CORVEL CORP

Previous 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.

Current wording

This Quarterly Report on Form 10-Q (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 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.

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 generally increased since 2020, 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

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.

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), such as imaging, physical therapy, durable medical equipment, translation and transportation.

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 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.

Current wording

Financial Accounting Standards Board (“FASB”) Accounting Standards 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 has similar economic characteristics.

Previous 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.

Current wording

The Company’s revenues increased to $267.1 million in the quarter ended September 30, 2026, from $239.6 million in the quarter ended September 30, 2025, an increase of $27.5 million, or 11%. This increase resulted primarily from higher network solutions activity with existing customers, drive by our enhanced bill review services, and higher patient management activity, driven by new customers for our claims services.

Previous 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.

Current wording

General and administrative expense increased to $26.5 million in the quarter ended September 30, 2026, from $22.3 million in the quarter ended September 30, 2025, an increase of $4.2 million, or 19%. General and administrative expense in the quarter ended September 30, 2026 represented approximately 10% 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

Income tax provision increased to $11.1 million in the quarter ended June 30, 2026, from $8.0 million in the quarter ended June 30, 2025, an increase of $3.1 million, or 38%. Income before income tax provision increased to $43.3 million in the quarter ended June 30, 2026, from $35.3 million in the quarter ended June 30, 2025, an increase of $8.1 million, or 23%. The effective tax rate was 26% for the quarter ended June 30, 2026, compared to 23% for the quarter ended June 30, 2025.

Current wording

Income tax provision increased to $11.8 million in the quarter ended September 30, 2026, from $8.0 million in the quarter ended September 30, 2025, an increase of $3.8 million, or 47%. Income before income tax provision increased to $45.8 million in the quarter ended September 30, 2026, from $35.9 million in the quarter ended September 30, 2025, an increase of $9.9 million, or 28%. The effective tax rate was 26% for the quarter ended September 30, 2026, compared to 22% for the quarter ended September 30, 2025.

Previous 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.

Current wording

Diluted weighted average common and common equivalent shares decreased to 50.7 million shares for the quarter ended September 30, 2026 from 51.7 million shares for the quarter ended September 30, 2025, a decrease of 1,033,000 shares, or 2.0%, 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 $0.63 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.

Current wording

Diluted earnings per share increased to $0.67 per share in the quarter ended September 30, 2026, from $0.54 per share in the quarter ended September 30, 2025, an increase of $0.13 per share, or 24%. The increase in diluted earnings per share was primarily due to an increase in net income.

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 three months ended June 30, 2026 and 2025. 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 three months ended September 30, 2026 and 2025.

Previous 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.

Current wording

Revenues increased to $267.1 million in the three months ended September 30, 2026, from $239.6 million in the three months ended September 30, 2025, an increase of $27.5 million, or 11%. Network solutions services revenues increased to $99.5 million from $88.8 million, an increase of $10.7 million, or 12%. The increase in network solutions services revenues was primarily attributable to existing customers using our enhanced bill review services. Patient management services revenues increased to $167.6 million from $150.8 million, an increase of $16.8 million, or 11%. Total new claims increased by 12% during the September 30, 2026 quarter compared to the September 30, 2025 quarter.

Previous 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.

Current wording

Cost of revenues increased to $194.8 million in the three months ended September 30, 2026, from $181.5 million in the three months ended September 30, 2025, an increase of $13.4 million, or 7%. 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. These cost increases were partially offset by productivity improvements in our claims and enhanced bill review services resulting from our investment in developed software.

Previous 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.

Current wording

For the three months ended September 30, 2026, approximately 42% of general and administrative expense consisted of corporate systems costs, which include 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 $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.

Current wording

General and administrative expense increased to $26.5 million in the three months ended September 30, 2026, from $22.3 million in the three months ended September 30, 2025, an increase of $4.2 million, or 19%. General and administrative expense in the quarter ended September 30, 2026, represented approximately 10% of revenues. The increase was due to an increase in corporate systems costs resulting from increased 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 $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.

Current wording

Income tax provision increased to $11.8 million in the three months ended September 30, 2026, from $8.0 million in the three months ended September 30, 2025, an increase of $3.8 million, or 47%. Income before income tax provision increased to $45.8 million in the three months ended September 30, 2026 from $35.9 million in the same period in the prior year, an increase of $9.9 million, or 28%. The income tax expense as a percentage of income before income taxes, also known as the effective tax rate, was 26% for the quarter ended September 30, 2026 and 22% for the quarter ended September 30, 2025. The increase in the effective tax rate was due to a decrease in the tax benefit from 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 $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.

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 $263.3 million as of September 30, 2026 from $234.2 million as of March 31, 2026, an increase of $29.0 million. Cash and cash equivalents increased to $270.0 million as of September 30, 2026 from $233.1 million as of March 31, 2026, an increase of $36.9 million. This was primarily due to the increase in net income.

Previous 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.

Current wording

As of September 30, 2026, the Company had $270.0 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

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.

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 financings, with terms favorable to the Company, may not be available when needed.

Previous wording

The Company faces pricing pressures due to the competitive pricing of its competitors. The Company is also impacted by rising costs for certain inflation-sensitive operating expenses such as labor, employee benefits, and facility leases. The Company believes inflation could have a material impact to pricing and operating expenses in future periods due to the state of the economy and current inflation rates.

Current wording

The Company faces pricing pressures due to the competitive pricing of its competitors. The Company is also impacted by rising costs for certain inflation-sensitive operating expenses such as labor, employee benefits, and facility leases. The Company believes inflation could have a material impact on pricing and operating expenses in future periods due to the state of the economy and current inflation rates.

Previous 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.

Current wording

Net cash provided by operating activities increased to $89.5 million in the six months ended September 30, 2026, from $80.0 million in the six months ended September 30, 2025, an increase of $9.5 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 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.

Current wording

Net cash used in investing activities decreased to $17.1 million in the six months ended September 30, 2026, from $25.2 million in the six months ended September 30, 2025, a decrease of $8.1 million. The decrease was primarily due to higher spending in the prior-year period on the purchase of software licenses under a finance agreement.

Previous 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.

Current wording

Net cash used in financing activities increased to $35.5 million for the six months ended September 30, 2026, from $18.0 million for the six months ended September 30, 2025, an increase of $17.5 million. The increase in net cash used in financing activities was primarily due to an increase in spending on share repurchases to $40.6 million for the six months ended September 30, 2026, from $22.5 million for the six months ended September 30, 2025. This increase was partially offset by an increase in proceeds from stock option exercises to $4.7 million for the six months ended September 30, 2026, from $4.1 million for the six months ended September 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.

Previous 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.

Current wording

Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). 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 and estimates 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, 2026 (the “Annual Report”), filed with the SEC on May 22, 2026. There have been no material changes to the critical accounting policies and estimates 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.

Current wording

The Company’s significant accounting policies and estimates 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, 2026 (the “Annual Report”), filed with the SEC on May 22, 2026. There have been no material changes to the critical accounting policies and estimates disclosed in the Annual Report. In many cases, the accounting treatment of a particular transaction is specifically dictated by GAAP, with no need for management’s judgment in its 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 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 Quarterly Report for information about recently issued and adopted accounting pronouncements.