Corvel Corp 10-Q for FY2024 Q3

Corvel Corp (CRVL)

10-Q 2024-02-01 For: 2023-12-31

Added on April 04, 2026

About this 10-Q

Corvel Corp filed this 10-Q on February 1, 2024, covering the quarter ended December 31, 2023 (FY2024 Q3).

Headline figures

Quarter ended December 31, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $202.3M; up 12.8% from $179.39M a year earlier
Net income: $17.1M; up 1.5% from net income of $16.85M a year earlier
Diluted EPS: $0.99; up 3.1% from $0.96 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, 2023 (unaudited) and March 31, 2023	3
	Consolidated Income Statements (unaudited) – Three months ended December 31, 2023 and 2022	4
	Consolidated Income Statements (unaudited) – Nine months ended December 31, 2023 and 2022	5
	Consolidated Statements of Stockholders’ Equity (unaudited) – Three and nine months ended December 31, 2023 and 2022	6
	Consolidated Statements of Cash Flows (unaudited) – Nine months ended December 31, 2023 and 2022	7
	Notes to Consolidated Financial Statements (unaudited) – December 31, 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


	December 31, 2023			March 31, 2023
	(Unaudited)
Assets
Current Assets
Cash and cash equivalents	$	106,994,000		$	71,329,000
Customer deposits		80,838,000			80,022,000
Accounts receivable, net		92,657,000			81,034,000
Prepaid taxes and expenses		13,903,000			11,385,000
Total current assets		294,392,000			243,770,000
Property and equipment, net		85,216,000			82,770,000
Goodwill		36,814,000			36,814,000
Other intangibles, net		927,000			1,244,000
Right-of-use asset, net		25,083,000			27,721,000
Deferred tax asset, net		1,147,000			224,000
Other assets		1,416,000			1,380,000
TOTAL ASSETS	$	444,995,000		$	393,923,000
Liabilities and Stockholders' Equity
Current Liabilities
Accounts and taxes payable	$	15,133,000		$	15,309,000
Accrued liabilities		173,254,000			152,578,000
Total current liabilities		188,387,000			167,887,000
Long-term lease liabilities		23,078,000			23,860,000
Total liabilities		211,465,000			191,747,000
Commitments and contingencies
Stockholders' Equity
Common stock, $.0001 par value: 120,000,000 shares authorized at December 31, 2023 and March 31, 2023; 55,094,668 shares issued (17,099,318 shares outstanding, net of Treasury shares) and 54,987,366 shares issued (17,169,500 shares outstanding, net of Treasury shares) at December 31, 2023 and March 31, 2023, respectively		3,000			3,000
Paid-in capital		229,785,000			218,700,000
Treasury stock (37,995,350 shares at December 31, 2023 and 37,817,866 shares at March 31, 2023)		(784,724,000	)		(748,195,000	)
Retained earnings		788,466,000			731,668,000
Total stockholders' equity		233,530,000			202,176,000
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	444,995,000		$	393,923,000


	Three Months Ended December 31,
	2023		2022
REVENUES	$	202,303,000	$	179,386,000
Cost of revenues		160,143,000		139,041,000
Gross profit		42,160,000		40,345,000
General and administrative expenses		19,798,000		18,128,000
Income before income tax provision		22,362,000		22,217,000
Income tax provision		5,267,000		5,368,000
NET INCOME	$	17,095,000	$	16,849,000
Net income per common and common equivalent share
Basic	$	1.00	$	0.98
Diluted	$	0.99	$	0.96
Weighted average common and common equivalent shares
Basic		17,106,000		17,245,000
Diluted		17,326,000		17,487,000


☒	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,
	2023		2022
REVENUES	$	588,078,000	$	533,119,000
Cost of revenues		459,788,000		416,811,000
Gross profit		128,290,000		116,308,000
General and administrative expenses		55,786,000		54,347,000
Income before income tax provision		72,504,000		61,961,000
Income tax provision		15,706,000		13,765,000
NET INCOME	$	56,798,000	$	48,196,000
Net income per common and common equivalent share
Basic	$	3.32	$	2.77
Diluted	$	3.27	$	2.73
Weighted average common and common equivalent shares
Basic		17,124,000		17,379,000
Diluted		17,352,000		17,647,000


	Three Months Ended December 31, 2023
	Common Shares		Stock Amount		Paid-in- Capital		Treasury Shares			Treasury Stock			Retained Earnings		Total Stockholders' Equity
Balance – September 30, 2023		55,070,842	$	3,000	$	226,595,000		(37,951,359	)	$	(775,400,000	)	$	771,371,000	$	222,569,000
Stock issued under stock option plan, net of shares repurchased		23,826		—		2,114,000		—			—			—		2,114,000
Stock-based compensation expense		—		—		1,076,000		—			—			—		1,076,000
Purchase of treasury stock		—		—		—		(43,991	)		(9,324,000	)		—		(9,324,000	)
Net income		—		—		—		—			—			17,095,000		17,095,000
Balance – December 31, 2023		55,094,668	$	3,000	$	229,785,000		(37,995,350	)	$	(784,724,000	)	$	788,466,000	$	233,530,000


	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


	Nine Months Ended December 31, 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		105,505		—		7,059,000		—			—			—		7,059,000
Stock-based compensation expense		—		—		3,690,000		—			—			—		3,690,000
Purchase of treasury stock		—		—		—		(177,484	)		(36,529,000	)		—		(36,529,000	)
Net income		—		—		—		—			—			56,798,000		56,798,000
Balance – December 31, 2023		55,094,668	$	3,000	$	229,785,000		(37,995,350	)	$	(784,724,000	)	$	788,466,000	$	233,530,000

