Financial Data and Key Metrics Changes - Revenue for the September quarter was $177 million, a 12% increase from $158 million in the same quarter of the prior year [5][23] - Earnings per share (EPS) for the quarter were $0.83, a decrease of 5.6% from $0.88 in the same quarter of the prior year [5][23] - Days sales outstanding (DSO) increased to 43 days, up three days from a year ago [27] Business Line Data and Key Metrics Changes - Revenue for patient management, including third-party administration and traditional case management, was $119 million, an annual increase of 14% [24] - Gross profit for patient management decreased by 9% due to increased staffing costs [24] - Revenue for network solutions sold in the wholesale market was $58 million, a 9% increase from the same quarter of the prior year, with gross profit up 5% [25] Market Data and Key Metrics Changes - The financial impact of musculoskeletal disorders (MSKs) in the workplace is approximately $20 billion per year, with indirect costs raising this figure to over $45 billion [11] - The company is focusing on minimizing medical spend in the musculoskeletal space through enhanced networks and service programs [13] Company Strategy and Development Direction - The company aims to differentiate its services through technological innovation and has a long-term view of success [10] - Investments in CERiS are being prioritized to enhance operational efficiencies and service outcomes [14][15] - The company is embracing a hybrid work model to improve productivity and employee morale while reducing office space by 40% by 2025 [26] Management's Comments on Operating Environment and Future Outlook - Management acknowledges challenges from the pandemic and labor market but emphasizes a strong customer retention rate of 97% [7] - The company is optimistic about future growth, particularly in the CERiS segment, and is actively investing in technology to improve service delivery [6][10] - Management believes that the current economic environment will reveal durable companies with solid foundations [9] Other Important Information - The company repurchased 164,500 shares at a total cost of $26 million during the quarter, with a total of 37.6 million shares repurchased to date [27][28] - The company received the 2022 Risk Management Team of the Year award from Business Insurance's US Insurance Awards [22] Q&A Session Summary - The Q&A session did not contain any recorded questions or answers, as the call concluded without further inquiries [28]

Financial Data and Key Metrics Changes - Revenues for the June quarter were $176 million, increasing 16% from $153 million in the same quarter of the prior year [4][23] - Earnings per share for the quarter were $0.94, a 2% increase from $0.92 per share in the same quarter of the prior year [4][23] - The company repurchased 174,822 shares at a total cost of $26.7 million during the quarter, with a total of 37.4 million shares repurchased for $681 million since inception [28] Business Line Data and Key Metrics Changes - Revenue for patient management, including TPA services, was $115 million, an annual increase of 14%, but gross profit decreased by 14% [24][25] - Revenue for network solutions sold in the wholesale market was $61 million, an increase of 18% from the same quarter of the prior year, with gross profit up 24% [26][27] Market Data and Key Metrics Changes - The company noted that inflation is at levels not experienced for many decades, impacting operational costs and the overall economic environment [9] - The workers' compensation industry is seeing higher increases in mega claims, driven by factors such as inflation, liability risk, and an aging workforce [11] Company Strategy and Development Direction - The company is focusing on automation and operational efficiencies to improve bottom line performance while managing increased operational costs [5][25] - CorVel is exploring synergistic acquisition opportunities, particularly in light of reduced valuations in the market [10] - The company continues to invest in technology and automation to enhance service delivery and operational efficiency [20][21][19] Management's Comments on Operating Environment and Future Outlook - Management expressed concerns about the ongoing economic dynamics, including inflation and the potential for a recession, which are affecting M&A activity [9] - The company remains optimistic about the demand for telehealth and virtual care models, despite regulatory challenges [15][14] Other Important Information - CorVel received the Business Insurance Innovation Award for its advanced data analytics solution, Cogency, highlighting its commitment to innovation [7][8] - The company is leveraging technology to keep injured workers engaged in their recovery, which is expected to reduce overall costs of care [16] Q&A Session Summary - The Q&A session concluded without any specific questions or answers being recorded [29]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 Title of each class Trading Symbol(s) Name of each exchange on which registered Common Stock, Par Value $0.0001 Per Share CRVL The Nasdaq Global Select Market FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2022 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ...

