Corvel Corp 10-Q for FY2024 Q2

Corvel Corp (CRVL)

10-Q 2023-11-02 For: 2023-09-30

Added on April 04, 2026

About this 10-Q

Corvel Corp filed this 10-Q on November 2, 2023, covering the quarter ended September 30, 2023 (FY2024 Q2).

Headline figures

Quarter ended September 30, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $195.52M; up 10.2% from $177.43M a year earlier
Net income: $19.9M; up 35.8% from net income of $14.66M a year earlier
Diluted EPS: $1.15; up 38.6% from $0.83 a year earlier

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5128 Apache Plume Road, Suite 400
Fort Worth, TX		76109
(Address of principal executive offices)		(Zip Code)


Large accelerated filer	☑	Accelerated filer	☐

Non-accelerated filer	☐	Smaller reporting company	☐

		Emerging growth company	☐


		Page

PART I - FINANCIAL INFORMATION

Item 1.	Financial Statements	3

	Consolidated Balance Sheets – September 30, 2023 (unaudited) and March 31, 2023	3
	Consolidated Income Statements (unaudited) – Three months ended September 30, 2023 and 2022	4
	Consolidated Income Statements (unaudited) – Six months ended September 30, 2023 and 2022	5
	Consolidated Statements of Stockholders’ Equity (unaudited) – Three and six months ended September 30, 2023 and 2022	6
	Consolidated Statements of Cash Flows (unaudited) – Six months ended September 30, 2023 and 2022	7
	Notes to Consolidated Financial Statements (unaudited) – September 30, 2023	8

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	17

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	24

Item 4.	Controls and Procedures	24

PART II - OTHER INFORMATION

Item 1.	Legal Proceedings	26

Item 1A.	Risk Factors	26

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	34

Item 3.	Defaults Upon Senior Securities	35

Item 4.	Mine Safety Disclosures	35

Item 5.	Other Information	35

Item 6.	Exhibits	36

	Signatures	37


	September 30, 2023			March 31, 2023
	(Unaudited)
Assets
Current Assets
Cash and cash equivalents	$	91,749,000		$	71,329,000
Customer deposits		90,127,000			80,022,000
Accounts receivable, net		86,937,000			81,034,000
Prepaid taxes and expenses		13,062,000			11,385,000
Total current assets		281,875,000			243,770,000
Property and equipment, net		84,939,000			82,770,000
Goodwill		36,814,000			36,814,000
Other intangibles, net		1,033,000			1,244,000
Right-of-use asset, net		27,174,000			27,721,000
Deferred tax asset, net		877,000			224,000
Other assets		1,405,000			1,380,000
TOTAL ASSETS	$	434,117,000		$	393,923,000
Liabilities and Stockholders' Equity
Current Liabilities
Accounts and taxes payable	$	15,356,000		$	15,309,000
Accrued liabilities		171,143,000			152,578,000
Total current liabilities		186,499,000			167,887,000
Long-term lease liabilities		25,049,000			23,860,000
Total liabilities		211,548,000			191,747,000
Commitments and contingencies
Stockholders' Equity
Common stock, $.0001 par value: 120,000,000 shares authorized at September 30, 2023 and March 31, 2023; 55,070,842 shares issued (17,119,483 shares outstanding, net of Treasury shares) and 54,987,366 shares issued (17,169,500 shares outstanding, net of Treasury shares) at September 30, 2023 and March 31, 2023, respectively		3,000			3,000
Paid-in capital		226,595,000			218,700,000
Treasury stock (37,951,359 shares at September 30, 2023 and 37,817,866 shares at March 31, 2023)		(775,400,000	)		(748,195,000	)
Retained earnings		771,371,000			731,668,000
Total stockholders' equity		222,569,000			202,176,000
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	434,117,000		$	393,923,000


	Three Months Ended September 30,
	2023		2022
REVENUES	$	195,522,000	$	177,426,000
Cost of revenues		151,270,000		141,332,000
Gross profit		44,252,000		36,094,000
General and administrative expenses		19,538,000		17,549,000
Income before income tax provision		24,714,000		18,545,000
Income tax provision		4,816,000		3,889,000
NET INCOME	$	19,898,000	$	14,656,000
Net income per common and common equivalent share
Basic	$	1.16	$	0.84
Diluted	$	1.15	$	0.83
Weighted average common and common equivalent shares
Basic		17,123,000		17,386,000
Diluted		17,346,000		17,650,000


