CorVel(US:CRVL)2023-10-31 22:30Financial Data and Key Metrics - September quarter revenues were $196 million, a 10% increase from $177 million in the September 2022 quarter [5] - Earnings per share for the quarter were $1.15, up 39% from $0.83 in the same quarter of the prior year [5] - Gross profit increased by 43% compared to the September 2022 quarter [19] - Revenue for patient management was $130 million, a 9% annual increase [19] - Revenue for network solutions was $66 million, up 13% from the same quarter of the prior year [22] - Gross profit in the wholesale business was up 7% from the September 2022 quarter [22] - Day sales outstanding (DSO) was 40 days, down four days from a year ago [23] - Quarter-ending cash balance was $92 million [23] Business Line Performance - Network solutions and patient management business showed balanced growth [5] - CERiS, focused on the commercial health payment integrity market, is maturing with new services added last year [5] - CareIQ, the ancillary benefits management solution, is gaining market attention due to service quality and results [6] - CERiS continues to focus on adding new services, with workflow optimization for the DRG service introduced in early 2023 [15][16] - Symbeo is guiding partners through digital payment transformations, leveraging hyperautomation for faster invoice cycle times and lower costs [17] - Treasury Services Department expanded online payment portals to include claimants and customers, enhancing functionality [18] Market Performance - The insurance industry is facing challenges with the labor market, including a shortage of qualified professionals and the impact of baby boomer retirements [7][8] - Pharmacy utilization has decreased significantly in Texas following the adoption of a closed formulary, with pharmacy claims down 57%, total scripts down 73%, and opioid scripts down 86% [13] - Physical therapy visits have increased by 13% over the last eight years, with costs per visit rising by 17% [14] - CorVel's CareIQ has seen a 23% lower increase in visits and 65% lower cost per visit compared to industry averages [14] Strategic Direction and Industry Competition - The company is addressing labor market challenges with automation, machine learning, and Generative AI to enhance efficiency and decision-making [9][10] - CorVel University was launched to train current employees and external candidates in claims management, with over 1,100 applicants for the first class [11] - The company is investing in technology, including Generative AI, and programs like CorVel View to attract younger professionals and modernize operations [12] - CorVel is actively involved in influencing policy and legislation, particularly in physical therapy and pharmacy [12] - The company is leveraging AI and ML to optimize workflows and improve financial results, with additional technological enhancements planned for future quarters [16] Management Commentary on Operating Environment and Future Outlook - The company is proactively adjusting to a dynamic business environment and shifting industry landscape [12] - Management expects increasing momentum in CERiS as transaction volumes grow and new payment integrity services are optimized [5] - The company anticipates further adoption and restructuring of state-level pharmacy formularies, which could impact pharmaceutical costs [13] - CorVel's strong financial position, with no debt and strong operating cash flow, supports ongoing investments in technology and programs [12][23] Other Important Information - The company repurchased 45,501 shares during the quarter at a total cost of $9.4 million, bringing total repurchases to 38 million shares at a cost of $775 million since inception [23] - CorVel's debt-free balance sheet contrasts with many others in the segment facing increasing debt loads and interest rate cost headwinds [24] Q&A Session - No specific questions or answers were provided in the transcript [24]