Financial Data and Key Metrics Changes - Revenues for the March quarter were $171 million, an 18% increase from the same quarter of the prior year [5][21] - Earnings per share for the quarter were $1.09, a 35% increase from $0.81 in the same quarter of the prior year [21] - Revenues for fiscal 2022 were $646 million, up 17% [5][21] - Earnings per share for fiscal 2022 were $3.66, a 44% increase from $2.55 in the prior fiscal year [21] Business Line Data and Key Metrics Changes - Patient management revenue for the March quarter was $111 million, an annual increase of 15% [23] - Network Solutions revenue for the March quarter was $60 million, a 24% increase from the same quarter of the prior year [24] - Fiscal year revenue for Network Solutions was $222 million, an annual increase of 21% [24] - Gross profit for the March quarter increased by 4% from the previous year [24] Market Data and Key Metrics Changes - CorVel's claim volumes have returned to pre-pandemic levels, with expectations of increased workers' comp claims as the labor market rebalances [8] - The company noted that inflation is affecting the markets served, increasing demand for risk management services [10] Company Strategy and Development Direction - CorVel is focused on expanding its penetration in the health market, with investments yielding positive results [25] - The company is enhancing its TPA and Network Solutions business, particularly through the CERiS payment integrity platform [6] - The introduction of conversational AI in contact centers aims to streamline processes and improve the experience for injured workers [18] Management's Comments on Operating Environment and Future Outlook - Management highlighted the impact of inflation and labor shortages on the healthcare market, emphasizing the need for effective risk management solutions [10] - The company remains committed to financial strength and innovation, which is being recognized in the industry [20] Other Important Information - The company repurchased 145,991 shares at a total cost of $24.8 million during the quarter [26] - The cash balance at the end of the quarter was $98 million, reflecting strong liquidity and a healthy balance sheet [26] Q&A Session Summary - No specific questions or answers were provided in the transcript, indicating the conclusion of the call without a Q&A segment [28]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended March 31, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO Commission File Number 0-19291 CorVel Corporation (Exact name of registrant as specified in its charter) Delaware 33-0282651 ( State or other jurisdiction of incor ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 2021 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to x Commission file number 0-19291 CORVEL CORPORATION (Exact Name of Registrant as Specified in its Charter) Delaware 33-0282651 (State or other jurisdict ...

CorVel Corporation (NASDAQ:CRVL) Q3 2022 Earnings Conference Call February 1, 2022 11:30 AM ET Company Participants Michael Combs - President and Chief Executive Officer Brandon O'Brien - Chief Financial Officer Disclaimer*: This transcript is designed to be used alongside the freely available audio recording on this page. Timestamps within the transcript are designed to help you navigate the audio should the corresponding text be unclear. The machine-assisted output provided is partly edited and is designe ...

PART I - FINANCIAL INFORMATION [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents CorVel Corporation's unaudited consolidated financial statements for the periods ended September 30, 2021, detailing balance sheets, income statements, equity, and cash flows, which reflect significant year-over-year growth in revenues and net income [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) As of September 30, 2021, total assets slightly increased to $424.9 million from $424.8 million at March 31, 2021, with cash decreasing to $131.1 million while accounts receivable rose, and total liabilities slightly decreased as stockholders' equity grew to $223.8 million Consolidated Balance Sheet Highlights (Unaudited) | Account | Sep 30, 2021 ($) | Mar 31, 2021 ($) | | :--- | :--- | :--- | | Cash and cash equivalents | $131.1M | $139.7M | | Accounts receivable, net | $69.4M | $64.7M | | Total current assets | $272.0M | $268.9M | | TOTAL ASSETS | $424.9M | $424.8M | | Total current liabilities | $162.6M | $162.5M | | Total liabilities | $201.1M | $204.4M | | Total stockholders' equity | $223.8M | $220.4M | [Consolidated Income Statements](index=5&type=section&id=Consolidated%20Income%20Statements) The company reported strong year-over-year growth, with three-month revenues increasing 16.0% to $157.7 million and net income rising 35.5% to $16.1 million, while six-month revenues grew 16.8% to $310.4 million and net income increased 63.2% to $32.9 million Three Months Ended September 30 (Unaudited) | Metric | 2021 ($) | 2020 ($) | Change | | :--- | :--- | :--- | :--- | | Revenues | $157.7M | $136.0M | +16.0% | | Gross Profit | $36.7M | $30.5M | +20.2% | | Net Income | $16.1M | $11.9M | +35.5% | | Diluted EPS | $0.88 | $0.65 | +35.4% | Six Months Ended September 30 (Unaudited) | Metric | 2021 ($) | 2020 ($) | Change | | :--- | :--- | :--- | :--- | | Revenues | $310.4M | $265.6M | +16.8% | | Gross Profit | $73.9M | $57.0M | +29.6% | | Net Income | $32.9M | $20.2M | +63.2% | | Diluted EPS | $1.81 | $1.11 | +63.1% | [Consolidated Statements of Stockholders' Equity](index=7&type=section&id=Consolidated%20Statements%20of%20Stockholders%27%20Equity) For the six months ended September 30, 2021, total stockholders' equity increased from $220.4 million to $223.8 million, driven by $32.9 million in net income, partially offset by $39.8 million in treasury stock purchases, with stock-based compensation also contributing - During the six months ended September 30, 2021, the company repurchased **284,348 shares** of treasury stock for **$39.8 million**[14](index=14&type=chunk) - Net income of **$32.9 million** for the six-month period increased retained earnings[14](index=14&type=chunk) [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended September 30, 2021, net cash provided by operating activities was $35.2 million, a decrease from the prior year, while net cash used in investing activities increased to $11.6 million and financing activities rose significantly to $32.2 million due to increased treasury stock repurchases Six Months Ended September 30 (Unaudited) | Cash Flow Activity | 2021 ($) | 2020 ($) | | :--- | :--- | :--- | | Net cash provided by operating activities | $35.2M | $39.5M | | Net cash used in investing activities | ($11.6M) | ($6.9M) | | Net cash used in financing activities | ($32.2M) | ($9.7M) | | (Decrease)/increase in cash | ($8.6M) | $22.9M | | Cash at end of period | $131.1M | $106.1M | [Notes to Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail the company's accounting policies, including revenue recognition disaggregated into Patient Management and Network Solutions services, stock-based compensation, treasury stock repurchases, and lease accounting, noting a reduction in lease footprint due to remote work - The company operates in a single reportable segment, managed care, with two service lines: Patient Management and Network Solutions[29](index=29&type=chunk) Revenue by Service Line (Three Months Ended Sep 30) | Service Line | 2021 ($) | 2020 ($) | | :--- | :--- | :--- | | Patient management services | $104.7M | $90.3M | | Network solutions services | $53.1M | $45.8M | | **Total services** | **$157.7M** | **$136.0M** | - In May 2021, the Board of Directors approved a **1 million share** expansion to the stock repurchase program, and during the six months ended Sep 30, 2021, the company repurchased **284,348 shares** for **$39.8 million**[58](index=58&type=chunk) - Due to the COVID-19 pandemic and an expected increase in remote work, the company no longer believes it is reasonably certain to exercise most of its lease renewal options, leading to a reduction in the right-of-use asset and lease liability[71](index=71&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=22&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the financial results, highlighting a 16.0% revenue increase for the quarter ended September 30, 2021, driven by economic recovery from the COVID-19 pandemic, with both Patient Management and Network Solutions services showing significant growth and strong liquidity supported by cash from operations despite increased stock repurchases [Overview and Business Segments](index=22&type=section&id=Overview%20and%20Business%20Segments) CorVel provides nationwide medical cost containment and managed care services for workers' compensation, auto insurance, and group health benefits, operating as a single reportable segment aggregated from geographically managed regions, with two service lines: Patient Management and Network Solutions - The company is a nationwide provider of medical cost containment and managed care services for workers' compensation, auto insurance, and group health[80](index=80&type=chunk) - CorVel operates in one reportable operating segment, managed care, which is aggregated from its geographically managed regions[85](index=85&type=chunk)[87](index=87&type=chunk) [COVID-19 Pandemic Impact](index=23&type=section&id=COVID-19%20Pandemic%20Impact) The COVID-19 pandemic significantly impacted the business in 2020, leading to a **10%** headcount reduction and cuts in discretionary spending, with the company deferring **$10.4 million** in payroll taxes under the CARES Act, while sequential revenue increases through September 2021 indicate recovery - The company implemented a **10%** headcount reduction in early 2020 and reduced discretionary spending in response to the pandemic[90](index=90&type=chunk) - The company deferred **$10.4 million** in payroll taxes under the CARES Act, with repayments scheduled for late 