Why Triple-S Management Shares Plunged
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Triple-S Management (NYS: GTS) , a managed-care company operating in Puerto Rico, dove 15% this morning following first-quarter results.
So what: For the quarter, Triple-S reported total revenue of $589.8 million and a profit of $0.26. Relative to what Wall Street was expecting, its numbers were slightly higher on revenue ($577.3 million), but a far cry from the $0.43 profit analysts were looking for. The company's management cited its American Health business as the primary reason for the shortfall, saying it was negatively affected by lower-than-expected premiums and increased utilization.
Now what: Higher expenses and weakening premiums seem to be a disturbing trend for many managed-care companies that depend on Medicaid for part of their funding. Although management remains optimistic that Triple-S remains on the right track, that didn't stop them from lowering full-year EPS guidance to a range of $1.80-$1.85 when the Street had been looking for $2.33 in EPS. With many questions left unanswered, I'm steering clear of Triple-S for the time being.
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At the time this article was published Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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