Q2 2020 Triple-S Management Corp Earnings Call
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Welcome to the Triple S management second quota 2020, adding school.
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Thank you and good morning, welcome to the Triple S management second quarter, 20th 20th earnings Conference call with US today are your house Babbage, ICI, President and Chief Executive Officer, Black and White Jose Rama The executive Vice President and Chief Financial Officer. In addition, mandolin Hernandez cheap.
Operating officer President of managed care it would be available during Q&A.
Right now everyone should have access to the earnings announcements, which was released prior to this call and which May also be found on the company's website at Triple That's management dotcom.
Before we begin for my remarks, we need to remind everyone that each corridor trip last management executive will provide their current view of the company future.
And that's they won't be sharing forward looking information misstatements can be affected by risks and uncertainty is involved in the business.
Despite management best effort actual results may differ materially from search Forwardlooking statements and what your fiance. His call. These statements are not guaranteed the future performance and therefore do you rely on it should not be placed upon them.
For further information on factors that could impact the company in the statements and projections contained herein. Please refer to the safe Harbor section insane and he was really.
And the company's filings with the Securities and Exchange Commission.
Each forward looking statement and protection of financial information made during this call is based on information available to us as of the date of his call.
[noise] just cleaned any obligation to update our forward looking to statements unless required by law.
In addition, that's causing webcast and an archive version will be available shortly after the call and on the Investor Relations portion of the company's website at Www Dot trip last management Dot com.
You cannot download a copy of the really you can contact us at 787.
7926488, and we will get one to you immediately and can add you to the distribution lists moving forward with that and now like trying to call over to Bobby Garcia. Please go ahead.
Thanks, worried and good morning, everyone.
We appreciate your taking the time to join US This morning, and hope you are.
Continuing to stay safe and healthy.
Today, we reported total operating revenues of $875.5 million for the second quarter.
This is slightly below our topline from the prior year period, but on the bottom line. We recorded strong adjusted net income $49 million $1.76 per diluted sure.
57 per cent more than the second quarter of 2019.
Is expected we experienced lower utilization due to stay at home measures established in Puerto Rico to help combat Kobe 19.
Moreover are managed care membership has remained relatively steady since the beginning of the pandemic with only a modest sequential decrease in our commercial business.
As a result, MLR decreased 510 basis poised to 79, 4% for the corner.
Most importantly, we adapted to the new environment, very well and it had remained resolute in support of our members employees providers and communities through this unprecedented period.
Our telehealth platforms and prescription drug home delivery service among other initiatives provides our members with the ability to handle their medical needs safely I remotely.
And to ensure we are providing our seniors with much needed assistance and care during the second quarter, we arrange for a monthly supply of groceries to 44000 dual seniors for a three month period.
We also entered partnerships to provide healthy Neil options for seniors purchase at an accessible price, while we covered delivery fees.
Our foundation also continues to provide vital funding to non-profits got or a dressing food and security, particularly for the homeless and other underserved populations.
I'm proud of our entire team and their efforts to deliver superior service and the health care experienced members have come to expect.
Been quick to design and implement initiatives that respond to these unique times and make sure that our services are there when most needed.
Before delving into our managed care performance and a quarter.
We want to provide an update on the current status of the island as well as what we had been seeing in recent days.
As of August 3rd our Health Department has reported over 18700 confirmed and suspected cases of code on the island.
And 230 people have unfortunately passed away from the virus.
Well it initially appeared as it Puerto Rico <unk> make it through the pandemic relatively unscathed compared to other jurisdictions, we have seen a spike in cases in recent weeks.
Many of these had been attributed to the increased volume of passengers arriving through the airport.
In response, the governor quickly reinstated certain restrictions from her earlier locked down order and has announced that further restrictions will be implemented if the curb an infection does not flattened over the course of the next few weeks.
Well this setback is disappointing it demonstrates to resolve over the Puerto Rico government to contain the spread of Kobe 19, and the success of these efforts so far.
Notably the number of positive Covid cases on the island is 615 per 100000 residents compared with a U S. Average of 1146 for 100000 residents and mortality rate in Puerto Rico is 694, 100000, compared with a national average Oh 42.
Seven.
Moreover, hospitals continue to have capacity to accept patients and our thankfully far from being overwhelmed.
Overall occupancy at hospitals meeting for all patients not just those diagnosed with Kobe 19.
Stands at 54% with 65 per cent of ICU beds, and only 28% a ventilator as in use.
We are hopeful the Puerto Rico governments. Most recent measures will counter the recent spike in cases and keep these hospitalization trends under control.
That said the impact of rolling back openings undoubtedly will have some additional near term impact on the economy.
For the Spike many businesses had reopened in some capacity taking appropriate precautions and tourism was picking up.
On the other hand, most of the manufacturing remained open during this period.
Where are closely watching the next round the stimulus that will be coming out of Congress and what will it entails for the residents and businesses Puerto Rico.
But we're not expecting a significant economic rebound in the immediate term and believe that the economy will begin recovering and Ernest.
