CorVel(CRVL) - 2026 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - CorVel's revenue for the nine months ending December 31, 2025, was $710 million, a 7% increase from $664 million in the same period of the previous fiscal year [5] - Earnings per share for the same period were $1.53, up 16% from $1.32 during the nine months ending December 31, 2024 [5] - For the December 2025 quarter, revenues were $236 million, a 3% increase from $228 million in the December 2024 quarter [5] - Earnings per share for the December 2025 quarter were $0.47, an increase of 2% over the same quarter of the prior year at $0.46 [5] - Overall net income for the December 2025 quarter was $24.1 million, up from $23.8 million in December 2024 [6] Business Line Data and Key Metrics Changes - Key growth drivers included Independent Medical Evaluations, CERIS, Ancillary Care Solutions, Medical Bill Re-review, and Claims Management [7] - The allocation of general and administrative expenses decreased from 9.7% to 9.6%, with margin improvement from 23.2% to 23.3% [6] Market Data and Key Metrics Changes - The U.S. Department of Labor reported a small decline in total work-related injuries from 2023 to 2024, consistent with a decade-long trend [7] - Average medical and lost time claim severity increased by 6% in 2024, leading to elevated medical costs and extended duration of injury claims [8] - Medical costs are rising due to inflation, with increases noted between 5%-12% across multiple states [9] Company Strategy and Development Direction - CorVel is focusing on product innovation, savings through clinical outcomes, and effective management to adapt to industry shifts and leverage growth opportunities [10] - The company is investing in AI initiatives to enhance operational efficiency and improve outcomes for partners [11] - A technology-centric acquisition was closed at the end of June, contributing to increased efficiency in health payment integrity services [12] Management's Comments on Operating Environment and Future Outlook - Management noted that the December quarter results were modest relative to expectations, primarily due to short-term operational factors [11] - The net revenue retention for the business was 107%, with a 44% close rate on new business opportunities [11] - Management emphasized the importance of technology and reputation in maintaining growth momentum despite recent revenue fluctuations [23] Other Important Information - CorVel repurchased 185,559 shares at a cost of $13.4 million during the quarter, totaling 69% of shares outstanding repurchased at an average price of $7.55 per share [19] - The quarter-ending cash balance was $230 million, with free cash flow of $90 million for the fiscal year to date [20][21] - The company maintains a strong and debt-free balance sheet, positioning it for continued strategic expansion and technological advancement [21] Q&A Session Summary Question: Can you provide more detail on the deceleration of year-over-year revenue growth for each segment? - Management indicated that revenue growth has not been a straight line historically and believes that investment in technology and reputation will support future growth [23] Question: Can you please provide more context around segment quarter three? - Management clarified that CorVel operates within a single segment, providing services under Patient Management and Network Solutions without breaking them out separately [24]