CORVEL CORP

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 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.

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 January 2026, the Bureau of Labor Statistics reported that the occupational injury count for 2024 was 2.34 million compared to 2.37 million in 2023, 2.34 million in 2022, 2.24 million in 2021, 2.11 million in 2020, and 2.69 million in 2019. While the injury count has steadily increased since 2019, it has not returned to pre-pandemic levels. Despite fewer claims to administrate in each of 2024, 2023, 2022, 2021 and 2020 as compared to 2019, the Company has been able to overcome the 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 include 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, translation and transportation.

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 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.

Current wording

The Company operates in one reportable operating segment: managed care. It generates its revenue through its patient management and network solutions services. Both services are available to customers throughout the United States. Accordingly, the Company’s internal financial reporting is segmented geographically and managed on a geographic rather than service line basis, with virtually all of its 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 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.

Current wording

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. 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 $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.

Current wording

The Company’s revenues increased to $235.6 million in the quarter ended December 31, 2025, from $228.0 million in the quarter ended December 31, 2024, an increase of $7.7 million, or 3%. This increase resulted primarily from an increase in network solutions activity with existing customers.

Previous 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.

Current wording

Cost of revenues increased to $180.7 million in the quarter ended December 31, 2025, from $175.1 million in the quarter ended December 31, 2024, an increase of $5.6 million, or 3%. This increase was primarily due to the increase of 3% in revenue mentioned above.

Previous 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.

Current wording

General and administrative expense increased to $22.7 million in the quarter ended December 31, 2025, from $22.1 million in the quarter ended December 31, 2024, an increase of $0.6 million, or 3%. General and administrative expense in the quarter ended December 31, 2025 consisted of approximately the increase of 3% of revenues. The Company expects the proportion of general and administrative expense in future quarters to be between 9% and 11% of revenues.

Previous wording

Diluted weighted average common and common equivalent shares decreased to 51.7 million shares for the quarter ended September 30, 2025 from 52.0 million shares for the quarter ended September 30, 2024, a decrease of 300,000 shares, or 0.6%, due to the weighted impact of shares repurchased partially offset by the weighted impact of options exercised.

Current wording

Diluted weighted average common and common equivalent shares decreased to 51.6 million shares for the quarter ended December 31, 2025 from 52.0 million shares for the quarter ended December 31, 2024, a decrease of 456,000 shares, or 0.9%, due to the weighted impact of shares repurchased partially offset by the weighted impact of options exercised.

Previous 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.

Current wording

Diluted earnings per share increased to $0.47 per share in the quarter ended December 31, 2025, from $0.46 per share in the quarter ended December 31, 2024, an increase of $0.01 per share, or 2%. The increase in diluted earnings per share was primarily due to an increase in net income.

Previous 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.

Current wording

Revenues increased to $235.6 million in the three months ended December 31, 2025, from $228.0 million in the three months ended December 31, 2024, an increase of $7.7 million, or 3%. Network solutions services revenues increased to $89.6 million from $82.1 million, an increase of $7.5 million, or 9%. 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

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.

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 33% 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 $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.

Current wording

Cost of revenues increased to $180.7 million in the three months ended December 31, 2025, from $175.1 million in the three months ended December 31, 2024, an increase of $5.6 million, or 3%. The increase in cost of revenues was primarily due to the increase in total revenues of 3%. Additionally, there was an increase in salaries of 3% resulting from increased average headcount of 1%. Headcount increased to help manage the increase in business volume from existing customers.

Previous 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.

Current wording

For the three months ended December 31, 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.

Previous 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.

Current wording

General and administrative expense increased to $22.7 million in the three months ended December 31, 2025, from $22.1 million in the three months ended December 31, 2024, an increase of $0.6 million, or 3%. General and administrative expense in the quarter ended December 31, 2025, equaled approximately the increase of 3% of revenues. The increase was due to an increase in corporate system costs due to an increase spending on developed software. The Company expects future quarters of general and administrative expense will remain at approximately 9% to 11% of revenues.

Previous wording

Results of Operations for the six months ended September 30, 2025 and 2024

Current wording

Results of Operations for the nine months ended December 31, 2025 and 2024

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, 2025 and 2024. 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, 2025 and 2024. 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, 2025 from the six months ended September 30, 2024

Current wording

Change in revenue to the nine months ended December 31, 2025 from the nine months ended December 31, 2024

Previous wording

Revenues increased to $474.4 million for the six months ended September 30, 2025 from $436.1 million for the six months ended September 30, 2024, an increase of $38.3 million, or 9%. Patient management services revenues increased to $297.6 million from $286.3 million, an increase of $11.2 million, or 4%. Network solutions services revenues increased to $176.8 million from $149.8 million, an increase of $27.0 million, or 18%. This increase is primarily due to increases in enhanced bill review programs services, which resulted in higher revenue per bill. The increase was attributable to growth with both existing and new customers.

