquidity. In sum, the Company believes it is
        well capitalized to support the fundamental operations of its business
        throughout the pandemic and beyond.

First Quarter 2020 Consolidated and Other Highlights

    --  Following a $45 million net of tax impact of net unrealized losses on
        equity investments after the significant decrease in equity markets this
        quarter, the Company reported a net loss of $26.1 million, or $1.12 per
        share, versus net income of $34.8 million, or $1.52 per diluted share,
        in the prior-year period;
    --  Adjusted net income of $17.7 million, or $0.75 per diluted share, versus
        adjusted net income of $17.7 million, or $0.77 per diluted share, in the
        prior-year period;
    --  Operating revenues of $896.4 million, a 13.8% increase from the
        prior-year period, primarily reflecting higher Managed Care net premiums
    --  Consolidated loss ratio of 81.6%, a 50 basis point increase versus the
        first quarter of 2019;
    --  Medical loss ratio ("MLR") increased 10 basis points to 83.7%;
    --  Consolidated operating income was $19.7 million, compared to
        consolidated operating income of $31.7 million in the prior-year period;
    --  Under the Company's share repurchase program, during the first quarter
        of 2020, the Company repurchased 577,447 shares at an aggregate cost of
        approximately $9.0 million. As of May 6, 2020, $2.5 million remained
        available under the program.

Selected Consolidated Quarterly Details

    --  Consolidated net premiums earned were $875.9 million, up 14.0% 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 $714.5 million, up 14.7%
        year-over-year. Consolidated loss ratio of 81.6% rose 50 basis points
        from the prior-year period, mostly reflecting $5 million of estimated
        earthquake losses recorded by the Property and Casualty segment and
        increased benefits in the Company's 2020 Medicare product offering,
        partially offset by lower Managed Care utilization of services during
        the last two weeks of the quarter as the result of the
        government-enforced lockdown related to the COVID-19 pandemic.
    --  Consolidated operating expenses of $162.2 million increased by $29.5
        million, or 22.2%, from the prior-year period, primarily resulting from
        reinstatement of the HIP fee in 2020. The consolidated operating expense
        ratio was 18.5%, a 130 basis point increase from the prior-year quarter.

Selected Managed Care Segment Quarterly Details

    --  Managed Care premiums earned were $809.8 million, up 14.8%
        --  Medicare premiums earned of $387.8 million increased 16.6% from the
            prior-year period, largely due to an increase of approximately
            24,000 member months, primarily reflecting a more competitive
            product offering, higher average premium rates, and an increase in
            the average membership risk score.
        --  Commercial premiums earned of $201.1 million increased 1.3% from the
            prior-year period, mainly reflecting an increase in fully insured
            enrollment during the quarter of approximately 25,000 member months.
        --  Medicaid premiums earned of $220.9 million increased 26.7% from the
            prior-year period, primarily reflecting higher membership of
            approximately 38,000 member months during the quarter, higher
            average premium rates, and the reinstatement of the HIP Fee
            pass-through in 2020.
    --  Reported MLR of 83.7% was 10 basis points higher than the prior-year
        period, reflecting increased benefits in the Company's 2020 Medicare
        product offering, partially offset by lower Managed Care utilization of
        services during the last two weeks of the quarter as the result of the
        government-enforced lockdown related to the COVID-19 pandemic.

Update on P&C Segment Reserves related to Hurricane María

As of March 31, 2020:

    --  Triple-S Propiedad, Inc. (TSP), the Company's P&C subsidiary, has paid a
        cumulative amount of $745 million in claims and expenses related to
        Hurricane María. Estimated gross losses remain unchanged at $967
    --  TSP received 9 new claims, reopened 26 claims, and paid 28 claims during
        the first quarter of 2020. 652 claims remain open.
    --  The Company has been served with process in 361 of the 652 claims that
        remain open.
    --  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

Due to COVID-19's potential impact on the macroeconomic environment and the Company's operations, the Company has decided to suspend its 2020 premium and cost guidance until it has more visibility; however, it is maintaining its full year 2020 adjusted net income per diluted share guidance of between $2.60 and $2.80. 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 23.3 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 March 31, 2020. To participate, callers within the U.S. and Canada should dial 1-888-204-4368 and international callers should dial 1-323-994-2093 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 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 May 21, 2020 by calling 1-844-512-2921 or 1-412-317-6671 and entering passcode 9070409. A replay will also be available at 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 or contact

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


        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)


                                                                                                                                                                                 March 31,                         December 31,
                                                                                                                                                                                      2020                                  2019


     Investments                                                                                                                                                                           $
        1,666,126                      $

     Cash and cash equivalents                                                                                                                                                                     104,580                           109,837

     Premium and other receivables, net                                                                                                                                                            644,984                           567,692

     Deferred policy acquisition costs and value of business acquired                                                                                                                              237,171                           234,885

     Property and equipment, net                                                                                                                                                                    89,367                            88,588

     Other assets                                                                                                                                                                                  245,966                           174,187

              Total assets                                                                                 $
              2,988,194                      $

                Liabilities and Stockholders' Equity

     Policy liabilities and accruals                                                                                                                                                       $
        1,466,165                      $

