Why This Puerto Rican Company Is Skyrocketing
- By Omar Venerio
Triple-S Management Corp.'s (GTS) stock has jumped more than 25% after the company reported second-quarter EPS of 39 cents on revenue of $745.9 million, which declined 0.9% year over year but beat estimates by $25.19 million. Earnings beat expectations by 57 cents per share.
President and CEO Roberto Garcia-Rodriguez was pleased with quarterly results. He emphasized the commercial business experienced additional MLR improvement due to the strict underwriting discipline employed. He added the Medicare and Medicaid operations are adjusted to offset the lower premiums and higher drug costs, while the trends are positive.
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The intrinsic value of GTS
A key event during the period was the deal between Triple-S and the Puerto Rico Health Insurance Administration to extend health care services in the Metro North and West regions via the government's health insurance program. This agreement should boost second-half operations while reducing costs through new initiatives.
Despite Puerto Rico?s contractive fiscal policy, the company achieved progress in its operational matters, clinical initiatives and allocated more capital to technology.
When looking at the business segments, managed care premiums earned $661.7 million, down 1.1% year over year due to a decrease in fully-insured memberships.Further, the managed care MLR of 87.5% was down slightly from previous year and managed care operating expenses were $89.5 million, a 3.6% year-over-year decline.
Moreover, Garcia-Rodriguez was positive about the company's full-year outlook. In the commercial business, the company expects new full-year, at-risk member month enrollment of about 4 million. For the Medicare advantage business, full-year member month enrollment is expected to be approximately 1.5 million. If the GHP contract is renewed, the member month enrollment would be 2.3 million.
Disclosure: The author holds no position in any stocks mentioned.
This article first appeared on GuruFocus.
Warning! GuruFocus has detected 3 Warning Sign with GTS. Click here to check it out.
The intrinsic value of GTS
