CORVEL CORP

Previous wording

The Company disclaims any obligations to update or revise any forward-looking statement based on the occurrence of future events, the receipt of new information or otherwise. Actual future performance, outcomes, and results may differ materially from those expressed in forward-looking statements made by the Company and its management as a result of a number of risks, uncertainties and assumptions. Representative examples of these factors include (without limitation): general industry and economic conditions, including a decreasing number of national claims due to a decreasing number of injured workers; competition from other managed care companies and third party administrators; the Company's ability to renew or maintain contracts with its customers on favorable terms or at all; the ability to expand certain areas of the Company’s business; growth in the Company’s sale of third-party administrator (“TPA”) services; shifts in customer demands; increases in operating expenses, including employee wages, benefits and medical inflation; the ability of the Company to produce market-competitive software; cost of capital and capital requirements; the Company’s ability to attract and retain key personnel; the impact of possible cybersecurity incidents on the Company’s business; existing and possible litigation and legal liability in the course of operations and the Company’s ability to resolve such litigation; changes in regulations affecting the workers’ compensation, insurance and healthcare industries in general; governmental and public policy changes, including but not limited to legislative and administrative law and rule implementation or change; the impact of recently issued accounting standards on the Company’s consolidated financial statements; the availability of financing in the amounts, at the times, and on the terms necessary to support the Company’s future business; and the other risks identified in Part II, Item 1A of this report, under the heading “Risk Factors.”

Current wording

The Company disclaims any obligations to update or revise any forward-looking statement based on the occurrence of future events, the receipt of new information or otherwise. Actual future performance, outcomes, and results may differ materially from those expressed in forward-looking statements made by the Company and its management as a result of a number of risks, uncertainties and assumptions. Representative examples of these factors include (without limitation): general industry and economic conditions, including a decreasing number of national claims due to a decreasing number of injured workers; competition from other managed care companies and third party administrators; the Company's ability to renew or maintain contracts with its customers on favorable terms or at all; the ability to expand certain areas of the Company’s business; growth in the Company’s sale of third-party administrator (“TPA”) services; shifts in customer demands; increases in general and administrative expense and in operating expenses, including employee wages, benefits and medical inflation; the ability of the Company to produce market-competitive software; cost of capital and capital requirements; the Company’s ability to attract and retain key personnel; the impact of possible cybersecurity incidents on the Company’s business; existing and possible litigation and legal liability in the course of operations and the Company’s ability to resolve such litigation; changes in regulations affecting the workers’ compensation, insurance and healthcare industries in general; governmental and public policy changes, including but not limited to legislative and administrative law and rule implementation or change; the impact of recently issued accounting standards on the Company’s consolidated financial statements; the availability of financing in the amounts, at the times, and on the terms necessary to support the Company’s future business; and the other risks identified in Part II, Item 1A of this report, under the heading “Risk Factors.”

Previous wording

The Company is an independent nationwide provider of medical cost containment and managed care services designed to address the escalating medical costs of workers’ compensation benefits, automobile insurance claims, and group health insurance benefits. The Company’s services are provided to insurance companies, TPAs, governmental entities, and self-administered employers to assist them in managing the medical costs and monitoring the quality of care associated with healthcare claims. In November 2023, the Bureau of Labor Statistics reported that the occupational injury count for 2022 was 2.34 million compared to 2.24 million in 2021, 2.11 million in 2020, and 2.69 million in 2019. While there was an increase in the injury count for 2022 compared to 2021, the count has not returned to pre-pandemic levels. Although there were fewer claims to administrate in each of 2022, 2021 and 2020 as compared to 2019, the Company was able to offset this with an increase in market share.

Current wording

The Company is an independent nationwide provider of medical cost containment and managed care services designed to address the escalating medical costs of workers’ compensation benefits, automobile insurance claims, and group health insurance benefits. The Company’s services are provided to insurance companies, TPAs, governmental entities, and self-administered employers to assist them in managing the medical costs and monitoring the quality of care associated with healthcare claims. In November 2024, the Bureau of Labor Statistics reported that the occupational injury count for 2023 was 2.37 million compared to 2.34 million in 2022, 2.24 million in 2021, 2.11 million in 2020, and 2.69 million in 2019. While there was an increase in the injury count for 2023 compared to 2022, the count has not returned to pre-pandemic levels. Although there were fewer claims to administrate in each of 2023, 2022, 2021 and 2020 as compared to 2019, the Company was able to offset this decrease with an increase in market share.

