SAN JUAN, Puerto Rico, Feb. 8,
2012/PRNewswire/ -- Triple-S Management Corporation
(NYSE: GTS), the leading managed care company in
Puerto Rico, today announced consolidated
revenues of $565.9 millionand operating income
of $26.7 millionfor the three months ended
December 31, 2011. Net income of
$19.0 million, or $0.67per
diluted share, includes an after tax gain of $0.1
million, or $0.01per diluted share,
related to net realized gains on investments.
Fourth-Quarter Consolidated Highlights
Total consolidated operating revenues were $565.4
million;
Operating income was $26.7 million;
Consolidated loss ratio was 83.0% and the medical loss
ratio (MLR) was 86.0%;
Medicare member month enrollment increased 75.3% year
over year;
Total member month enrollment increased 72.3%
sequentially.
Commenting on the period's results, Ramon M.
Ruiz-Comas, President and Chief Executive Officer,
said, "We met or surpassed all of the metrics we
provided in our revised guidance. The Managed Care business
enjoyed both membership and premium growth, along with a
60-basis-point improvement in the adjusted MLR. The
increase in business volume contributed to a decline in the
administrative expense ratio. Most importantly, utilization
within our Medicare Advantage (MA) segment seems to have
stabilized and membership increased, the latter reflecting
a favorable open-enrollment selling season and the ability
to add some of these members in the final month of the
quarter."
Mr. Ruiz-Comas continued, "Total member month
enrollment increased as we began providing healthcare
services to nearly 860,000 members under the miSalud
(Medicaid) contract on November 1st. We
are pleased to again be serving this important segment of
the population within five regions of Puerto
Rico, and look forward to expanding awareness of the
products that we offer."
"As we commence 2012, Triple-S Management has multiple
initiatives underway to grow revenue and manage costs.
For example, we will continue to focus on increasing
MA enrollment through both of our brands, which should
boost our top line throughout the year. In addition, we
will expand the implementation of health risk assessments
in the MA segment in an effort to measure this population
more accurately. Also, we are now working with a
leading provider of data-driven healthcare solutions to
improve our CMS Star ratings and health risk factors in
2013 and beyond. We believe that we can improve our
ratings by leveraging this provider's healthcare
quality measurement system and large-scale healthcare
dataset analytics, as well as their insight into clinical
quality outcomes and risk scores," added Mr.
Ruiz-Comas.
"We continue investing in our IT systems and software
platforms to bolster our customer and provider services and
to increase electronic health record penetration across all
of our sectors, particularly in Medicaid. Moreover, we now
have a controlling financial stake in a health clinic on
the island, as we seek innovative alternatives to serve our
Managed Care membership more cost effectively. This
quarter, we will also be opening our first stand-alone
center where all Triple-S products-health, life, and
property-will be sold and serviced. In summary, our ongoing
investments in our core operations, a diversified business
mix, which mitigates risk and segment variability, and a
healthy balance sheet support our belief that we can
deliver a solid overall performance this year,"
concluded Mr. Ruiz-Comas.
Selected Quarterly Details
Pro Forma Net Income was $18.9 Million, or
$0.66Per Diluted Share. Weighted
average shares outstanding were 28.5 million. This
compares with pro forma net income of $13.6
million, or $0.46per diluted share,
in the corresponding quarter of 2010, based on weighted
average shares outstanding of 29.1 million.
Consolidated Premiums Increased 31.0%, to $534.0
Million. Theincrease is principally due to
the effect of the acquisition of American Health (AH)
offset by the termination of the Medicaid contracts in
the fourth quarter of 2010.
Consolidated Administrative Service Fees Increased
319.1%, to $19.7 Million. The
significant increase primarily reflects the addition of
the miSalud business, effective November 1,
2011.
Managed Care Membership. Our Managed Care
membership grew by 113.4% year over year, mostly
reflecting the return of the miSalud business, in which
self-insured membership was 858,757 at the end of this
quarter. Medicare membership increased 78.5%, to 113,431,
driven by the AH acquisition. Fully insured
Commercial membership was 482,771, down 0.3% from the
same period last year.