When covid cases slow to triple and people feel safe to resume their daily activities within the new normal.
Let me know turned who are managed care segment.
Or Medicare advantage <unk> membership remained steady and as I mentioned earlier, we are focused on facilitating more services during the pandemic to heightened engagement and drive retention.
As a reminder, there'll be no hidden fee and 2021, which will be a potential tailwind for next year.
And you may recall or Medicaid contract with a Puerto Rico Health Insurance administration provides for the annual negotiation of premium rates.
The rates for the current contract ear expired on June 30th 2020.
However, we are executed amendments to the contract extending the current premium rates until August 30, 2020, well new premium rates are negotiated.
The new premium rates will be effective retroactively from July 1st 2022 September 30th 2021.
Also in the next week's we expect to see an influx of new Medicaid patients as one of our competitors exits the Puerto Rico market.
Their membership is expected to be split among the four remaining Medicaid providers.
Finally in our commercial business vast majority of members are continuing to pay their premiums and we are offering various methods pay remotely as well as grace period isn't deferrals for those of our members who are struggling.
Again remember attrition during the quarter was less than I expected as we believe the stimulus has allowed more businesses to navigate through the pandemic.
With a recent rollback of openings were obviously paying close attention to see whether businesses can remain resilient.
Moving briefly the Hurricane Maria we provided an update on PNC reserves and pending claims in our earnings release earlier this morning.
We are pleased with a significant number of claims that we're closed during the second quarter.
This progress has continued into July and as of July 31st 2020, we have only for 187 open claims.
We believe this segment remains adequately reserved to handle all remaining claims to date.
Looking ahead.
As we think about the near term, we're seeing utilization gradually approach more normalised level and are closely watching how economic.
And public health factors impact them.
And additionally, while lapsed policies in payment to for all activity has been relatively muted. Thus far we continue to work closely with all our members as a recent rollback could have a near term impact on our membership roles.
In terms of guidance given the solid second quarter results. The company is raising it's four year 2020, adjusted net income per diluted shared guidance to between $2.80 and $3.
From its previous guidance of between $2.60 and $2.80.
Adjusted net income per diluted sure as soon as a weighted average diluted sure count for for all year 2020.
23 point, formerly chairs and assumes no further share repurchases.
Summing up.
We generated solid results in the second quarter and our entire team is working tirelessly to ensure our members are receiving superior service.
Our management continues to closely monitor the ongoing public health and economic crises in Puerto Rico and across the country.
At the same time, we are still moving forward on key portions of our longer term. So cheek plan that are both mission critical to our current managed care business and foundational for the company's transition sort of value based integrated care delivery system.
Over the longer term.
So this and I am pleased to announce the appointment of once Toronto as executive Vice President and Chief strategy Officer, a newly created a role from issue heat from where she will leave the build out a variety S capabilities and oversee are ambulatory clinic network and medical group practice.
One who's brought experienced into payor and provider space over a 25 year career.
Our vision remains clear and and faxes taken on grader relevance and this time of prices.
Create value for all our stakeholders by providing seamless access the high quality affordable and holistic health care.
Well this allow ask one jose to address our financial results.
Thank you won't be in good morning, do whatever you want on this call I suspect that logged on make sure. It's intended to limit Dispread I'll spell the 19 cause significant disruptions in the availability on utilization of medical services in Puerto Rico for the mid March through June 20 twin.
Many providers offices word clothes electric <unk> were suspended many individuals did not seek or postpone medical services that they otherwise may have.
Ah there, we sold <unk> medical costs bakery significantly during the quarter.
June 30th 2020, some love down restriction has been lifted but make sure intended to leave me display that's gonna be 19 are stealing place.
Looking ahead with begged significant portion of daily for utilization to come back in the second half of the year.
This will result in an increasingly MLR relatives to what would be normal for that period.
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Now door second quarter results, we reported gap net income per diluted chair or $1.87 and it just said diluted knitting <unk> per diluted chairs a $1.76 cents.
<unk> two gap net income per diluted sure or $1.35 cents and it just isn't that income per day little bit chair to $1.12 things in the prior year period.
Let me know discuss the miniskirts segment resold in detail.
Miniskirt premium's earn for the quarter degrees, besides malian or 0.6 person over the Saint Peters last year.
Their degrees he's do do they recognition of estimated premium rebates in the Medicare and commercial businesses as a result of lower utilization, resulting from the government enforced love them.
<unk>, they're 2019 quarter included maybe gateway proactive premiums related to adjustments to the premium rates for the high cause I need members, that's part of that I'm going to a consultation process wait S. S.
These decreases where barks I live said lighting cause he's membership in the Medicare and commercial businesses.
Higher average premium rates in their commercial and Medicaid businesses and lettuce, they mean as the heat feedback through into any twin.
<unk> hours premium rates and could easily due to the they negotiated rate of approximately six person.
<unk> November 2019, and I know, they're six per cent and kitties effective may 22, any stupid, Hawaii for an increasing rate to certain providers required by S. S. As of the same date.