     Accounts payable and accrued liabilities                                                                                                                                                      492,982                           370,483

     Short-term borrowings                                                                                                                                                                          78,000                            54,000

     Long-term borrowings                                                                                                                                                                           24,897                            25,694

              Total liabilities                                                                                        2,062,044                                1,875,654

     Stockholders' equity:

              Common stock                                                                                                23,386                                   23,800

              Other stockholders' equity                                                                                 903,464                                  920,065

                                                       Total Triple-S Management Corporation
                                                        stockholders' equity                                                      926,850                                           943,865

     Non-controlling interest in consolidated subsidiary                                                                                                                                             (700)                            (693)

     Total stockholders' equity                                                                                                                                                                    926,150                           943,172

     Total liabilities and stockholders' equity                                                                                                                                            $
        2,988,194                      $

                Exhibit II

               Condensed Consolidated Statements of Earnings

       (dollar amounts in thousands, except per share data)


                                                                                                                                                               For the Three Months Ended

              March 31,

                                                                                                                                                                                     2020                          2019


              Premiums earned, net                                                      $
              875,897                                                         $

              Administrative service fees                                                             2,194                                                                       2,632

              Net investment income                                                                  14,311                                                                      15,376

              Other operating revenues                                                                4,039                                                                       1,577

              Total operating revenues                                                              896,441                                                                     787,587

                                       Net realized investment (losses) gains on sale of
                                        securities                                                                             (466)                                                                      1,315

                                       Net unrealized investment (losses) gains on equity
                                        investments                                                                         (56,806)                                                                     19,669

              Other income, net                                                                       3,605                                                                       1,169

                Total revenues                                                           842,774                                                                     809,740

                Benefits and expenses:

              Claims incurred                                                                         714,522                                                                     623,190

              Operating expenses                                                                    162,201                                                                     132,663

              Total operating costs                                                                 876,723                                                                     755,853

              Interest expense                                                                          1,853                                                                       1,788

                                                    Total benefits and expenses                                               878,576                                                                     757,641

              (Loss) income before taxes                                                           (35,802)                                                                     52,099

                Income tax (benefit) expense                                                                                                                                                    (9,650)                 17,316

     Net (loss) income                                                                                                                                                                            (26,152)                 34,783

                                       Net loss attributable to the non-controlling interest                                                     7                                                                    3

                Net (loss) income attributable to Triple-S Management Corporation                                                                                                      $
          (26,145)              $


                Earnings per share attributable to Triple-S Management Corporation:

              Basic net (loss) income per share                                          $
              (1.12)                                                           $

              Diluted net (loss) income per share                                        $
              (1.12)                                                           $

              Weighted average of common shares                                                  23,381,949                                                                  22,757,794

              Diluted weighted average of common shares                                            23,381,949                                                                  22,840,274

                Exhibit III

                Condensed Consolidated Statements of Cash Flows

              (dollar amounts in thousands)


                                                                                                                                                                                                                   For the three months ended

              March 31,

                                                                                                                                                                                                                                         2020                      2019

     Net cash provided by (used in) operating activities                                                                                                                                                                                       $
       6,518                        $

     Cash flows from investing activities:

              Proceeds from investments sold or matured:

              Securities available for sale:

              Fixed maturities sold                                                                                                       43,425                                                  164,997

              Fixed maturities matured/called                                                                                             11,099                                                   12,267

                                               Securities held to maturity -fixed maturities matured/called                                                                                                 81                                                    1,154

              Equity investments sold                                                                                                                                21,107                                                   23,123

              Other invested assets sold                                                                                                                              8,524                                                      373

              Acquisition of investments:

              Securities available for sale - fixed maturities                                                                                                     (42,822)                                               (166,626)

              Securities held to maturity - fixed maturities                                                                                                           (80)                                                   (539)

              Equity investments                                                                                                                                  (102,733)                                                  (9,139)

              Other invested assets                                                                                                                                (10,438)                                                 (8,546)

              Increase in other investments                                                                                                                         (4,086)                                                   (535)

              Net change in policy loans                                                                                                                              (241)                                                   (309)

              Net capital expenditures                                                                                                                              (4,587)                                                 (2,968)

              Capital contribution on equity method investees                                                                                                       (4,933)                                                               -

                                                                                                            Net cash (used in) provided by investing
                                                                                                             activities                                                                                                              (85,684)                             13,252

     Cash flows from financing activities:

              Change in outstanding checks in excess of bank balances                                                                                                53,485                                                   36,682

              Net change in short-term borrowings                                                                                                                    24,000                                                                -

              Repayments of long-term borrowings                                                                                                                      (810)                                                   (808)

              Repurchase and retirement of common stock                                                                                                             (8,989)                                                     (1)

              Proceeds from policyholder deposits                                                                                                                    10,296                                                    3,607

              Surrender of policyholder deposits                                                                                                                    (4,073)                                                 (4,560)

                                                                                                            Net cash provided by financing activities                                                                                  73,909                              34,920

                                                                                                            Net decrease in cash and cash equivalents                                                                                 (5,257)                           (21,728)