Managed Care MLR Increased by 200 Basis Points, to 86.0%.
Excluding the effect of the lost at-risk Medicaid
contract in September 2010, the MLR was 140
basis points lower than last year, reflecting the
870-basis-point improvement in the Commercial MLR.
This was partially offset by the effect of the
higher MLR ratio in the acquired AH business and the
higher-than-expected utilization of medical services in
the remaining Medicare business, particularly the
non-dual offerings.
Consolidated Loss Ratio Increased by 340 Basis Points, to
83.0%. The higher consolidated loss ratio primarily
results from the 200-basis-point increase in the Managed
Care MLR. The loss ratios of the Property and Casualty
and Life Insurance segments also rose year over year.
Consolidated Operating Expense Ratio Decreased 150 Basis
Points, to 17.2%. The lower consolidated operating
expense ratio was mainly due to the incremental business
volume generated by the AH acquisition in 2011, and the
addition of the miSalud enrollment, which allowed us to
leverage our overall operating costs, as well as lower
operating expenses in the Life and Property and Casualty
Insurance segments. Consolidated operating expenses
increased by $18.1 million, or 23.4%, from a
year ago, mostly due to the higher member month
enrollment in the 2011 period. In the fourth
quarter, $0.8 millionwas attributable to
enhanced customer service to members and providers during
the IT system conversion, and approximately $2.1
millionwas associated with the amortization of
intangible assets related to the AH transaction.
Consolidated Operating Income Increased 23.0%, to
$26.7 Million. The increase mostly
reflects the improved MLR of the Commercial business, the
reduction in the operating expense ratio, and the
resumption of the miSalud program, effective
November 1, 2011.
Consolidated Operating Income Margin Was 4.7%. The
consolidated operatingmargin declined by 40 basis points
year over year. Excluding the amortization of the
intangible asset associated with the AH acquisition, the
operating income margin for the period was similar to
prior year.
Parent Company Information. As of December
31, 2011, Triple-S Management had $53.2
millionin parent company cash, cash equivalents,
and investments.
Share Repurchase Program. During the quarter,
Triple-S repurchased and retired 210,905 shares at an
average price per share of $17.71, for an
aggregate cost of $3.7 million.
Pro Forma Net Income
(Unaudited)
Three months ended December 31,
Twelve months ended December 31,
(dollar amounts in millions)
2011
2010
2011
2010
Net income
$ 19.0
$ 20.1
$ 58.0
$ 66.8
Less pro forma adjustments:
Net realized investment gains, net of
tax
0.1
2.4
15.8
2.2
Net unrealized trading investments gain
(loss), net of tax
-
4.1
(6.2)
4.6
Derivative loss, net of tax
-
-
(0.7)
(0.8)
Charge related to change in enacted tax
rate
-
-
(6.4)
-
Pro forma net income
$ 18.9
$ 13.6
$ 55.5
$ 60.8
Diluted pro forma net income per share
$ 0.66
$ 0.46
$ 1.92
$ 2.08
Year-End Recap
For the year ended December 31, 2011,
consolidated operating revenues rose 7.6% to $2.1
billion, primarily reflecting an increase in
Medicare member months attributable to new members acquired
from AH, offset, in part, by the termination of the
Medicaid contracts effective September 30,
2010. The addition of the miSalud enrollees,
effective November 1, 2011, also contributed
to the higher operating revenues and is reflected in
administrative service fees. Consolidated claims
incurred in 2011 were $1.7 billion, up 7.5%
year over year. The consolidated loss ratio decreased
50 basis points to 83.5%, and the MLR fell 90 basis points
to 87.2%. This decline was mostly driven by lower
utilization in the Commercial segment, offset by an
increased Medicare MLR resulting from higher utilization
trends. Consolidated operating expenses in 2011 were
$347.6 millionand the operating expense ratio
was 16.6%. Pro forma net income for the year was
$55.5 million, or $1.92per
diluted share, based on weighted average shares outstanding
of 28.8 million, compared with $60.8 million,
or $2.08per diluted share, based on weighted
average shares outstanding of 29.2 million at the same time
last year.
