Corvel Corporation Quarterly Report on Form 10-Q

Financial Performance Highlights for the Company

The Company, a leading provider of managed care services, has reported strong financial results for the quarter and nine months ended December 31, 2024. The Company’s revenues, profits, and earnings per share all showed solid growth compared to the same periods in the prior year.

Revenue Growth

The Company’s revenues increased by 12.7% in the quarter ended December 31, 2024, reaching $228.0 million compared to $202.3 million in the same quarter of the prior year. This increase was driven by growth in both the Company’s patient management services and network solutions services.

For the nine-month period ended December 31, 2024, revenues grew by 12.9% to $664.1 million, up from $588.1 million in the same period of the prior year. The patient management services segment saw an 11.0% increase in revenues, while the network solutions services segment grew by 16.7%.

The growth in revenues was attributed to higher activity with both existing and new customers across the Company’s service lines.

Profitability

The Company’s profitability also improved significantly. Gross profit increased by 25.4% in the quarter ended December 31, 2024, reaching $52.9 million compared to $42.2 million in the same quarter of the prior year. As a percentage of revenues, gross profit margin expanded from 20.8% to 23.2%.

For the nine-month period, gross profit grew by 18.1% to $151.5 million, with the gross profit margin increasing from 21.8% to 22.8%.

The Company’s income before income tax provision increased by 37.7% in the quarter and 20.7% in the nine-month period, reflecting the strong operational performance.

Earnings per Share

Diluted earnings per share increased by 39.4% in the quarter ended December 31, 2024, rising to $0.46 per share from $0.33 per share in the same quarter of the prior year. For the nine-month period, diluted earnings per share grew by 21.1% to $1.32 per share.

The increase in earnings per share was primarily driven by the growth in net income, which rose by 39.1% in the quarter and 21.0% in the nine-month period.

Cost Management

The Company was able to manage its costs effectively despite the revenue growth. Cost of revenues increased by 9.3% in the quarter and 11.5% in the nine-month period, lagging the pace of revenue growth.

General and administrative expenses increased by 11.4% in the quarter and 14.8% in the nine-month period, remaining within the Company’s target range of 9-11% of revenues.

Liquidity and Capital Resources

The Company’s financial position remained strong, with cash and cash equivalents increasing to $162.9 million as of December 31, 2024, up from $105.6 million at the end of the prior fiscal year. Working capital also improved, reaching $166.4 million compared to $117.7 million at the end of the prior fiscal year.

The Company believes its cash resources, along with cash generated from operations and stock option exercises, will be sufficient to meet its cash requirements for the next 12 months and beyond, including funding for new service introductions, ongoing operations, and the continuation of its stock repurchase program.

Outlook and Risks

The Company faces some challenges, including pricing pressures from competitors and the impact of inflation on operating expenses such as labor and facility costs. However, the Company believes it is well-positioned to navigate these headwinds and continue its growth trajectory.

The Company’s management remains focused on driving organic growth, exploring strategic acquisitions, and maintaining a strong financial position to support the execution of its business plan. The Company’s diversified service offerings, strong customer relationships, and operational efficiency are expected to be key factors in its future success.

Investors should be aware of certain risks that could impact the Company’s performance, including potential declines in revenue due to factors such as changes in workers’ compensation and automobile insurance laws, increased competition, and the ability to retain and attract talent. Natural disasters and pandemics also pose risks that could disrupt the Company’s operations.

Overall, the Company’s recent financial results demonstrate its ability to deliver consistent growth and profitability, even in a challenging economic environment. Investors may find the Company’s stock an attractive investment opportunity given its strong market position, diversified service offerings, and solid financial performance.