CORVEL CORP

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 include revenue from the Company’s directed care network (known as CareIQ), including imaging, physical therapy, durable medical equipment, and translation and transportation.

Previous wording

The Company’s management is structured geographically with regional vice presidents who are responsible for all services provided by the Company within his or her particular region and responsible for the operating results of the Company in multiple states. These regional vice presidents have area and district managers who are also responsible for all services provided by the Company in their given area and district.

Current wording

The Company’s management is structured geographically with regional vice presidents who are responsible for all services provided by the Company within his or her particular region and the operating results of the Company in multiple states. In addition, the regional vice presidents oversee area and district managers who are also responsible for all services provided by the Company in their given area and district.

Previous wording

The Company operates in one reportable operating segment: managed care. The Company’s services are delivered to its customers through its local offices in each region and financial information for the Company’s operations follows this service delivery model. All regions provide the Company’s patient management and network solutions services to customers. Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) 280-10, “Segment Reporting,” establishes standards for the way that public business enterprises report information about operating segments in annual and interim consolidated financial statements. The Company’s internal financial reporting is segmented geographically, as discussed above, and managed on a geographic rather than service line basis, with virtually all of the Company’s operating revenue generated within the United States.

Current wording

The Company operates in one reportable operating segment: managed care. The Company’s services are delivered to its customers through its local offices in each region and financial information for the Company’s operations follows this service delivery model. All regions offer the Company’s patient management and network solutions services to customers. Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) 280-10, “Segment Reporting,” establishes standards for the way that public business enterprises report information about operating segments in annual and interim consolidated financial statements. The Company’s internal financial reporting is segmented geographically and managed on a geographic rather than service line basis, with virtually all of the Company’s operating revenue generated within the United States.

Previous wording

Under FASB ASC 280-10, two or more operating segments may be aggregated into a single operating segment for financial reporting purposes if aggregation is consistent with the objective and basic principles, if the segments have similar economic characteristics, and if the segments are similar in each of the following areas: (i) the nature of products and services; (ii) the nature of the production processes; (iii) the type or class of customer for their products and services; and (iv) the methods used to distribute their products or provide their services. The Company believes each of its regions meet these criteria as each provides similar services and products to similar customers using similar methods of production and distribution.

Current wording

Under FASB ASC 280-10, two or more operating segments may be aggregated into a single operating segment for financial reporting purposes if aggregation is consistent with the objective and basic principles, if the segments have similar economic characteristics, and if the segments are similar in each of the following areas: (i) the nature of products and services; (ii) the nature of the production processes; (iii) the type or class of customer for their products and services; and (iv) the methods used to distribute their products or provide their services. The Company believes its patient management and network solutions services meet these criteria as each provides similar services and products to similar customers using similar methods of production and distribution.

Previous wording

The Company’s revenues increased to $234.7 million in the quarter ended June 30, 2025, from $211.7 million in the quarter ended June 30, 2024, an increase of $23.0 million, or 11%. This increase resulted primarily from an increase in patient management and network solutions activity with new customers.

Current wording

The Company’s revenues increased to $239.6 million in the quarter ended September 30, 2025, from $224.4 million in the quarter ended September 30, 2024, an increase of $15.3 million, or 7%. This increase resulted primarily from an increase in network solutions activity with existing customers.

Previous wording

Cost of revenues increased to $178.0 million in the quarter ended June 30, 2025, from $163.6 million in the quarter ended June 30, 2024, an increase of $14.4 million, or 9%. This increase was primarily due to the increase of 11% in revenue mentioned above.

Current wording

Cost of revenues increased to $181.5 million in the quarter ended September 30, 2025, from $173.6 million in the quarter ended September 30, 2024, an increase of $7.8 million, or 5%. This increase was primarily due to the increase of 7% in revenue mentioned above.