Segment Performance
Triple-S Management operates in three segments: 1) Managed
Care, 2) Life Insurance, and 3) Property and Casualty
Insurance. Management evaluates performance based
primarily on the operating revenues and operating income of
each segment. Operating revenues include premiums
earned, net administrative service fees and net investment
income. Operating costs include claims incurred and
operating expenses. The Company calculates operating
income or loss as operating revenues minus operating
expenses. Operating margin is defined as operating
income or loss divided by operating revenues. The
adjusted medical loss ratio accounts for subsequent
adjustments to estimates, such as MA premium adjustments
and prior period reserve developments, and presents them in
the corresponding period. The adjusted medical loss
ratio for the Managed Care segment and for the Commercial
business for the three months ended December 31,
2011, also include out of period favorable
adjustments of $2.2 millioncorresponding to
the previous three quarters of 2011 that would have
increased premiums earned or lowered the claims incurred in
those quarters. The Company is currently reviewing
the impact this situation may have on the evaluation of its
internal controls over financial reporting.
(Unaudited)
Three months ended December 31,
Twelve months ended December 31,
(dollar amounts in millions)
2011
2010
Percentage Change
2011
2010
Percentage Change
Premiums earned, net:
Managed Care:
Commercial
$ 243.9
$ 232.1
5.1%
$ 947.1
$ 947.1
0.0%
Medicare
238.2
113.7
109.5%
896.6
468.4
91.4%
Medicaid
-
11.7
(100.0%)
2.7
284.8
(99.1%)
Total Managed Care
482.1
357.5
34.9%
1,846.4
1,700.3
8.6%
Life Insurance
29.4
27.1
8.5%
113.0
105.8
6.8%
Property and Casualty
23.2
24.0
(3.3%)
97.6
99.2
(1.6%)
Other
(0.7)
(1.0)
(30.0%)
(2.5)
(4.1)
(39.0%)
Consolidated premiums earned, net
$ 534.0
$ 407.6
31.0%
$ 2,054.5
$ 1,901.2
8.1%
Operating revenues:
Managed Care
$ 507.0
$ 368.2
37.7%
$ 1,906.9
$ 1,763.3
8.1%
Life Insurance
34.3
31.3
9.6%
131.5
122.9
7.0%
Property and Casualty
25.5
25.9
(1.5%)
107.1
109.3
(2.0%)
Other
(1.4)
(1.8)
(22.2%)
(4.3)
(5.6)
(23.2%)
Consolidated operating revenues
$ 565.4
$ 423.6
33.5%
$ 2,141.2
$ 1,989.9
7.6%
Operating income:
Managed Care
$ 20.3
$ 16.3
24.5%
$ 53.0
$ 63.8
(16.9%)
Life Insurance
4.6
4.3
7.0%
17.7
17.3
2.3%
Property and Casualty
2.6
0.3
766.7%
4.5
3.6
25.0%
Other
(0.8)
0.8
(200.0%)
2.1
3.3
(36.4%)
Consolidated operating income
$ 26.7
$ 21.7
23.0%
$ 77.3
$ 88.0
(12.2%)
Operating margin:
Managed Care
4.0%
4.4%
-40 bp
2.8%
3.6%
-80 bp
Life Insurance
13.4%
13.7%
-30 bp
13.5%
14.1%
-60 bp
Property and Casualty
10.2%
1.2%
900 bp
4.2%
3.3%
90 bp
Consolidated
4.7%
5.1%
-40 bp
3.6%
4.4%
-80 bp
Depreciation and amortization expense
$ 5.6
$ 3.3
69.7%
$ 21.9
$ 12.2
79.5%
Managed Care Additional Data
Three months ended December 31,
Twelve months ended December 31,
(Unaudited)
2011
2010
2011
2010
Member months enrollment:
Commercial:
Fully-insured
1,443,224
1,461,006
5,806,053
5,982,094
Self-insured
686,066
726,747
2,744,431
2,966,291
Total Commercial
2,129,290
2,187,753
8,550,484
8,948,385
Medicare:
Medicare Advantage
309,370
163,628
1,132,634
670,250
Stand-alone PDP
26,339
27,902
105,987
112,297
Total Medicare
335,709
191,530
1,238,621
782,547
Medicaid:
Fully-insured
-
-
-
3,078,288
Self-insured