2021 and 2022[114](index=114&type=chunk) - Sequential revenue increases were realized through the September 2021 quarter, indicating a recovery trend[90](index=90&type=chunk) [Results of Operations - Three Months Ended Sep 30, 2021 vs 2020](index=25&type=section&id=Results%20of%20Operations%20-%20Three%20Months%20Ended%20Sep%2030%2C%202021%20vs%202020) For the third quarter of 2021, revenues grew **16.0%** to **$157.7 million**, driven by increases in Patient Management and Network Solutions services, leading to a **20.2%** rise in gross profit and a **35.5%** increase in net income to **$16.1 million**, with diluted EPS rising to **$0.88** Q3 2021 vs Q3 2020 Performance | Metric | Q3 2021 ($) | Q3 2020 ($) | Change | | :--- | :--- | :--- | :--- | | Revenue | $157.7M | $136.0M | +16.0% | | Gross Profit | $36.7M | $30.5M | +20.2% | | Net Income | $16.1M | $11.9M | +35.5% | | Diluted EPS | $0.88 | $0.65 | +35.4% | - Revenue growth was driven by higher revenue from TPA and related services, with total new claims increasing by **16%** YoY[101](index=101&type=chunk) - Cost of revenues increased **14.7%**, primarily due to a **12%** increase in headcount in field operations to support revenue growth[103](index=103&type=chunk) [Results of Operations - Six Months Ended Sep 30, 2021 vs 2020](index=28&type=section&id=Results%20of%20Operations%20-%20Six%20Months%20Ended%20Sep%2030%2C%202021%20vs%202020) For the first six months of fiscal 2022, revenues increased **16.8%** to **$310.4 million**, with Patient Management and Network Solutions both growing, leading to a gross profit margin improvement from **21.5%** to **23.8%**, and net income surging **63.2%** to **$32.9 million**, with diluted EPS increasing to **$1.81** H1 2021 vs H1 2020 Performance | Metric | H1 2021 ($) | H1 2020 ($) | Change | | :--- | :--- | :--- | :--- | | Revenue | $310.4M | $265.6M | +16.8% | | Gross Profit | $73.9M | $57.0M | +29.6% | | Net Income | $32.9M | $20.2M | +63.2% | | Diluted EPS | $1.81 | $1.11 | +63.1% | - Total new claims increased by **18%** during the six-month period compared to the prior year[110](index=110&type=chunk) - The effective tax rate for the six-month period was **18.9%** in 2021, down from **22.3%** in 2020, primarily due to the impact of stock option exercises[113](index=113&type=chunk) [Liquidity and Capital Resources](index=29&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains a strong liquidity position with **$131.1 million** in cash as of September 30, 2021, funding operations primarily through **$35.2 million** in cash flow from operations, despite increased capital expenditures of **$11.6 million** and significant share repurchases of **$39.8 million** - Cash decreased by **$8.6 million** to **$131.1 million** as of Sep 30, 2021, from March 31, 2021, primarily due to increased spending on share repurchases[114](index=114&type=chunk) - Net cash used in financing activities increased by **$22.5 million** YoY to **$32.2 million**, mainly due to spending **$39.8 million** on share repurchases compared to **$14.4 million** in the prior year period[122](index=122&type=chunk) - Net cash from operating activities decreased by **$4.3 million** YoY to **$35.2 million**, partly because a prior year deferral of payroll taxes under the CARES Act was not available in 2021[120](index=120&type=chunk) [Critical Accounting Policies](index=32&type=section&id=Critical%20Accounting%20Policies) The company states that its significant accounting policies, requiring management's judgment and estimates, are described in its Annual Report on Form 10-K for the fiscal year ended March 31, 2021, with no changes made since that filing - No changes in critical accounting policies have been made since the filing of the Annual Report on Form 10-K for the fiscal year ended March 31, 2021[129](index=129&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=32&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) As of September 30, 2021, the company had no market risk sensitive instruments, did not use derivative financial instruments, and had no outstanding debt, resulting in negligible exposure to market risk - The Company held no market risk sensitive instruments for trading purposes and had no debt outstanding as of September 30, 2021[131](index=131&type=chunk) [Controls and Procedures](index=32&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of September 30, 2021, with no material changes in internal control over financial reporting during the quarter - The CEO and CFO concluded that as of September 30, 2021, the company's disclosure controls and procedures were effective[132](index=132&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls[134](index=134&type=chunk) PART II - OTHER INFORMATION [Legal Proceedings](index=34&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in litigation arising in the ordinary course of business, which management believes will not have a material impact on its consolidated financial position or results of operations - Management believes that ongoing litigation will not result in any payment that would be material to the company's financial position or operations[136](index=136&type=chunk) [Risk Factors](index=34&type=section&id=Item%201A.