Previous wording

General and administrative expense increased to $21.5 million in the quarter ended June 30, 2025, from $20.1 million in the quarter ended June 30, 2024, an increase of $1.4 million, or 7%. The increase in general and administrative expense was primarily due to the increase in total revenues of 11%. General and administrative expense in the quarter ended June 30, 2025 consisted of approximately 9% 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 $22.3 million in the quarter ended September 30, 2025, from $22.1 million in the quarter ended September 30, 2024, an increase of $0.2 million, or 1%. General and administrative expense in the quarter ended September 30, 2025 consisted of approximately 9% of revenues. The Company expects proportion of general and administrative expense in future quarters to remain between 9% and 11% of revenues.

Previous wording

Income tax provision increased to $8.0 million in the quarter ended June 30, 2025, from $6.5 million in the quarter ended June 30, 2024, an increase of $1.6 million, or 25%. Income before income tax provision increased to $35.3 million in the quarter ended June 30, 2025, from $28.0 million in the quarter ended June 30, 2024, an increase of $7.2 million, or 26%. The effective tax rate was approximately 23% for the quarters ended June 30, 2025 and 2024.

Current wording

Income tax provision increased to $8.0 million in the quarter ended September 30, 2025, from $5.3 million in the quarter ended September 30, 2024, an increase of $2.7 million, or 52%. Income before income tax provision increased to $35.9 million in the quarter ended September 30, 2025, from $28.7 million in the quarter ended September 30, 2024, an increase of $7.2 million, or 25%. The effective tax rate was 22% for the quarter ended September 30, 2025 and 18% for the quarter ended September 30, 2024.

Previous wording

Diluted earnings per share increased to $0.52 per share in the quarter ended June 30, 2025, from $0.42 per share in the quarter ended June 30, 2024, an increase of $0.10 per share, or 24%. The increase in diluted earnings per share was primarily due to an increase in net income.

Current wording

Diluted earnings per share increased to $0.54 per share in the quarter ended September 30, 2025, from $0.45 per share in the quarter ended September 30, 2024, an increase of $0.09 per share, or 20%. The increase in diluted earnings per share was primarily due to an increase in net income.

Previous wording

The Company generates revenues from providing patient management and network solutions services to payors of workers’ compensation benefits, automobile insurance claims, and group health insurance benefits. The percentage of total revenue attributable to patient management and network solutions services for the three months ended June 30, 2025 and 2024, are as follows:

Current wording

The Company generates revenues from providing patient management and network solutions services to payors of workers’ compensation benefits, automobile insurance claims, and group health insurance benefits.

Previous wording

Revenues increased to $234.7 million in the three months ended June 30, 2025, from $211.7 million in the three months ended June 30, 2024, an increase of $23.0 million, or 11%. Network solutions services revenues increased to $87.9 million from $72.6 million, an increase of $15.4 million, or 21%. The increase in revenue was primarily with new customers in managed care. Additionally, the increase is attributable to the growth with existing customers in enhanced bill review.

Current wording

Revenues increased to $239.6 million in the three months ended September 30, 2025, from $224.4 million in the three months ended September 30, 2024, an increase of $15.3 million, or 7%. Network solutions services revenues increased to $88.8 million from $77.2 million, an increase of $11.6 million, or 15%. The increase in revenue was primarily with existing customers in network solutions, as well as an increase in enhanced billed review due to a growth with existing customers.

Previous wording

The Company’s cost of revenues consists of direct expenses, which are expenses directly attributable to the generation of revenue, and indirect costs, which are costs incurred to support the operations in the field offices that generate the revenue. Direct expenses primarily include (i) case manager and bill review analysts’ salaries, along with related payroll taxes and fringe benefits, and (ii) expenses associated with independent medical examinations, prescription drugs, MRIs, physical therapy, and durable medical equipment providers. Most of the Company’s revenue is generated in offices that provide both patient management services and network solutions services. The remaining revenue is generated in the field. Approximately 32% of the costs incurred in the field are considered field indirect costs. The largest of the field indirect costs are (i) manager salaries and bonuses, (ii) account executive base pay and commissions, (iii) salaries of administrative and clerical support, field systems personnel and PPO network developers, along with related payroll taxes and fringe benefits, and (iv) office rent.

