Corvel Corp 10-Q for FY2023 Q3

Corvel Corp (CRVL)

10-Q 2023-02-02 For: 2022-12-31

Added on April 04, 2026

About this 10-Q

Corvel Corp filed this 10-Q on February 2, 2023, covering the quarter ended December 31, 2022 (FY2023 Q3).

Headline figures

Quarter ended December 31, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $179.39M; up 9.0% from $164.51M a year earlier
Net income: $16.85M; up 21.6% from net income of $13.86M a year earlier
Diluted EPS: $0.96; up 26.3% from $0.76 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 – December 31, 2022 (unaudited) and March 31, 2022	3
	Consolidated Income Statements (unaudited) – Three months ended December 31, 2022 and 2021	4
	Consolidated Income Statements (unaudited) – Nine months ended December 31, 2022 and 2021	5
	Consolidated Statements of Stockholders’ Equity (unaudited) – Three and nine months ended December 31, 2022 and 2021	6
	Consolidated Statements of Cash Flows (unaudited) – Nine months ended December 31, 2022 and 2021	7
	Notes to Consolidated Financial Statements (unaudited) – December 31, 2022	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	33

Item 3.	Defaults Upon Senior Securities	34

Item 4.	Mine Safety Disclosures	34

Item 5.	Other Information	34

Item 6.	Exhibits	35

	Signatures	36


	December 31, 2022			March 31, 2022
	(Unaudited)
Assets
Current Assets
Cash and cash equivalents	$	78,031,000		$	97,504,000
Customer deposits		82,857,000			69,781,000
Accounts receivable, net		82,791,000			82,586,000
Prepaid taxes and expenses		13,064,000			15,123,000
Total current assets		256,743,000			264,994,000
Property and equipment, net		82,066,000			76,268,000
Goodwill		36,814,000			36,814,000
Other intangibles, net		1,350,000			1,669,000
Right-of-use asset, net		29,936,000			35,020,000
Other assets		778,000			481,000
TOTAL ASSETS	$	407,687,000		$	415,246,000
Liabilities and Stockholders' Equity
Current Liabilities
Accounts and taxes payable	$	16,616,000		$	14,431,000
Accrued liabilities		169,810,000			156,939,000
Total current liabilities		186,426,000			171,370,000
Deferred income taxes, net		683,000			1,689,000
Long-term lease liabilities		25,773,000			29,792,000
Total liabilities		212,882,000			202,851,000
Commitments and contingencies
Stockholders' Equity
Common stock, $.0001 par value: 120,000,000 shares authorized at December 31, 2022 and March 31, 2022; 54,891,298 shares issued (17,180,180 shares outstanding, net of Treasury shares) and 54,788,712 shares issued (17,569,087 shares outstanding, net of Treasury shares) at December 31, 2022 and March 31, 2022, respectively		3,000			3,000
Paid-in capital		210,904,000			201,609,000
Treasury stock (37,711,118 shares at December 31, 2022 and 37,219,625 shares at March 31, 2022)		(729,601,000	)		(654,520,000	)
Retained earnings		713,499,000			665,303,000
Total stockholders' equity		194,805,000			212,395,000
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	407,687,000		$	415,246,000


	Three Months Ended December 31,
	2022		2021
REVENUES	$	179,386,000	$	164,508,000
Cost of revenues		139,041,000		129,320,000
Gross profit		40,345,000		35,188,000
General and administrative expenses		18,128,000		17,506,000
Income before income tax provision		22,217,000		17,682,000
Income tax provision		5,368,000		3,824,000
NET INCOME	$	16,849,000	$	13,858,000
Net income per common and common equivalent share
Basic	$	0.98	$	0.78
Diluted	$	0.96	$	0.76
Weighted average common and common equivalent shares
Basic		17,245,000		17,785,000
Diluted		17,487,000		18,211,000


☒	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


	Nine Months Ended December 31,
	2022		2021
REVENUES	$	533,119,000	$	474,871,000
Cost of revenues		416,811,000		365,808,000
Gross profit		116,308,000		109,063,000
General and administrative expenses		54,347,000		50,810,000
Income before income tax provision		61,961,000		58,253,000
Income tax provision		13,765,000		11,480,000
NET INCOME	$	48,196,000	$	46,773,000
Net income per common and common equivalent share
Basic	$	2.77	$	2.62
Diluted	$	2.73	$	2.57
Weighted average common and common equivalent shares
Basic		17,379,000		17,841,000
Diluted		17,647,000		18,221,000


