December 9, 2021

Triple-S Management Corporation Reports Third Quarter 2021 Results

SAN JUAN, Puerto Rico, Nov. 4, 2021 /PRNewswire/ — Triple-S Management Corporation (NYSE:GTS), a leading healthcare services company in Puerto Rico,…

SAN JUAN, Puerto Rico, Nov. 4, 2021 /PRNewswire/ — Triple-S Management Corporation (NYSE:GTS), a leading healthcare services company in Puerto Rico, today announced its third quarter 2021 results.

Roberto Garcia-Rodriguez, President and Chief Executive Officer, commented: “We had a solid third quarter performance as we continued to record double-digit revenue growth year-over-year, driven by our Medicaid offering along with solid growth at our Life and P&C segments.  Moving forward, we continue to progress in our integrated healthcare strategy, enabling us to deliver additional attractive products, along with the high-quality care and superior service to which our members have become accustomed.”

Third Quarter 2021 Consolidated Results and Other Highlights

  • Net income of $8.2 million, or $0.35 per diluted share, compared with $23.6 million, or $1.02 per diluted share, in the prior year period.
  • Adjusted net income of $9.6 million, or $0.41 per diluted share, versus $14.2 million, or $0.61 per diluted share, in the prior-year period.
  • Operating revenue of $1.0 billion, a 10.8% increase from the prior-year period, primarily reflecting higher Managed Care net premiums earned.
  • Consolidated loss ratio of 86.2%, an increase of 370 basis points compared with the third quarter of 2020, reflecting normalized Managed Care utilization patterns in the third quarter of 2021.
  • Medical loss ratio (MLR) of 88.7%, 400 basis points higher than the same period last year.
  • Consolidated operating income of $11.5 million, compared with $22.3 million in the prior-year period.

Selected Segment Quarterly Details

Managed Care

  • Managed Care premiums earned were $939.7 million, up 10.6% year-over-year.
    • Medicare premiums earned were $423.1 million, an increase of 5.6% from the prior-year period. The increase was largely due to higher premium rates resulting from a rise in the premium rate benchmark and membership risk score and higher enrollment.
    • Medicaid premiums earned were $302.2 million, an increase of 25.4% from the prior-year period, primarily reflecting an increase in enrollment of approximately 210,000 member months and higher average premium rates. In addition, following a reconciliation process with ASES this quarter, the Company recognized premiums corresponding to prior periods. These increases were partially offset by the elimination of the HIP fee pass-through in 2021.
    • Commercial premiums earned were $214.4 million, an increase of 2.9% from the prior-year period, mainly reflecting higher average premium rates in the 2021 period, partially offset by the elimination of the HIP fee pass-through in 2021.
  • Reported MLR was 88.7%, an increase of 400 basis points from the prior-year period, primarily reflecting the elimination of the HIP fee in 2021, normalized utilization of services compared with the low utilization in the prior-year quarter due to the pandemic, higher costs associated with COVID-19-related testing, treatment costs and the waiver of medical and payment policies, and increased benefits in the Medicare product offering in 2021.
  • Managed Care operating expenses were $109.4 million, a decrease of $15.5 million, or 12.4%, from the prior-year quarter, primarily reflecting the elimination of the HIP fee in 2021 and lower business promotion expenses, partially offset by higher personnel costs. The segment operating expense ratio was 11.6%, a 300 basis-point improvement from the prior-year quarter.

Life Insurance Segment

  • Premiums earned, net were $55.1 million, a 10.0% increase from the prior-year period, resulting from higher sales across all lines of business, particularly in the Individual Life and Cancer lines of business. Operating income was $5.6 million, compared to $5.7 million in the prior-year period.

Property and Casualty Segment

  • Premiums earned, net were $26.3 million, an increase of 10.0% from the prior-year period. The increase was primarily due to higher premiums in Personal Package, Commercial Liability, Commercial Auto and Commercial Property products, partially offset by a decrease in Commercial Package products.
  • Operating income was $2.0 million, compared with $4.4 million in the prior-year period, primarily driven by higher losses and operating expenses in the 2021 quarter. Losses during the 2020 period were lower due to the COVID-19 pandemic.