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


	Six Months Ended September 30,
	2023		2022
REVENUES	$	385,775,000	$	353,733,000
Cost of revenues		299,644,000		277,770,000
Gross profit		86,131,000		75,963,000
General and administrative expenses		35,989,000		36,219,000
Income before income tax provision		50,142,000		39,744,000
Income tax provision		10,439,000		8,397,000
NET INCOME	$	39,703,000	$	31,347,000
Net income per common and common equivalent share
Basic	$	2.32	$	1.80
Diluted	$	2.29	$	1.77
Weighted average common and common equivalent shares
Basic		17,133,000		17,446,000
Diluted		17,365,000		17,726,000


	Three Months Ended September 30, 2023
	Common Shares		Stock Amount		Paid-in- Capital		Treasury Shares			Treasury Stock			Retained Earnings		Total Stockholders' Equity
Balance – June 30, 2023		55,019,773	$	3,000	$	221,486,000		(37,905,858	)	$	(765,982,000	)	$	751,473,000	$	206,980,000
Stock issued under employee stock purchase plan		1,797		—		336,000		—			—			—		336,000
Stock issued under stock option plan, net of shares repurchased		49,272		—		3,472,000		—			—			—		3,472,000
Stock-based compensation expense		—		—		1,301,000		—			—			—		1,301,000
Purchase of treasury stock		—		—		—		(45,501	)		(9,418,000	)		—		(9,418,000	)
Net income		—		—		—		—			—			19,898,000		19,898,000
Balance – September 30, 2023		55,070,842	$	3,000	$	226,595,000		(37,951,359	)	$	(775,400,000	)	$	771,371,000	$	222,569,000

	Three Months Ended September 30, 2022
	Common Shares		Stock Amount		Paid-in- Capital		Treasury Shares			Treasury Stock			Retained Earnings		Total Stockholders' Equity
Balance – June 30, 2022		54,832,358	$	3,000	$	204,839,000		(37,394,507	)	$	(681,208,000	)	$	681,994,000	$	205,628,000
Stock issued under employee stock purchase plan		2,636		—		346,000		—			—			—		346,000
Stock issued under stock option plan, net of shares repurchased		38,208		—		1,851,000		—			—			—		1,851,000
Stock-based compensation expense		—		—		950,000		—			—			—		950,000
Purchase of treasury stock		—		—		—		(164,509	)		(25,598,000	)		—		(25,598,000	)
Net income		—		—		—		—			—			14,656,000		14,656,000
Balance – September 30, 2022		54,873,202	$	3,000	$	207,986,000		(37,559,016	)	$	(706,806,000	)	$	696,650,000	$	197,833,000


	Six Months Ended September 30, 2023
	Common Shares		Stock Amount		Paid-in- Capital		Treasury Shares			Treasury Stock			Retained Earnings		Total Stockholders' Equity
Balance – March 31, 2023		54,987,366	$	3,000	$	218,700,000		(37,817,866	)	$	(748,195,000	)	$	731,668,000	$	202,176,000
Stock issued under employee stock purchase plan		1,797		—		336,000		—			—			—		336,000
Stock issued under stock option plan, net of shares repurchased		81,679		—		4,946,000		—			—			—		4,946,000
Stock-based compensation expense		—		—		2,613,000		—			—			—		2,613,000
Purchase of treasury stock		—		—		—		(133,493	)		(27,205,000	)		—		(27,205,000	)
Net income		—		—		—		—			—			39,703,000		39,703,000
Balance – September 30, 2023		55,070,842	$	3,000	$	226,595,000		(37,951,359	)	$	(775,400,000	)	$	771,371,000	$	222,569,000