Previous wording

The Company’s network solutions services are designed to reduce the price paid by its customers for medical services rendered in workers’ compensation cases, automobile insurance policies, and group health insurance policies. The network solutions services offered by the Company include automated medical fee auditing, preferred provider management and reimbursement services, retrospective utilization review, facility claim review, professional review, pharmacy services, directed care services, Medicare solutions, clearinghouse services, independent medical examinations, and inpatient medical bill review. Network solutions services also includes revenue from the Company’s directed care network (known as CareIQ), including imaging, physical therapy, durable medical equipment, and translation and transportation.

Current wording

The Company’s network solutions services are designed to reduce the price paid by its customers for medical services rendered in workers’ compensation cases, automobile insurance policies, and group health insurance policies. The network solutions services offered by the Company include automated medical fee auditing, preferred provider management and reimbursement services, retrospective utilization review, facility claim review, professional review, pharmacy services, directed care services, Medicare solutions, clearinghouse services, independent medical examinations, and inpatient medical bill review. Network solutions services also includes revenue from the Company’s directed care network (known as CareIQ), including imaging, translation and transportation, physical therapy, and durable medical equipment.

Previous wording

In addition to its network solutions services, the Company offers a range of patient management services, which involve working one-on-one with injured employees and their various healthcare professionals, employers and insurance company adjusters. Patient management services include claims management and all services sold to claims management customers, case management, 24/7 nurse triage, utilization management, vocational rehabilitation, and life care planning. The services are designed to monitor the medical necessity and appropriateness of healthcare services provided to workers’ compensation and other healthcare claimants and to expedite return to work. The Company offers these services on a stand-alone basis, or as an integrated component of its medical cost containment services. Patient management services include the processing of claims for self-insured payors with respect to property and casualty insurance.

Current wording

In addition to its network solutions services, the Company offers a range of patient management services, which involve working one-on-one with injured employees and their various healthcare professionals, employers and insurance company adjusters. Patient management services include claims management and all services sold to claims management customers, case management, 24/7 nurse triage, utilization management, vocational rehabilitation, and life care planning. The services are designed to monitor the medical necessity and appropriateness of healthcare services provided to workers’ compensation and other healthcare claimants and to expedite the return to work. The Company offers these services on a stand-alone basis, or as an integrated component of its medical cost containment services. Patient management services include the processing of claims for self-insured payors with respect to property and casualty insurance.

Previous wording

The Company’s revenues increased to $224.4 million in the quarter ended September 30, 2024 from $195.5 million in the quarter ended September 30, 2023, an increase of $28.9 million, or 14.8%. This increase resulted from an increase in patient management and network solutions activity with new and existing customers.

Current wording

The Company’s revenues increased to $228.0 million in the quarter ended December 31, 2024, from $202.3 million in the quarter ended December 31, 2023, an increase of $25.7 million, or 12.7%. This increase resulted from an increase in patient management and network solutions activity with existing and new customers.

Previous wording

Cost of revenues increased to $173.6 million in the quarter ended September 30, 2024 from $151.3 million in the quarter ended September 30, 2023, an increase of $22.4 million, or 14.8%. This increase was primarily due to the increase of 14.8% in revenue mentioned above.

Current wording

Cost of revenues increased to $175.1 million in the quarter ended December 31, 2024, from $160.1 million in the quarter ended December 31, 2023, an increase of $15.0 million, or 9.3%. This increase was primarily due to the increase of 12.7% in revenue mentioned above.

Previous wording

General and administrative expense increased to $22.1 million in the quarter ended September 30, 2024 from $19.5 million in the quarter ended September 30, 2023, an increase of $2.5 million, or 13.0%. The increase in general and administrative expense was primarily due to the increase in total revenues of 14.8%. General and administrative expense in the quarter ended September 30, 2024 equaled approximately 10% of revenues. The Company expects general and administrative expense in future quarters to remain between 9% and 11% of revenues.

Current wording

General and administrative expense increased to $22.1 million in the quarter ended December 31, 2024, from $19.8 million in the quarter ended December 31, 2023, an increase of $2.3 million, or 11.4%. The increase in general and administrative expense was primarily due to the increase in total revenues of 12.7%. General and administrative expense in the quarter ended December 31, 2024 consisted of approximately 10% of revenues. The Company expects general and administrative expense in future quarters to remain between 9% and 11% of revenues.