1,718,888
-
1,718,888
1,782,426
Total Medicaid
1,718,888
-
1,718,888
4,860,714
Total member months
4,183,887
2,379,283
11,507,993
14,591,646
Claim liabilities(in
millions)
$ 262.2
$ 267.6
*
Days claim payable (excluding American
Health)
63.5
63.9
*
Premium PMPM:
Managed Care
$ 270.97
$ 216.35
$ 262.10
$ 172.74
Commercial
169.19
158.83
163.31
158.31
Medicare
709.45
593.89
723.88
598.56
Medicaid
-
-
-
92.52
Medical loss ratio
86.0%
84.0%
87.2%
88.1%
Commercial
80.0%
88.7%
85.6%
89.7%
Medicare Advantage
91.9%
85.6%
89.6%
84.3%
Stand-alone PDP
81.5%
59.6%
77.7%
71.7%
Medicaid
0.0%
0.0%
0.0%
89.5%
Adjusted medical loss ratio
86.7%
87.3%
87.0%
88.4%
Commercial
82.7%
88.4%
85.4%
89.8%
Medicare Advantage
90.8%
84.9%
89.0%
84.2%
Stand-alone PDP
75.4%
59.5%
78.1%
70.3%
Medicaid
0.0%
0.0%
0.0%
91.5%
Operating expense ratio:
Consolidated
17.2%
18.7%
16.6%
15.7%
Managed Care
14.4%
14.2%
12.9%
11.6%
* Information provided as of September 30,
2011.
Managed Care Membership by Segment
As of December 31,
2011
2010
Members:
Commercial:
Fully-insured
482,771
484,163
Self-insured
228,737
241,165
Total Commercial
711,508
725,328
Medicare:
Medicare Advantage
104,696
54,276
Stand-alone PDP
8,735
9,277
Total Medicare
113,431
63,553
Medicaid:
Fully-insured
-
-
Self-insured
858,757
-
Total Medicaid
858,757
-
Total members
1,683,696
788,881
2012 Guidance
Mr. Ruiz-Comas stated, "Our 2012 guidance reflects a
full-year contribution from American Health and our
Medicaid business, as well as the effect of our share
buyback authorization. Our outlook also accounts for the
reduction in our Medicare premiums, the effect of
concluding our IT conversion, and investments required to
reach our MA Star program goals. We estimate consolidated
operating revenues of $2.3 to $2.4 billionand
earnings per share of $2.32-$2.38."
2012 Range
Medical enrollment fully-insured
(member months)
7.2-7.4 million
Medical enrollment self-insured
(member months)
12.7-13.0 million
Consolidated operating revenues
(in billions)
$2.3-$2.4
Consolidated loss ratio
83.8%-84.8%
Medical loss ratio
87.6%-88.6%
Consolidated operating expense ratio
17.2%-18.2%
Consolidated operating income (in
millions)
$88.0-$98.0
Consolidated effective tax rate
25%-26%
Pro forma earnings per share
$2.32-$2.38
Weighted average of diluted shares
outstanding (in millions)
28.5
Conference Call and Webcast
Management will host a conference call and webcast on
February 8, 2012at 7:30 a.m. Eastern
Timeto discuss its financial results for the three
months and the year ended December 31, 2011,
as well as expectations for future earnings. To
participate, callers within the U.S. and
Canadashould dial 1-800-762-8779, and
international callers should dial 1-480-629-9771 about five
minutes before the presentation.
To listen to the webcast, participants should visit the
"Investor Relations" section of the Company's
Web site 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 Web site, 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 Web site.
About Triple-S Management Corporation
Triple-S Management Corporation is an independent licensee
of the Blue Cross Blue Shield Association. It is the
leading player in the managed care industry in Puerto
Rico. Triple-S Management also has the
exclusive right to use the Blue Cross Blue Shield name and
mark throughout Puerto Ricoand the U.S.
