Triple-S Management (GTS) Tops Q4 EPS by 31c, Revenues Beat; Offers FY19 Revenue Guidance Above Consensus, FY19 EPS View In-Line with Estimates

Triple-S Management (NYSE: GTS) reported Q4 EPS of $0.44, $0.31 better than the analyst estimate of $0.13. Revenue for the quarter came in at $723.7 million versus the consensus estimate of $706.25 million.

• Net loss of $10.9 million, or $0.48 loss per share, versus net income of $24.2 million, or $1.03 per diluted share, in the prior-year period; net loss in the fourth quarter of 2018 was driven by net unrealized losses on equity investments and a change in the effective tax rate of certain deferred tax assets/liabilities, which together impacted after-tax results by approximately $29.6 million, or $1.30 per share;
• Adjusted net income of $10.1 million, or $0.44 per diluted share, versus adjusted net income of $22.1 million, or $0.94 per diluted share, in the prior-year period.
• Excluding the above mentioned deferred tax adjustment and the cost of retroactive reinsurance, adjusted net income was $17.8 million, or $0.78 per diluted share, compared to adjusted net income of $15.2 million, or $0.65 per diluted share, in the fourth quarter of 2017, after excluding the impact of the hurricanes in that period;
• Operating revenues of $723.7 million, a 2.4% increase from the prior-year period, primarily reflecting higher Managed Care premiums;
• Consolidated loss ratio rose 270 basis points to 80.9%;
• Medical loss ratio ("MLR") rose 290 basis points to 83.8%, primarily driven by lower Managed Care utilization in the 2017 period related to the hurricanes.

"The fourth quarter signaled a return to normalcy at Triple-S after undergoing a couple of quarters of hurricane-related impact," said Roberto Garcia-Rodriguez, President and Chief Executive Officer. "The financial results of our core Managed Care segment continued improving, driven once again by our Medicare Advantage offering. We have also fared well under the revised Medicaid health plan, gaining a significant amount of membership that was initially assigned to other carriers. We completed a smooth transition to our new consolidated pharmacy benefits manager. And perhaps most importantly, there were no additional adverse reserve developments in our P&C segment during the quarter."

"Looking forward, our overall strategy remains firmly on track," added Mr. Garcia-Rodriguez. "We are focused on growing our market share in Medicare Advantage, buoyed by our 4.5-star quality rating in our HMO product and 4.0-star quality rating in our PPO product for payment year 2020. Additionally, we will concentrate on further optimizing our infrastructure and developing both analytical and clinical capabilities to accelerate our top-line growth, generate operating efficiencies, improve patient outcomes and create long-term value for our shareholders."

GUIDANCE:

Triple-S Management sees FY2019 EPS of $1.85-$2.05, versus the consensus of $1.95. Triple-S Management sees FY2019 revenue of $3.04-3.08 billion, versus the consensus of $3.02 billion.

The Company is initiating the following full year 2019 consolidated guidance:

• Consolidated operating revenue is expected to be between $3.04 billion to $3.08 billion, which includes Managed Care premiums earned, net between $2.71 billion and $2.75 billion;
• Consolidated claims incurred ratio is expected to be between of 81.3% and 83.3%, while the Managed Care MLR is expected to be between 84.0% and 86.0%;
• Consolidated operating expense ratio is expected to be between of 17.6% and 18.6%;
• The effective tax rate is expected to be between 25.0% and 30.0%; and
• Adjusted net income per diluted share is expected to be between $1.85 to $2.05. Adjusted net income per diluted share guidance does not account for any share repurchase activity during 2019.

For earnings history and earnings-related data on Triple-S Management (GTS) click here.

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