Press Release

Triple-S Management Corporation Reports Fourth Quarter 2020 Results

Company Release - 2/25/2021

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, or $1.13 per diluted share, versus net income of $13.2 million, or $0.55 per diluted share, in the prior-year period;
  • Adjusted net income of $4.2 million, or $0.18 per diluted share, versus adjusted net income of $6.0 million, or $0.25 per diluted share, in the prior-year period;
  • Operating revenues of $969.8 million, a 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, compared with operating income of $8.7 million in the prior-year period.

Selected Segment Quarterly Details

Managed Care

  • Managed Care premiums earned were $873.1 million, up 17.7% year-over-year.
    • Medicare premiums earned of $392.5 million increased 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 increased 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 increased 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 decreased by $5.7 million, or 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 increased 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, a 72.7% increase compared to $4.4 million in the prior-year period, primarily reflecting higher premiums in the 2020 quarter.

Property and Casualty Segment

  • Premiums earned, net of $25.1 million increased 10.1% from the prior-year period.
  • Operating income was $8.9 million, compared with an operating loss of $0.5 million during the prior-year period, primarily driven by lower losses and operating expenses in the 2020 quarter.
  • Reserves related to Hurricane Maria were $183 million as of 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 and $4.02 billion, which includes Managed Care premiums earned, net between $3.58 billion and $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,
2020


December 31,
2019

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
Change


2020

2019

Percentage
Change

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
December 31,

Twelve months ended
December 31,

(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