%20Risk%20Factors) This section outlines significant risks to the company's business, including the ongoing impact of the COVID-19 pandemic, intense competition, potential declines in workers' compensation claims, reliance on technology, cybersecurity threats, potential litigation, evolving government regulations, and common stock volatility [Risks Related to Our Business and Our Industry](index=34&type=section&id=Risks%20Related%20to%20Our%20Business%20and%20Our%20Industry) The company faces risks from the COVID-19 pandemic's economic disruption, intense competition from national providers and in-house services, and potential adverse effects from a decline in workers' compensation claims, failure to grow market share, or inability to retain key personnel - The COVID-19 pandemic could materially adversely affect business operations and financial results due to factors like reduced economic activity, lower claim volumes, and potential customer financial instability[139](index=139&type=chunk)[140](index=140&type=chunk) - The company faces significant competition from other managed care companies, PPOs, and insurance carriers that may perform similar services in-house[150](index=150&type=chunk)[157](index=157&type=chunk) - A long-term decline in work-related injuries and workers' compensation claims would have a material adverse impact on the business[152](index=152&type=chunk) [Risks Related to Cybersecurity and Our Information Systems](index=38&type=section&id=Risks%20Related%20to%20Cybersecurity%20and%20Our%20Information%20Systems) The business is highly dependent on IT systems and sensitive data, making it vulnerable to cybersecurity attacks that could lead to data loss, reputational damage, litigation, and financial harm, despite continuous security investments, as threats are sophisticated and evolving - A cybersecurity attack could result in the unauthorized disclosure of customer or company information, disrupting operations and causing significant reputational and financial harm[168](index=168&type=chunk) - The frequency and sophistication of cyber-attacks are increasing, and despite security investments, there is no assurance that breaches can be prevented[169](index=169&type=chunk)[171](index=171&type=chunk) - An interruption in the ability to access critical data could cause customers to cancel service and have a material adverse effect on business operations[177](index=177&type=chunk) [Risks Related to Potential Litigation](index=41&type=section&id=Risks%20Related%20to%20Potential%20Litigation) The company faces litigation risk from its utilization management services, potentially leading to claims for adverse medical outcomes, and is also exposed to lawsuits challenging cost containment programs, alongside rising liability insurance costs - The company is exposed to claims for adverse medical consequences arising from its recommendations concerning medical treatment plans[181](index=181&type=chunk) - Healthcare providers have brought individual and class action lawsuits challenging the company's cost containment programs, which could result in significant liabilities if successful[183](index=183&type=chunk) [Risks Related to Our Regulatory Environment](index=42&type=section&id=Risks%20Related%20to%20Our%20Regulatory%20Environment) The business is subject to numerous evolving state and federal regulations, including licensing and data privacy laws like GDPR and CCPA, which could increase operational costs, reduce demand for services, or expose the company to increased liability - Changes in government regulations, including licensing requirements and standards for medical review, could increase costs and impact competitiveness[187](index=187&type=chunk) - Increasingly stringent data privacy laws, such as GDPR and CCPA, could impact business models and expose the company to increased liability and reputational harm[190](index=190&type=chunk) [Risks Related to Ownership of Our Common Stock](index=42&type=section&id=Risks%20Related%20to%20Ownership%20of%20Our%20Common%20Stock) The market price of the company's common stock may be highly volatile, and the ongoing stock repurchase program, while intended to enhance long-term value, could increase price volatility and diminish cash reserves, with no guarantee of effectiveness or price stability - The market price and trading volume of the company's common stock may be volatile, leading to potential substantial losses for stockholders[191](index=191&type=chunk) - The stock repurchase program could increase stock price volatility and will diminish cash reserves, which could impact the ability to pursue future strategic opportunities[192](index=192&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=44&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the