Liquidity and Capital Resources

  • As of September 30, 2021, the Company had cash and cash equivalents of $122.7 million and investments of $1.9 billion on its consolidated balance sheet.

2021 Outlook and Conference Call

Due to the pending transaction with GuideWell Mutual Holding Corporation announced on August 24, 2021, the Company will not be hosting a conference call or providing an updated outlook for the fourth quarter or full year 2021. The Company’s previously issued full year 2021 outlook should no longer be relied upon. Please visit the Investor Relations section of the Company’s website at http://investors.triplesmanagement.com for the latest releases and information.

About Triple-S Management Corporation

Triple-S Management, a health services company, serves more than 1 million customers in Puerto Rico, which represents nearly one-third of the island’s population. With over 60 years of experience, it is the premier insurance and managed care brand, with the largest customer base and broadest provider networks on the island. Triple-S Management has the exclusive right to use the Blue Cross Blue Shield name and mark throughout Puerto Rico, the U.S. Virgin Islands, Costa Rica, the British Virgin Islands and Anguilla, and offers a broad portfolio of managed care and related products in the commercial, Medicare Advantage and Medicaid segments. Triple-S Management is also a well-known brand in the life insurance and property and casualty insurance segments in Puerto Rico, with strong customer relationships and a significant market share. For more information about Triple-S Management, visit www.triplesmanagement.com or contact investorrelations@ssspr.com

Non-GAAP Financial Measures

This earnings release presents information about the Company’s adjusted net income, which is a non-GAAP financial metric provided as a complement to the results provided in accordance with accounting principles generally accepted in the United States of America (GAAP). A reconciliation of adjusted net income to net income, the most comparable GAAP financial measure, is provided in the accompanying tables found at the end of this release.

Forward-Looking Statements

This document contains forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements include information about possible or assumed future sales, results of operations, developments, regulatory approvals or other circumstances. Sentences that include “believe”, “expect”, “plan”, “intend”, “estimate”, “anticipate”, “project”, “may”, “will”, “shall”, “should” and similar expressions, whether in the positive or negative, are intended to identify forward-looking statements.

All forward-looking statements in this news release reflect management’s current views about future events and are based on assumptions and subject to risks and uncertainties. Consequently, actual results may differ materially from those expressed here as a result of various factors, including all the risks discussed and identified in public filings with the U.S. Securities and Exchange Commission (SEC).

In addition, the Company operates in a highly competitive, constantly changing environment, influenced by very large organizations that have resulted from business combinations, aggressive marketing and pricing practices of competitors, and regulatory oversight. The following factors, if markedly different from the Company’s planning assumptions (either individually or in combination), could cause Triple-S Management’s results to differ materially from those expressed in any forward-looking statements shared here:

  • Trends in health care costs and utilization rates
  • Ability to secure sufficient premium rate increases
  • Competitor pricing below market trends of increasing costs
  • Re-estimates of policy and contract liabilities and reserves
  • Changes in government laws and regulations of managed care, life insurance or property and casualty insurance
  • Significant acquisitions or divestitures by major competitors
  • Introduction and use of new prescription drugs and technologies
  • A downgrade in the Company’s financial strength ratings
  • Litigation or legislation targeted at managed care, life insurance or property and casualty insurance companies
  • Ability to contract with providers and government agencies consistent with past practice
  • Ability to successfully implement the Company’s disease management, utilization management and Star ratings programs
  • Ability to maintain Federal Employees, Medicare and Medicaid contracts
  • Volatility in the securities markets and investment losses and defaults
  • General economic downturns, major disasters and epidemics

This list is not exhaustive. Management believes the forward-looking statements in this release are reasonable. However, there is no assurance that the actions, events or results anticipated by the forward-looking statements will occur or, if any of them do, what impact they will have on the Company’s results of operations or financial condition. In view of these uncertainties, investors should not place undue reliance on any forward-looking statements, which are based on current expectations. In addition, forward-looking statements are based on information available the day they are made, and (other than as required by applicable law, including the securities laws of the United States) the Company does not intend to update or revise any of them in light of new information or future events.