Current wording

Cost of revenues consists of direct expenses, which are expenses directly attributable to the generation of revenue, and indirect costs, which are costs incurred to support the operations in the field offices that generate the revenue. Direct expenses primarily include (i) case manager and bill review analysts’ salaries, along with related payroll taxes and fringe benefits, and (ii) expenses associated with independent medical examinations, prescription drugs, MRIs, physical therapy, and durable medical equipment providers. Most of the Company’s revenue is generated in offices that provide both patient management services and network solutions services. The remaining revenue is generated in the field. Approximately 30% of the costs incurred in the field are considered field indirect costs. The largest of the field indirect costs are (i) manager salaries and bonuses, (ii) account executive base pay and commissions, (iii) salaries of administrative and clerical support, field systems personnel and PPO network developers, along with related payroll taxes and fringe benefits, and (iv) office rent.

Previous wording

Cost of revenues increased to $178.0 million in the three months ended June 30, 2025, from $163.6 million in the three months ended June 30, 2024, an increase of $14.4 million, or 9%. The increase in cost of revenues was primarily due to the increase in total revenues of 11%. Additionally, there was an increase in salaries of 4.2% resulting from increased average headcount of 3.9%. Headcount increased to help manage the increase in new and existing business volume.

Current wording

Cost of revenues increased to $181.5 million in the three months ended September 30, 2025, from $173.6 million in the three months ended September 30, 2024, an increase of $7.8 million, or 5%. The increase in cost of revenues was primarily due to the increase in total revenues of 7%. Additionally, there was an increase in salaries of 3% resulting from increased average headcount of 3%. Headcount increased to help manage the increase in business volume from existing customers.

Previous wording

For the three months ended June 30, 2025, general and administrative expense consisted of approximately 46% 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 September 30, 2025, 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 $21.5 million in the three months ended June 30, 2025, from $20.1 million in the three months ended June 30, 2024, an increase of $1.4 million, or 7%. The increase in general and administrative expense was primarily due to the increase in total revenues of 11%. The increase in general and administrative expense was due to an increase in legal and insurance expenses. General and administrative expense in the quarter ended June 30, 2025, equaled approximately 9% of revenues. The Company expects future quarters of general and administrative expense will remain at approximately 9% to 11% of revenues.

Current wording

General and administrative expense increased to $22.3 million in the three months ended September 30, 2025, from $22.1 million in the three months ended September 30, 2024, an increase of $0.2 million, or 1%. General and administrative expense in the quarter ended September 30, 2025, equaled approximately 9% 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 $8.0 million in the three months ended June 30, 2025, from $6.5 million in the three months ended June 30, 2024, an increase of $1.6 million, or 25%. Income before income tax provision increased to $35.3 million in the three months ended June 30, 2025 from $28.0 million in the same period in the prior year, an increase of $7.2 million, or 26%. The effective tax rate was 23% for the three months ended June 30, 2025 and 2024. The effective tax rate was less than the statutory tax rate primarily due to the impact of stock option exercises.

Current wording

Income tax provision increased to $8.0 million in the three months ended September 30, 2025, from $5.3 million in the three months ended September 30, 2024, an increase of $2.7 million, or 52%. Income before income tax provision increased to $35.9 million in the three months ended September 30, 2025 from $28.7 million in the same period in the prior year, an increase of $7.2 million, or 25%. The effective tax rate was 22% for the quarter ended September 30, 2025 and 18% for the quarter ended September 30, 2024. The effective tax rate was less than the statutory tax rate primarily due to the impact of 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 $186.4 million as of June 30, 2025 from $182.7 million as of March 31, 2025, an increase of $3.8 million. Cash and cash equivalents increased to $202.0 million as of June 30, 2025 from $170.6 million as of March 31, 2025, an increase of $31.4 million. This was primarily due to the increase in net income.

