Triple-S reports $12.7M in net income for 2Q17
Triple-S Management Corp. announced Tuesday consolidated revenues of $745.9 million and net income of $12.7 million, or $0.52 per diluted share, versus net income of $3.9 million, or $0.16 per diluted share for the same second quarter of 2016.
The adjusted net income for the quarter was $9.4 million, or $0.39 per diluted share, versus adjusted net income of $2.8 million, or $0.11 per diluted share, a year ago, the company said.
Coupled with its quarterly results, Triple-S confirmed its Board of Directors has authorized a $30 million common stock repurchase program.
“We are beginning to see meaningful results from our strategic transformation program and premium trends within our Medicare and Medicaid businesses are poised to improve in 2018,” said Triple-S President Roberto García-Rodríguez.
“Since our stock trades at a significant discount to tangible book value, repurchasing shares at current levels continues to represent a prudent use of our capital and will be accretive to earnings in the future,” he said.
In a call with analysts, García-Rodríguez said to be pleased with the quarter’s results, saying “it reflects the steady progress of our strategic initiatives, clinical programs, and operational improvements in what remains a challenging environment.”
“Once again our commercial business experienced additional Medical Loss Ratio [MLR] improvement due to the strict underwriting discipline we have been following for several years now,” he said.
“The Medicare and Medicaid operations are making adjustments to compensate for lower premiums and higher drug costs, but trends are positive,” the executive said, adding the company’s Medicaid operation lost money in the first half of the year, reflecting a decline in membership and higher pharmacy cost trends.
However, García-Rodríguez said a key recent development for the health care management company was the agreement between Triple-S and the Puerto Rico Health Insurance Administration, or ASES by its Spanish acronym, to extend the contract to provide health care services through the government’s health insurance program in the Metro North and West regions.
The extension, which covers a three-month period that began on July 1, is designed to allow for continuity of services as Triple-S concludes negotiations on the contract renewal for the remainder of the current fiscal year.
“ASES has agreed to new rates that incorporate cost and utilization trends for fiscal 2016-2017. The rate increase should lead to a better second-half showing, further aided by cost saving initiatives implemented by both parties,” he said.
For the six months ended June 30, 2017, consolidated operating revenues decreased 2.8 percent year over year, to $1.5 billion, primarily reflecting a $45.7 million decline in Managed Care segment premiums.
The premium decrease is mainly due to lower membership in the segment’s Medicaid and Commercial businesses and lower Medicare risk score adjustments, Triple-S said.
Looking ahead, García-Rodríguez said in the Commercial business, Triple-S expects full-year at-risk member month enrollment to be approximately 4 million, plus or minus 5 percent, reflecting some attrition as well as the addition of new groups. The company’s MLR now should be in the 83 percent to 85 percent range.
“In the Medicare Advantage business, we anticipate full year member month enrollment of about 1.5 million, plus or minus 5 percent. The expected MLR should be between 90 percent and 92 percent.
“Assuming the government health plan contract is renewed through the remainder of the year, we expect a member month enrollment of 2.3 million, plus or minus 5 percent, and an average MLR of 91 percent for the second half of the year in that business,” the executive said.