Readers are advised to carefully review and consider the various disclosures in the Company’s SEC reports.

Earnings Release Schedules and Supplemental Information

Condensed Consolidated Balance Sheets……………………………………………………………………… Exhibit I

Condensed Consolidated Statements of Earnings…………………………………………………………… Exhibit II

Condensed Consolidated Statements of Cash Flows………………………………………………………. Exhibit III

Segment Performance Supplemental Information…………………………………………………………… Exhibit IV

Reconciliation of Non-GAAP Financial Measures……………………………………………………………. Exhibit V

 

Exhibit I


Condensed Consolidated Balance Sheets

(dollar in thousands)

Unaudited
































September 30,

2021


December 31,

2020

Assets



















Investments


$

1,940,745


$

1,874,024

Cash and cash equivalents



122,709



110,989

Premium and other receivables, net



496,477



488,840

Deferred policy acquisition costs and value of business acquired


255,010



248,325

Property and equipment, net



137,762



131,974

Other assets



238,963



234,266













Total assets


$

3,191,666


$

3,088,418























Liabilities and Stockholders’ Equity



















Policy liabilities and accruals


$

1,588,117


$

1,550,798

Accounts payable and accrued liabilities



537,110



487,356

Short-term borrowings





30,000

Long-term borrowings



49,498



52,751













Total liabilities



2,174,725



2,120,905











Stockholders’ equity:








Common stock



23,795



23,430


Other stockholders’ equity



993,879



944,800













Total Triple-S Management Corporation stockholders’ equity


1,017,674



968,230













Non-controlling interest in consolidated subsidiary



(733)



(717)













Total stockholders’ equity



1,016,941



967,513













Total liabilities and stockholders’ equity


$

3,191,666


$

3,088,418

 

Exhibit II


Condensed Consolidated Statements of Earnings

(dollar in thousands, except per share information)

Unaudited




























For the Three Months Ended


For the Nine Months Ended









September 30,


September 30,









2021


2020


2021


2020

Revenues

















Premiums earned, net


$

1,019,696


$

922,934


$

3,016,012


$

2,657,366


Administrative service fees



3,875



3,752



9,316



8,755


Net investment income



17,572



14,168



46,178



42,294


Other operating revenues



3,925



2,052



8,518



6,394



Total operating revenues



1,045,068



942,906



3,080,024



2,714,809





















Net realized investment gains (losses)



1,015



507



3,746



(180)


Net unrealized investment (losses) gains on equity investments



(7,912)



11,040



13,383



(17,428)


Other income, net



11,085



1,811



19,047



6,217



Total revenues



1,049,256



956,264



3,116,200



2,703,418
















Benefits and expenses














Claims incurred, net of reinsurance



878,947



761,792



2,573,569



2,129,401


Operating expenses



154,526



158,809



456,880



499,669



Total operating costs



1,033,473



920,601



3,030,449



2,629,070





















Interest expense



2,016



2,096



6,225



5,813


















Total benefits and expenses



1,035,489



922,697



3,036,674



2,634,883


















Income before taxes



13,767



33,567



79,526



68,535
















Income tax expense



5,607



9,989



24,505



27,520
















Net income






8,160



23,578



55,021



41,015

















Net loss attributable to the non-controlling interest



7



3



16



20
















Net income attributable to Triple-S Management Corporation


$

8,167


$

23,581


$

55,037


$

41,035




















Earnings per share attributable to Triple-S Management Corporation:
































Basic net income per share


$

0.35


$

1.02


$

2.35


$

1.77


Diluted net income per share


$

0.35


$

1.02


$

2.34


$

1.76





















Weighted average of common shares



23,494,415



23,073,511



23,402,622



23,215,840


Diluted weighted average of common shares



23,610,672



23,193,980



23,546,277



23,318,069

 

Exhibit III


Condensed Consolidated Statements of Cash Flows

(dollar in thousands)

Unaudited




















 

For the Nine Months Ended








September 30,








2021


2020













Net cash provided by operating activities


$

100,699


$

223,681











Cash flows from investing activities:








Proceeds from investments sold or matured:









Securities available-for-sale:










Fixed-maturities sold



140,866



94,557




Fixed-maturities matured/called



18,271



37,450



Securities held-to-maturity – fixed-maturities matured/called



747



1,079



Equity investments sold



99,951



80,152



Other invested assets sold



19,652



13,231


Acquisition of investments:









Securities available-for-sale – fixed-maturities



(129,066)



(206,387)



Securities held-to-maturity – fixed-maturities



(751)



(1,087)



Equity investments



(199,046)



(201,324)



Other invested assets 



(9,317)



(25,442)


(Decrease) increase in other investments



(4,470)



(3,924)


Net change in policy loans



(21)



240


Net capital expenditures



(16,948)



(52,549)


Capital contribution on equity method investees





(7,083)















Net cash used in investing activities



(80,132)



(271,087)











Cash flows from financing activities:








Change in outstanding checks in excess of bank balances



20,594



16,814


Net change in short-term borrowings



(30,000)



28,500


Proceeds of long-term borrowings





30,841


Repayments of long-term borrowings



(3,370)



(2,760)


Repurchase and retirement of common stock





(14,980)


Proceeds from policyholder deposits



12,594



21,586


Surrender of policyholder deposits



(8,665)



(12,829)















Net cash (used in) provided by financing activities



(8,847)



67,172















Net increase in cash and cash equivalents



11,720



19,766













Cash and cash equivalents, beginning of period



110,989



109,837











Cash and cash equivalents, end of period


$

122,709


$

129,603

 

Exhibit IV


Segment Performance Supplemental Information


(Unaudited)


Three months ended September 30,


Nine months ended September 30,

(dollar in millions)

2021

2020

Percentage

Change


2021

2020

Percentage

Change

Premiums earned, net:









Managed Care:










Medicare

$      423.1

$      400.7

5.6%


$   1,233.8

$   1,160.9

6.3%



Medicaid

302.2

240.9

25.4%


916.7

682.9

34.2%



Commercial

214.4

208.4

2.9%


631.0

605.3

4.2%




Total Managed Care

939.7

850.0

10.6%


2,781.5

2,449.1

13.6%


Life Insurance

55.1

50.1

10.0%


161.6

144.9

11.5%


Property and Casualty

26.3

23.9

10.0%


76.9

66.9

14.9%


Other



(1.4)

(1.0)

(40.0%)


(4.0)

(3.5)

(14.3%)





Consolidated premiums earned, net

$   1,019.7

$      923.0

10.5%


$   3,016.0

$   2,657.4

13.5%

Operating revenues: 1









Managed Care

$      951.7

$      858.2

10.9%


$   2,810.6

$   2,473.7

13.6%


Life Insurance

61.9

57.0

8.6%


181.5

165.5

9.7%


Property and Casualty

28.8

26.1

10.3%


83.7

73.5

13.9%


Other



2.6

1.6

62.5%


4.2

2.1

100.0%





Consolidated operating revenues

$   1,045.0

$      942.9

10.8%


$   3,080.0

$   2,714.8

13.5%

Operating income (loss): 2









Managed Care

$         8.5

$        13.0

(34.6%)


$        34.5

$        56.5

(38.9%)


Life Insurance

5.6

5.7

(1.8%)


17.8

20.2

(11.9%)


Property and Casualty

2.0

4.4

(54.5%)


7.8

10.9

(28.4%)


Other



(4.6)

(0.8)

(475.0%)


(10.6)

(1.9)

(457.9%)





Consolidated operating income

$        11.5

$        22.3

(48.4%)


$        49.5

$        85.7

(42.2%)

Operating margin: 3









Managed Care

0.9%

1.5%

-60 bp


1.2%

2.3%

-110 bp


Life Insurance

9.0%

10.0%

-100 bp


9.8%

12.2%

-240 bp


Property and Casualty

6.9%

16.9%

-1,000 bp


9.3%

14.8%

-550 bp


Consolidated

1.1%

2.4%

-130 bp


1.6%

3.2%

-160 bp

Depreciation and amortization expense

$         3.6

$         3.1

16.1%


$        10.7

$        10.9

(1.8%)

1 Operating revenues include premiums earned, net, administrative service fees and net investment income.

2 Operating income or loss include operating revenues minus operating costs. Operating costs include claims incurred and operating expenses.

