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
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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 Shortly after it ends, you will see an archived version on the Investor Relations page of the company's website at www.triplesmanagement.com.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