	Six Months Ended September 30, 2022
	Common Shares		Stock Amount		Paid-in- Capital		Treasury Shares			Treasury Stock			Retained Earnings		Total Stockholders' Equity
Balance – March 31, 2022		54,788,712	$	3,000	$	201,609,000		(37,219,625	)	$	(654,520,000	)	$	665,303,000	$	212,395,000
Stock issued under employee stock purchase plan		2,636		—		346,000		—			—			—		346,000
Stock issued under stock option plan, net of shares repurchased		81,854		—		3,702,000		—			—			—		3,702,000
Stock-based compensation expense		—		—		2,329,000		—			—			—		2,329,000
Purchase of treasury stock		—		—		—		(339,391	)		(52,286,000	)		—		(52,286,000	)
Net income		—		—		—		—			—			31,347,000		31,347,000
Balance – September 30, 2022		54,873,202	$	3,000	$	207,986,000		(37,559,016	)	$	(706,806,000	)	$	696,650,000	$	197,833,000


	Three Months Ended		Three Months Ended
	September 30, 2023		September 30, 2022
Patient management services	$	129,805,000	$	119,470,000
Network solutions services		65,717,000		57,956,000
Total services	$	195,522,000	$	177,426,000


	Six Months Ended		Six Months Ended
	September 30, 2023		September 30, 2022
Patient management services	$	257,643,000	$	234,279,000
Network solutions services		128,132,000		119,454,000
Total services	$	385,775,000	$	353,733,000


	September 30, 2023			March 31, 2023
Billed receivables	$	58,749,000		$	57,218,000
Unbilled receivables		31,408,000			26,639,000
Allowance for doubtful accounts		(3,220,000	)		(2,823,000	)
Accounts receivable, net	$	86,937,000		$	81,034,000


	Six Months Ended
	September 30, 2023
Beginning balance at April 1, 2023	$	26,978,000
Additions		25,014,000
Revenue recognized from beginning of period		(12,787,000	)
Revenue recognized from additions		(10,034,000	)
Ending balance at September 30, 2023	$	29,171,000


	Three Months Ended September 30, 2023					Three Months Ended September 30, 2022
	Shares			Weighted Average Exercise Price		Shares			Weighted Average Exercise Price
Options outstanding, beginning		611,901		$	110.10		722,343		$	90.94
Options granted		16,500			222.26		35,600			163.61
Options exercised		(50,776	)		74.53		(39,947	)		52.97
Options cancelled/forfeited		(2,362	)		145.71		(11,268	)		130.12
Options outstanding, ending		575,263		$	116.31		706,728		$	96.14


	Three Months Ended	Three Months Ended
	September 30, 2023	September 30, 2022
Risk-free interest rate	4.19%	2.73%
Expected volatility	36%	36%
Expected dividend yield	0.00%	0.00%
Expected weighted average life of option in years	4.2 years	4.3 years


Range of Exercise Price	Number of Outstanding Options		Weighted Average Remaining Contractual Life		Outstanding Options – Weighted Average Exercise Price		Exercisable Options – Number of Exercisable Options		Exercisable Options – Weighted Average Exercise Price
$33.16 to $79.49		171,549		2.36	$	60.68		157,157	$	59.92
$79.50 to $119.48		154,298		2.41		93.95		93,399		92.56
$119.49 to $157.94		145,565		4.11		153.55		26,990		151.94
$157.95 to $222.26		103,851		4.67		189.23		15,116		180.86
Total		575,263		3.23	$	116.31		292,662	$	85.07


	Number of Options			Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Life (Years)		Aggregate Intrinsic Value as of September 30, 2023
Options outstanding at July 1, 2023		611,901		$	110.10
Granted		16,500			222.26
Exercised		(50,776	)		74.53
Cancelled – forfeited		(2,204	)		149.83
Cancelled – expired		(158	)		88.22
Ending outstanding		575,263		$	116.31		3.23	$	46,657,138
Ending vested and expected to vest		497,652		$	113.66		3.27	$	41,732,227
Ending exercisable at September 30, 2023		292,662		$	85.07		2.69	$	32,659,247



2024	$	5,376,000
2025		9,751,000
2026		7,490,000
2027		5,798,000
2028		4,817,000
Thereafter		4,303,000
Total lease payments		37,535,000
Less interest		(2,939,000	)
Total lease liabilities	$	34,596,000