Many scared claims we're done with 44 million year over a year and the M. On our at 79, four person was 510 basis lower than last year.
Due to lower utilization of survey says I explain the moment that goes.
Basically the auction was barks any upset by other cause such as Kobe 19 related treatment and testing waivers of medical embayment policies and the financial assistance would work better lighting daughter members.
We saw lower utilization in almost all service got they always such as in <unk> office visits M procedures.
No that will exception these pharmacy, where we did not see if he could <unk> I've seen the older cafe or he's but rather a slight increase over expected utilization in the month of March and April as members, Russia to refill their medication to do they looked down well. These trained in high schools and May continue to cause a short term degrees in.
[noise], where claim cause we expect our claims goes to increase as they demand for the third known emerging or elective health services regimes.
The access to and the men for care was most constrained from need March 5th away.
And began to recover <unk>, Maine approaching more typical lives by the end of the second quarter.
Mulino until they managed care quarterly obrecht inexpensive.
The segments operating expenses increased 88 million from a year ago, but I'm not really reflecting decorative all of 32 million related to a potential litigation laws in the Blue Cross Blue Shield antitrust litigation, we have disclose in but I hear periodic filings.
<unk> and don't do any of the heat C, which represents an additional 15 million and 4 million of members assistance to support Kobe 19 relieve Air Force.
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Let me come in briefly on our life them propagating casualties segments life, but he means earn where approximately seven per cent friendly, but I hear a year period.
Primarily reflecting premium growth in the segment individual life cancer and group business length of business.
By the acquisition of having <unk>, Oh, finding students portfolio living these quarter.
Although premium increase over the same period lussier premium girls decelerate during the second quarter. As a result of is slow Boeing sales do do that two months go over them and enforce logged on.
The segments, Oh, Buddy named gun was 9.5 million compared to five point to me learning the prior year period, we did the friends, mostly due to nowhere actuarial researchers following an increasing policy cancellations and lower claims to live in the World Lane of business do do they love them upsetting part bye.
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Let me turn toward B M C segment, where knit premium's earn in the water work 22 million 1 million higher than last year. The segment operating income. This quarter was six <unk> 7 million compared to operating income a 4.8 during the same quartered last year, primarily due to better.
Los experience.
As you may have seen in the news <unk> fast approximately 150 miles south of Puerto Rico, <unk> that'll be goes storm last week.
The storm cause floating mainly along the coastal plains, but liter when damage.
Based on any means shall assessment triple as appropriate those notice big that storm related claims would've brison M. A D. D. L exposure for several reasons first the company has limited exposure took on dominions appropriate. These.
[noise] coastal areas it seems like 2017.
Second eat those note off or flooring shoe hands as a standalone coverage and it's personal package go raise it has a looming of 2500 per policy.
Finally, most of the homes that suffered damages are only in sure.
Owning suitable due to their location and construction.
Returning daughter would old Reso's, we experienced an increasing consolidated income tax expense or 14 million, resulting friendly hired taxable income in 2020.
Under the companies share repurchased borough of them, we reverse six 375373 chairs during the second quarter of 2020 at an aggregate cause of 6 million.
These program was completed May 2020.
As well we mentioned we will continue to support our members community employees M fertilizers.
We will be there for them to live in limb you can we.
We hope you continue to stay safe and healthy in these unprecedented times.
We will now proceed store Guilani section operator, please open Nicole for questions.
We will now begin to question and answer session.
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[noise] well once again, if you have a question please crestar than one.
There are no.
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First question comes from MC friend, well, some snow capital partners. Please go ahead.
Oh, Hi, you just wanted to ask about the the P&C business.
What's the remaining claims <unk> what was the sorry average dollar value paid in the quarter.
I didn't have the hours with me, but as Bobby's said, we were able to close close to 150 claims during the quarter and now we're down to 487 as of July.
$400, if they get in and and the <unk> are you holding up.
The legal reserve against those are just any update on on court service process on those.
Yeah. So is we have said before all all all our claims and all the legal cases have every surface Savage based on our estimate of the claim loss for each of them. So 100 per cent of the case. It has been have history, Sir some of the cases that <unk> during the water.
Actually did have a lawsuit attached to it which will be clothes right, because we were able to reach it settlement.
The courts open in Puerto Rico right now.
Yes. They opened on July 15th So cases are proceeding through the system.
Perfect. Thank you I appreciate it.
Thanks, Thank you Mike.
This concludes the question answer session I would like to turn the conference back over to bother you go see for any closing remarks.
Thank you operator, and thanks, once again to the entire Triple S team for all the hard work in efforts to eat our members through the Sun President at a time.
We're all in this together and we're all in on helping our members and employees there families.
Our members and providers to get through Kobe safely and begin returning to normal while we build a health care delivery system for the longterm that is patient centered and committed to quality outcomes.
Thank you for your time, an ongoing support.
I hope everyone remains safe and healthy please reach out to us if you have any more questions and have a great day.
This concludes today's conference call.
He made disconnect your lines. Thank you for participating kind of have a pleasant day.
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