CORVEL CORP

Previous wording

This report may include certain forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including (without limitation) statements with respect to anticipated future operating and financial performance, growth and acquisition opportunities and other similar forecasts and statements of expectation. Words such as “expects,” “anticipates,” “intends,” “plans,” “predicts,” “believes,” “seeks,” “estimates,” “potential,” “continue,” “strive,” “ongoing,” “may,” “will,” “would,” “could,” “should,” as well as variations of these words and similar expressions, are intended to identify these forward-looking statements. Forward-looking statements made by the Company and its management are based on estimates, projections, beliefs and assumptions of management at the time of such statements and are not guarantees of future performance.

Current wording

This Quarterly Report on Form 10-Q for our first fiscal quarter ended June 30, 2026 (this “Quarterly Report”) may include certain forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including (without limitation) statements with respect to anticipated future operating and financial performance, growth and acquisition opportunities and other similar forecasts and statements of expectation. Words such as “expects,” “anticipates,” “intends,” “plans,” “predicts,” “believes,” “seeks,” “estimates,” “potential,” “continue,” “strive,” “ongoing,” “may,” “will,” “would,” “could,” “should,” as well as variations of these words and similar expressions, are intended to identify these forward-looking statements. Forward-looking statements made by the Company and its management are based on estimates, projections, beliefs and assumptions of management at the time of such statements and are not guarantees of future performance.

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 fluctuations in the number of national claims based on the 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; 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 based on the 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 potential 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 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 Quarterly 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 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.

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 from 2020 to 2024 as compared to 2019, the Company has been able to overcome the decrease with an increase in market share.

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

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.

Previous 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.

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 of the accounting guidance, 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 because they each provide similar managed care services and products to the same customer base using comparable methods of production and distribution and because each of our regions have similar economic characteristics.

Previous 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.

Current wording

The Company’s revenues increased to $259.9 million in the quarter ended June 30, 2026, from $234.7 million in the quarter ended June 30, 2025, an increase of $25.2 million, or 11%. This increase resulted primarily from an increase in network solutions and patient management activity with existing customers.

Previous 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.

Current wording

Cost of revenues increased to $192.1 million in the quarter ended June 30, 2026, from $178.0 million in the quarter ended June 30, 2025, an increase of $14.2 million, or 8%. This increase was primarily due to the increase of 11% in revenue mentioned above.

Previous 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.

Current wording

General and administrative expense increased to $24.5 million in the quarter ended June 30, 2026, from $21.5 million in the quarter ended June 30, 2025, an increase of $3.0 million, or 14%. General and administrative expense in the quarter ended June 30, 2026 consisted of approximately 11% 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 51.6 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.

Current wording

Diluted weighted average common and common equivalent shares decreased to 50.9 million shares for the quarter ended June 30, 2026 from 51.9 million shares for the quarter ended June 30, 2025, a decrease of 984,000 shares, or 1.9%, 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 $0.47 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.

Current wording

Diluted earnings per share increased to $0.63 per share in the quarter ended June 30, 2026, from $0.52 per share in the quarter ended June 30, 2025, an increase of $0.11 per share, or 21%. The increase in diluted earnings per share was primarily due to an increase in net income.

Previous 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.

Current wording

Revenues increased to $259.9 million in the three months ended June 30, 2026, from $234.7 million in the three months ended June 30, 2025, an increase of $25.2 million, or 11%. Network solutions services revenues increased to $100.6 million from $87.9 million, an increase of $12.7 million, or 14%. The increase in revenue was primarily with existing customers in enhanced billed review services. Patient management services revenues increased to $159.3 million from $146.8 million, an increase of $12.5 million, or 9%. Total new claims increased by 8% during the June 30, 2026 quarter compared to the June 30, 2025 quarter.

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 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.

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 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.

Previous 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.

Current wording

Cost of revenues increased to $192.1 million in the three months ended June 30, 2026, from $178.0 million in the three months ended June 30, 2025, an increase of $14.2 million, or 8%. 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 9% resulting from increased average headcount of 5%. Headcount increased to help manage the increase in business volume from existing customers.

Previous 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.

Current wording

For the three months ended June 30, 2026, 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 $22.7 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.

Current wording

General and administrative expense increased to $24.5 million in the three months ended June 30, 2026, from $21.5 million in the three months ended June 30, 2025, an increase of $3.0 million, or 14%. General and administrative expense in the quarter ended June 30, 2026, consisted of approximately 11% of revenues. The increase was due to an increase in corporate system costs due to an increase in spending on developed software. Additionally, there was an increase in marketing and insurance costs. 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 $8.1 million in the three months ended December 31, 2025, from $7.0 million in the three months ended December 31, 2024, an increase of $1.0 million, or 15%. Income before income tax provision increased to $32.2 million in the three months ended December 31, 2025 from $30.8 million in the same period in the prior year, an increase of $1.4 million, or 5%. The effective tax rate was 25% for the quarter ended December 31, 2025 and 22.8% for the quarter ended December 31, 2024. The increase in the effective tax rate was due to a decrease in stock option exercises.

Current wording

Income tax provision increased to $11.1 million in the three months ended June 30, 2026, from $8.0 million in the three months ended June 30, 2025, an increase of $3.1 million, or 38%. Income before income tax provision increased to $43.3 million in the three months ended June 30, 2026 from $35.3 million in the same period in the prior year, an increase of $8.1 million, or 23%. The effective tax rate was 26% for the quarter ended June 30, 2026 and 23% for the quarter ended June 30, 2025. The increase in the effective tax rate was due to a decrease in 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 $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.

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 $244.7 million as of June 30, 2026 from $234.2 million as of March 31, 2026, an increase of $10.5 million. Cash and cash equivalents increased to $255.9 million as of June 30, 2026 from $233.1 million as of March 31, 2026, an increase of $22.8 million. This was primarily due to the increase in net income.

Previous 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.

Current wording

As of June 30, 2026, the Company had $255.9 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 $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.

Current wording

Net cash provided by operating activities decreased to $49.9 million in the three months ended June 30, 2026, from $55.0 million in the three months ended June 30, 2025, a decrease of $5.1 million. The decrease in cash flow from operating activities was primarily due to the increase in accounts receivable due to a 11% increase in revenues.

Previous 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.

Current wording

Net cash flow used in investing activities decreased to $6.8 million in the three months ended June 30, 2026, from $15.5 million in the three months ended June 30, 2025, a decrease of $8.6 million. In the prior year, the Company increased its spending primarily on purchase of software licenses under the finance agreement.

Previous 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.

Current wording

Net cash flow used in financing activities increased to $20.3 million for the three months ended June 30, 2026, from $8.1 million for the three months ended June 30, 2025, an increase of $12.2 million. The increase in net cash used in financing activities was primarily due to an increase in spending on share repurchases to $22.0 million for the three months ended June 30, 2026 from $9.6 million for the three months ended June 30, 2025. This was slightly offset due to stock option exercises increasing to $1.7 million for the three months ended June 30, 2026 from $1.5 million for the three months ended June 30, 2025. 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.