Current wording

Revenues increased to $710.0 million for the nine months ended December 31, 2025 from $664.1 million for the nine months ended December 31, 2024, an increase of $45.9 million, or 7%. Network solutions services revenues increased to $266.4 million from $231.9 million, an increase of $34.5 million, or 15%. This increase is primarily due to increases in enhanced bill review programs services, which resulted in higher revenue per bill. The increase was attributable to growth with existing customers adding additional services during the nine months ended December 31, 2025.

Previous wording

Change in cost of revenues to the six months ended September 30, 2025 from the six months ended September 30, 2024

Current wording

Change in cost of revenues to the nine months ended December 31, 2025 from the nine months ended December 31, 2024

Previous wording

Cost of revenues increased to $359.6 million in the six months ended September 30, 2025 from $337.2 million in the six months ended September 30, 2024, an increase of $22.4 million, or 7%. The increase in cost of revenues was primarily due to the increase in total revenues of 9%. Additionally, there was an increase in salaries of 4% resulting from increased average headcount to 3%. Headcount increased due to an increase in new and existing business volume.

Current wording

Cost of revenues increased to $540.1 million in the nine months ended December 31, 2025 from $512.5 million in the nine months ended December 31, 2024, an increase of $27.6 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 to 1%. 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, 2025 from the six months ended September 30, 2024

Current wording

Change in general and administrative expense to the nine months ended December 31, 2025 from the nine months ended December 31, 2024

Previous wording

General and administrative expense increased to $43.6 million in the six months ended September 30, 2025 from $42.2 million in the six months ended September 30, 2024, an increase of $1.4 million, or 3%. The increase in general and administrative expense was primarily related to legal expenses. General and administrative expense in the six months ended September 30, 2025, equaled approximately 9% of revenues.

Current wording

General and administrative expense increased to $66.4 million in the nine months ended December 31, 2025 from $64.0 million in the nine months ended December 31, 2024, an increase of $2.4 million, or 4%. The increase in general and administrative expense was primarily related to legal expenses. General and administrative expense in the nine months ended December 31, 2025, equaled approximately the increase of 7% of revenues.

Previous wording

Change in income tax provision to the six months ended September 30, 2025 from the six months ended September 30, 2024

Current wording

Change in income tax provision to the nine months ended December 31, 2025 from the nine months ended December 31, 2024

Previous wording

Income tax expense increased to $16.0 million for the six months ended September 30, 2025 from $11.7 million for the six months ended September 30, 2024, an increase of $4.3 million, or 37%. Income before income tax provision increased to $71.2 million in the six months ended September 30, 2025 from $56.7 million in the same period in the prior year, an increase of $14.5 million, or 26%. The income tax expense as a percentage of income before income taxes, also known as the effective tax rate, was 23% for the six months ended September 30, 2025 and 21% for the six months ended September 30, 2024. 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 $24.1 million for the nine months ended December 31, 2025 from $18.8 million for the nine months ended December 31, 2024, an increase of $5.3 million, or 28%. Income before income tax provision increased to $103.4 million in the nine months ended December 31, 2025 from $87.5 million in the same period in the prior year, an increase of $15.9 million, or 18%. The income tax expense as a percentage of income before income taxes, also known as the effective tax rate, was 23.3% for the nine months ended December 31, 2025 and 21.4% for the nine months ended December 31, 2024. 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 $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.

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 $213.5 million as of December 31, 2025 from $182.7 million as of March 31, 2025, an increase of $30.8 million. Cash and cash equivalents increased to $230.0 million as of December 31, 2025 from $170.6 million as of March 31, 2025, an increase of $59.4 million. This was primarily due to the increase in net income.

Previous 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.

Current wording

As of December 31, 2025, the Company had $230.0 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.

Previous 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.

Current wording

Net cash provided by operating activities increased to $126.2 million in the nine months ended December 31, 2025, from $104.4 million in the nine months ended December 31, 2024, an increase of $21.8 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 $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.

Current wording

Net cash flow used in investing activities increased to $36.2 million in the nine months ended December 31, 2025, from $27.1 million in the nine months ended December 31, 2024, an increase of $9.1 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 $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.

Current wording

Net cash flow used in financing activities increased to $30.5 million for the nine months ended December 31, 2025, from $19.9 million for the nine months ended December 31, 2024, an increase of $10.6 million. The increase in net cash used in financing activities was primarily due to an increase in spending on share repurchases to $36.0 million for the nine months ended December 31, 2025 from $28.6 million for the nine months ended December 31, 2024. Additionally, the increase in net cash used in financing activities can be attributed to the decrease in stock option exercises to $5.0 million for the nine months ended December 31, 2025, from $8.3 million for the nine months ended December 31, 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.