company's stock repurchase activity for the quarter ended September 30, 2021, where **165,455 shares** were repurchased at an average price of **$154.46** per share, with **1,062,100 shares** remaining authorized under the expanded program Common Stock Repurchases (Quarter Ended Sep 30, 2021) | Period | Total Shares Purchased | Average Price Paid Per Share ($) | | :--- | :--- | :--- | | July 2021 | 61,175 | $137.25 | | August 2021 | 56,537 | $155.59 | | September 2021 | 47,743 | $175.17 | | **Total** | **165,455** | **$154.46** | - In May 2021, the Board of Directors increased the total number of shares authorized for repurchase to **38,000,000**, and as of September 30, 2021, **1,062,100 shares** may yet be purchased under the program[196](index=196&type=chunk) [Defaults Upon Senior Securities](index=44&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reports no defaults upon senior securities - None[197](index=197&type=chunk) [Mine Safety Disclosures](index=44&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[198](index=198&type=chunk) [Other Information](index=44&type=section&id=Item%205.%20Other%20Information) The company reports no other information for this period - None[199](index=199&type=chunk) [Exhibits](index=45&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including the company's certificate of incorporation, bylaws, employee stock purchase plan, and certifications by the CEO and CFO as required by the Sarbanes-Oxley Act - Exhibits include corporate governance documents, employee benefit plans, and required CEO/CFO certifications (Sections 302 and 906)[201](index=201&type=chunk)[202](index=202&type=chunk)[203](index=203&type=chunk)[204](index=204&type=chunk)

CorVel Corporation (NASDAQ:CRVL) Q2 2021 Earnings Conference Call November 2, 2021 11:30 AM ET Company Participants Michael Combs - President and Chief Executive Officer Brandon O'Brien - Chief Financial Officer Conference Call Participants Disclaimer*: This transcript is designed to be used alongside the freely available audio recording on this page. Timestamps within the transcript are designed to help you navigate the audio should the corresponding text be unclear. The machine-assisted output provided is ...

PART I - FINANCIAL INFORMATION This section presents CorVel Corporation's unaudited consolidated financial statements and management's analysis for Q2 2021 [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) CorVel Corporation's unaudited consolidated financial statements, encompassing balance sheets, income, equity, cash flows, and detailed accounting notes, are presented [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) Consolidated balance sheet data shows changes in assets, liabilities, and equity between March 31, 2021, and June 30, 2021 | Metric | June 30, 2021 (USD) | March 31, 2021 (USD) | | :----------------------------- | :-------------------- | :------------------- | | Cash and cash equivalents | 138,662,000 | 139,716,000 | | Total Assets | 422,483,000 | 424,760,000 | | Total Liabilities | 192,944,000 | 204,358,000 | | Total Stockholders' Equity | 229,539,000 | 220,402,000 | [Consolidated Income Statements](index=4&type=section&id=Consolidated%20Income%20Statements) Consolidated income statement data highlights significant revenue and net income growth for the three months ended June 30, 2021 | Metric | Three Months Ended June 30, 2021 (USD) | Three Months Ended June 30, 2020 (USD) | Change (YoY) | | :----------------------------------- | :------------------------------------- | :------------------------------------- | :----------- | | REVENUES | 152,620,000 | 129,600,000 | +17.8% | | Cost of revenues | 115,407,000 | 103,091,000 | +11.9% | | Gross profit | 37,213,000 | 26,509,000 | +40.4% | | Income before income tax provision | 20,568,000 | 10,924,000 | +88.3% | | NET INCOME | 16,843,000 | 8,302,000 | +102.9% | | Basic EPS | 0.94 | 0.46 | +104.3% | | Diluted EPS | 0.92 | 0.46 | +100.0% | [Consolidated Statements of Stockholders' Equity](index=5&type=section&id=Consolidated%20Statements%20of%20Stockholders'%20Equity) Consolidated statements of stockholders' equity show changes in equity components for the three months ended June 30, 2021 | Item | Three Months Ended June 30, 2021 (USD) | Three Months Ended June 30, 2020 (USD) | | :------------------------------------ | :------------------------------------- | :------------------------------------- | | Balance – March 31 | 220,402,000 | 189,711,000 | | Stock issued under stock option plan, net | 5,145,000 | 1,482,000 | | Stock-based compensation expense | 1,345,000 | 995,000 | | Purchase of treasury stock | (14,196,000) | (2,398,000) | | Net income | 16,843,000 | 8,302,000 | | Balance – June 30 | 229,539,000 | 198,092,000 | [Consolidated Statements of Cash Flows](index=6&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Consolidated statements of cash flows detail cash movements from operating, investing, and financing