Previous wording

Diluted weighted average common and common equivalent shares were 17.3 million shares for the quarters ended September 30, 2024 and 2023, a decrease of 5,000 shares.

Current wording

Diluted weighted average common and common equivalent shares were approximately 52.0 million shares for each of the quarters ended December 31, 2024 and 2023, with an increase of 60,000 shares from the quarter ended Decmeber 31, 2023.

Previous wording

Diluted earnings per share increased to $1.35 per share in the quarter ended September 30, 2024 from $1.15 per share in the quarter ended September 30, 2023, an increase of $0.20 per share, or 17.4%. The increase in diluted earnings per share was primarily due to an increase in net income.

Current wording

Diluted earnings per share increased to $0.46 per share in the quarter ended December 31, 2024, from $0.33 per share in the quarter ended December 31, 2023, an increase of $0.13 per share, or 39.4%. The increase in diluted earnings per share was primarily due to an increase in net income.

Previous wording

Revenues increased to $224.4 million in the three months ended September 30, 2024 from $195.5 million in the three months ended September 30, 2023, an increase of $28.9 million, or 14.8%. Patient management services revenues increased to $147.2 million from $129.8 million, an increase of $17.4 million, or 13.4%. This increase is primarily due to higher revenue from the Company’s TPA and related services. Total new claims increased by 5% during the three months ended September 30, 2024 compared to the three months ended September 30, 2023. Network solutions services revenues increased to $77.2 million from $65.7 million, an increase of $11.5 million, or 17.5%. Most of the increase is primarily attributable to the growth with new customers and, to a lesser extent, growth with existing customers.

Current wording

Revenues increased to $228.0 million in the three months ended December 31, 2024, from $202.3 million in the three months ended December 31, 2023, an increase of $25.7 million, or 12.7%. Patient management services revenues increased to $145.9 million from $131.8 million, an increase of $14.1 million, or 10.7%. This increase is primarily due to higher revenue from the Company’s TPA and related services. Total new claims increased by 10% during the three months ended December 31, 2024, compared to the three months ended December 31, 2023. Network solutions services revenues increased to $82.1 million from $70.5 million, an increase of $11.6 million, or 16.4%. Most of the increase is primarily attributable to the growth with existing customers and, to a lesser extent, growth with new customers.

Previous wording

Cost of revenues increased to $337.2 million in the six months ended September 30, 2024 from $299.6 million in the six months ended September 30, 2023, an increase of $37.6 million, or 12.5%. The increase in cost of revenues was primarily due to the increase in total revenues of 13.0%. Additionally, there was an increase in salaries of 11.9% resulting from increased average headcount plus an increase in paid days equating to 8.6%. Headcount increased due to an increase in new and existing business volume.

Current wording

Cost of revenues increased to $175.1 million in the three months ended December 31, 2024, from $160.1 million in the three months ended December 31, 2023, an increase of $15.0 million, or 9.3%. The increase in cost of revenues was primarily due to the increase in total revenues of 12.7%. Additionally, there was an increase in salaries of 9.4% resulting from increased average headcount of 5.5%. Headcount increased to help manage the increase in new and existing business volume.

Previous wording

For the three months ended September 30, 2024, general and administrative expense consisted of approximately 45% of corporate systems costs, which include the corporate systems support, implementation and training, rules engine development, national IT strategy and planning, depreciation of hardware costs in the Company’s corporate offices and backup data center, the Company’s nationwide area network, and other systems related costs. All IT-related costs managed by the corporate office are recorded under general and administrative expense whereas the field IT-related costs are included in the cost of revenues. The remaining general and administrative expense consists of national marketing, national sales support, corporate legal, corporate insurance, human resources, accounting, product management, new business development, and other general corporate expenses.

Current wording

For the three months ended December 31, 2024, general and administrative expense consisted of approximately 44% of corporate systems costs, which include the corporate systems support, implementation and training, rules engine development, national IT strategy and planning, depreciation of hardware costs in the Company’s corporate offices and backup data center, the Company’s nationwide area network, and other systems related costs. All IT-related costs managed by the corporate office are recorded under general and administrative expense whereas the field IT-related costs are included in the cost of revenues. The remaining general and administrative expense consists of national marketing, national sales support, corporate legal, corporate insurance, human resources, accounting, product management, new business development, and other general corporate expenses.