3 Operating margin is defined as operating income or loss divided by operating revenues.

 

Managed Care Additional Data








Three months ended September 30,


Nine months ended

September 30,

(Unaudited)


2021

2020


2021

2020

Member months enrollment:







Medicare Advantage




410,939

407,170


1,228,732

1,220,280


Medicaid


1,342,953

1,132,626


3,972,136

3,278,098


Commercial:








Fully insured

966,002

966,906


2,871,788

2,920,460



Self-insured

281,153

324,372


875,844

981,634




Total Commercial

1,247,155

1,291,278


3,747,632

3,902,094





Total member months

3,001,047

2,831,074


8,948,500

8,400,472

Claim liabilities (in millions)




$            533.7

$            417.6

Days claim payable




60

57

Premium PMPM:







Managed Care

$       345.49

$      339.09


$          344.56

$          330.12



Medicare Advantage

1,029.59

984.11


1,004.12

951.34



Medicaid 

225.03

212.69


230.78

208.32



Commercial

221.95

215.53


219.72

207.26

Medical loss ratio:

88.7%

84.7%


88.0%

82.7%


Medicare Advantage

82.5%

80.6%


85.1%

80.2%


Medicaid 


95.2%

94.0%


92.1%

92.7%


Commercial

91.9%

81.9%


87.9%

76.1%

Adjusted medical loss ratio: 1

90.7%

81.8%


89.9%

81.1%


Medicare Advantage

84.6%

75.0%


86.8%

77.4%


Medicaid 


99.2%

90.9%


95.6%

91.1%


Commercial

90.5%

83.8%


87.8%

76.5%

Operating expense ratio:







Consolidated

15.1%

17.1%


15.1%

18.7%


Managed Care

11.6%

14.6%


11.7%

15.9%

1 The adjusted medical loss ratio accounts for subsequent adjustments to estimates, such as prior-period reserve developments and Medicare premium adjustments, and presents them in their corresponding period.

 

Managed Care Membership by Business


Managed Care Membership by Segment

As of September 30,







2021

2020

Members:






Medicare Advantage





136,459

136,135


Medicaid


449,474

385,344


Commercial:





Fully insured

321,772

321,673



Self-insured

94,261

107,830




Total Commercial

416,033

429,503





Total members

1,001,966

950,982









 


Exhibit V


Reconciliation of Non-GAAP Financial Measures



Adjusted Net Income

(Unaudited)

Three months ended

September 30,


Nine months ended

September 30,

(dollar in millions)

2021

2020


2021

2020

Net income


$          8.2

$         23.6


$       55.0

$       41.0

Less adjustments:







Net realized investment gains (losses)

1.0

0.5


3.7

(0.2)


Unrealized (losses) gains on equity investments

(7.9)

11.0


13.4

(17.4)


Contingency accrual 


(32.0)


Private equity investment income

8.4

0.2


10.8

3.9


GuideWell transaction costs

(1.8)


(1.8)


Tax impact of non-GAAP adjustments

(1.095)

(2.3)


(6.80)

14.0



Adjusted net income

$          9.6

$         14.2


$       35.7

$       72.7



Diluted adjusted net income per share

$         0.41

$         0.61


$       1.52

$       3.12

Adjusted net income is a non-GAAP financial metric and should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP.  Management believes that the use of this adjusted net income and adjusted net income per share provides investors and management useful information about the earnings impact of realized and unrealized investment gains or losses, as well as other non-recurring items impacting the Company’s results of operations.  The Company estimates tax impact of net realized and non-realized gains (losses), private equity investment income and contingency accrual at the applicable statutory tax rates.  These non-GAAP metrics do not consider all the items associated with the Company’s operations as determined in accordance with GAAP.  As a result, one should not consider these measures in isolation.

FOR FURTHER INFORMATION:




AT THE COMPANY:

INVESTOR RELATIONS:

Victor J. Haddock-Morales

Mr. Garrett Edson

EVP and Chief Financial Officer

ICR

(787) 749-4949

(787) 792-6488

 

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SOURCE Triple-S Management Corporation