Triple-S Management Corp (GTS)

Q2 2010 Earnings Call

August 04, 2010 9:00 a.m. ET

Executives

Kathy Waller - IR

Ramon Ruiz-Comas - President & CEO

Juan-Jose Roman - VP, Finance & CFO

Analysts

Peter Costa - Wells Fargo

Carl McDonald - Citigroup

Tom Carroll - Stifel

Ken Weakley - UBS Investment Bank

Presentation

Operator

Ladies and Gentlemen welcome to the Triple-S Management Corporation Second Quarter 2010 Conference Call on Wednesday 4 of August, 2010. Throughout today's recorded presentation, all participants will be in a listen-only mode. After the presentation, there will be an opportunity to ask questions. (Operator Instructions).

I will now hand the conference over to Kathy Waller. Please go ahead.

Kathy Waller

Thank you, Christine. Good morning everyone. Welcome to today's second quarter conference call. With us today we have your host, Ramon Ruiz-Comas, President and Chief Executive Officer; and Juan-Jose Roman, Vice President of Finance and Chief Financial Officer.

I'm sure all of you have heard our Safe Harbor statements before, but we still need to get this housekeeping issue out of the way. Each quarter Triple-S Management Executives will provide their current view of the company's future. This means that they will share forward-looking information. As you know, these statements can be affected by the risks and uncertainties involved in the business.

And despites management's best efforts, what actually happens may be materially different from what you hear today. To get a better understanding of why this might occur, please look at the Safe Harbor section in today's news release and in the company's periodic filings with the SEC. In addition, the information shared on this call should be considered current as of only today. After today, please use this information for your reference only and remember that the company assumes no responsibility to update it.

This call is being webcast. Shortly after it ends, you will see an archived version on the Investor Relations page of the company's website at www.triplesmanagement.com. If you don't have a copy of today's news release already, you can either find one on the company's website or you can call my mobile phone at 312-543-6708 and I'll get you one immediately and I will also make sure that you're on our distribution list going forward.

With that, I'd like to turn the call over to Ramon. Ramon, please go ahead.

Ramon Ruiz-Comas

Thank you, Kathy. I would like to welcome everyone to our call today. Let me begin today with review of strong second quarter highlights. Thereafter I will turn the call over to Juan-Jose to take you through the details of our performance.

Overall I am pleased with the quarter results, marked by solid revenue our membership grows in our managed care segment.

Premiums earned for the second quarter rose to 502.8 million up 8.6% compared with the prior year driven by a 26.4% year-over-year rise in commercial premiums.

The increased result from higher commercial membership reflecting organic growth and the La Cruz Azul acquisition as well as higher premium rates across all business.

Adjusted consolidated net income for the quarter rose to $19.6 million or $0.67 per diluted share, compared with $15 million or $0.51 per diluted share for the same period last year or as a 1% increase. The balance sheet remains healthy, our capital base exceeds what is required on a statutory basis and our cash flow continues to be strong in this time of the ongoing delay in payment by the Puerto Rico government for our Puerto Rico health reform or Medicaid business for the last several quarters.

On the medical cost front, we achieved an MLR of 88.5% in the Managed Care segment, an 80 basis points a year-over-year improvement. The reduction in this metric was driven by a 220 basis point decrease in digested Medicare MLR, offset in part by increase in the commercial and Medicaid MLR. The improvement in the Medicare business reflects lower utilization trends and a new rate sharing arrangements with our providers in our non-dual product. Cost trends are in line with expectations.

In our commercial business the increased MLR is mostly due to an upper end shift of utilization to a second quarter. Year-to-date the adjusted commercial MLR was lower than in 2009. I want to remind everyone that the very strong seasonality in this program utilization and historically the MLR in the second half of the year have typically been below that or the first six months. All the utilization trends are somewhat above our expectations; we anticipate that the MLR for all of 2010 will be down from 2009.

The Medicaid business continue to be impacted by the action on any rate increase and the lengthy RFP submission and a work process. We expect an improvement in this segment MLR in the fourth quarter, once the new rates become effective.

Regarding our reform business, let me briefly update you on the stature of the government of the Puerto Rico bidding process, in May 2010 the government issued an new request for proposal for all eight reform regions.

With the contract expected to regarding to a freight on October 1, 2010. We present proposals for all the regions because in this RFP the government required the regions that we bid in groups meaning those parties who works on meeting bids for the current region has also to submit bid for other region.

In light of the considerable time needed for the RFP process, the parties agree to extend a current contract on to September 30, 2010.

Read the rest of this transcript for free on seekingalpha.com

More from Stocks

Week Ahead: Trade Fears and Stress Tests Signal More Volatility To Come

Week Ahead: Trade Fears and Stress Tests Signal More Volatility To Come

3 Great Stock Market Sectors Millennials Should Invest In

3 Great Stock Market Sectors Millennials Should Invest In

Why Millennials Are Ditching Stocks for ETFs

Why Millennials Are Ditching Stocks for ETFs

Trump's 'Space Force' Could Launch a $1 Trillion Industry, Morgan Stanley Says

Trump's 'Space Force' Could Launch a $1 Trillion Industry, Morgan Stanley Says

Abiomed Stock Should Rise Some 12% From Here, Piper Jaffray Analyst Says

Abiomed Stock Should Rise Some 12% From Here, Piper Jaffray Analyst Says