	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


	Three Months Ended		Three Months Ended
	December 31, 2023		December 31, 2022
Patient management services	$	131,756,000	$	118,918,000
Network solutions services		70,547,000		60,468,000
Total services	$	202,303,000	$	179,386,000


	Nine Months Ended		Nine Months Ended
	December 31, 2023		December 31, 2022
Patient management services	$	389,398,000	$	353,197,000
Network solutions services		198,680,000		179,922,000
Total services	$	588,078,000	$	533,119,000


	December 31, 2023			March 31, 2023
Billed receivables	$	57,963,000		$	57,218,000
Unbilled receivables		38,514,000			26,639,000
Allowance for doubtful accounts		(3,820,000	)		(2,823,000	)
Accounts receivable, net	$	92,657,000		$	81,034,000


	Nine Months Ended
	December 31, 2023
Beginning balance at April 1, 2023	$	26,978,000
Additions		38,201,000
Revenue recognized from beginning of period		(18,287,000	)
Revenue recognized from additions		(17,069,000	)
Ending balance at December 31, 2023	$	29,823,000


	Three Months Ended December 31, 2023					Three Months Ended December 31, 2022
	Shares			Weighted Average Exercise Price		Shares			Weighted Average Exercise Price
Options outstanding, beginning		575,263		$	116.31		706,728		$	96.14
Options granted		43,000			200.55		69,200			155.99
Options exercised		(24,666	)		94.78		(18,210	)		67.63
Options cancelled/forfeited		(3,523	)		149.42		(1,256	)		126.62
Options outstanding, ending		590,074		$	123.15		756,462		$	102.25


	Three Months Ended	Three Months Ended
	December 31, 2023	December 31, 2022
Risk-free interest rate	4.65%	4.36%
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		158,365		2.24	$	60.23		148,439	$	59.51
$79.50 to $148.89		184,780		2.43		104.96		105,097		99.35
$148.90 to $189.02		152,285		4.41		161.02		30,412		156.83
$189.03 to $222.26		94,644		4.27		203.08		7,769		197.16
Total		590,074		3.18	$	123.15		291,717	$	87.66


	Number of Options			Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Life (Years)		Aggregate Intrinsic Value as of December 31, 2023
Options outstanding at October 1, 2023		575,263		$	116.31
Granted		43,000			200.55
Exercised		(24,666	)		94.78
Cancelled – forfeited		(3,523	)		149.42
Cancelled – expired		—			—
Ending outstanding		590,074		$	123.15		3.18	$	73,254,040
Ending vested and expected to vest		494,068		$	119.17		3.24	$	63,310,212
Ending exercisable at December 31, 2023		291,717		$	87.66		2.56	$	46,595,645



2024	$	2,790,000
2025		9,698,000
2026		7,488,000
2027		5,849,000
2028		4,905,000
Thereafter		4,363,000
Total lease payments		35,093,000
Less interest		(2,699,000	)
Total lease liabilities	$	32,394,000


	December 31, 2023		March 31, 2023
Accounts payable	$	14,925,000	$	15,058,000
Income taxes payable and uncertain tax positions		208,000		251,000
Total accounts and taxes payable	$	15,133,000	$	15,309,000


	December 31, 2023		March 31, 2023
Payroll, payroll taxes and employee benefits	$	40,550,000	$	22,170,000
Customer deposits		80,838,000		80,022,000
Accrued professional service fees		8,245,000		8,601,000
Self-insurance accruals		3,318,000		3,563,000
Deferred revenue		29,823,000		26,978,000
Operating lease liabilities		9,316,000		9,900,000
Other		1,164,000		1,344,000
Total accrued liabilities	$	173,254,000	$	152,578,000


	Three Months Ended			Three Months Ended						Percentage
	December 31, 2023			December 31, 2022			Change			Change
Revenue	$	202,303,000		$	179,386,000		$	22,917,000			12.8	%
Cost of revenues		160,143,000			139,041,000			21,102,000			15.2	%
Gross profit		42,160,000			40,345,000			1,815,000			4.5	%
Gross profit as percentage of revenue		20.8	%		22.5	%
General and administrative expenses		19,798,000			18,128,000			1,670,000			9.2	%
General and administrative as percentage of revenue		9.8	%		10.1	%
Income before income tax provision		22,362,000			22,217,000			145,000			0.7	%
Income before income tax provision as percentage of revenue		11.1	%		12.4	%
Income tax provision		5,267,000			5,368,000			(101,000	)		(1.9	%)
Net income	$	17,095,000		$	16,849,000		$	246,000			1.5	%
Weighted average common and common equivalent shares
Basic		17,106,000			17,245,000			(139,000	)		(0.8	%)
Diluted		17,326,000			17,487,000			(161,000	)		(0.9	%)
Net income per common and common equivalent shares
Basic	$	1.00		$	0.98		$	0.02			2.0	%
Diluted	$	0.99		$	0.96		$	0.03			3.1	%


					Total Number of
					Shares Purchased		Maximum Number
					as Part of Publicly		of Shares that may
	Total Number of		Average Price Paid		Announced		still be Purchased
Period	Shares Purchased		Per Share		Program		Under the Program
October 1 to October 31, 2023		16,498	$	199.85		16,498		1,032,143
November 1 to November 30, 2023		14,689	$	206.18		14,689		1,017,454
December 1 to December 31, 2023		12,804	$	234.05		12,804		1,004,650
Total		43,991	$	211.92		43,991		1,004,650


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 With Embedded Linkbases 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 1, 2024	By:	/s/ Michael G. Combs
	Michael G. Combs, Chief Executive Officer and President

Dated: February 1, 2024	By:	/s/ Brandon T. O’Brien
	Brandon T. O’Brien,
	Chief Financial Officer (Principal Financial Officer)