Previous wording

General and administrative expense increased to $22.1 million in the three months ended September 30, 2024 from $19.5 million in the three months ended September 30, 2023, an increase of $2.5 million, or 13.0%. The increase in general and administrative expense was primarily due to the increase in total revenues of 14.8%. General and administrative expense in the quarter ended September 30, 2024 equaled approximately 10% of revenues. The Company expects future quarters of general and administrative expense will remain to 9% to 11% of revenues.

Current wording

General and administrative expense increased to $22.1 million in the three months ended December 31, 2024, from $19.8 million in the three months ended December 31, 2023, an increase of $2.3 million, or 11.4%. The increase in general and administrative expense was primarily due to the increase in total revenues of 12.7%. General and administrative expense in the quarter ended December 31, 2024, equaled approximately 10% of revenues. The Company expects future quarters of general and administrative expense will remain at approximately 9% to 11% of revenues.

Previous wording

Income tax provision increased to $5.3 million in the three months ended September 30, 2024 from $4.8 million in the three months ended September 30, 2023, an increase of $0.5 million, or 9.5%. Income before income tax provision increased to $28.7 million in the three months ended September 30, 2024 from $24.7 million in the same period in the prior year, an increase of $4.0 million, or 16%. The effective tax rate was 18.4% for the three months ended September 30, 2024 compared to 19.5% in the same period in the prior year. The effective tax rate is less than the statutory tax rate primarily due to the impact of stock option exercises.

Current wording

Income tax provision increased to $7.0 million in the three months ended December 31, 2024, from $5.3 million in the three months ended December 31, 2023, an increase of $1.8 million, or 33.5%. Income before income tax provision increased to $30.8 million in the three months ended December 31, 2024 from $22.4 million in the same period in the prior year, an increase of $8.4 million, or 37.7%. The effective tax rate was 22.8% for the three months ended December 31, 2024 compared to 23.6% in the same period in the prior year. The effective tax rate is less than the statutory tax rate primarily due to the impact of stock option exercises.

Previous wording

Results of Operations for the six months ended September 30, 2024 and 2023

Current wording

Results of Operations for the nine months ended December 31, 2024 and 2023

Previous wording

The following table sets forth, for the periods indicated, the dollar amounts, dollar and percent changes, share changes, and the percentage of revenues represented by certain items reflected in the Company’s unaudited consolidated income statements for the six months ended September 30, 2024 and 2023. The Company’s past operating results are not necessarily indicative of future operating results.

Current wording

The following table sets forth, for the periods indicated, the dollar amounts, dollar and percent changes, share changes, and the percentage of revenues represented by certain items reflected in the Company’s unaudited consolidated income statements for the nine months ended December 31, 2024 and 2023. The Company’s past operating results are not necessarily indicative of future operating results.

Previous wording

Change in revenue to the six months ended September 30, 2024 from the six months ended September 30, 2023

Current wording

Change in revenue to the nine months ended December 31, 2024 from the nine months ended December 31, 2023

Previous wording

Revenues increased to $436.1 million for the six months ended September 30, 2024 from $385.8 million for the six months ended September 30, 2023, an increase of $50.3 million, or 13.0%. Patient management services revenues increased to $286.3 million from $257.6 million, an increase of $28.7 million, or 11.1%. This increase is primarily due to higher revenue from the Company’s TPA and related services. Total new claims increased by 2.2% during the six months ended September 30, 2024 compared to the six months ended September 30, 2023. Network solutions services revenues increased to $149.8 million from $128.1 million, an increase of $21.6 million, or 16.9%. This increase is primarily due to increases in enhanced bill review programs services, which resulted in higher revenue per bill. Most of the increase came from growth with new and existing customers.

Current wording

Revenues increased to $664.1 million for the nine months ended December 31, 2024, from $588.1 million for the nine months ended December 31, 2023, an increase of $76.0 million, or 12.9%. Patient management services revenues increased to $432.2 million from $389.4 million, an increase of $42.8 million, or 11.0%. This increase is primarily due to higher revenue from the Company’s TPA and related services. Total new claims increased by 4% during the nine months ended December 31, 2024, compared to the nine months ended December 31, 2023. Network solutions services revenues increased to $231.9 million from $198.7 million, an increase of $33.2 million, or 16.7%. This increase is primarily due to increases in enhanced bill review programs services, which resulted in higher revenue per bill. Most of the increase came from growth with both existing and new customers.