	Three Months Ended December 31, 2022
	Common Shares		Stock Amount		Paid-in- Capital		Treasury Shares			Treasury Stock			Retained Earnings		Total Stockholders' Equity
Balance – September 30, 2022		54,873,202	$	3,000	$	207,986,000		(37,559,016	)	$	(706,806,000	)	$	696,650,000	$	197,833,000
Stock issued under stock option plan, net of shares repurchased		18,096		—		1,220,000		—			—			—		1,220,000
Stock-based compensation expense		—		—		1,698,000		—			—			—		1,698,000
Purchase of treasury stock		—		—		—		(152,102	)		(22,795,000	)		—		(22,795,000	)
Net income		—		—		—		—			—			16,849,000		16,849,000
Balance – December 31, 2022		54,891,298	$	3,000	$	210,904,000		(37,711,118	)	$	(729,601,000	)	$	713,499,000	$	194,805,000


	Three Months Ended December 31, 2021
	Common Shares		Stock Amount		Paid-in- Capital		Treasury Shares			Treasury Stock			Retained Earnings		Total Stockholders' Equity
Balance – September 30, 2021		54,701,476	$	3,000	$	196,174,000		(36,937,900	)	$	(604,190,000	)	$	631,808,000	$	223,795,000
Stock issued under stock option plan, net of shares repurchased		25,917		—		1,627,000		—			—			—		1,627,000
Stock-based compensation expense		—		—		1,183,000		—			—			—		1,183,000
Purchase of treasury stock		—		—		—		(135,734	)		(25,536,000	)		—		(25,536,000	)
Net income		—		—		—		—			—			13,858,000		13,858,000
Balance – December 31, 2021		54,727,393	$	3,000	$	198,984,000		(37,073,634	)	$	(629,726,000	)	$	645,666,000	$	214,927,000


	Nine Months Ended December 31, 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		99,950		—		4,922,000		—			—			—		4,922,000
Stock-based compensation expense		—		—		4,027,000		—			—			—		4,027,000
Purchase of treasury stock		—		—		—		(491,493	)		(75,081,000	)		—		(75,081,000	)
Net income		—		—		—		—			—			48,196,000		48,196,000
Balance – December 31, 2022		54,891,298	$	3,000	$	210,904,000		(37,711,118	)	$	(729,601,000	)	$	713,499,000	$	194,805,000

	Nine Months Ended December 31, 2021
	Common Shares		Stock Amount		Paid-in- Capital		Treasury Shares			Treasury Stock			Retained Earnings		Total Stockholders' Equity
Balance – March 31, 2021		54,529,642	$	3,000	$	185,941,000		(36,653,552	)	$	(564,435,000	)	$	598,893,000	$	220,402,000
Stock issued under employee stock purchase plan		1,534		—		271,000		—			—			—		271,000
Stock issued under stock option plan, net of shares repurchased		196,217		—		8,888,000		—			—			—		8,888,000
Stock-based compensation expense		—		—		3,884,000		—			—			—		3,884,000
Purchase of treasury stock		—		—		—		(420,082	)		(65,291,000	)		—		(65,291,000	)
Net income		—		—		—		—			—			46,773,000		46,773,000
Balance – December 31, 2021		54,727,393	$	3,000	$	198,984,000		(37,073,634	)	$	(629,726,000	)	$	645,666,000	$	214,927,000


	Three Months Ended		Three Months Ended
	December 31, 2022		December 31, 2021
Patient management services	$	118,918,000	$	107,711,000
Network solutions services		60,468,000		56,797,000
Total services	$	179,386,000	$	164,508,000


	Nine Months Ended		Nine Months Ended
	December 31, 2022		December 31, 2021
Patient management services	$	353,197,000	$	312,829,000
Network solutions services		179,922,000		162,042,000
Total services	$	533,119,000	$	474,871,000


	December 31, 2022			March 31, 2022
Billed receivables	$	56,957,000		$	57,841,000
Allowance for doubtful accounts		(3,043,000	)		(2,562,000	)
Unbilled receivables		28,877,000			27,307,000
Accounts receivable, net	$	82,791,000		$	82,586,000


	Nine Months Ended
	December 31, 2022
Beginning balance at April 1, 2022	$	25,796,000
Additions		33,686,000
Revenue recognized from beginning of period		(20,193,000	)
Revenue recognized from additions		(12,949,000	)
Ending balance at December 31, 2022	$	26,340,000