     Cash and cash equivalents, beginning of period                                                                                                                                                                                               109,837                              117,544

     Cash and cash equivalents, end of period                                                                                                                                                                                                $
       104,580                          $

                  Exhibit IV
                    Segment Performance Supplemental Information


                (Unaudited)                                                                                                                                                 Three months ended March 31,

                (dollar amounts in millions)                                                                                                                                                        2020               2019      


              Premiums earned, net:

              Managed Care:

              Commercial                                                                     $201.1                                             $198.5                                1.3%

              Medicare                                                                        387.8                                              332.7                               16.6%

              Medicaid                                                                        220.9                                              174.3                               26.7%

              Total Managed Care                                             809.8                                              705.5                               14.8%

              Life Insurance                                                                   46.7                                               44.2                                5.7%

              Property and Casualty                                                            20.6                                               19.4                                6.2%

              Other                                                                                                                               (1.2)                              (1.1)            (9.1%)

                                                                                                Consolidated premiums earned, net                                               $875.9                              $768.0              14.0%

              Operating revenues: (1)

              Managed Care                                                                   $818.1                                             $715.0                               14.4%

              Life Insurance                                                                   53.6                                               50.8                                5.5%

              Property and Casualty                                                            22.7                                               21.9                                3.7%

              Other                                                                                                                                 2.0                               (0.1)            100.0%

                                                                                                Consolidated operating revenues                                                 $896.4                              $787.6              13.8%

              Operating income (loss): (2)

              Managed Care                                                                    $14.2                                              $22.1                             (35.7%)

              Life Insurance                                                                    5.0                                                5.6                             (10.7%)

              Property and Casualty                                                           (0.2)                                               3.6                            (105.6%)

              Other                                                                                                                                 0.7                                 0.4              75.0%

                                                                                                Consolidated operating income                                                    $19.7                               $31.7            (37.9%)

              Operating margin: (3)

              Managed Care                                                                     1.7%                                              3.1%                 
              -140 bp

              Life Insurance                                                                   9.3%                                             11.0%                 
              -170 bp

              Property and Casualty                                                          (0.9%)                                             16.4%               
              -1,730 bp

              Consolidated                                                                     2.2%                                              4.0%                 
              -180 bp

              Depreciation and amortization expense                                                                                                                                                            $3.9               $3.5                11.4%


                  (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                                                                                                             Three months ended
                                                                                                                                                              March 31,

                (Unaudited)                                     2020                           2019


              Member months enrollment:


              Fully-insured                            978,342                           953,052

              Self-insured                             330,232                           362,490

              Total Commercial                        1,308,574     1,315,542

              Medicare Advantage                                                      407,907       383,608

              Medicaid                                                                           1,068,016                        1,029,736

                                                                                                                            Total member months    2,784,497                        2,728,886

              Claim liabilities (in millions)                            $340.0                         $397.3

              Days claim payable                                             46                             61


              Premium PMPM:

              Managed Care                                                                       $329.96                          $298.13

              Commercial                                205.55                            208.28

              Medicare Advantage                        950.71                            867.29

              Medicaid                                  206.83                            169.27

              Medical loss ratio:                                         83.7%                         83.6%

              Commercial                                                                78.4%        82.9%

              Medicare Advantage                                                        82.7%        80.6%

              Medicaid                                                                               90.3%                           90.3%

              Adjusted medical loss ratio: (1)                            84.1%                         85.5%

              Commercial                                                                             78.4%                           83.1%

              Medicare Advantage                                                        81.3%        79.4%

              Medicaid                                                                               94.6%                           99.9%

              Operating expense ratio:

              Consolidated                                                              18.5%        17.2%

              Managed Care                                                              15.5%        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                                                       As of March 31,

                                                                                                 2020     2019



                                             Fully-insured     325,253     318,523

                                             Self-insured      109,760     118,677

                                                              Commercial    435,013   437,200

               Medicare Advantage                                                             135,710  128,090

            Medicaid                                          355,512     355,694

                                                                            members  926,235   920,984

                Exhibit V

                  Reconciliation of Non-GAAP Financial Measures


                                                                                                                      Adjusted Net
                                                                                                                      Income (Loss)

                (Unaudited)                                                                              Three months ended
                                                                                                       March 31,

                     (dollar amounts in millions)                        2020        2019


       Net (loss) income                                             $(26.1)      $34.8

       Less adjustments:

                                                                Net realized
                                                                 (losses) gains,
                                                                 net of tax                (0.4)  1.1

                                                                 (losses) gains on
                                                                 investments              (45.4) 15.7

                                                                Private equity
                                                                 income, net of
                                                                 tax                         2.0   0.3

                                                                Adjusted net
                                                                 income                    $17.7 $17.7

                                                                 adjusted net
                                                                 income per
                                                                 share                     $0.75 $0.77

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.


                AT THE COMPANY:                         INVESTOR RELATIONS:

     Juan José Román-Jiménez               
     Mr. Garrett Edson

     EVP and Chief Financial Officer       

     (787) 749-4949                        
     (787) 792-6488

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SOURCE Triple-S Management Corporation