Previous wording

Change in cost of revenues to the six months ended September 30, 2024 from the six months ended September 30, 2023

Current wording

Change in cost of revenues to the nine months ended December 31, 2024 from the nine months ended December 31, 2023

Previous wording

Cost of revenues increased to $173.6 million in the three months ended September 30, 2024 from $151.3 million in the three months ended September 30, 2023, an increase of $22.4 million, or 14.8%. The increase in cost of revenues was primarily due to the increase in total revenues of 14.8%. Additionally, there was an increase in salaries of 12.3% resulting from increased average headcount plus an increase in paid days equating to 8.6%. Headcount increased due to an increase in new and existing business volume.

Current wording

Cost of revenues increased to $512.5 million in the nine months ended December 31, 2024, from $459.8 million in the nine months ended December 31, 2023, an increase of $52.7 million, or 11.5%. The increase in cost of revenues was primarily due to the increase in total revenues of 12.9%. Additionally, there was an increase in salaries of 11% resulting from increased average headcount of 6.9%. Headcount increased due to an increase in new and existing business volume.

Previous wording

Change in general and administrative expense to the six months ended September 30, 2024 from the six ended September 30, 2023

Current wording

Change in general and administrative expense to the nine months ended December 31, 2024 from the nine ended December 31, 2023

Previous wording

Change in income tax provision to the six months ended September 30, 2024 from the six ended September 30, 2023

Current wording

Change in income tax provision to the nine months ended December 31, 2024 from the nine ended December 31, 2023

Previous wording

Income tax expense increased to $11.7 million for the six months ended September 30, 2024 from $10.4 million for the six months ended September 30, 2023, an increase of $1.3 million, or 12.4%. Income before income tax provision increased to $56.7 million in the six months ended September 30, 2024 from $50.1 million in the same period in the prior year, an increase of $6.6 million, or 13.1%. The income tax expense as a percentage of income before income taxes, also known as the effective tax rate, was 20.7% for the six months ended September 30, 2024 and 20.8% for the six months ended September 30, 2023. For the six months ended September 30, 2024 and 2023, the effective tax rate is less than the statutory tax rate primarily because of the impact of the stock option exercises.

Current wording

Income tax expense increased to $18.8 million for the nine months ended December 31, 2024, from $15.7 million for the nine months ended December 31, 2023, an increase of $3.1 million, or 19.4%. Income before income tax provision increased to $87.5 million in the nine months ended December 31, 2024 from $72.5 million in the same period in the prior year, an increase of $15.0 million, or 20.7%. The income tax expense as a percentage of income before income taxes, also known as the effective tax rate, was 21.4% for the nine months ended December 31, 2024, and 21.7% for the nine months ended December 31, 2023. For the nine months ended December 31, 2024 and 2023, the effective tax rate is less than the statutory tax rate primarily because of the impact of the stock option exercises.

Previous wording

The Company has historically funded its operations and capital expenditures primarily from cash flow from operations, and to a lesser extent, proceeds from stock option exercises. Working capital increased to $150.5 million as of September 30, 2024 from $117.7 million as of March 31, 2024, an increase of $32.7 million. Cash increased to $138.3 million as of September 30, 2024 from $105.6 million as of March 31, 2024, an increase of $32.8 million. This is primarily due to the increase in net income, and to a lesser extent, a decrease in spending to repurchase shares of the Company's common stock under its stock repurchase program.

Current wording

The Company has historically funded its operations and capital expenditures primarily from cash flow from operations, and to a lesser extent, proceeds from stock option exercises. Working capital increased to $166.4 million as of December 31, 2024 from $117.7 million as of March 31, 2024, an increase of $48.7 million. Cash and cash equivalents increased to $162.9 million as of December 31, 2024 from $105.6 million as of March 31, 2024, an increase of $57.4 million. This is primarily due to the increase in net income, and to a lesser extent, a decrease in spending to repurchase shares of the Company's common stock under its stock repurchase program.

Previous wording

As of September 30, 2024, the Company had $138.3 million in cash and cash equivalents, invested primarily in short-term, interest-bearing, highly liquid investment grade securities with maturities of 90 days or less.

Current wording

As of December 31, 2024, the Company had $162.9 million in cash and cash equivalents, invested primarily in short-term, interest-bearing, highly liquid investment grade securities with maturities of 90 days or less.

Previous wording

Net cash provided by operating activities increased to $62.7 million in the six months ended September 30, 2024 from $54.6 million in the six months ended September 30, 2023, an increase of $8.1 million. The increase in cash flow from operating activities was primarily due to the increase in net income.