	Three Months Ended December 31, 2022					Three Months Ended December 31, 2021
	Shares			Weighted Average Exercise Price		Shares			Weighted Average Exercise Price
Options outstanding, beginning		706,728		$	96.14		778,982		$	72.17
Options granted		69,200			155.99		50,200			197.16
Options exercised		(18,210	)		67.63		(25,917	)		62.78
Options cancelled/forfeited		(1,256	)		126.62		(6,407	)		81.62
Options outstanding, ending		756,462		$	102.25		796,858		$	80.27


	Three Months Ended
	December 31, 2022	December 31, 2021
Risk-free interest rate	4.36%	1.27%
Expected volatility	36%	36%
Expected dividend yield	0.00%	0.00%
Expected weighted average life of option in years	4.3 years	4.4 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 $70.24		204,302		2.09	$	52.49		187,542	$	52.17
$70.25 to $87.69		248,327		2.92		83.32		111,749		82.64
$87.70 to $155.99		209,534		4.30		138.56		30,938		108.20
$156.00 to $197.16		94,299		4.85		179.20		7,330		174.40
Total		756,462		3.32	$	102.25		337,559	$	70.05


	Number of Options			Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Life (Years)		Aggregate Intrinsic Value as of December 31, 2022
Options outstanding at October 1, 2022		706,728		$	96.14
Granted		69,200			155.99
Exercised		(18,210	)		67.63
Cancelled – forfeited		(1,225	)		121.76
Cancelled – expired		(31	)		121.96
Ending outstanding		756,462		$	102.25		3.32	$	36,912,256
Ending vested and expected to vest		662,773		$	99.55		3.34	$	33,500,567
Ending exercisable at December 31, 2022		337,559		$	70.05		2.54	$	25,647,949



2023	$	3,412,000
2024		10,529,000
2025		8,415,000
2026		6,120,000
2027		4,380,000
Thereafter		6,049,000
Total lease payments		38,905,000
Less interest		(2,445,000	)
Total lease liabilities	$	36,460,000


	December 31, 2022		March 31, 2022
Accounts payable	$	14,702,000	$	14,080,000
Income taxes payable and uncertain tax positions		1,914,000		351,000
Total accounts and taxes payable	$	16,616,000	$	14,431,000


	December 31, 2022		March 31, 2022
Payroll, payroll taxes and employee benefits	$	36,477,000	$	36,066,000
Customer deposits		82,857,000		69,781,000
Accrued professional service fees		8,596,000		8,073,000
Self-insurance accruals		3,032,000		2,798,000
Deferred revenue		26,340,000		25,796,000
Operating lease liabilities		10,687,000		13,348,000
Other		1,821,000		1,077,000
Total accrued liabilities	$	169,810,000	$	156,939,000


	Three Months Ended			Three Months Ended						Percentage
	December 31, 2022			December 31, 2021			Change			Change
Revenue	$	179,386,000		$	164,508,000		$	14,878,000			9.0	%
Cost of revenues		139,041,000			129,320,000			9,721,000			7.5	%
Gross profit		40,345,000			35,188,000			5,157,000			14.7	%
Gross profit as percentage of revenue		22.5	%		21.4	%
General and administrative		18,128,000			17,506,000			622,000			3.6	%
General and administrative as percentage of revenue		10.1	%		10.6	%
Income before income tax provision		22,217,000			17,682,000			4,535,000			25.6	%
Income before income tax provision as percentage of revenue		12.4	%		10.7	%
Income tax provision		5,368,000			3,824,000			1,544,000			40.4	%
Net income	$	16,849,000		$	13,858,000		$	2,991,000			21.6	%
Weighted Average Shares
Basic		17,245,000			17,785,000			(540,000	)		(3.0	%)
Diluted		17,487,000			18,211,000			(724,000	)		(4.0	%)
Earnings Per Share
Basic	$	0.98		$	0.78		$	0.20			25.6	%
Diluted	$	0.96		$	0.76		$	0.20			26.3	%


					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
October 1 to October 31, 2022		55,904	$	150.21		55,904		385,080
November 1 to November 30, 2022		53,084	$	152.52		53,084		1,331,996
December 1 to December 31, 2022		43,114	$	146.06		43,114		1,288,882
Total		152,102	$	149.84		152,102		1,288,882


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

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