EX-99.1 2 brhc10030429_ex99-1.htm EXHIBIT 99.1
Exhibit 99.1

 
Triple-S Management Corporation
 
1441 F.D. Roosevelt Ave.
 
San Juan, PR 00920
 
www.triplesmanagement.com
   
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

Triple-S Management Corporation Reports Third Quarter 2021 Results

SAN JUAN, Puerto Rico, November 4, 2021 – 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.

1
Triple-S Management Corporation
Selected Segment Quarterly Details

Managed Care


 •
Managed Care premiums earned were $939.7 million, up 10.6% year-over-year.


o
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.


o
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.


o
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.

2
Triple-S Management Corporation
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.

3
Triple-S Management Corporation
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

4
Triple-S Management Corporation

 •
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.

5
Triple-S Management Corporation
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

6
Triple-S Management Corporation
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
  

7
Triple-S Management Corporation
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
  

8
Triple-S Management Corporation
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
  

9
Triple-S Management Corporation
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.

10
Triple-S Management Corporation
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.

11
Triple-S Management Corporation
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
  

12
Triple-S Management Corporation
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
    
(1.1
)
    
(2.3
)
    
(6.8
)
    
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.


13