activities for the three months ended June 30, 2021 | Cash Flow Activity | Three Months Ended June 30, 2021 (USD) | Three Months Ended June 30, 2020 (USD) | | :------------------------------------ | :------------------------------------- | :------------------------------------- | | Net cash provided by operating activities | 14,460,000 | 15,411,000 | | Net cash used in investing activities | (6,463,000) | (3,607,000) | | Net cash used in financing activities | (9,051,000) | (916,000) | | (Decrease)/increase in cash and cash equivalents | (1,054,000) | 10,888,000 | | Cash and cash equivalents at end of period | 138,662,000 | 94,111,000 | [Notes to Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section provides detailed notes explaining significant accounting policies, revenue recognition, stock-based compensation, treasury stock, weighted average shares, shareholder rights plan, contingencies, accounts payable, and leases [Note 1 — Summary of Significant Accounting Policies](index=7&type=section&id=Note%201%20%E2%80%94%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the basis of presentation for the unaudited consolidated financial statements and addresses the impact of the COVID-19 pandemic and recent accounting pronouncements - The unaudited consolidated financial statements are prepared under SEC rules, omitting disclosures that would substantially duplicate those in the March 31, 2021 audited consolidated financial statements[18](index=18&type=chunk)[20](index=20&type=chunk) - The COVID-19 pandemic's impact on business, results of operations, and financial condition is highly uncertain, but the company believes the impact has decreased over time[21](index=21&type=chunk) - Recent accounting pronouncements are not expected to have a material impact on the company's financial statements[22](index=22&type=chunk) [Note 2 – Revenue Recognition](index=7&type=section&id=Note%202%20%E2%80%93%20Revenue%20Recognition) This note details the company's revenue recognition policies for patient management and network solutions, including a breakdown of revenues by service line - Revenue is recognized when control of promised services is transferred to customers, reflecting the consideration expected in exchange for those services[23](index=23&type=chunk) - The company generates revenue through patient management services (workers' compensation claims, case management) and network solutions services (medical bill review, third-party services like pharmacy and directed care)[24](index=24&type=chunk)[25](index=25&type=chunk)[30](index=30&type=chunk)[31](index=31&type=chunk) Revenue by Service Line | Service Line | Three Months Ended June 30, 2021 (USD) | Three Months Ended June 30, 2020 (USD) | | :---------------------- | :------------------------------------- | :------------------------------------- | | Patient management services | 100,449,000 | 85,221,000 | | Network solutions services | 52,171,000 | 44,379,000 | | Total services | 152,620,000 | 129,600,000 | - As of June 30, 2021, the company had **$22.1 million** in remaining performance obligations for fixed-price claims and non-claims services, with approximately **97%** expected to be recognized as revenue within one year[40](index=40&type=chunk) [Note 3 — Stock-Based Compensation and Stock Options](index=10&type=section&id=Note%203%20%E2%80%94%20Stock-Based%20Compensation%20and%20Stock%20Options) This note outlines the company's Restated Omnibus Incentive Plan, detailing stock option grants, valuation, compensation expense, and activity during the quarter - Under the Plan, options for up to **20,615,000 shares** of common stock may be granted to key employees, non-employee directors, and consultants at exercise prices not less than fair market value[46](index=46&type=chunk) Stock-Based Compensation Expense | Metric | Three Months Ended June 30, 2021 (USD) | Three Months Ended June 30, 2020 (USD) | | :---------------------------------------------------------------------------------------------------- | :------------------------------------- | :------------------------------------- | | Total cost of stock-based compensation included in income before income tax provision | 1,345,000 | 995,000 | | Amount charged against net income | 1,101,000 | 756,000 | | Effect on diluted earnings per share | (0.06) | (0.04) | Stock Option Activity | Stock Option Activity | Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | | :-------------------------- | :------------------------------- | :------------------------------- | | Options outstanding, beginning | 937,158 | 1,029,103 | | Options granted | 33,000 | 45,175 | | Options exercised | (118,756) | (44,363) | | Options cancelled/forfeited | (4,777) | (12,421) | | Options outstanding, ending | 846,625 | 1,017,494 | | Weighted Average Exercise Price (ending) | $68.50 | $55.54 | - The weighted-average grant-date fair value of options granted was **$34.43** for the three months ended June 30, 2021, compared to **$15.19** for the same