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.
Employees
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
computer.
-- The Company has recently implemented a prescription drug home delivery
service.
-- 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
communities.
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
earned;
-- 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%
year-over-year.
-- 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
million.
-- 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 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 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 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 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
-- 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)
Unaudited
March 31, December 31,
2020 2019
Assets
Investments $
1,666,126 $
1,643,637
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 $
2,818,826
Liabilities and Stockholders' Equity
Policy liabilities and accruals $
1,466,165 $
1,425,477
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 $
2,818,826
Exhibit II
Condensed Consolidated Statements of Earnings
(dollar amounts in thousands, except per share data)
Unaudited
For the Three Months Ended
March 31,
2020 2019
Revenues:
Premiums earned, net $
875,897 $
768,002
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) $
34,786
===
Earnings per share attributable to Triple-S Management Corporation:
Basic net (loss) income per share $
(1.12) $
1.53
Diluted net (loss) income per share $
(1.12) $
1.52
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)
Unaudited
For the three months ended
March 31,
2020 2019
Net cash provided by (used in) operating activities $
6,518 $
(69,900)
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 $
95,816
Exhibit IV
Segment Performance Supplemental Information
---
(Unaudited) Three months ended March 31,
(dollar amounts in millions) 2020 2019
Percentage
Change
---
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:
Commercial:
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
Members:
Commercial:
Fully-insured 325,253 318,523
Self-insured 109,760 118,677
Total
Commercial 435,013 437,200
Medicare Advantage 135,710 128,090
Medicaid 355,512 355,694
Total
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
investment
(losses) gains,
net of tax (0.4) 1.1
Unrealized
(losses) gains on
equity
investments (45.4) 15.7
Private equity
investment
income, net of
tax 2.0 0.3
Adjusted net
income $17.7 $17.7
Diluted
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.
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
