CorVel Corporation
Q4 2020 Earnings Call Transcript

Published: 2 Feb 2021

[Operator:]

Thank you for standing by. Welcome to the CorVel Corporation Quarterly Earnings Release Webcast. During the course of this webcast, CorVel Corporation may make projections or other forward-looking statements regarding future events or the future financial performances of the company. CorVel wishes to caution you that these statements are only predictions and that actual events or results may differ materially. CorVel refers you to the documents that the company files from time to time with the Securities and Exchange Commission, specifically the Company's last Form 10-K and 10-Q filed for the most recent fiscal year and quarter. These documents contain and identify important factors that could cause the actual results to differ materially from those contained in our projections or forward-looking statements.

[Michael Combs:]

Good day, and thank you for joining us to review CorVel's December quarter. Joining me on the call today is Brandon O’Brien, CorVel's Chief Financial Officer. Today, I'll be discussing the current environment, business performance, market trends, and progress on strategic software initiatives. Brandon will then provide additional insight into our financial results for the December quarter. Earnings per share for the quarter ended December 31, 2020, were $0.63, up 26% from the same quarter of the prior year. Revenues were $142 million, we're still recovering, during the pandemic, from $148 million of revenue in the December quarter of 2019. The company's claims management services have continued their market share growth, with margins assisted by some of the economies associated with the work from anywhere technologies CorVel had implemented before the virus outbreak. Given the considerable uncertainty and concern everyone felt in late March and throughout April, the Company's results for 2020 demonstrate our organization's resilience and sound technology foundation. We come to the beginning of 2021 having finished a strong year. Our cash flow has been stronger than ever. New sales were a record for the year with particular success in claims administration, and our CERiS commercial health review business. And now for an overview of sales, a self-assessment of our sales results before last year identified this is an area where we believe we can and should improve. CorVel has strong product offerings in a number of managed care and claims management services in workers compensation. We have increased our focus on the drivers of sales success with good results in the first year of this effort. This remains a continued area of emphasis. Sales results reflect a healthy balanced growth in network solutions, enterprise comp TPA and serious medical review service offerings. An area of focus has been system enhancements to meet the needs of mid-market carriers. These enhancements are translating to increase sales in the network solutions segment of the market. Also, we have aggressively expanded our sales team over the last several months and expect continued healthy sales momentum in this new year. Digging a bit deeper into our strategic focus, CorVel has invested in information management technologies from the outset over 30 years ago. These past investments provide a foundation upon which the company expects to build new capabilities not imaginable just a few years ago. Investments in artificial intelligence and machine learning will be built to leverage existing investments in both the management of care and transaction processing within the healthcare industry.

[Brandon O’Brien:]

Thank you, Michael. And good morning, everyone. The December quarter revenue was $142 million, a 4% decrease from the same quarter of the prior year. Earnings per share were $0.63, a 26% increase from $0.51 per share in the same quarter of the prior year. The earnings per share increase of 26% was primarily realized through improved operational efficiencies across our service lines. These efficiencies are driven by temporary reductions of discretionary spend plus long-term structural improvements. The revenue for patient management, including third-party administration, TPA services, and traditional case management for the December quarter was $97 million, an annual decrease of 2%. Gross profit increased by 17% from the December quarter of 2019. Our third-party administration services hit record levels and continue to be well received in the marketplace. The enterprise comp integrated care model is tightly coordinated with the expanding avenues of care. CorVel’s telehealth and care IQ services provide immediate virtual care and concierge level scheduling of in-office care. In delivering favorable outcomes to employees, employers, and CorVel, these services offer ongoing revenue expansion opportunities. The revenue for Network Solutions sold in the wholesale market for the quarter was $45 million, a decrease of 10% from the same quarter of the prior year. Gross profit in the wholesale business was down 3% from the December quarter of 2019. Gross margins increased as the CERiS business increased its revenue mix within Network Solutions at accretive margins. I would now like to review a few additional financial items. During the quarter, the company purchased 82,000 shares for a total price of $7.7 million. Inception to date, the company has repurchased 36.6 million shares for a cost of $554 million. Through this program, the company has repurchased 67% of the total shares outstanding.

[Operator:]

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[Operator:]

This concludes today's webcast. You may disconnect your lines at this time.