Current wording

Net cash provided by operating activities increased to $104.4 million in the nine months ended December 31, 2024, from $84.0 million in the nine months ended December 31, 2023, an increase of $20.4 million. The increase in cash flow from operating activities was primarily due to the increase in net income.

Previous wording

Net cash flow used in investing activities increased to $17.6 million in the six months ended September 30, 2024 from $12.3 million in the six months ended September 30, 2023, an increase of $5.3 million. The Company increased its spending primarily on developed software, offset by a reduction in its spending on furniture and leasehold improvements as the Company reduces its lease footprint.

Current wording

Net cash flow used in investing activities increased to $27.1 million in the nine months ended December 31, 2024, from $19.2 million in the nine months ended December 31, 2023, an increase of $7.9 million. The Company increased its spending primarily on developed software, offset by a reduction in its spending on furniture and leasehold improvements as the Company reduces its lease footprint.

Previous wording

Net cash flow used in financing activities decreased to $12.4 million for the six months ended September 30, 2024 from $21.9 million for the six months ended September 30, 2023, a decrease of $9.5 million. The decrease in net cash used in financing activities was primarily due to a decrease in spending on share repurchases to $19.1 million for the six months ended September 30, 2024from $27.2 million for the six months ended September 30, 2023, offset by stock option exercises increasing to $6.4 million for the six months ended September 30, 2024 from $4.9 million for the six months ended September 30, 2023. The Company has historically used cash provided by operating activities and from the exercise of stock options to repurchase stock. The Company expects that it may use a portion of its cash balance to repurchase additional shares of its common stock under its stock repurchase program in the future; however, there can be no assurance that any further stock repurchases will be made.

Current wording

Net cash flow used in financing activities decreased to $19.9 million for the nine months ended December 31, 2024, from $29.1 million for the nine months ended December 31, 2023, a decrease of $9.2 million. The decrease in net cash used in financing activities was primarily due to a decrease in spending on share repurchases to $28.6 million for the nine months ended December 31, 2024, from $36.5 million for the nine months ended December 31, 2023, offset by stock option exercises increasing to $8.3 million for the nine months ended December 31, 2024, from $7.1 million for the nine months ended December 31, 2023. The Company has historically used cash provided by operating activities and from the exercise of stock options to repurchase stock. The Company expects that it may use a portion of its cash balance to repurchase additional shares of its common stock under its stock repurchase program in the future; however, there can be no assurance that any further stock repurchases will be made.

Previous wording

Our financial statements are prepared in accordance with accounting principles generally accepted in the United States of America. In connection with the preparation of our financial statements, we are required to make certain assumptions and estimates that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Current wording

Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America. In connection with the preparation of our consolidated financial statements, we are required to make certain assumptions and estimates that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Previous wording

The Company’s significant accounting policies which have the greatest potential impact on its financial statements are more fully described in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of its Annual Report on Form 10-K for the fiscal year ended March 31, 2024, filed with the SEC on May 24, 2024. There have been no material changes to the critical accounting policies disclosed in that certain Annual Report on Form 10-K. In many cases, the accounting treatment of a particular transaction is specifically dictated by accounting principles generally accepted in the United States of America (“GAAP”), with no need for management’s judgment in their application. There are also areas in which management’s judgment in selecting an available alternative would not produce a materially different result. Actual results could differ from the estimates we use in applying our critical accounting policies. We are not currently aware of any reasonably likely events or circumstances that would result in materially different amounts being reported.

Current wording

The Company’s significant accounting policies which have the greatest potential impact on its consolidated financial statements are more fully described in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of its Annual Report on Form 10-K for the fiscal year ended March 31, 2024 (the “Annual Report”), filed with the SEC on May 24, 2024. There have been no material changes to the critical accounting policies disclosed in that certain Annual Report. In many cases, the accounting treatment of a particular transaction is specifically dictated by accounting principles generally accepted in the United States of America (“GAAP”), with no need for management’s judgment in their application. There are also areas in which management’s judgment in selecting an available alternative would not produce a materially different result. Actual results could differ from the estimates we use in applying our critical accounting policies. We are not currently aware of any reasonably likely events or circumstances that would result in materially different amounts being reported.

Previous wording

See Note 1 – Summary of Significant Accounting Policies to the accompanying unaudited consolidated financial statements contained elsewhere in this report for information about recently issued and adopted accounting pronouncements.

Current wording

See Note 1 – Summary of Significant Accounting Policies to the accompanying unaudited consolidated financial statements contained in this report for information about recently issued and adopted accounting pronouncements.