CorVel(US:CRVL)2021-08-04 16:00PART I - FINANCIAL INFORMATION This section presents CorVel Corporation's unaudited consolidated financial statements and management's analysis for Q2 2021 Item 1. Financial Statements CorVel Corporation's unaudited consolidated financial statements, encompassing balance sheets, income, equity, cash flows, and detailed accounting notes, are presented Consolidated Balance Sheets 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 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 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 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 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 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 statements1820 - 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 time21 - Recent accounting pronouncements are not expected to have a material impact on the company's financial statements22 Note 2 – Revenue Recognition 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 services23 - 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)24253031 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 year40 Note 3 — Stock-Based Compensation and Stock Options 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 value46 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