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 $203.9 million as of September 30, 2025 from $182.7 million as of March 31, 2025, an increase of $21.3 million. Cash and cash equivalents increased to $207.5 million as of September 30, 2025 from $170.6 million as of March 31, 2025, an increase of $36.9 million. This was primarily due to the increase in net income.

Previous wording

As of June 30, 2025, the Company had $202.0 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 September 30, 2025, the Company had $207.5 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

The Company believes its cash and cash equivalents, cash generated from ongoing operations and funds received from exercises of employee stock options will be sufficient to satisfy its cash requirements for the next 12 months and beyond, including its existing obligations, repurchase shares of the Company's common stock under its current stock repurchase program, introduce new services, and continue to develop the Company’s healthcare related services for at least the next twelve months. Should the Company experience lower income or cash flows, repurchases under the stock repurchase program may be reduced or eliminated until earnings and cash flow return to comfortable levels. The Company regularly evaluates its cash requirements for current operations, commitments, capital acquisitions, and other strategic transactions. The Company may elect to raise additional funds for these purposes, through debt or equity financings or otherwise, as appropriate. However, additional equity or debt financing may not be available, with terms favorable to the Company, or at all, when needed.

Current wording

The Company believes its cash and cash equivalents, cash generated from ongoing operations and funds received from exercises of employee stock options will be sufficient to satisfy its cash requirements for the next 12 months and beyond, including its existing obligations, repurchase shares of the Company’s common stock under its current stock repurchase program, introduce new services, and continue to develop the Company’s healthcare related services for at least the next 12 months. Should the Company experience lower income or cash flows, repurchases under the stock repurchase program may be reduced or eliminated until earnings and cash flow return to comfortable levels. The Company regularly evaluates its cash requirements for current operations, commitments, capital acquisitions, and other strategic transactions. The Company may elect to raise additional funds for these purposes, through debt or equity financings or otherwise, as appropriate. However, additional equity or debt financing may not be available, with terms favorable to the Company, or at all, when needed.

Previous wording

Net cash provided by operating activities increased to $55.0 million in the three months ended June 30, 2025, from $40.4 million in the three months ended June 30, 2024, an increase of $14.6 million. The increase in cash flow from operating activities was primarily due to the increase in net income, as well as an increase in accrued payroll due to the timing of the Company's bi-weekly payroll.

Current wording

Net cash provided by operating activities increased to $80.0 million in the six months ended September 30, 2025, from $62.7 million in the six months ended September 30, 2024, an increase of $17.3 million. The increase in cash flow from operating activities was primarily due to the increase in net income and an improvement in accounts receivable.

Previous wording

Net cash flow used in investing activities increased to $15.5 million in the three months ended June 30, 2025, from $7.7 million in the three months ended June 30, 2024, an increase of $7.8 million. The Company increased its spending primarily on developed software and on purchase of software license under finance agreement.

Current wording

Net cash flow used in investing activities increased to $25.2 million in the six months ended September 30, 2025, from $17.6 million in the six months ended September 30, 2024, an increase of $7.7 million. The Company increased its spending primarily on developed software and on the purchase of software licenses under a finance agreement.

Previous wording

Net cash flow used in financing activities increased to $8.1 million for the three months ended June 30, 2025, from $6.4 million for the three months ended June 30, 2024, an increase of $1.7 million. The increase in net cash used in financing activities was primarily due to stock option exercises decreasing to $1.5 million for the three months ended June 30, 2025, from $3.1 million for the three months ended June 30, 2024. 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 increased to $18.0 million for the six months ended September 30, 2025, from $12.4 million for the six months ended September 30, 2024, an increase of $5.5 million. The increase in net cash used in financing activities was due to stock option exercises decreasing to $4.1 million for the six months ended September 30, 2025, from $6.4 million for the six months ended September 30, 2024. Additionally, the increase in net cash used in financing activities was primarily due to an increase in spending on share repurchases to $22.5 million for the six months ended September 30, 2025 from $19.1 million for the six months ended September 30, 2024. 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.