	September 30, 2023		March 31, 2023
Accounts payable	$	15,148,000	$	15,058,000
Income taxes payable and uncertain tax positions		208,000		251,000
Total accounts and taxes payable	$	15,356,000	$	15,309,000


	September 30, 2023		March 31, 2023
Payroll, payroll taxes and employee benefits	$	29,324,000	$	22,170,000
Customer deposits		90,127,000		80,022,000
Accrued professional service fees		8,645,000		8,601,000
Self-insurance accruals		3,157,000		3,563,000
Deferred revenue		29,171,000		26,978,000
Operating lease liabilities		9,547,000		9,900,000
Other		1,172,000		1,344,000
Total accrued liabilities	$	171,143,000	$	152,578,000


	Three Months Ended			Three Months Ended						Percentage
	September 30, 2023			September 30, 2022			Change			Change
Revenue	$	195,522,000		$	177,426,000		$	18,096,000			10.2	%
Cost of revenues		151,270,000			141,332,000			9,938,000			7.0	%
Gross profit		44,252,000			36,094,000			8,158,000			22.6	%
Gross profit as percentage of revenue		22.6	%		20.3	%
General and administrative expenses		19,538,000			17,549,000			1,989,000			11.3	%
General and administrative as percentage of revenue		10.0	%		9.9	%
Income before income tax provision		24,714,000			18,545,000			6,169,000			33.3	%
Income before income tax provision as percentage of revenue		12.6	%		10.5	%
Income tax provision		4,816,000			3,889,000			927,000			23.8	%
Net income	$	19,898,000		$	14,656,000		$	5,242,000			35.8	%
Weighted average common and common equivalent shares
Basic		17,123,000			17,386,000			(263,000	)		(1.5	%)
Diluted		17,346,000			17,650,000			(304,000	)		(1.7	%)
Net income per common and common equivalent shares
Basic	$	1.16		$	0.84		$	0.32			38.1	%
Diluted	$	1.15		$	0.83		$	0.32			38.6	%


					Total Number of
					Shares Purchased		Maximum Number
					as Part of Publicly		of Shares that may
	Total Number of		Average Price Paid		Announced		yet be Purchased
Period	Shares Purchased		Per Share		Program		Under the Program
July 1 to July 31, 2023		14,784	$	202.68		14,784		1,079,358
August 1 to August 31, 2023		15,703	$	218.00		15,703		1,063,655
September 1 to September 30, 2023		15,014	$	199.64		15,014		1,048,641
Total		45,501	$	206.96		45,501		1,048,641


3.1		Fourth Amended and Restated Certificate of Incorporation of the Company. Incorporated herein by reference to Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2020 filed with the SEC on August 6, 2020 (File No. 000-19291).

3.2		Second Amended and Restated Bylaws of the Company. Incorporated herein by reference to Exhibit 3.2 to the Company’s Quarterly Report on Form 10-Q for the quarterly report period ended June 30, 2020 filed with the SEC on August 6, 2020 (File No. 000-19291).

31.1		Certification of the Chief Executive Officer Pursuant to Rule 13a-14(a) or Rule 15d-14(a) Promulgated under the Securities Exchange Act of 1934, as amended, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of the Chief Financial Officer Pursuant to Rule 13a-14(a) or Rule 15d-14(a) Promulgated under the Securities Exchange Act of 1934, as amended, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1*		Certification of the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).

32.2*		Certification of the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).

101.INS		Inline XBRL Instance Document.

101.SCH		Inline XBRL Taxonomy Extension Schema Document.

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document.

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document.

104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

*		The certifications attached as Exhibit 32.1 and Exhibit 32.2 accompany this Quarterly Report pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and shall not be deemed “filed” by the registrant for purposes of Section 18 of the Exchange Act and are not to be incorporated by reference into any of the registrant’s filings under the Securities Act or the Exchange Act, irrespective of any general incorporation language contained in any such filing.


	CORVEL CORPORATION

Dated: November 2, 2023	By:	/s/ Michael G. Combs
	Michael G. Combs, Chief Executive Officer and President

Dated: November 2, 2023	By:	/s/ Brandon T. O’Brien
	Brandon T. O’Brien,
	Chief Financial Officer (Principal Financial Officer)