Virgin Islands. With more than 50 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 Reform markets under
the Blue Cross Blue Shield brand through its subsidiary
Triple-S Salud, Inc. and effective February
2011, also offer non-branded Medicare products
through American Health Inc. In addition to its
managed care business, Triple-S Management provides
non-Blue Cross Blue Shield branded life and property and
casualty insurance in Puerto Rico.
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
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.
Condensed Consolidated Balance Sheets
(Dollar amounts in thousands, except per
share data)
Unaudited December 31, 2011
Historical December 31, 2010
Assets
Investments
$
1,153,293
$
1,100,694
Cash and cash equivalents
71,834
45,021
Premium and other receivables, net
287,184
325,780
Deferred policy acquisition costs and value
of business acquired
155,788
146,086
Property and equipment, net
81,872
76,745
Other assets
130,606
65,044
Total assets
$
1,880,577
$
1,759,370
Liabilities and Stockholders' Equity
Policy liabilities and accruals
$
836,029
$
760,028
Accounts payable and accrued
liabilities
253,202
216,043
Long-term borrowings
114,387
166,027
Total liabilities
1,203,618
1,142,098
Stockholders' equity:
Common stock
28,365
28,816
Other stockholders equity
648,594
588,456
Total stockholders' equity
676,959
617,272
Total liabilities and stockholders'
equity
$
1,880,577
$
1,759,370
Condensed Consolidated Statements of
Earnings
(Dollar amounts in thousands, except per
share data)
For the Three Months Ended
For the Year Ended
December 31,
December 31,
Unaudited 2011
Historical 2010
Unaudited 2011
Historical 2010
Revenues:
Premiums earned, net
$
533,983
$
407,651
$
2,054,468
$
1,901,100
Administrative service fees
19,692
4,687
38,459
39,546
Net investment income
11,713
11,257
48,226
49,145
Total operating revenues
565,388
423,595
2,141,153
1,989,791
Net realized investment gains :
Total other-than-temporary impairment losses
on securities
(257)
-
(257)
(2,997)
Net realized gains, excluding
other-than-temporary
impairment losses on securities
397
2,791
18,854
5,529
Total net realized investment gains
140
2,791
18,597
2,532
Net unrealized investment loss on trading
securities
-
4,802
(7,267)
5,433
Other income, net
406
485
716
889
Total revenues
565,934
431,673
2,153,199
1,998,645
Benefits and expenses:
Claims incurred
443,341
324,609
1,716,254
1,596,789
Operating expenses
95,374
77,293
347,590
304,995
Total operating costs
538,715
401,902
2,063,844
1,901,784
Interest expense
2,285
3,032
10,855
12,658
Total benefits and expenses
541,000
404,934
2,074,699
1,914,442
Income before taxes
24,934
26,739
78,500
84,203
Income tax expense
5,979
6,675
20,464
17,402
Net income
$
18,955
$
20,064
$
58,036
$
66,801
Basic net income per share
$
0.67
$
0.70
$
2.02
$
2.30
Diluted earnings per share
$
0.67
$
0.69
$
2.01
$
2.28
Condensed Consolidated Statements of Cash
Flows
(Dollar amounts in thousands, except per
share data)
For the Year Ended
December 31,
Unaudited 2011
Historical 2010
Net cash provided by operating
activities
$
159,732
$
37,656
Cash flows from investing activities:
Proceeds from investments sold or
matured:
Securities available for sale:
Fixed maturities sold
240,034
121,968
Fixed maturities matured/called
104,728
175,483
Equity securities
38,022
41,802
Securities held to maturity:
Fixed maturities matured/called
1,941
2,587
Acquisition of investments:
Securities available for sale:
Fixed maturities
(262,561)
(337,569)
Equity securities
(129,328)
(21,957)
Securities held to maturity:
Fixed maturities
(755)
(1,050)
Other investments
(2,500)
(5,000)
Net inflows / (outflows) for policy
loans
(420)
53
Acquisition of business, net of $30,070 of
cash acquired
(54,680)
-
Net capital expenditures
(16,337)
(19,222)
Net cash used in investing activities
(81,856)
(42,905)
Cash flows from financing activities:
Change in outstanding checks in excess of
bank balances
Recommend:
